Case T-130/02


Kronoply GmbH & Co. KG
v
Commission of the European Communities

«(State Aid – Multisectoral framework on regional aid for large investment projects – Request for amendment to a decision declaring aid compatible with the common market – Commission's reply – Not in the nature of a decision – Action for annulment – Inadmissibility)»

Order of the Court of First Instance (Fourth Chamber, Extended Composition), 5 November 2003
    

Summary of the Order

Actions for annulment – Actionable measures – Definition – Measures producing binding legal effects – Assessment of those effects in relation to the substance of the measure – Informal letter from the Commission responding to a Member State's informal initiative – Exclusion

(Art. 230 EC)

The mere fact that a letter is sent by a Community institution to its addressee in response to a request made by the latter is not enough for it to be treated as a decision within the meaning of Article 230 EC, thereby entitling its recipient to bring an action for its annulment. Furthermore, only measures with binding legal effects capable of affecting the interests of the applicant by bringing about a distinct change in his legal position, are capable of being the subject-matter of an application for annulment under Article 230 EC. To determine whether an act or decision produces such effects, it is necessary to look to its substance.A Commission reply to a letter from the authorities of a Member State cannot be interpreted as an act in the nature of a decision where it is clear from their form and content and from the identity of their authors that that letter and that reply are only the expression, respectively, of an informal initiative on the part of those authorities seeking to obtain, at the end of an unofficial review, an amendment to a Commission decision declaring State aid compatible with the common market, and a reply, also informal, to that initiative, formulated by the Commission's staff with responsibility for State aid.see paras 42-45




ORDER OF THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition)
5 November 2003 (1)


((State aid – Multisectoral framework on regional aid for large investment projects – Request for amendment to a decision declaring aid compatible with the common market – The Commission's reply – Not in the nature of a decision – Action for annulment – Inadmissibility))

In Case T-130/02,

Kronoply GmbH & Co. KG, established in Heiligengrabe (Germany), represented initially by B. Luther, and subsequently by R. Nierer, lawyers,

applicant,

v

Commission of the European Communities, represented by V. Di Bucci and T. Scharf, acting as Agents, with an address for service in Luxembourg,

defendant,

APPLICATION for annulment of the alleged decision of the Commission of 5 February 2002 not to amend its decision of 3 July 2001 concerning the authorisation of State aid of DEM 69.3 million granted to the applicant to make an investment in Heiligengrabe (Germany),



THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fourth Chamber, Extended Composition),



composed, at the time of the deliberation, of: V. Tiili, President, J. Pirrung, P. Mengozzi, A.W.H. Meij and M. Vilaras, Judges,

Registrar: H. Jung,

makes the following



Order



Legal background

1
The multisectoral framework on regional aid for large investment projects (OJ 1998 C 107, p. 7; the multisectoral framework) sets out the rules for assessing aid granted for that purpose, which falls within its scope of application.

2
Point 3.10 of the multisectoral framework contains the description of the calculation formula on the basis of which the Commission determines the maximum allowable intensity of notified aid.

3
That formula is based, first and foremost, on the determination of the maximum allowable intensity applicable to aid for large companies in the area concerned, called regional ceiling (R factor), which is then affected by three coefficients corresponding, respectively, to the state of competition in the sector concerned (T factor), to the capital/labour ratio (I factor) and to the regional impact of the aid in question (M factor). The authorised maximum aid intensity therefore corresponds to the following formula: R x T x I x M.

4
According to points 3.2 to 3.4 of the multisectoral framework, the competition factor involves an analysis of whether the notified project will take place in a sector or subsector suffering from structural overcapacity. The reference period for that analysis will be the last five years for which data are available. In the absence of sufficient data on capacity utilisation, the Commission will consider whether the investment in question takes place in a declining market. For this purpose, the Commission will compare the evolution of apparent consumption of the product(s) in question (that is, production plus imports minus exports) with the growth rate of European Economic Area (EEA) manufacturing industry as a whole.

5
Under point 3.10.1 of the multisectoral framework, an adjustment factor of 0.25, 0.5, 0.75 or 1 is applicable to the T factor (competition), in accordance with the following criteria:

(i)
Project which results in a capacity expansion in a sector facing serious structural overcapacity and/or an absolute decline in demand 0.25

(ii)
Project which results in a capacity expansion in a sector facing structural overcapacity and/or a declining market and which is likely to reinforce high market share 0.50

(iii)
Project which results in a capacity expansion in a sector facing structural overcapacity and/or a declining market 0.75

(iv)
No likely negative effects in terms of (i)-(iii) 1.00.

The facts

6
The applicant is a company governed by German law which manufactures timber products.

7
By letter of 22 December 2000, the Federal Republic of Germany, pursuant to Article 2(1) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88] of the EC Treaty (OJ 1999 L 83, p.1), notified the Commission of a plan to grant the applicant aid falling within the scope of the multisectoral framework.

8
The plan notified provided for the grant to the applicant of aid of DEM 77 million (EUR 39.36 million) for the construction of a production site for OSB (oriented strand boards), the total cost of which was DEM 220 million (EUR 112.5 million). In that project, the German authorities stated that the adjustment factor to be applied in respect of competition (T factor) was 1.00.

9
By letters of 3 January and 9 February 2001 respectively, the Commission requested additional information from the German authorities and put a number of questions to them. The authorities provided the additional information requested and replied to the questions raised, by letters dated 9 and 20 February and 21 May 2001.

10
By letter of 19 June 2001, the Federal Republic of Germany amended the initial notification of the aforementioned aid plan in relation to the aid intensity. It informed the Commission inter alia that it [had] decided to reduce the notified competition factor of 1 to 0.75. The application of the new T factor notified by the German authorities reduced the total amount of the aid to DEM 69.3 million (EUR 35.4 million).

11
On 3 July 2001, the Commission, pursuant to Article 4(3) of Regulation No 659/1999, adopted a decision not to raise objections against the aid plan thus notified (OJ 2001 C 226, p. 14; the decision of 3 July 2001).

12
In that decision, the Commission points out that, by the aforementioned letter of 19 June 2001, the Federal Republic of Germany amended its initial notification and that the amount of aid to be granted to the applicant is DEM 69.3 million (EUR 35.4 million) for a total investment cost assessed at DEM 220 million, which corresponds to an aid intensity of 31.5%.

13
On the basis of an assessment of the notified aid in the light of the criteria laid down by the multisectoral framework, the Commission stated, in the same decision, the reasons why the factors applicable in the case were to be fixed at: ─ 35% as regards the authorised maximum intensity in the region of Heiligengrabe;─ 0.75 for the T factor in the light of the competition on the market concerned;─ 0.8 for the I factor (capital/labour ratio);─ 1.5 for the M factor in the light of the regional impact of the planned aid, that is, a maximum intensity of 31.5% (= 35% x 0.75 x 0.8 x 1.5).

14
Since it was found that the amount of aid which the Federal Republic of Germany planned to grant the applicant was therefore consistent with the maximum aid authorised, the Commission declared the notified aid compatible with the EC Treaty.

15
By letter of 3 January 2002 ( the letter of 3 January 2002), Mr Happe, Head of Department at the German Finance Ministry, sent the Commission a document entitled Communication from the German Federal Government to the European Commission, according to which the German Federal Government wished to request an amendment to the decision of 3 July 2001, raising the authorised aid intensity from 31.5% to 35% of the investment cost eligible for aid and, in particular, altering the T factor (competition). The reason for that request was that the forecasts for annual growth in OSB and plywood consumption on the relevant market for the year 2000, communicated in the course of the notification procedure ─ which were disregarded in recital 33 of the decision of 3 July 2001 on the ground that they were based on estimates and not on established values ─ were confirmed by a recent study (Jaakko Pöyry, The development of OSB and wood based panels consumption in the European Economic Area 1996-2000 with an outlook on the demand development for OSB in 2001), according to which the exceptional growth forecast for the OSB market for 2000 had actually taken place. That development justified altering the T factor from 0.75 to 1.00.

16
By letter of 5 February 2002 ( the contested measure), Mr Drabbe, Director of the State Aid II Directorate of the Commission's Directorate-General for Competition, replied to the letter of 3 January 2002 in the following terms: Dear Mr Happe,With reference to your letter of 3 January 2002 regarding the above matter, I regret to inform you that it will not be possible to make the amendment requested by the Government of the Federal Republic of Germany to the decision of the European Commission sent on 3 July 2001.Under Article 9 of ... Regulation [No 659/1999], the Commission may revoke a decision it has taken where the decision was based on incorrect information provided during the procedure. However, the facts stated by the German Federal Government, regarding the financial data for the year 2000, do not relate to information which was known at the time the decision was taken and which allegedly led to a manifest error of assessment.Since, in this case, the competition factor is based on a comparison of the development of the consumption of the product in question with the growth rate in the manufacturing industry as a whole during the years 1994 to 1999, and since the projected data were not incorrect at the time the decision was taken, a new decision cannot be adopted in the same case. Furthermore, the Commission's decision concerns the whole of the construction of a production plant for OSB panels project, subsidised by ad hoc individual aid. It is therefore likewise not possible to make a partial distinction between different periods, to which would apply competition factors and, accordingly, different aid intensities. I hope this information has been helpful to you.

Procedure and forms of order sought by the parties

17
It was in those circumstances that, by application lodged at the Court Registry on 17 April 2002, the applicant brought the present action.

18
By separate document lodged at the Court Registry on 9 August 2002, the Commission raised a plea of inadmissibility, on which the applicant submitted its observations on 8 October 2002.

19
In its application, the applicant claims that the Court should: ─ annul the contested measure;─ order the Commission to pay the costs.

20
In its plea of inadmissibility, the Commission contends that the Court should: ─ dismiss the action as inadmissible;─ order the applicant to pay the costs.

21
In its observations on the plea of inadmissibility, the applicant claims that the Court should: ─ reject the plea of inadmissibility and declare the action admissible;─ order the Commission to pay the costs.

Law

22
Under Article 114(1) of the Rules of Procedure of the Court of First Instance, if a party so requests, the Court of First Instance may decide on inadmissibility without hearing argument on the substance of the case. Under Article 114(3), unless the Court of First Instance otherwise decides, the remainder of the proceedings is to be oral. In the present case, the Court considers that it has sufficient information from the documents put in evidence and that it is not necessary to open the oral procedure.

Arguments of the parties

23
The Commission maintains, first, that a letter sent by the Commission to its addressee in response to a request made by the latter does not constitute a decision (order in Case T-106/99 Meyer v Commission [1999] ECR II-3273, paragraph 31). The contested measure is not an actionable measure, since it does not produce nor is it intended to produce any legal effects (Case C-147/96 Netherlands v Commission [2000] ECR I-4723, paragraph 26).

24
From a procedural point of view, too, the contested measure is not a decision. The measure is signed by the director of the State Aid II Directorate of the Directorate-General for Competition, not by a member of the Commission. Furthermore, it contains no reference to a decision of the Commission which, as a collegiate body, is alone empowered to adopt an official decision. Contrary to the applicant's claims, however, that does not constitute an indication that the principle of collegiality has been infringed but, on the contrary, shows that this is not a Commission decision.

25
Finally, the contested measure cannot in any case constitute a decision on the ground that, in the present case, there was no notification of new aid on which the measure could have decided. It is true that national authorities may notify a plan to grant new aid or to amend aid already granted. However, the letter of 3 January 2002 cannot be regarded as notification of such planned aid but merely as a request for the amendment of a decision already adopted authorising aid for the whole of the amount notified.

26
Secondly, the Commission maintains that it is clear from the content of the contested measure that, even if it does constitute a decision, it is a measure which merely confirms the decision of 3 July 2001.

27
In that regard, the Commission points out, first, that the contested measure was clearly not preceded by a review of the situation and, as the applicant itself recognises, in the present case neither has there been a preliminary examination nor has the formal investigation procedure provided for in Article 88(2) EC been opened.

28
Next, the contested measure contains no new information in relation to the decision of 3 July 2001, but gives a brief list of the reasons why the decision cannot be amended. As to the information communicated by the German authorities in the letter of 3 January 2002 in respect of the year 2000, the contested measure alludes to it only to state that the decision was not based on data which were incorrect at the time it was adopted and that the information for the year 2000 was not yet known at that time.

29
Finally, contrary to the assertions made by the applicant in its application, it is not a question, in the present case, of amending aid already declared compatible with the common market, which was fixed at too low a level on the basis of a bad assessment made by the Commission. Quite the contrary, the Commission applied the competition factor, which had been communicated to it by the Federal Government and based its decision on that factor. In those circumstances, there was no reason to re-examine the aid already granted and approved by the decision of 3 July 2001 or to take into consideration information not known at the time of its adoption.

30
Lastly, the Commission claims that even if the contested measure were an actionable measure, the applicant would have no interest in its being annulled (Case T-212/00 Nuove Industrie Molisane v Commission [2002] ECR II-347, paragraph 33).

31
The applicant replies, first, that the contested measure is an actionable measure for the purposes of Article 230 EC. In that regard, it points out that a measure is actionable where it has binding legal effects (Case C-57/95 France v Commission [1997] ECR I-1627, paragraph 7). In order to establish whether the contested measure has or is designed to have such effects, it is necessary to refer to its content. On that point, the legal effect of the contested measure is that the Commission refuses the request made by the Federal Republic of Germany that it should amend the decision of 3 July 2001. The refusal of a request for amendment of a decision constitutes, in its turn, a decision. Otherwise, any subsequent request for amendment of a decision could be refused simply by reference to the first decision, without the party concerned having the opportunity to challenge that refusal.

32
As to the Commission's argument that the contested measure is not a formal decision of the College of Commissioners, the applicant considers that it is not persuasive. Indeed, the form taken by measures or decisions is, in principle, immaterial as regards the question whether they are open to challenge. In order to ascertain whether such measures constitute acts within the meaning of Article 230 EC, it is necessary to look to their substance (Case 60/81 IBM v Commission [1981] ECR 2639, paragraph 9; Case T-113/00 DuPont Teijin Films Luxembourg and Others v Commission [2002] ECR II-3681, paragraph 45). That conclusion also applies to letters which are not signed by a member of the Commission but by an official (order in Case T-84/97 BEUC v Commission [1998] ECR II-795, paragraphs 47 and 48), if they contain, as in this case, a definitive finding on a request.

33
Secondly, and contrary to the Commission's assertions, the applicant considers that the contested measure does not merely confirm the decision of 3 July 2001. Indeed, the contested measure was adopted following an examination of the new facts supplied in the letter of 3 January 2002 and it therefore constitutes a challengeable act.

34
Lastly, the applicant considers it has a legitimate interest in the contested measure being annulled, in accordance with the reasoning followed by the Court in paragraph 47 of its judgment in Nuove Industrie Molisane v Commission. In that regard, the applicant maintains that, if the Commission considered that the letter of 3 January 2002 did not constitute full notification, it should have asked the Member State concerned for all the necessary information in accordance with Article 5(1) of Regulation No 659/1999.

Findings of the Court

35
As a preliminary point, it should be pointed out that, by the decision of 3 July 2001, adopted on the basis of Article 4(3) of Regulation No 659/1999, the Commission decided not to raise objections to the plan to grant aid to the applicant notified by the Federal Republic of Germany and, after establishing that the amount of the planned aid was consistent with the authorised maximum aid and after examining that plan in the light of the other criteria laid down by the multisectoral framework, it declared the whole of the notified aid compatible with the common market. In order to calculate the maximum intensity of the aforementioned aid, the Commission applied to the T factor (competition) the adjustment factor notified during the administrative procedure by the letter of 19 June 2001 from the Federal Republic of Germany, namely 0.75.

36
In its examination of the T factor, the Commission based its assessments and conclusions on the data supplied by the German authorities during the administrative procedure regarding the trend of the products market concerned, that of OSB and plywood (which are substitutable products) throughout the EEA for the period 1994-2000, and on a comparison of those data with data on the development of the manufacturing industry as a whole during the same period.

37
As regards, in particular, the year 2000, the Commission held, in recital 33 of the decision of 3 July 2001, that the forecasts for that year were based largely on an estimate and not on established values and that there was no reliable information on the development of apparent consumption in the manufacturing industry as a whole which could serve as a comparison. Furthermore, a study carried out by the United Nations Food and Agriculture Organisation (ECE/FAO Forest Products Annual Market Review 1999-2000) showed a different market development. Finally, and above all, the Commission held that a positive trend in one year [was] not enough to lead to the conclusion that the relative growth rate show[ed] a strong upward market trend.

38
The Commission also stated, in the same recital, that the relevant market had to be considered, in spite of some signs of upturn in recent years, as in decline in relation to the development of the manufacturing industry as a whole.

39
On the basis of those considerations, the Commission came to the conclusion, in recital 36 of the decision of 3 July 2001, that the plan in question, which results in a capacity expansion in a sector facing structural overcapacity, would be implemented in a declining market and that, therefore, the adjustment factor to be applied to the T factor, under point 3.10.1(iii) of the multisectoral framework, was that notified by the German authorities, namely 0.75.

40
It is apparent from the foregoing that the Commission, by the decision of 3 July 2001, authorised the State aid planned in favour of the applicant in its entirety, in accordance with the application from the Federal Republic of Germany.

41
Next, it must be established whether the contested measure is an act in the nature of a decision, as the applicant claims, or whether, as the Commission maintains, it is only a measure of information, which is not actionable.

42
It is apparent from settled case-law that the mere fact that a letter is sent by a Community institution to its addressee in response to a request made by the latter is not enough for it to be treated as a decision within the meaning of Article 230 EC, thereby entitling its recipient to bring an action for its annulment (Case T-277/94 AITEC v Commission [1996] ECR II-351, paragraph 50; orders in Case T-5/96 Sveriges Betodlares and Henrikson v Commission [1996] ECR II-1299, paragraph 26, and Meyer v Commission, paragraph 31).

43
Furthermore, also according to settled case-law, only measures with binding legal effects capable of affecting the interests of the applicant by bringing about a distinct change in his legal position are capable of being the subject-matter of an application for annulment under Article 230 EC ( IBM v Commission, paragraph 9; Joined Cases C-68/94 and C-30/95 France and Others v Commission [1998] ECR I-1375, paragraph 62; Case T-87/96 Assicurazioni Generali and Unicredito v Commission [1999] ECR II-203, paragraph 37; Joined Cases T-125/97 and T-127/97 Coca-Cola v Commission [2000] ECR II-1733, paragraph 77; Case T-112/99 M6 and Others v Commission [2001] ECR II-2459, paragraph 35; and order in BEUC v Commission, paragraph 43).

44
To determine whether an act or decision produces such effects, it is necessary to look to its substance (order in Case C-50/90 Sunzest v Commission [1991] ECR I-2917, paragraph 12; France and Others v Commission, paragraph 63; and Coca-Cola v Commission, paragraph 78).

45
The Court considers that the contested measure cannot be interpreted as an act in the nature of a decision. It is clear both from the form and content of the letter of 3 January 2002 and of the contested measure and from the identity of their authors that the letter and the measure are only the expression, respectively, of an informal initiative on the part of the German authorities designed to obtain, at the end of an unofficial review, an amendment to the decision of 3 July 2001, and the reply, also informal, to that initiative, formulated by the Commission's staff with responsibility for State aid.

46
The Court thus points out that the Communication from the German Federal Government to the European Commission, referred to in paragraph 15 above, is an undated, unsigned document and that it is only from reading the contested measure that it may be inferred that the communication was sent, by the letter of 3 January 2002, to the Commission. As to the contested measure, the Court deduces from its very wording, particularly from the wording of the first and last paragraphs, that it was by no means designed to constitute a decision formally refusing a request, but only to provide information in reply to the expression of a wish. The Court also points out that the use of such terms in the contested measure is consistent with the fact that the measure comes not from the Commission itself or from the member of the Commission responsible for competition, but from the Director of the State Aid II Directorate of the Directorate-General for Competition, Mr Drabbe, and there is no indication whatsoever in the contested measure that he was empowered by the Commission to take a decision.

47
The Court also finds that the limited scope of the letters exchanged between Mr Happe and Mr Drabbe is also connected with the fact that the amendment sought by the German Federal Government, far from concerning the amendment of a typing or arithmetical error, which might possibly have been contemplated outside the strict procedural framework defined in Regulation No 659/1999, in fact related to a substantive change to the decision in question, which could be examined only by implementing the procedures laid down by that regulation and, in particular, by the Federal Republic of Germany notifying a new aid plan in accordance with Article 2 of the regulation.

48
A different conclusion, according to which the contested measure is an act in the nature of a decision, could have been contemplated, in the present case, only if the letter of 3 January 2002, containing the Communication from the German Federal Government to the European Commission, were to be interpreted as notification of a plan to alter the aid already granted to the applicant and approved by the decision of 3 July 2001, in such a way as to render it more favourable to the applicant, a plan on which the Commission, by the contested measure, could have taken a negative decision.

49
In that regard, it should be borne in mind that, under Article 2(1) and (2) of Regulation No 659/1999, any plan to grant new aid is to be notified to the Commission in sufficient time by the Member State concerned. In a notification, the Member State concerned is to provide all necessary information in order to enable the Commission to take a decision pursuant to Articles 4 and 7 of that regulation. The purpose of the obligation to notify is to provide the Commission with the opportunity to review, in sufficient time and in the general interest of the Community, any plans to grant or alter aid (Case C-301/87 France v Commission [1990] ECR I-307, paragraph 17, and Joined Cases T-126/96 and T-127/96 BFM and EFIM v Commission [1998] ECR II-3437, paragraph 46).

50
Furthermore, it should be noted that nothing precludes the national authorities from notifying a plan to introduce new aid in favour of an undertaking or to alter aid already granted to it. In such a case, it is clear from the case-law that, if the Commission adopts a totally or partially negative decision against such a project, the undertaking receiving the proposed individual aid is entitled to bring an action for annulment (Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 5; Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 5; Case C-188/92 TWD [1994] ECR I-833, paragraph 24; and Nuove Industrie Molisane v Commission, paragraph 47).

51
However, it must be stated that that is not the situation in the present case.

52
Indeed, in the light of its content, the letter of 3 January 2002 cannot be interpreted as notification of planned aid designed to alter the aid already granted to the applicant and approved by the decision of 3 July 2001. The letter does not notify any aid in favour of the applicant, and contains no explicit reference to Article 88(3) EC (see, on this last point, BFM and EFIM v Commission, paragraph 47). The wording of that letter and the communication it contains ( we hereby request an amendment to the competition (T) factor) clearly and unambiguously confirms that the letter is at most a request for review or amendment of the decision of 3 July 2001 authorising the amount of the aid initially notified in its entirety.

53
It follows that, since the letter of 3 January 2002 cannot be regarded as valid notification, not even as notification, of an aid plan designed to alter the aid already granted to the applicant, it cannot be maintained that the contested measure is a negative decision taken by the Commission against such a plan, which can be the subject of an action for annulment brought by the applicant, on the basis of the case-law cited in paragraph 50 above. In that regard, it must also be stated that, by the contested measure, the Commission clearly did not carry out a preliminary investigation of an aid plan allegedly notified by the letter of 3 January 2002 or open the formal investigation procedure in respect of such a plan.

54
In those circumstances, the applicant's argument that the Commission, if it considered that the letter of 3 January 2002 did not constitute full notification, should have required of the Member State concerned all the necessary additional information, in accordance with Article 5(1) of Regulation No 659/1999, is based on an incorrect premiss and must be rejected.

55
It must therefore be concluded that the contested measure is not a decision, but a measure of information against which it is not possible to bring an action for annulment. The application must therefore be dismissed as inadmissible, without the need to examine the other arguments raised by the defendant.


Costs

56
Under the first subparagraph of Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the costs in accordance with the form of order sought by the Commission.

On those grounds,

THE COURT OF FIRST INSTANCE (Fourth Chamber, Extended Composition)

hereby orders:

1.
The application is dismissed as inadmissible.

2.
The applicant is to pay the costs.

Luxembourg, 5 November 2003.

H. Jung

V. Tiili

Registrar

President

1 –
Language of the case: German.