(Appeal State aids Subsidised loans with a view to enabling third country market penetration programmes Commission's duty to give reasons for a decision)
- In Commission Decision 2006/177/EC ('the contested decision'), (2) the Commission concluded that two subsidies granted by Italy to Wam SpA ('Wam') (3) constituted State aid falling within the scope of Article 87(1) EC. Since this aid had not previously been notified to the Commission, (4) the Commission declared it to be unlawful.
- By its judgment of 6 September 2006 in Joined Cases T-304/04 and T-316/04 Italy and Wam v Commission (5) the Court of First Instance annulled the contested decision on the grounds that the Commission had failed to state sufficient reasons. In particular, the Court held that the reasons given were not adequate to justify the conclusion that the aid granted met all the conditions of Article 87(1) EC. The Commission now appeals on the grounds that the Court of First Instance applied a test for adequacy of reasoning that departs from the settled case-law of the Court of Justice.
Legal context
Relevant Community law
- Article 87(1) EC provides:
'Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.'
- Article 253 EC provides:
'Regulations, directives and decisions adopted jointly by the European Parliament and the Council, and such acts adopted by the Council or the Commission, shall state the reasons on which they are based and shall refer to any proposals or opinions which were required to be obtained pursuant to this Treaty.'
Relevant national law
- Article 2 of Law No 394, of 29 July 1981 (6) on supporting measures for Italian exports provides the legal basis under which the Italian authorities may grant subsidised finance to exporting companies undertaking market penetration programmes in third countries.
Factual background
- Wam is an Italian company which designs, manufactures and sells industrial mixing machinery and components, mainly for use in the food, chemical, pharmaceutical and environmental industries. (7)
- On 24 November 1995, the Italian authorities decided to award Wam a subsidised loan of LIT 2 281 485 000 (8) in order to facilitate its penetration of the Japanese, South Korean and Taiwanese markets. Following an economic crisis in Korea and Taiwan, the planned projects were not implemented in those countries. Wam actually received a loan of LIT 1 358 505 421 (9) towards the establishment of permanent structures and the costs of trade promotion in the Far East.
- On 9 November 2000, the same authorities decided to award Wam a further subsidised loan of LIT 3 603 574 689. (10) The programme financed by that loan was to be implemented in China by Wam and by Wam Bulk Handling Machinery (Shanghai) Co. Ltd, a local business fully controlled by Wam. (11)
The contested decision
- By a letter dated 26 July 1999, the Commission received a complaint from Morton Machine Company Ltd ('Morton Machine Company'). Morton Machine Company is a competitor of Wam Engineering Ltd, a UK member of the multinational group to which Wam belongs. Morton Machine Company alleged that its prices were being undercut by Wam Engineering Ltd as a result of the Italian loan to Wam.
- After having obtained further information, the Commission initiated the procedure laid down in Article 88(2) EC, and adopted the contested decision on 19 May 2004.
- The adequacy of the Commission's reasoning in respect of Article 87(1) EC falls to be assessed on the basis of recitals 74 to 79. After recalling the terms of that provision, the decision continues:
'(75) The aid under scrutiny consists of transfers of public funding, in the form of subsidised loans, to a specific undertaking, WAM SpA. These loans improve the financial situation of the aid recipient. As regards the potential effect on trade between Member States, it has been stressed by the Court of Justice (12) that, even if the aid is intended to promote exports outside the EU, intra-Community trade may be affected. Moreover, having regard to the interdependence between the markets on which Community undertakings operate, it is possible that such aid might distort competition within the Community.
(76) WAM SpA has subsidiaries all around the world, including in almost all the EU Member States, including France, the Netherlands, Finland, the United Kingdom, Denmark, Belgium and Germany. In particular, the complainant stressed that it competed on the Community market directly with 'WAM Engineering Ltd', which is the subsidiary for the United Kingdom and Ireland of WAM SpA, and that it was losing many orders to the Italian company. Furthermore, as regards outward-looking competition among Community undertakings, it transpired that the programme financed by the second loan and designed to support business penetration in China, was to be jointly carried out by WAM SpA and 'WAM Bulk Handling Machinery Shangai [sic] Co Ltd', a local firm wholly owned by WAM SpA.
(77) According to the case-law of the Court of Justice, even if the recipient exports almost its entire production outside the EU, the EEA and the accession countries, any subsidising of export activities can affect trade between Member States.
(78) Moreover, in the case at hand, it has been ascertained that in the period 1995-1999 sales abroad accounted for between 52% and 57.5% of the overall annual turnover of WAM SpA, two thirds of which was generated inside the EU (in absolute figures, some EUR 10 million compared with EUR 5 million).
(79) Accordingly, irrespective of whether the aid under consideration supports exports to other Member States or outside the EU, it has the potential to affect trade between Member States and is, therefore, caught by Article 87(1) of the Treaty.'
Proceedings before the Court of First Instance
- Italy and Wam applied separately for the annulment of the contested decision before the Court of First Instance. The applications were subsequently joined. Italy relied on seven grounds in its application. Wam relied on ten. (13) Among the grounds invoked was the allegation that the Commission had failed in its obligation to give adequate reasoning for the contested decision.
- Without examining the other grounds for annulment, the Court of First Instance annulled the contested decision on the ground that the Commission had failed to provide adequate reasoning to show that the loans were likely to affect trade, or that they distorted or threatened to distort competition. The appeal is therefore confined to that question.
- If the appeal were to succeed, the case would be remitted to the Court of First Instance, so that it may consider the other grounds of annulment. If, however, the appeal were to fail, that would dispose of the case.
- During the course of the appeal, all parties have made extensive submissions as to the (contested) facts leading to the Commission's decision. Since detailed consideration of the facts falls outside the ambit of an appeal on a point of law from the Court of First Instance to the Court of Justice, those submissions are to be disregarded. (14)
The appeal
- The Commission argues that in holding that the reasoning in the contested decision was insufficient to support the conclusion that the loans Italy made to Wam were likely to affect trade and distort or threaten to distort competition, the Court of First Instance misread Articles 87(1) and 253 EC and departed from the established case-law of the Court of Justice. That case-law establishes a relatively light standard of proof that the Commission must meet in order to show that an alleged aid is liable to affect trade or distort or threaten to distort competition. In the judgment under appeal, the Court of First Instance has imposed a heavier standard of proof.
- In support of its principal argument, the Commission advances a number of ancillary arguments. In particular, the Commission objects to the findings of the Court of First Instance in respect of the reasoning as to (i) the effect of financial support for Wam and (ii) Wam's presence on the intra-Community markets. The Commission also contests (iii) the need for it to examine the relationship between the Community market and Far Eastern markets.
- Italy and Wam both maintain that the Court of First Instance has not erred in law and has not departed from established case-law.
Admissibility
- Both Italy and Wam contest the admissibility of the appeal. Italy argues that the Commission's contention that the judgment of the Court of First Instance is inconsistent with the case-law of the Court of Justice is a ground of appeal which does not relate to a point of law.
- Article 58 of the Statute provides that, 'an appeal to the Court of Justice shall be limited to points of law. It shall lie on the grounds of [inter alia] the infringement of Community law by the Court of First Instance'. The Commission's appeal is based, precisely, upon the allegation that the Court of First Instance has infringed Community law by failing to follow and apply the interpretation of Articles 87 and 253 EC laid down in the case-law of the Court of Justice.
- The appeal is based on a point of law and on a ground of appeal identified in Article 58 of the Statute. It is therefore admissible.
- Wam further argues that the Commission's appeal invites the Court of Justice to review the substance of the Court of First Instance's decision, rather than being limited to a review of an 'essential procedural requirement' as laid down in Article 230 EC.
- Article 230 EC gives the Court jurisdiction to review acts of Community institutions other than the Court. Appeals from the Court of First Instance are governed by the terms of Article 225(1) EC (15) and the Statute of the Court of Justice. Wam's argument on admissibility, insofar as it is based on Article 230 EC, is manifestly ill-conceived and should likewise be rejected.
The obligation to state reasons
- It is convenient first to set out the scope of the obligation to state reasons in a decision on the application of Article 87(1) EC, before examining the Court of First Instance's application of that case-law to the case before it.
- The duty to give reasons imposed by Article 253 EC is a procedural requirement that is distinct from the duty to give reasons that are well founded. (16) It ensures that the parties concerned by the decision understand the reasons for it (and are therefore able to defend their rights). It also enables the Court to exercise its supervisory jurisdiction effectively. (17) Reasons which the decision-maker later seeks to rely on in court must therefore be identifiable in the decision itself.
26. In a decision relating to State aid, the Commission must give its reasons for concluding that a grant of financial assistance constitutes Stat
e aid falling within Article 87(1) EC. To do so, the Commission must show that the alleged aid has four characteristics.
- First, there must have been an intervention by the State or through State resources. Second, that intervention must be liable to affect trade between Member States. Third, it must confer an advantage on the recipient. Fourth, it must distort or threaten to distort competition. (18)
- The case-law has set limits on the extent of the Commission's obligation to show the existence of the second and fourth characteristics. Thus, 'the Commission is required, not to establish that such aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition'. (19) The concept of an 'effect' on trade between Member States also extends to the possibility that the aid may have such an impact. (20)
- The exact scope of the requirement to state reasons cannot be defined in the abstract. As the Court held in Papierwarenfabriek:
'The requirements to be satisfied depend upon the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the need to inform the undertakings to whom the measure is addressed.
[...]
Whilst in certain cases the very circumstances in which the aid is granted are sufficient to show that the aid is capable of affecting trade between Member States and of distorting or threatening to distort competition, the Commission must at least set out those circumstances in the statement of reasons for its decision.' (21)
- In Sytraval, (22) the Court stated that it was settled case-law that the statement of reasons must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Community court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case. It is not necessary for the reasoning to go into all the relevant facts and points of law, as the statement of reasons must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. (23)
The Commission's principal argument
- The Commission accepts that the Court of First Instance correctly summarised the applicable case-law. (24) The Commission alleges, however, that the Court of First Instance proceeded to apply a higher standard of proof. Whilst the Court of First Instance accepted in principle that the Commission merely had to show the foreseeable effects (25) of the alleged aid (26) and that there was no need to demonstrate a real effect, (27) the Court of First Instance later required the Commission to demonstrate that there had been a real effect on trade and competition. (28) The Court of First Instance therefore misapplied that case-law and its judgment lacks internal consistency.
- Has the Commission made good its argument in this appeal?
- The Court of First Instance stated (29) that the financial assistance in question was granted to support an export programme designed to penetrate a third-country market and was of (relatively) low value. For those reasons, it was probable that its effect on intra-Community trade would be less discernible. I find nothing exceptionable in that proposition.
- Looking at the effect of such assistance rather than its reason or purpose, (30) the Court of First Instance accepted that a possible effect on intra-Community trade, or distortion of competition could not be excluded. (31) However, the Court of First Instance went on, the Commission was under a particular duty in such circumstances to examine whether the alleged aid was liable to distort competition and affect trade between Member States, and to set out in its decision the specific considerations that had led it to conclude that such effects were likely. (32)
- The Court of First Instance affirmed that a simple statement of principle cannot of itself suffice to discharge the Commission's obligation to show that an alleged aid is likely to have an effect on intra-Community trade and that it distorts or threatens to distort competition. (33) It proceeded to examine the specific elements identified by the Commission in the contested decision (namely, Wam's improved financial position, the company's activity on the intra-Community market and the presumed interdependence between EU and Far Eastern markets). It found that the material presented did not show that there would 'potentially' be such an effect. (34) The Court of First Instance concluded (35) that the Commission had failed to show why, in the circumstances, the loans were likely to affect trade or distort or threaten to distort competition.
- The Court of First Instance therefore held that the contested decision had failed to set out sufficient material to discharge the (limited) burden of showing a likely economic effect. Because the Commission had failed to satisfy its duty to give reasons, the contested decision should be annulled.
- The Commission in its appeal has not shown that the Court of First Instance overlooked a key component in the contested decision or that it failed to appreciate that the Commission had indeed explained why an effect on trade and a distortion of competition was likely. Essentially, the Commission is asking the Court to endorse the novel proposition that, because it cannot a priori be excluded that the grant of financial assistance will be likely to have an effect on trade and competition, it follows that the grant of financial assistance has been shown to have such an effect.
- I cannot agree with that proposition. The fact that conclusion Y cannot be ruled out in circumstance X means that if the Commission shows X, it is not precluded from concluding Y. To say that therefore if the Commission shows X, conclusion Y automatically follows involves a radical leap in logic. It also implies a weakening of the duty to give reasons that I consider to be unacceptable.
- I agree with the Court of First Instance that bare statements of principle do not suffice to satisfy the obligation to state reasons. More is needed.
- I emphasise that I am not suggesting that the Commission was required to use any specific combination of economic analysis and evidence to arrive at the conclusion that there was a 'likely' effect on trade and competition. It would be quite wrong to limit its executive discretion in that way. Circumstances vary from case to case; particular kinds of evidence may be scanty; and the Commission's investigative resources are by no means unlimited. Thus, the Commission is not required to make a detailed economic analysis and demonstrate at length precisely how a contested aid is likely to affect trade between Member States and distort or threaten to distort competition. It is, however, required to sketch out material that plausibly leads to that conclusion in other words, to show that the effect is 'likely'.
- To put the point more generally: the Commission has to show that the aid in question is likely to have an effect on trade and distort or threaten to distort competition. To do this, it must adduce sufficient evidence. What constitutes sufficient evidence will depend on the circumstances. At one end of the scale, where the circumstances in which the aid is paid of themselves indicate that an effect on trade and a distortion of competition is likely, the Commission will need to do no more than set out those circumstances in the decision in order to show that the aid fulfils the criteria set out in Article 87(1) EC. At the other end of the scale, where the circumstances surrounding payment do not necessarily suggest that such effects are likely, the Commission will need to adduce rather more evidence in order to fulfil its obligation.
- I therefore do not consider that the Court of First Instance erred in the test that it applied or that its decision is internally inconsistent.
- I now turn to examine the additional specific points raised by the Commission.
The Commission's specific arguments
The effect of financial support for Wam
- Does a finding that a company enjoys a 'strengthened financial position' suffice to show that aid given to that company fulfils the conditions set out in Article 87(1) EC? The Court of First Instance held that it does not. (36) The Commission challenges that assessment, arguing that because money is fungible, the loans granted to Wam as export support relieved the company of costs that it would otherwise normally have to bear. The loans therefore meet the test set out in Germany v Commission (37) and the reasoning in the contested decision (38) is therefore adequate.
- In Germany v Commission, the Court held that, '[i]n principle, operating aid, that is to say aid which, like that provided for [by the measure there at issue], is intended to release an undertaking from costs which it would normally have had to bear in its day-to-day management or normal activities, distorts the conditions of competition'. (39)
- Much earlier, in Philip Morris, the Court explained that there will be an effect on intra-Community trade when financial aid granted by a State 'strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade'. (40)
- The contested decision does indeed show that Wam received money from the Italian authorities. The Court of First Instance found, however, that the Commission's reference to the loan was a general observation, aimed at demonstrating that there had been a transfer of State resources to the company concerned which constituted an 'advantage' for Wam. It was not, however, a specific finding directly linked to the likely effect upon trade and competition. The Court of First Instance observed (perhaps tartly, but accurately) that an improvement to the recipient's financial situation is something which is inherent in all grants of State aid, including those grants which do not fulfil the other criteria required by Article 87(1) EC. In consequence, the Court of First Instance held (41) that the reasoning provided was insufficient to demonstrate that the conditions of Article 87(1) EC were fulfilled.
- I agree with that assessment.
- In Commission v Germany, (42) the Court specifies that aid 'which ... is intended to release an undertaking from costs which it would normally have had to bear in its day-to-day management or normal activities' distorts the conditions of competition. In order to satisfy that test it is necessary for the Commission to outline how the contested aid is intended to release the recipient from such costs. That implies identifying costs that would 'normally' have to be borne and showing a plausible connection between the grant of the aid and alleviation of the burden of such costs for the company concerned. Otherwise, one cannot conclude that the alleged aid 'strengthens the position' of the recipient, thus giving it a competitive advantage over other undertakings with which it is in competition in the internal EU market, (43) as required by Philip Morris.
- In the present case, the aid Wam received was equivalent to the amount that it spent on its external market penetration programme. (44) The Commission's reasoning is confined to stating that the subsidised loans came from public funds and that the recipient's financial position was improved as a result. The Commission does not attempt to make a more specific connection between the loans and Wam's activities so as to demonstrate how, in the circumstances of this case, the loans operated so as to release Wam from costs which it would normally have had to bear. (45) Unlike in the contested decision in Tubemeuse, (46) there is no real indication as to Wam's pre-existing export activities or future plans. (47) The Commission's description of Wam as a 'multinational company' adds nothing to the analysis.
- I therefore share the Court of First Instance's view that the Commission failed to show that the grant of the loans was likely to affect intra-Community trade or distorted or threatened to distort competition.
The establishment of an effect on trade by reference to intra-Community activity
- The Commission argues that a reference to a company's participation in the internal EU market is sufficient and that the recitals to the contested decision went beyond what was necessary to satisfy the conditions of Article 87(1) EC. The Court of First Instance therefore erred in finding (48) that the Commission's statement that Wam participated in intra-Community trade was insufficient to show the existence of a likely effect on trade or distortion of competition. The Commission here specifically invokes the reference, in the contested decision, to the complaint lodged by Morton Machines Company.
- The last point may be dealt with summarily. The fact that a complaint has been lodged with the Commission cannot suffice to show a likelihood that competition will be distorted. To hold otherwise would place significant power in the hands of any competitors of a company that happened to be active on the intra-Community market a power that would, self-evidently, be open to abuse.
- Reverting to the essentials of the Commission's argument, it seems to me that the Court of First Instance was well aware that Wam was an active intra-Community exporter and part of a multinational group operating in the EU. (49) What the Court of First Instance said (50) is that recitals 74 and 77 of the contested decision merely recall the legal principles laid down, in particular, in Tubemeuse; and that that, read in conjunction with the general statement that it 'cannot be excluded' that there is an effect on intra-Community trade or competition, fails to satisfy the requirements of Article 253 EC. I have already explained (51) why I consider that to be a correct statement of the law.
- The Commission recalls that in Italy v Commission, (52) the Court stated that even where a beneficiary of aid does not participate on the intra-Community market, trade and competition may still be affected. In Tubemeuse, (53) the Court held that even where aids are de minimis, an effect on trade and competition is not excluded.
- Both those authorities formulate essentially the same proposition in slightly different ways: in such circumstances, a possible effect on trade and a distortion of competition cannot be excluded. They do not, however, provide support for the contention essential to the Commission's case that it suffices for the Commission to establish that an effect on trade and competition cannot be excluded in order to show the presence of two of the characteristics required by Article 87(1) EC.
- The Commission also relies on the Court's statement in Cassa di Risparmio di Firenze (54) that aid in a liberalised economic sector is of a nature to affect trade and competition. The Court was there referring back to Spain v Commission, (55) a case in which the Court held that the Commission had set out sufficient evidence in its decision to demonstrate a likely effect on trade and competition. Amongst the evidence it supplied was the fact that the market sector had been liberalised. The liberalisation of the market sector is therefore not, as such, conclusive evidence of a likely effect on trade and a distortion or threatened distortion of competition. (56)
The examination of the relationship between the EC and the Far Eastern markets
- The Commission claims that the Court of First Instance erred in requiring (57) the Commission to carry out an in-depth analysis of the effects of the loans, taking into account the circumstance that these were made in order to support the costs of Wam's establishment on the Far Eastern market.
- An examination of this argument should begin with paragraph 73 of the judgment under appeal. Dealing with the submission made by the Commission at the hearing (namely, that thanks to the loans, Wam's position vis-à -vis potential competitors on the intra-Community market was strengthened), the Court of First Instance found that the contested decision failed to provide any evidence in support of that assertion. Whilst the recitals to the decision (58) indicated that the loan supported Wam's costs of establishment outside the EU, they did not take the analysis the necessary step further so as to demonstrate that there was a consequential strengthening of Wam's position on the EU market.
- Against that background, I read paragraph 74 of the Court of First Instance's judgment as, essentially, reinforcing this point. The Court of First Instance held that, 'even if the Commission did not necessarily have to examine [the relationship of interdependence between the EU market and the Far Eastern market]', (59) the bald statement that Wam was involved in intra-Community trade was inadequate to show a likely effect on such trade or a distortion or threatened distortion of competition. For that reason (the Court of First Instance continued) the Commission had to carry out a detailed examination of the effects of the aids, taking into account in particular the fact that they met expenses incurred on the Far Eastern market as well as, to the extent necessary, (60) the interdependence between that market and the EU market.
- I understand the Court of First Instance here to be saying that, where a contested aid is granted specifically to meet expenses incurred in a third country rather than expenses incurred in intra-Community trade, a greater level of examination on the part of the Commission will be required to show that there is nevertheless a likely effect on the EU market. I do not think that that is an erroneous application of the Court's case-law.
- Any underlying uncertainty as to the Court of First Instance's meaning here is it seems to me removed by the next sentence. There the Court of First Instance stated that recital 75 of the contested decision refers to the interdependence of the markets on which the Community-based undertakings were operating; but that unlike the decision in Tubemeuse it fails to advance precise probative material to support the contention that (applying the 'Tubemeuse principle') such interdependence means that the contested aids are likely to affect competition within the Community.
- The Commission argues that an aid can have an effect on trade between Member States even where the beneficiary exports most of its goods out of the Community and that the Court of First Instance was wrong to require the Commission to provide further precise material to show that the EU and Far Eastern markets were interdependent.
- This is merely a further illustration of the basic misconception that it suffices to show that a particular conclusion 'cannot be excluded' in order to demonstrate that that conclusion is 'likely'. (61) In Tubemeuse, the contested decision referred to worldwide market conditions in the steel tubes sector and alluded to Tubemeuse's long-term intentions. There was, therefore, some material in that case to support the Commission's conclusion that there was interdependence between the export market and the EU market. There is no such material in the present case.
- It follows that the Commission has failed to show that the Court of First Instance departed from established case-law in annulling the contested decision.
Costs
- Under Article 69(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. Both Italy and Wam have applied for costs, and should in my view be successful. The Commission should therefore bear the costs, both at first instance and on appeal.
Conclusion
- I therefore consider that the Court should:
dismiss the Commission's appeal; and
order the Commission to pay the costs at first instance and on appeal.
1 Original language: English.
2 Decision of 19 May 2004 on State aid No C-4/2003 (ex NN 102/2002) implemented by Italy for WAM SpA (OJ 2006 L 63, p. 11).
3 In the contested decision, the company is referred to as 'WAM SpA'. In the subsequent litigation, 'Wam' has been used. I shall therefore refer to it as Wam in this Opinion.
4 As required by Article 88(3) EC.
5 Not published in the ECR. The judgment underwent summary publication and is available in full in French and Italian only.
6 L. 29/07/81 No 394; GURI 30/05/81 No 147 and 29/07/81 No 206.
7 See recital 32 of the contested decision.
8 Approximately EUR 1.18 million.
9 Approximately EUR 700 000.
10 Approximately EUR 1 860 000. This was the figure given by Italy on 23 July 2003; previously (in a letter to the Commission dated 16 May 2002) Italy had declared that the sum loaned was LIT 1 940 579 808, or approximately EUR 1 million. This was one of the sums actually paid to Wam; other sums were also paid, but the exact amount is not clear from the wording of the contested decision.
11 See paragraphs 3 and 4 of the judgment under appeal for a more detailed overview.
12 Footnote to the contested decision: Case C-142/87 Belgium v Commission ('Tubemeuse') [1990] ECR I-959.
13 The Court of First Instance lists grounds concerning the decision-making procedure; violation of the rights of self-defence, legitimate expectations and legal certainty; the substantive questions of whether the aids were unlawful under Article 88(3) EC and whether those aids affected trade and distorted competition; the consequences of the fact that the aids in question were linked to exports; the application of de minimis rules and the question of the amount of aid paid and to be repaid (paragraph 38 of the judgment under appeal).
14 See Article 225(1) EC, Article 58 of the Statute of the Court of Justice and Case C-115/90 P Turner v Commission [1991] ECR I-1423.
15 Article 225(1) EC, second paragraph, states that '[d]ecisions given by the Court of First Instance ... may be subject to a right of appeal to the Court of Justice on points of law only, under the conditions and within the limits laid down by the Statute.'
16 Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, at paragraph 19; Case C-367/95 P Commission v Sytraval and Brink's France [1998] ECR I-1719, at paragraph 67.
17 Case 24/62 Germany v Commission [1963] ECR 63, paragraph 11. See also Papierwarenfabriek, cited above in footnote 16, at paragraph 21.
18 Case C-280/00 Altmark Trans and Regierungspräsidium Magdeburg [2003] ECR I-7747, paragraph 75.
19 Case C-372/97 Italy v Commission [2004] ECR I-3679, paragraph 44.
20 Case C-66/02 Italy v Commission [2005] ECR I-10901, paragraph 112.
21 Cited in footnote 16, paragraphs 19 and 24. See also Joined Cases C-329/93, C-62/95 and C-63/95 Germany v Commission [1996] ECR I-5151, paragraph 52.
22 Cited in footnote 16, paragraph 63.
23 The Court here referred to Papierwarenfabriek, cited in footnote 16, paragraph 19; Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraphs 15 and 16; and Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 86.
24 At paragraphs 60 to 62 and 64 of the judgment under appeal.
25 In Italian, 'prevedibili effetti'; in French,'effets prévisibles'.
26 At paragraph 64, the Court of First Instance stated in terms that the Commission was not required to show that the aid had a real effect, or to delineate the market in question, or to make a real economic analysis of the market, the economic sector, competitors' positions and intra-Community trade (provided that it had set out the ways in which the aid was likely to produce effects on that market), or to examine the effect of the loans on Wam's prices, compare them with competitors' prices or examine Wam's sales in the UK.
27 Idem.
28 The Commission identifies paragraph 72 (and following) of the judgment under appeal as imposing this inconsistent obligation.
29 At paragraph 63 of the judgment under appeal.
30 As required by the Court in Case 173/73 Italy v Commission [1974] ECR 709, paragraph 13.
31 Tubemeuse, cited in footnote 12, point 43.
32 The Court of First Instance here cited Joined Cases T-298/97, T-312/97, T-313/97, T-315/97, T-600/97 to T-607/97, T-1/98, T-3/98 to T-6/98 and T-23/98 Alzetta and Others v Commission [2000] ECR II-2319, paragraph 80, which refers back (inter alia) to Tubemeuse.
33 See paragraphs 66, 70 and 72 of the judgment under appeal.
34 In Italian, 'sarebbe potenzialmente costituivo de tali effetti'; in French, 'serait potentiellement constitutive de tels effets'.
35 At paragraph 76 of the judgment under appeal.
36 At paragraph 67 of the judgment under appeal.
37 Case C-156/98 Germany v Commission [2000] ECR I-6857.
38 At recital 75.
39 At paragraph 30: see also Case C-301/87 France v Commission ('Boussac Saint Frères') [1990] ECR I-307, at paragraphs 44 and 50, and Case C-86/89 Italy v Commission [1990] ECR I-3891, at paragraph 18, there cited.
40 Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraph 11 (my emphasis).
41 At paragraph 67 of the judgment under appeal.
42 Cited in footnote 37, at paragraph 30.
43 See further the first half of paragraph 72 of the Court of First Instance's judgment, which deals expressly with this lacuna in the Commission's reasoning.
44 Recitals 34 and 37 (with regard to the first loan), and 62 and 64 (with regard to the second loan).
45 It does not (for example) examine whether Wam's decision to undertake the export penetration programme was dependent on, or independent from, the availability of the loans. In consequence, it is (for example) impossible to say whether on the 'money is fungible' argument the loans enabled Wam to divert funds that it would otherwise have spent on export promotion into supporting a lower pricing policy on the EU market, or whether in the absence of the loans the export promotion programme would simply not have happened.
46 Cited in footnote 12.
47 There is (for example) no argument advanced that the loans enabled Wam to run a more effective sales and marketing campaign in both the export markets and the EU market. While advantages such as economies of scale are certainly a possibility, there is again no exploration of such a possibility in the contested decision.
48 At paragraph 74 of the judgment under appeal.
49 See paragraph 64 of the judgment under appeal, where the Court of First Instance referred expressly to Wam's sales on the UK market, and further paragraph 68, where the Court of First Instance summarised the material to be gleaned from recitals 76 and 78 of the contested decision.
50 At paragraph 66 of the judgment under appeal.
51 At points 37 to 39 above.
52 Cited in footnote 20, paragraph 117; see likewise Case C-310/99 Italy v Commission [2002] ECR I-2289, paragraph 84.
53 Cited above in footnote 12, paragraph 43. The Commission also cited Case C-310/99 Italy v Commission, cited in footnote 52, paragraph 86.
54 Case C-222/04 [2006] ECR I-289. The Commission also cited Case C-66/02 Italy v Commission, cited in footnote 20, and Case C-148/04 Unicredito Italiano [2005] ECR I-11137.
55 Case C-409/00 [2003] ECR I-1487, at paragraph 75.
56 See paragraph 142 in Cassa di Risparmio di Firenze. The French text reads 'la circonstance qu'un secteur économique a fait l'objet d'une libéralisation au niveau communautaire est de nature à caractériser une incidence réelle ou potentielle des aides sur la concurrence, ainsi que leur effet sur les échanges entre États Membres'. In contrast, the English translation reads '[t]he fact that an economic sector has been liberalised may serve to determine that the aid has [a likely effect on trade and competition]' (my emphasis) and the Italian (the language of the case) uses 'evidenzia un'incidenza'. It seems to me that the French text is ambiguous and that the Italian and English versions more faithfully reflect the principle set out by the Court in Spain v Commission.
57 At paragraph 74 of the judgment under appeal.
58 See recitals 34 and 37 (with regard to the first loan), and 62 and 64 (with regard to the second loan).
59 My emphasis.
60 In Italian, 'eventualemente'; in French, 'le cas échéant' (my emphasis).
61 See point 38 above.
