In its Judgment in Commission v MOL, C-15/14, EU:C:2015:362, the CJEU upheld the previous Judgment of the GC where the selectivity of two-part State aid measures was assessed with very generous deference towards the State's exercise of regulatory powers (which I criticised here).
The CJEU assessed the criticism by the Commission of the GC's position (T-499/10, paras 64 and 65) that the presence of a selective advantage cannot be deduced from the mere fact that the operator is left better off than other operators when the Member State concerned justifiably confined itself to exercising its regulatory power following a change on the market.
Remarkably, the Commission took issue with the fact that the General Court linked "the
assessment of the selective nature of the ... agreement, and therefore
the measure at issue, to whether or not the Member State concerned had
the intention, at the time of concluding that agreement, of protecting
one or more operators from the application of a new fee regime" (C-15/14, para 85, emphasis added). As the CJEU stresses
According to the Commission, the General Court thus disregarded the settled case-law of the Court of Justice to the effect that Article 107(1) TFEU defines State interventions on the basis of their effects, and independently of the techniques used by the Member States to implement their interventions (see, inter alia, judgments in Belgium v Commission, C‑56/93, EU:C:1996:64, paragraph 79; Belgium v Commission, C‑75/97, EU:C:1999:311, paragraph 25; British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 89; and Commission v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 91, 92 and 98) (C-15/14, para 86).
I had also criticised the GC for the inclusion of the element of "intention" in its previous Judgment. However, I also expressed doubts as to the CJEU's willingness to side by the GC. In my view back then,
If Article 107(1) TFEU is meant to avoid distortions of competition in the internal market, when confronted with sequential, two-part or complex aid measures, the fact that they all formed part of a 'master plan' from the outset or are the 'random or supervening' result of discrete interventions should be irrelevant. Otherwise, the burden of proving 'distortive intent' from the outset may simply make it impossible to pursue these cases. However, it may well be that the remarks made by the GC in para 67 of MOL v Commission will remain a 'mere' obiter dictum and that the assessment of two-part or complex measures will remain much more objective in the future.
Consequently, I was hoping that the CJEU would quash this part of the Judgment in T-499/10. However, the CJEU rejected the argument of the Commission and determined that the GC's argumentation in paras 64 to 67 and 82 of the Judgment in T-499/10 was not vitiated by any error of law. I disagree with the CJEU's arguments to support the GC's position, which deserve close scrutiny (below). However, given that the CJEU has managed to uphold the GC's reasoning and at the same time stress that two-part or complex State aid measures must be assessed without any reference to the "intention" of the Member State, I agree with the outcome of the case.
According to the CJEU,
92 ... the General Court stated, in paragraph 67 of the judgment under appeal, that [under] the case-law of the Court of Justice, ... for the purposes of Article 107(1) TFEU, a single aid measure may consist of combined elements on condition that, having regard to their chronology, their purpose and the circumstances of the undertaking at the time of their intervention, they are so closely linked to each other that they are inseparable from one another (judgment in Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others, C‑399/10 P and C‑401/10 P, EU:C:2013:175, paragraphs 103 and 104 and the case-law cited).
93 In that context, the General Court emphasised, in paragraph 67 of the judgment under appeal, that a combination of elements such as that relied upon by the Commission in the decision at issue may be categorised as State aid when the State acts in such a way as to protect one or more operators already present on the market, by concluding with them an agreement granting them fee rates guaranteed for the entire duration of that agreement, while having the intention at that time of subsequently exercising its regulatory power, by increasing the fee rate so that other market operators are placed at a disadvantage, be they operators already present on the market on the date on which that agreement was concluded or new operators.
94 It was in the light of those considerations that the General Court, in paragraph 68 of the judgment under appeal, decided that it was necessary to examine whether, in those proceedings, the Commission was entitled to consider that the contested measure was selective.
95 It follows from the foregoing that, as MOL contends, paragraphs 64 to 67 of the judgment under appeal do not, as such, concern the examination of the selectivity of the 2005 agreement, but are preliminary explanations aimed at introducing the relevant framework in relation to which the General Court examined whether the Commission was correct in finding that the measure at issue was selective (sic).
96 As the Advocate General stated in points 107 and 114 of his Opinion, by those preliminary explanations, the General Court in fact sought to deal with the issue of the links existing between the 2005 agreement and the 2008 amendment, which the Commission had not specifically addressed in the decision at issue, and more particularly, to underline the fact that, given that there is no chronological and/or functional link between those two elements, they cannot be interpreted as constituting a single aid measure.
97 By those preliminary explanations, the General Court merely applied the case-law laid down by the Court of Justice in the judgment in Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others (C‑399/10 P and C‑401/10 P, EU:C:2013:175), to which the General Court also expressly referred in paragraph 67 of the judgment under appeal, and according to which, since State interventions take various forms and have to be assessed in relation to their effects, it cannot be excluded that several consecutive measures of State intervention must, for the purposes of Article 107(1) TFEU, be regarded as a single intervention. That could be the case, in particular when consecutive interventions, having regard to their chronology, their purpose and the circumstances of the undertaking at the time of those interventions, are so closely related to each other that they are inseparable from one another (C-15/14, paras 92 to 97, emphasis added).
I find the reasoning of the CJEU very poor. By artificially breaking up paragraph 67 of the GC's Judgment in paras 92 and 93 of its own Judgment, the CJEU attempts to limit the requirement of the element of "intention" to some mysterious "preliminary explanations" excluded from the selectivity assessment, and this is very unsatisfactory and unconvincing.
In my view, the CJEU should have plain and simply said that the GC would have been wrong to include an element of "intention" in the test applicable to two-part or complex State aid measures, which assessment needs to be carried out in view of objective factors such as 'their chronology, their
purpose and the circumstances of the undertaking at the time of their
intervention, [or whether] they are so closely linked to each other that they are
inseparable from one another' as per Bouygues and Bouygues Télécom v Commission and Others and Commission v France and Others.
Allowing the GC to save face by limiting its erroneous interpretation of that case law in para 67 of T-499/10, or failing to stress the fact that it was an unfortunate expression made obiter dictum (if they wanted to remain deferential) pays lip service to legal certainty. In my view, the CJEU could have decided otherwise because the element of "intention" is actually not assessed at any point of the GC's Judgment and the CJEU was ready to accept the selectivity analysis carried out by the GC. Consequently, there was no need for the strange and convoluted analysis in paras 92 to 97 of the Judgment in C-15/14.
Be it as it may, the silver lining is in the fact that the CJEU has clearly rejected that the test it progressively laid down for the analysis of two-part or complex State aid measures encompasses any subjective element of "intention" on the part of the granting Member State. Consequently, the analysis of the selectivity of measures closely connected will continue to have to be carried out on the basis of purely objective factors, such as 'their chronology, their
purpose and the circumstances of the undertaking at the time of their
intervention, [or whether] they are so closely linked to each other that they are
inseparable from one another. All is well that ends well.