CJEU follows AG Jääskinen in revisiting PreussenElektra and minimising Doux Elevages' requirements for State imputability of aid measures (C-262/12)

In its Judgment of 19 December 2013 in case C-262/12 Vent De Colère and Others, the Court of Justice of the EU has largely followed AG Jääskinen's Opinion (commented here) and confirmed that, under Article 107(1) TFEU, a mechanism for offsetting in full the additional costs imposed on undertakings because of an obligation to purchase wind-generated electricity at a price higher than the market price that is financed by all final consumers of electricity in the national territory constitutes an intervention through State resources and, consequently, is under the general prohibition of State aid.
This Judgment must be welcomed, particularly because the CJEU follows the submission made by the AG, who considered that consumer contributions amounted to the existence of 'State resources', due to 'the fact that these resources constantly remain under public control and, therefore, are available to the competent national authorities, [which] suffices to qualify them as State funds to finance the measure, which then falls within the scope of Article 107(1) TFEU' (para 34 of his Opinion, own translation from Spanish).
Indeed, the CJEU has reviewed the characteristics of the body administering the funds paid by consumers (a public body under effective State supervision) and has stressed that
33 […] the sums thus managed by the Caisse des dépôts et consignations must be regarded as remaining under public control.
34 All those factors taken together serve to distinguish the present case from that which gave rise to the judgment in PreussenElektra, in which the Court held that an obligation imposed on private electricity supply undertakings to purchase electricity produced from renewable sources at fixed minimum prices could not be regarded as an intervention through State resources where it does not lead to any direct or indirect transfer of State resources to the undertakings producing that type of electricity (see, to that effect, PreussenElektra, paragraph 59).
35 As the Court has already had occasion to point out – in paragraph 74 of the judgment in Essent Netwerk Noord and Others – in the case which gave rise to the judgment in PreussenElektra, the private undertakings had not been appointed by the Member State concerned to manage a State resource, but were bound by an obligation to purchase by means of their own financial resources.
36 Consequently, the funds at issue [in PreussenElektra] could not be considered a State resource since they were not at any time under public control and there was no mechanism, such as the one at issue in the main proceedings in the present case, established and regulated by the Member State, for offsetting the additional costs arising from that obligation to purchase and through which the State offered those private operators the certain prospect that the additional costs would be covered in full.
37 Accordingly, Article 107(1) TFEU must be interpreted as meaning that a mechanism for offsetting in full the additional costs imposed on undertakings because of an obligation to purchase wind-generated electricity at a price higher than the market price that is financed by all final consumers of electricity in the national territory, such as that resulting from Law No 2000-108, constitutes an intervention through State resources (C-262/12 at paras 33 to 37, emphasis added).
In my view, the Vent De Colère Judgment advances in the functional approach to State aid and consolidates a general criterion of State control that should reduce the uncertainty surrounding the imputability to the State of (indirect) support measures through consumer contributions. The distinction with PreussenElektra is also rather clear now.
The only hurdle that remains in the way of such truly functional approach is the issue of imputability as addressed in Doux Élevages particularly in relation with (pseudo)fiscal measures (something that AG Jääskinen had addressed in  paras 50-54 of his Opinion but the CJEU felt no need to discuss in Vent De Colère). Hopefully, the CJEU will also minimise Vent De Colère on that point some time soon.

#CJEU incorrectly analyses 'State imputability' and gives green light to (pseudo)fiscal #Stateaid schemes (C-677/11)

In its Judgment of 30 May 2013 in case C-677/11 Doux Élevages and Coopérative agricole UKL-AREE  the Court of Justice of the European Union (CJEU) has carried on with its line of case law in C-345/02 Pearle and Others and stressed that, according to Art 107(1) TFEU, State aid cannot exist if the economic advantage under analysis is not funded by 'State resources' and there is no 'imputability to the State'.

In the case at hand CIDEF, a French agricultural inter-trade organisation (for poultry), introduced the levying of a 'cotisation volontaire obligatoire' (sic) (CVO) for the purposes of financing common activities decided on by that organisation. The contribution was initially introduced in 2007 as a voluntary measure for the members of CIDEF, but it was extended to all traders in the sector on a compulsory basis in 2009 by a tacit Ministerial decision to accept that extension (see press release).

Two complainants challenged the extension of the CVO on the basis that making it a mandatory payment for all traders in the sector (ie going beyond the group of members of CIDEF) involved State aid. The French Conseil d’État referred the matter to the CJEU for a preliminary ruling, which has decided that there is no element of State aid in the mandatory extension of the CVO to all traders in the industry concerned.

The reasoning of the CJEU indeed follows its previous line of case law in the area of State aid and adopts a very narrow approach to the concept of economic advantages 'granted by a Member State or through State resources'. On the point of the involvement of State resources, the CJEU finds that
the contributions [...] are made by private‑sector economic operatorswhether members or non-members of the inter‑trade organisation involved – which are engaged in economic activity on the markets concerned. That mechanism does not involve any direct or indirect transfer of State resources, the sums provided by the payment of those contributions do not go through the State budget or through another public body and the State does not relinquish any resources, in whatever form (such as taxes, duties, charges and so on), which, under national legislation, should have been paid into the State budget. The contributions remain private in nature throughout their lifecycle and, in order to collect those contributions in the event of non‑payment, the inter-trade organisation must follow the normal civil or commercial judicial process, not having any State prerogatives (C-677/11 at para 32, emphasis added).
This should come as no big surprise, since this has become the standard position in the case law of the CJEU (ie that if the State 'does not touch' and 'should not have touched' the money, it cannot constitute a 'State resource'). However, one may wonder why the Court has not addressed the point of the (pseudo)fiscal nature of the imposition of a contribution (ie a levy) on undertakings that do not belong to the private organisation charging it. In the absence of a voluntarily established association (via membership), the prerogative of the inter-trade association to require payments from undertakings surely goes beyond the sphere of powers created by private law (taxation is one of the very exclusive powers of the State). In that regard, the reasoning followed by the CJEU on the point of 'imputability to the State' requires some close scrutiny. The Court finds that
35 […] Article 107(1) TFEU covers all the financial means by which the public authorities may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector. Therefore, even if the sums corresponding to the measure in question are not permanently held by the Treasury, the fact that they constantly remain under public control, and therefore available to the competent national authorities, is sufficient for them to be categorised as State resources (see [C‑482/99 France v Commission (2002) ECR I‑4397], paragraph 37 and the case-law cited).
36 In the case in the main proceedings, the conditions laid down by the Court in paragraph 37 of the judgment in France v Commission are not met. It is clear that the national authorities cannot actually use the resources resulting from the [CVOs] to support certain undertakings. It is the inter-trade organisation that decides how to use those resources, which are entirely dedicated to pursuing objectives determined by that organisation. Likewise, those resources are not constantly under public control and are not available to State authorities.
37 Any influence that the Member State may exercise over the functioning of the inter-trade organisation by means of its decision extending an inter-trade agreement to all traders in an industry is not capable of altering the findings made in paragraph 36 of this judgment.
38 It is clear from the case-file submitted to the Court that the legislation at issue in the main proceedings does not confer upon the competent authority the power to direct or influence the administration of the funds. Moreover, as the Advocate General noted in point 71 of his Opinion, according to the case-law of the competent national courts, the provisions of the Rural Code governing the extension of an agreement introducing the levying of contributions within an inter-trade organisation do not permit public authorities to exercise control over CVOs except to check their validity and lawfulness.
39 Regarding that control, it should be noted that Article L. 632-3 of the Rural Code does not permit making the extension of an agreement dependent upon the pursuit of political objectives which are specific, fixed and defined by the public authorities, given that that article non‑exhaustively lists the very general and varied objectives that an inter-trade agreement must promote in order to be capable of being extended by the competent administrative authority. That conclusion cannot be undermined by the obligation imposed by Article L. 632-8-I of that code to inform the authorities of the way in which CVOs have been used.
40 Moreover, there is nothing in the case-file submitted to the Court permitting it to consider that the initiative for imposing the CVOs originated with the public authorities rather than the inter-trade organisation. It is important to emphasise, as the Advocate General observed in point 90 of his Opinion, that the State was simply acting as a ‘vehicle’ in order to make the contributions introduced by the inter-trade organisations compulsory, for the purposes of pursuing the objectives established by those organisations.
41 Thus, neither the State’s power to recognise an inter-trade organisation under Article L. 632-1 of the Rural Code, nor the power of that State to extend an inter‑trade agreement to all the traders in an industry under Articles L. 632-3 and 632-4 of that code permit the conclusion that the activities carried out by the inter‑trade organisation are imputable to the State (sic) (C-677/11 at paras 35 to 41, emphasis added).
The reasoning followed by the CJEU could not be more puzzling, particularly at para 41, which to me seems plainly wrong. Given the literal tenor of Art 107(1) TFEU, which sets that the prohibition of State aid covers 'any aid granted by a Member State or through State resources in any form whatsoever' it is clear that the analysis of the 'imputability to the State' must cover the aid measure and not the activities of the beneficiary of such measure. 

Therefore, the conclusion reached in para 41 of C-677/11 is simply a non sequitur. After having recognised that 'the State was simply (sic) acting as a ‘vehicle’ in order to make the contributions introduced by the inter-trade organisations compulsory, for the purposes of pursuing the objectives established by those organisations' (para 40), it is an illogical step to conclude that such (vehicular) intervention is not imputable to the State. In my opinion, this plainly makes no sense.

The implications of the Judgment in Doux Élevages are likely to be far fetched, since they open the door to a floodgate of (pseudo)fiscal measures designed by Member States (by indirect influence to the relevant inter-trade or similar organisations, which should not be readily proven, see para 40 ab initio) to compensate for the stricter (?) controls on aid directly granted by public authorities. 

The only remaining hope at this point is that, under the relevant constitutional law of the Member States, such (pseudo)fiscal levies are considered unconstitutional limitations to the right to property, since the State is the only entity vested with powers to extract money payments not voluntarily accepted, at least as a general implication of the membership of an association (as was the case in Pearle, although any element of mandatory membership obviously would grant the same conclusion). And, consequently, this (pseudo)fiscal structure  that allows non-State entities to extract mandatory payments can be seen as an excessive restriction of the right to property under some Member States constitutional law (such as in Spain, for instance).

Maybe with the accession of the EU to the European Convention on Human Rights and a (stronger) duty to protect the right to property under Art 1 Protocol No. 1 ECHR (which includes rules on taxation not mentioned in the right to property recognised in Art 17 of the Charter of Fundamental Rights of the EU), the CJEU will need to revisit this line of case law.