11The Court of First Instance held as follows in the contested judgment:129 Under Article 92(2)(c) of the Treaty, aid compatible with the common market includes “aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division”.130 Far from being implicitly repealed following German reunification, that provision was retained by both the Maastricht Treaty concluded on 7 February 1992 and the Amsterdam Treaty concluded on 2 October 1997. Moreover, an identical provision was inserted into Article 61 (2)(c) of the [EEA Agreement].131 Having regard to the objective scope of the rules of Community law, the authority and effectiveness of which must be preserved, it cannot therefore be assumed that that provision has become devoid of purpose since the reunification of Germany, as the Commission maintained at the hearing, contradicting its own administrative practice (see, in particular, the Daimler-Benz and Tettau decisions).132 It should, nevertheless, be emphasised that, since it is a derogation from the general principle laid down in Article 92(1) of the Treaty that State aid is incompatible with the common market, Article 92(2)(c) of the Treaty must be interpreted narrowly.133 Moreover, as the Court of Justice has emphasised, in interpreting a provision of Community law it is necessary to consider not only its wording but also the context in which it occurs and the aims of the rules of which it forms part (Case 292/[82] Merck v Hauptzollamt Hamburg-Jonas [1983] ECR 3781, 3792; Case 337/82 St. Nikolaus Brennerei v Hauptzollamt Krefeld [1984] ECR 1051, 1062).134 In this case, the phrase “division of Germany” refers historically to the establishment of the dividing line between the two zones in 1948. Therefore, the “economic disadvantages caused by that division” can only mean the economic disadvantages caused by the isolation which the establishment or maintenance of that frontier entailed, such as, for example, the encirclement of certain areas (see the Daimler-Benz decision), the breaking of communication links (see the Tettati decision), or the loss of the natural markets of certain undertakings, which therefore need support, either to be able to adapt to new conditions or to be able to survive that disadvantage (on that point, but in relation to the fourth paragraph of Article 70 of the ECSC Treaty, see [Joined Cases 3/58 to 18/58, 25/58 and 26/58 Barbara Erzbergbau and Others [1960] ECR 173, at p. 195]).135 By contrast, the conception of the applicants and the German Government, according to which Article 92(2)(c) of the Treaty permits full compensation for the undeniable economic backwardness suffered by the new Lander, until such time as they reach a level of development comparable with that of the original Länder, disregards both the nature of that provision as a derogation and its context and aims.136 The economic disadvantages suffered by the new Länder as a whole have not been caused by the division of Germany within the meaning of Article 92(2)(c) of the Treaty. As such, the division of Germany has had only marginal consequences on the economic development of either zone, which, moreover, it affected equally at the outset, and it has not prevented the economies of the original Lander from developing favourably thereafter.137 It follows that the differences in development between the original and the new Lander are explained by causes other than the division of Germany as such, and in particular by the different politico-economic systems established in each State on either side of the frontier.138 It also follows from the above that the Commission did not make any error of law by stating generally, in the third paragraph of Point X of the [contested decision], that the derogation laid down in Article 92(2)(c) of the Treaty should not be applied to regional aid for new investment projects and that the derogations provided for in Article 92(3)(a) and (c) of the Treaty and the Community framework were sufficient to deal with the problems faced by the new Länder.139 In that respect, the applicants are wrong to accuse the Commission of contradictory reasoning in its description of the disputed investments at other points in the [contested decision] as extensions of existing capacity. The expression “regional aid for new investment projects” is used in reply to a general argument raised by the German Government (see Point V, first paragraph, subparagraph 1 of the [contested decision]) and thus concerns not aid to Volkswagen's investment plans at Mosel II and Chemnitz II specifically, but the whole of the aid intended to promote general economic development of the new Länder.140 Moreover, as regards the question whether, apart from its character as aid for the economic development of the Free State of Saxony, the aid in question is specifically designed to compensate for the disadvantages caused by the division of Germany, it should be borne in mind that a Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules has a duty to collaborate with the Commission, requiring it in particular to provide all the information to enable the Commission to verify that the conditions for the derogation sought are fulfilled ([Case C-364/90 Italy v Commission [1993] ECR I-2097], paragraph 20).141 On that point, there is nothing in the documents before the Court to show that the German Government or the applicants put forward specific arguments during the administrative procedure in order to prove a causal link between the situation of the motor vehicle industry in Saxony after German reunification and the division of Germany.142 The Commission is therefore right in maintaining that the parties have not put forward specific evidence capable of justifying the application of Article 92(2)(c) of the Treaty to this case.143 Before the Court, the applicants, and the German Government, which refers on those questions to its written submissions in Case C-301/96, have argued that proof of the economic disadvantages caused to Saxony by the division of Germany arose from a comparison between German motor-vehicle production carried on in that region before 1939 and that achieved in 1990. According to those parties, the relative decline of the motor-vehicle industry in Saxony, compared with that of West Germany in general, was caused in particular by the partition of the German market and the corresponding loss of that industry's traditional outlets to the West, following that partition.144 In so far as that argument is capable of being raised before the Court of First Instance, given that it was not raised during the administrative procedure (see Joined Cases C-278/92, C-279/[92] and C-280/[92] Spain v Commission [1994] ECR I-4103, paragraph 31; Case T-37/97 Forges de Clabecq v Commission [1999] ECR II-859, paragraph 93), it must be rejected.145 Even if there were obstacles to inter-German trade, entailing the loss of traditional outlets for the motor-vehicle industry in Saxony, that would not automatically mean that the poor economic situation of that industry in 1990 was a direct consequence of that loss of outlets caused, ex hypothesis by the division of Germany in 1948. The difficulties referred to by the applicants are primarily the result of the different economic organisation of the East German regime itself, which was not “caused by the division of Germany” within the meaning of Article 92(2)(c) of the Treaty.146 A comparison between the position of the motor-vehicle industry in Saxony before 1939 and that in 1990 is not therefore in itself enough to establish the existence of a sufficiently direct link between the economic disadvantages suffered by that industry at the time of the granting of the aid in dispute and the “division of Germany” within the meaning of Article 92(2)(c).147 As for [the Commission decision of 11 December 1964 concerning aids designed to facilitate the integration of the Saarland into the economy of the Federal Republic of Germany (Bulletin of the European Economic Community No 2-1965, p. 33, “the Saarland decision”)], none of the parties have produced or requested it in these proceedings. The applicants have failed to show that the latter decision reflected a different approach by the Commission in the past and that such an approach, if it were established, would call into question the validity of the legal assessments made in 1996.148 In those circumstances, the applicants and the Federal Republic of Germany have not adduced sufficient evidence to support the conclusion that the Commission exceeded the limits of its discretion by holding that the aid in question did not comply with the conditions for benefiting from the derogation laid down in Article 92(2)(c) of the Treaty.’
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.