#CJEU does not tolerate a slacker @EU_Commission in #Stateaid control (C-615/11): Commission counter-attacks with 'case management' excuses

In its Judgment of 16 May 2013 in case C-615/11 Commission v Ryanair, the Court of Justice of the European Union (CJEU) has dismissed the Commission's appeal against the prior Judgment of the General Court where it was found that the Commission failed to fulfill its obligations under the Treaty by not adopting a decision following a complaint lodged by Ryanair. 

Building up on the prior case law in Athinaïki Techniki AE v Commission (C-521/06), the CJEU has imposed upon the European Commission a clear duty to act when it is put in possession of information regarding alleged unlawful aid and called upon to to define its position within the meaning of Article 265(2) TFEU. In the view of the CJEU

27 As a preliminary point, it should be borne in mind that, under Article 20(2) of Regulation No 659/1999, any interested party may inform the Commission of any alleged unlawful aid and of any alleged misuse of aid.

28 Where it has in its possession information, from whatever source, regarding alleged unlawful aid, the Commission is required, under Article 10(1) of Regulation No 659/1999, immediately to examine the possible existence of aid and its compatibility with the internal market. The examination of such information, on the basis of that provision, gives rise to the initiation of the preliminary examination stage under Article 108(3) TFEU (see, to that effect, Case C‑322/09 P NDSHT v Commission [2010] ECR I‑11911, paragraph 49 and the case-law cited).

29 At that stage, and where it considers that there are insufficient grounds for taking a view on the case, the Commission, in accordance with the second sentence of Article 20(2) of Regulation No 659/1999, must communicate that finding to the interested parties which have sent it the information in question and must also allow those parties to submit additional comments within a reasonable period (see, to that effect, Athinaïki Techniki v Commission, paragraph 39).

30 Article 13(1) of Regulation No 659/1999, which is applicable in the context of an examination of alleged unlawful aid, obliges the Commission to close that preliminary examination stage by adopting a decision pursuant to Article 4(2), (3) or (4) of that regulation, that is to say, a decision finding that aid does not exist, raising no objections or initiating the formal investigation procedure, since that institution is not authorised to persist in its failure to act during the preliminary examination stage (Athinaïki Techniki v Commission, paragraph 40).

31 It follows […] that the preliminary examination stage, which ultimately obliges the Commission to take a position, requires that, where that examination is carried out on the initiative of an interested party, information concerning alleged unlawful aid be sent to the Commission by that party (C-615/11 at paras 27 to 31, emphasis added).

The extent of the Commission's duties is crystal clear and, consequently, the Institution should better internalize this obligation--which, more generally, is not much more than a specific expression of the duty of good administration that is increasingly recognised as a general principle of EU (Administrative) Law.

Indeed, this Judgment should seriously be taken into consideration in the current State Aid Modernisation (SAM) initiative--which the Commission should use to streamline its procedures as necessary to discharge the (raised) duty of diligence that derives from the CJEU's Ryanair Judgment. In this regard, it is positive to see that, as part of SAM (and probably in view of the defeat suffered before the GC and the likely, now actual, defeat before the CJEU), the Commission is already proposing to modernise the Procedural Regulation (659/1999) with regard to complaint-handling and market information tools. According to the Commission's proposal:

The Commission is required to conduct a diligent and impartial examination of complaints submitted from interested parties and take a decision thereon without undue delay. Where the Commission takes a decision finding that there exists no State aid as alleged by a complainant, the Commission must at least provide the complainant with an adequate explanation of the reasons for which the facts and points of law put forward in the complaint have failed to demonstrate the existence of State aid [COM(2012)0725 final, Explanatory Memorandum].

This begs the question why did the Commission not desist from the appeal in case C-615/11 if it had, itself, already assumed that it was in the wrong in the Ryanair case? (although the potential Art 340 TFEU claim for non-contractual liability of the European Commission that may follow today's CJEU Judgment seems the obvious explanation...).

Going back to the specific proposals of the Commission to improve the way it handles State aid complaints, the positive impression disappears when one realizes that the December 2012 proposal aims to modify Regulation 659/1999 to expressly regulate the way in which complaints need to be lodged--and, consequently, the reform is largely a 'self-defence' instrument for the European Commission, which feels overburdened by State aid complaints. As explained (excusation non petita...)

the Commission receives on average more than 300 complaints every year, whether lodged by interested parties or not, among which many are either not motivated by genuine competition concerns or not sufficiently substantiated. Most complaints are not treated as a priority and the average duration of those cases therefore tends to increase. Therefore, the complaints handling procedure is sometimes perceived by Member States and complainants as unpredictable and lacking transparency [COM(2012)0725 final, Explanatory Memorandum].

Hence, the Commission is proposing to consolidate in the regulation some of the 2009 Code of Best Practices for the conduct of State aid procedures, which expected benefits 'of shorter duration, increased efficiency and greater predictability – have not fully materialised [Moreover] Best Practices could not address some of the main shortcomings of the current system, since they directly stem from the Procedural Regulation. That is why a reform of the Procedural Regulation itself is proposed to address those issues.' Therefore, the European Commission proposed the following modifications:

In the interests of transparency and legal certainty (sic), the conditions to lodge a complaint which put the Commission in possession of information regarding alleged unlawful aid and thereby set in motion the preliminary examination should therefore be clarified. Indeed it is appropriate to require that:

– complainants submit a certain amount of compulsory information. To that end, it is appropriate to empower the Commission to adopt implementing provisions to define the form and the content of a complaint.

– complainants demonstrate that they are interested parties within the meaning of Article 108(2) TFEU and Article 1(h) of the Procedural Regulation and that they therefore have a legitimate interest to lodge a complaint. To reach that objective, it is proposed to specify in Article 20(2) on the "rights of interested parties" that "any interested party may lodge a complaint".

In cases where the information received will not be classified as a complaint since it will not have passed the admissibility criteria, the Commission will no longer be under an obligation to adopt formal decisions. Those submissions will be registered as market information and could be used at a later stage to conduct ex officio investigations.

To complete the staged procedure introduced by the Best Practices Code, the Procedural Regulation should formalise the possibility for the Commission to deem complaints withdrawn if the complainant does not return to it with meaningful information or otherwise fails to cooperate during the procedure. In that way, the treatment of complaints could be streamlined and improved (emphasis added and references omitted).

In my view, these changes are self-serving and would simply (aim to) deactivate the functional approach and the high duty of administrative diligence stressed by the CJEU in the Ryanair Judgment and, consequently, may diminish significantly the effectiveness of the complaints mechanism, sacrificing it in the altar of workload allocation and Commission liability-proofing. The trade-off may likely reduce the effectiveness of State aid control in the long run. 

Interestingly, these proposals were the object of a consultation and, hopefully, the Commission will issue a revised proposal in view of those and other considerations. In my opinion, given the very clear approach followed by the CJEU in Ryanair, the European Commission should abandon its self-centered approach to the reform of the rules on the handling of complaints in State aid cases and, in the spirit of institutional loyalty and in with the aim to keep (or develop) a well-functioning State aid control system, introduce more flexibility in the criteria for the lodging of complaints by (non)interested parties.

GC backs broad Commission discretion not to pursue antitrust cases in absence of "Community interest"

In its Judgment of 13 September 2012 in case T‑119/09 Protégé International Ltd v European Commission and Pernod Ricard SA, the General Court has backed the Commission's decision not to pursue a complaint filed by Protégé International Ltd regarding a potential abuse of a dominant position by Pernod Ricard SA in the whisky market, in view of the absence of a sufficient "Community interest" [Decision C (2009) 505 (Case COMP/39414 - International Protégé / Pernod Ricard)].

The GC basically restates the prexisting case law of the CJEU on the Commission's discretion to pursue or drop cases in view of their "Community interest" and extends it to the post-Regulation 1/2003 enforcement scenario (as expressly mentioned in Recital 18 of that Regulation). Most importantly, the GC expressly shows certain judicial deference towards the Commission's assessment of the existence (or lack of) "Community interest", which review will be limited to check that the Commission's assessment guaranteees that the facts have been accurately stated and that there has been no manifest error or appraisal or misuse of power (on such "marginal review", see the key contribution by M Jaeger, "Standard of review in Competition Cases Involving Complex Economic Assessments: Towards the Margnialisation of the Marginal Review?" (2011) J of Eur Comp Law & Practice 2(4):295-314].

In more detail, in its Judgment (only available in French), the GC stressed that:

32 Il ressort d’une jurisprudence constante que l’article 7, paragraphe 2, du règlement n° 1/2003 ne confère pas à l’auteur d’une demande présentée en vertu dudit article le droit d’exiger de la Commission une décision définitive quant à l’existence ou non de l’infraction alléguée (voir, en ce sens, arrêts de la Cour du 18 octobre 1979, GEMA/Commission, 125/78, Rec. p. 3173, points 17 et 18, et du 4 mars 1999, Ufex e.a./Commission, C‑119/97 P, Rec. p. I‑1341, point 87 ; arrêt du Tribunal du 18 septembre 1992, Automec/Commission, T‑24/90, Rec. p. II‑2223, point 75).

33 En effet, la Commission, investie par l’article 85, paragraphe 1, CE, de la mission de veiller à l’application des principes fixés par les articles 81 CE et 82 CE, est appelée à définir et à mettre en œuvre l’orientation de la politique communautaire de la concurrence. Afin de s’acquitter efficacement de cette tâche, elle est en droit d’accorder des degrés de priorité différents aux plaintes dont elle est saisie et dispose à cet effet d’un pouvoir discrétionnaire (arrêt Ufex e.a./Commission, précité, point 88, et arrêt de la Cour du 17 mai 2001, IECC/Commission, C‑449/98 P, Rec. p. I‑3875, point 36).

34 La Commission est notamment en droit de se référer à l’intérêt communautaire pour déterminer le degré de priorité à accorder aux différentes plaintes dont elle est saisie (arrêt Automec/Commission, précité, point 85, et arrêt du Tribunal du 13 décembre 1999, Européenne automobile/Commission, T‑9/96 et T‑211/96, Rec. p. II‑3639, point 28). La possibilité pour la Commission de rejeter une plainte pour défaut d’intérêt communautaire est par ailleurs explicitement reconnue au considérant 18 du règlement n° 1/2003 (voir, en ce sens, arrêt du Tribunal du 16 janvier 2008, Scippacercola et Terezakis/Commission, T‑306/05, non publié au Recueil, point 93).

35 Le pouvoir discrétionnaire dont dispose la Commission à cet égard n’est cependant pas sans limites (arrêts Ufex e.a./Commission, précité, point 89, et Européenne automobile/Commission, précité, point 29).

36 En effet, d’une part, la Commission est tenue d’examiner attentivement l’ensemble des éléments de fait et de droit qui sont portés à sa connaissance par les plaignants (arrêts de la Cour du 11 octobre 1983, Schmidt/Commission, 210/81, Rec. p. 3045, point 19 ; du 28 mars 1985, CICCE/Commission, 298/83, Rec. p. 1105, point 18 ; du 17 novembre 1987, British American Tobacco et Reynolds Industries/Commission, 142/84 et 156/84, Rec. p. 4487, point 20).

37 D’autre part, la Commission est astreinte à une obligation de motivation lorsqu’elle refuse de poursuivre l’examen d’une plainte. La motivation devant être suffisamment précise et détaillée pour mettre le Tribunal en mesure d’exercer un contrôle effectif sur l’exercice par la Commission de son pouvoir discrétionnaire de définir des priorités, cette institution est tenue d’exposer les éléments de fait dont dépend la justification de la décision et les considérations juridiques qui l’ont amenée à prendre celle-ci (arrêts Ufex e.a./Commission, précité, points 90 et 91 ; Automec/Commission, précité, point 85, et Européenne automobile/Commission, précité, point 29).

38 De même, il importe de relever que le contrôle juridictionnel des décisions de rejet de plaintes ne doit pas conduire le Tribunal à substituer son appréciation de l’intérêt communautaire à celle de la Commission, mais vise à vérifier que la décision litigieuse ne repose pas sur des faits matériellement inexacts et qu’elle n’est entachée d’aucune erreur de droit ni d’aucune erreur manifeste d’appréciation ou de détournement de pouvoir (arrêt Automec/Commission, précité, point 80 ; arrêt du Tribunal du 18 septembre 1996, Asia Motor France e.a./Commission, T‑387/94, Rec. p. II‑961, point 46, et Européenne automobile/Commission, précité, point 29).

39 Par ailleurs, aux fins de l’appréciation de l’intérêt communautaire, il appartient à la Commission de mettre en balance l’importance de l’infraction prétendue pour le fonctionnement du marché commun, la probabilité de pouvoir établir son existence et l’étendue des mesures d’investigation nécessaires, en vue de remplir, dans les meilleures conditions, sa mission de surveillance du respect des articles 81 CE et 82 CE (voir, en ce sens, arrêt Automec/Commission, précité, point 86, et arrêt du Tribunal du 24 janvier 1995, Tremblay e.a./Commission, T‑5/93, Rec. p. II‑185, point 62).

40 En tout cas, l’évaluation de l’intérêt communautaire présenté par une plainte étant fonction des circonstances de chaque espèce, il ne convient ni de limiter le nombre de critères d’appréciation auxquels la Commission peut se référer ni de lui imposer le recours exclusif à certains critères (voir arrêt IECC/Commission, précité, point 46).

41 Enfin, la Commission n’est pas tenue de prendre position sur tous les arguments que les intéressés ont soumis à l’appui de leur plainte. Il suffit qu’elle expose les faits et les considérations juridiques revêtant une importance essentielle dans l’économie de la décision (voir, en ce sens, arrêt AEPI/Commission, précité, point 61, et la jurisprudence citée). (GC T-119/09,, at paras. 32-41, emphasis added).

In my view, this endorsement by the GC comes to strengthen the Commission's control over its own docket and case load, while still guaranteeing effective judicial review for aggrieved parties (ie complainants) in a sufficient degree.