Contents
Judgment of the Court (Fifth Chamber)10 March 2021note(Appeal — State aid — Seventh Framework Programme for research, technological development and demonstration activities — Recommendation 2003/361/EC — Decision of the Validation Panel of the European Commission on classification as a micro, small or medium-sized enterprise (SME) — Decision 2012/838/EU, Euratom — Annex — Sections 1.2.6 and 1.2.7 — Request for review — Regulation (EC) No 58/2003 — Article 22 — No administrative proceedings — Link between request for review and administrative proceedings — Refusal of SME status despite formal observance of the Recommendation 2003/361 criteria — Legal certainty — Legitimate expectations — Handicaps usually faced by SMEs — None)In Case C‑572/19 P,APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 July 2019,European Road Transport Telematics Implementation Coordination Organisation – Intelligent Transport Systems & Services Europe (Ertico – ITS Europe), established in Brussels (Belgium), represented by M. Wellinger and K. T’Syen, avocats,supported by:Czech Republic, represented by M. Smolek, J. Vláčil, O. Serdula and J. Očková, acting as Agents,the other party to the proceedings being:European Commission, represented by R. Lyal and A. Kyratsou, acting as Agents,THE COURT (Fifth Chamber),composed of E. Regan (Rapporteur), President of the Chamber, M. Ilešič, E. Juhász, C. Lycourgos and I. Jarukaitis, Judges,Advocate General: J. Richard de la Tour,Registrar: A. Calot Escobar,having regard to the written procedure,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following
Judgment
1By its appeal, European Road Transport Telematics Implementation Coordination Organisation – Intelligent Transport Systems & Services Europe (Ertico – ITS Europe) seeks the setting aside of the judgment of the General Court of the European Union of 22 May 2019, Ertico – ITS Europe v Commission (T‑604/15, EU:T:2019:348) (‘the judgment under appeal’), by which that court dismissed its action for annulment of the decision of 18 August 2015 (‘the decision at issue’) adopted by the validation panel provided for under section 1.2.7 of the Annex to Commission Decision 2012/838/EU, Euratom of 18 December 2012 on the adoption of the Rules to ensure consistent verification of the existence and legal status of participants, as well as their operational and financial capacities, in indirect actions supported through the form of a grant under the Seventh Framework Programme of the European Community for research, technological development and demonstration activities and under the Seventh Framework Programme of the European Atomic Energy Community for nuclear research and training activities (OJ 2012 L 359, p. 45) (‘the Validation Panel’), in so far as the Validation Panel concluded that the appellant could not be classified as a micro, small or medium-sized enterprise (SME) within the meaning of Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ 2003 L 124, p. 36) (‘the SME Recommendation’).
Legal context
Regulation (EC) No 58/2003
2Article 22 of Council Regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes (OJ 2003 L 11, p. 1), entitled ‘Legality of acts’, is worded as follows:1. Any act of an executive agency which injures a third party may be referred to the [European] Commission by any person directly or individually concerned or by a Member State for a review of its legality.Administrative proceedings shall be referred to the Commission within one month of the day on which the interested party or Member State concerned learnt of the act challenged.After hearing the arguments adduced by the interested party or by the Member State concerned and those of the executive agency, the Commission shall take a decision on the administrative proceedings within two months of the date on which proceedings were instituted. Without prejudice to the Commission’s obligation to reply in writing giving grounds for its decision, the failure by the Commission to reply within that deadline shall be taken as implicit rejection of the proceedings.2. On its own initiative the Commission may review any act of an executive agency. It shall decide within two months of the day [of] that review, after having heard the arguments adduced by the agency.3. Where an act is referred to the Commission in accordance with paragraphs 1 or 2, the Commission may suspend implementation of the act at issue or prescribe interim measures. In its final decision the Commission may uphold the executive agency’s act or decide that the agency must modify it either in whole or in part.4. Executive agencies must take the necessary measures within a reasonable period to comply with the Commission’s decision.5. An action for annulment of the Commission’s explicit or implicit decision to reject the administrative appeal may be brought before the Court of Justice [of the European Union], in accordance with [Article 263 TFEU].’
The SME Recommendation
3Under recitals 9 and 12 of the SME Recommendation:(9) To gain a better understanding of the real economic position of SMEs and to remove from that category groups of enterprises whose economic power may exceed that of genuine SMEs, a distinction should be made between various types of enterprises, depending on whether they are autonomous, whether they have holdings which do not entail a controlling position (partner enterprises), or whether they are linked to other enterprises. The current limit shown in [Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (OJ 1996 L 107, p. 4)], of a 25% holding below which an enterprise is considered autonomous, is maintained.…(12) Account should also be taken, in suitable cases, of relations between enterprises which pass through natural persons, with a view to ensuring that only those enterprises which really need the advantages accruing to SMEs from the different rules or measures in their favour actually benefit from them. In order to limit the examination of these situations to the strict minimum, the account taken of such relationships has been restricted to the relevant market or to adjacent markets – reference being had, where necessary, to the Commission’s definition of “relevant markets” in the Commission notice on the definition of relevant market for the purposes of [EU] competition law [(OJ 1997 C 372, p. 5)].’
4Article 1(1) of that recommendation provides:‘This Recommendation concerns the definition of [SMEs] used in [EU] policies applied within the [European Union] and the European Economic Area [(EEA)].’
5Article 1 of the Annex to that recommendation, entitled ‘Enterprise’, provides:‘An enterprise is considered to be any entity engaged in an economic activity, irrespective of its legal form. This includes, in particular, self-employed persons and family businesses engaged in craft or other activities, and partnerships or associations regularly engaged in an economic activity.’
6Article 2 of that same annex, entitled ‘Staff headcount and financial ceilings determining enterprise categories’, provides, in paragraph 1 thereof:‘The category of [SMEs] is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million.’
7Article 3 of the Annex to the SME Recommendation, entitled ‘Types of enterprise taken into consideration in calculating staff numbers and financial amounts’, is worded as follows:1. An “autonomous enterprise” is any enterprise which is not classified as a partner enterprise within the meaning of paragraph 2 or as a linked enterprise within the meaning of paragraph 3.2. “Partner enterprises” are all enterprises which are not classified as linked enterprises within the meaning of paragraph 3 and between which there is the following relationship: an enterprise (upstream enterprise) holds, either solely or jointly with one or more linked enterprises within the meaning of paragraph 3, 25% or more of the capital or voting rights of another enterprise (downstream enterprise).…3.“Linked enterprises” are enterprises which have any of the following relationships with each other:(a) an enterprise has a majority of the shareholders’ or members’ voting rights in another enterprise;(b) an enterprise has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another enterprise;(c) an enterprise has the right to exercise a dominant influence over another enterprise pursuant to a contract entered into with that enterprise or to a provision in its memorandum or articles of association;(d) an enterprise, which is a shareholder in or member of another enterprise, controls alone, pursuant to an agreement with other shareholders in or members of that enterprise, a majority of shareholders’ or members’ voting rights in that enterprise.…’
Decision 2012/838
8Under section 1.2.6 of the Annex to Decision 2012/838, entitled ‘Administrative review of validations’:1. Prior to any request for review, the applicant shall ask for the confirmation of the outcome of the validation.2. Requests for review … of validations may be addressed in writing with no other formalities being required directly to the competent validation service by the nominated [Legal Entity Appointed Representative] of the concerned legal entity.Requests for review submitted by a party not concerned by the validation shall be rejected.3. The validation services shall acknowledge the receipt of the request for review. They shall duly inform the concerned party of the decision thereon. In case of rejection, the grounds shall be given.A request for review of a validation does not suspend the validation, which shall remain in force until it is overturned. This administrative review process is without prejudice to the applicant’s rights of appeal before the European Ombudsman or the Court of Justice of the European Union.’
9That section is accompanied by a footnote, which states:‘Acts of an executive agency can be referred to the Commission for a review of [their] legality under Article 22 of [Regulation No 58/2003].’
10Section 1.2.7 of the Annex to that decision, entitled ‘The Validation Panel’, provides:‘The [Directorates-General (DGs)] and Executive Agencies of the … Commission implementing [the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013)] shall set up an inter-service panel for coordination purposes (referred to as the validation panel) and shall delegate their representative to this panel. The validation services shall participate in the validation panel without voting rights and assure the secretariat of the validation panel under the supervision of the Chair of the validation panel. The Commission shall establish the rules of procedure for the coordination processes including a register of common practices.In case a request for review is submitted by an applicant to the competent validation services in accordance with 1.2.7 above, these services shall refer the request to the validation panel. The validation panel shall review and decide on the referred cases of legal entity validation. The validation panel does not have the mandate to deal with cases related to the verification of the financial capacity.’
Background to the dispute
11The background to the dispute is set out in paragraphs 1 to 10 of the judgment under appeal and, for the purposes of the present proceedings, can be summarised as follows.
12The appellant, established in 1991, is a cooperative limited liability company governed by Belgian law. It provides a multisectoral platform to both private and public stakeholders in the intelligent transport systems and services sector. Its articles of association state that its objects are to encourage, promote and help to coordinate the implementation of advanced transport telematics in European transport infrastructure.
13Since 31 December 2006, the appellant had been regarded as having SME status within the meaning of the SME Recommendation. That status enabled it to receive, for several years, additional grants from the European Union, in particular within the context of the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013).
14In December 2013, in connection with a review of the SME status of participants in existing research programmes, the Research Executive Agency (‘the REA’), in its capacity as the validation service regarding the SME status of participants in those programmes, requested that the appellant provide information proving that it should still be entitled to that status. Following a series of emails, the REA decided, on 27 January 2014, that the appellant could no longer be regarded as an SME within the meaning of the SME Recommendation (‘the decision refusing SME status’).
15By email of 7 February 2014, the appellant contested the position adopted by the REA and attached two legal consultations prepared by its lawyers.
16By email of 24 February 2014, the REA informed the appellant that it could request a review of the decision refusing SME status before the Validation Panel under sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838.
17Accordingly, by email of 25 February 2014, the appellant requested that the REA refer that decision to the Validation Panel for review.
18On 15 April 2014, the REA informed the appellant of the decision of the Validation Panel confirming the decision refusing SME status (‘the first negative decision’).
19On 23 June 2014, the appellant brought an action against the first negative decision before the General Court, registered as Case T‑499/14. That action was brought against both the Commission and the Validation Panel.
20On 18 November 2014, the appellant was informed by the REA of the Validation Panel’s decision to withdraw the first negative decision pending the adoption of a new decision. That withdrawal was explained by the fact that, in the first negative decision, the Validation Panel had not explicitly addressed the arguments relied on by the appellant in its email of 7 February 2014. Following that withdrawal, the General Court found that the action brought in Case T‑499/14 had become devoid of purpose and held, by order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), that there was no longer any need to adjudicate on that action.
21On 18 August 2015, the Validation Panel adopted the decision at issue, in which it concluded, on the basis of an amended version of the line of argument adopted in the first negative decision, that the appellant was no longer entitled to SME status.
The procedure before the General Court and the judgment under appeal
22By application lodged at the Registry of the General Court on 27 October 2015, the appellant brought an action for annulment of the decision at issue.
23By the judgment under appeal, the General Court dismissed that action.
Procedure before the Court of Justice and forms of order sought
24By its appeal, the appellant claims that the Court should:– set aside the judgment under appeal;– annul the decision at issue and confirm its SME status; and– order the Commission to pay the costs.
25The Commission contends that the Court should:– dismiss the appeal; and– order the appellant to pay the costs.
26By decision of the President of the Court of 19 November 2019, the Czech Republic was granted leave to intervene in support of the form of order sought by the appellant.
The appeal
27In support of its appeal, the appellant raises three grounds of appeal, alleging that the General Court (i) misinterpreted sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 and Article 22 of Regulation No 58/2003, (ii) infringed the SME Recommendation and the fundamental principles of legal certainty and the protection of legitimate expectations, and (iii) made a manifest error of assessment concerning the appellant’s SME status.
The first ground of appeal
Arguments of the parties
28By its first ground of appeal, the appellant argues that the General Court erred in law, in particular in paragraphs 28 to 42, 50, and 68 to 77 of the judgment under appeal, inasmuch as it concluded that sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838, on the one hand, and Article 22 of Regulation No 58/2003, on the other, lay down separate appeal procedures. Contrary to the General Court’s findings in paragraphs 28 to 31 of that judgment, those provisions concern a single procedure. In particular, sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 specify how the requests for review of legality referred to in Article 22 of Regulation No 58/2003 are to be addressed to the Commission.
29In the first place, sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 make explicit reference to Article 22 of Regulation No 58/2003. Footnote 24 to section 1.2.6(2) of the Annex to Decision 2012/838 specifies that the review concerned by that section is that referred to in Article 22 of Regulation No 58/2003. That footnote establishes a link between Article 22 of that higher-ranking regulation, and the provisions implementing it, namely sections 1.2.6 and 1.2.7 of the Annex to the lower-ranking Decision 2012/838.
30In the second place, although section 1.2.6(3) of the Annex to Decision 2012/838 specifies that that administrative review process is without prejudice to the applicant’s rights of appeal before the Ombudsman or the Court of Justice of the European Union, it does not state that it is without prejudice to the review procedure referred to in Article 22 of Regulation No 58/2003.
31In the third place, the Commission itself considered that sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 and Article 22 of Regulation No 58/2003 concerned a single review procedure. The REA indicated, in its email of 24 February 2014, that a request for review of legality had to be submitted in accordance with sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838. The REA made no reference whatsoever to Article 22 of Regulation No 58/2003, which it should – and certainly would – have done if the review procedure referred to in Article 22 of Regulation No 58/2003 were separate from that referred to in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838.
32There is a general principle of EU administrative procedural law whereby the decisions of the institutions and other administrative authorities of the Union which adversely affect the rights or interests of a private person must clearly state the possible remedies and the means of exercising those remedies. That requirement is also explicitly laid down in, inter alia, Article 133(2) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1). That regulation is the current legal basis for the regulatory requirements on which Decision 2012/838 is based.
33In the fourth place, by applying sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838, the Validation Panel and, by extension, the Commission, in fact complied with the two-month deadline set out in the third subparagraph of Article 22(1) of Regulation No 58/2003. The Validation Panel issued the first negative decision within the two months following the date on which the appellant formally requested that the REA refer its file to that panel.
34Moreover, the Commission did not make any objection regarding the fact that, first, the appellant, in its application in the case giving rise to the order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), explicitly identified Article 22 of Regulation No 58/2003 as being one of the legal bases for that application and that, second, the appellant relied extensively on that provision in its letter to the General Court of 5 January 2015.
35In the fifth place, while Article 22 of Regulation No 58/2003 provides that the Commission is to take a decision on the administrative proceedings within two months of the date on which proceedings were instituted, that the failure by the Commission to reply within that deadline is to be taken as implicit rejection of the administrative proceedings, and that an action for annulment of the Commission’s explicit or implicit decision to reject the administrative appeal may be brought before the Court of Justice of the European Union in accordance with Article 263 TFEU, sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 do not refer to any deadline that applies to the adoption of a decision by the Validation Panel and, by extension, the Commission; nor do they lay down any rule concerning a situation where the Validation Panel and, by extension, the Commission, fails to adopt a decision. Article 22 of Regulation No 58/2003 thus necessarily applies in the context of the procedure laid down in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838. Otherwise, the appellant questions how the interested party would be in a position to determine when the period for bringing proceedings against an implicit negative decision begins to run.
36In the sixth place, contrary to the findings of the General Court in the judgment under appeal, there is no difference between the remedy provided for in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 and that referred to in Article 22 of Regulation No 58/2003 in terms of their respective procedures and natures.
37First, the review is to be carried out by a single entity, namely the Commission. This is clear from the wording of Article 22 of Regulation No 58/2003. Similarly, sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 provide that the review of legality is to be carried out by the Validation Panel, namely an ‘inter-service panel’ for the purpose of coordinating the DGs and the Executive Agencies of that institution implementing the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013).
38In addition, the General Court held that the Validation Panel and the Commission had to be regarded as a single entity, which that court could not disregard in the judgment under appeal without infringing the principle of res judicata. The appellant’s application in the case giving rise to the order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), was brought against both the Commission and the Validation Panel. By fax of 4 September 2014, the Registry of the General Court informed the appellant that the Seventh Chamber of that court had decided that the Commission had to be regarded as the sole defendant.
39The fact that the Validation Panel and the Commission must be regarded as being a single entity is also confirmed by section 1.2.7 of the Annex to Decision 2012/838, which states that that institution must adopt rules of procedure specifying the way in which the Validation Panel is to operate. Thus, by requesting the Validation Panel to carry out a review, the appellant, in fact, brought an appeal before the Commission.
40Second, the request for review was made by means of a request addressed to the competent validation service. It is apparent from the numerous emails exchanged between the REA and the appellant that the competent validation service, in the present case, the REA, merely acted as an intermediary that forwarded the appellant’s request for review to the Commission.
41Third, the review of legality concerns acts of executive agencies, such as, in the present case, the REA, which was neither contested by the Commission nor examined in the judgment under appeal.
42Fourth, the objective of the review is to enable the Commission to exercise oversight and to ensure homogeneity of interpretation, an objective which was neither contested by that institution nor examined in the judgment under appeal.
43Fifth, the appellant was given the possibility to make its views known. In accordance with the wording of Article 22 of Regulation No 58/2003, the appellant has always maintained that it had to be heard by the Commission. Sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 do not clearly indicate that the applicant should have the possibility to submit observations. This, however, is logical, given that it is not necessary to state explicitly what is already stated in Article 22 of Regulation No 58/2003. In any event, the General Court itself confirmed, in paragraph 52 of the judgment under appeal, that the appellant had to be placed in a position in which it could effectively make its views known prior to the adoption of the decision at issue, notwithstanding the fact that no express provision was made for such a right in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838.
44Sixth, it follows from section 1.2.6 of the Annex to Decision 2012/838 and Article 22 of Regulation No 58/2003 that the review is administrative in nature and consists in a full review of the substance of the act challenged.
45The General Court itself indicated, in paragraph 30 of the judgment under appeal, that the review carried out under sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 involves a full review of the decision, in terms of both the law and the facts. However, contrary to the findings of the General Court in paragraphs 30 and 37 of that judgment and, implicitly, in paragraph 41 thereof, the same must necessarily be true in the context of applying Article 22 of Regulation No 58/2003. In order to monitor the activities of the executive agencies, as well as to ensure homogeneity of interpretation and to hear the appellant’s arguments, the Commission must, by definition, be in a position to review the substance of the act challenged.
46Seventh, the request for review must be made within one month from the day on which the interested party learnt of the act challenged. This follows from the wording of Article 22 of Regulation No 58/2003. As that higher-ranking legislation imposes a deadline, it is not necessary to recall that deadline in the specific provisions implementing it, namely sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838.
47Consequently, the decision at issue, which was issued after the expiry of the two-month period from the date on which the administrative proceedings referred to in Article 22 of Regulation No 58/2003 were instituted, must be regarded as null and void and the appellant’s SME status must be confirmed. Given that the first negative decision was adopted within the prescribed two-month period, it cannot be held, as was confirmed by the General Court in the order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), that there was an implicit rejection decision pursuant to the third subparagraph of Article 22(1) of Regulation No 58/2003.
48The Commission contends that the first ground of appeal must be set aside as ineffective and, in any event, as unfounded.
Findings of the Court
49It should be observed that, even assuming that, as is asserted by the appellant, sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 specify the way in which the requests for review of legality referred to in Article 22 of Regulation No 58/2003 are to be addressed to the Commission, so that all of those provisions concern a single procedure governed by, inter alia, Article 22 of that regulation, the fact remains that the third subparagraph of Article 22(1) of Regulation No 58/2003 specifies that, ‘without prejudice to the Commission’s obligation to reply in writing giving grounds for its decision, the failure by the Commission to reply within that deadline shall be taken as implicit rejection of the proceedings’.
50It follows that the legislature did not exclude the possibility of the Commission, upon expiry of the two-month period laid down in Article 22 of that regulation, confining itself to an implicit rejection of the administrative proceedings. Consequently, and without there being a need to examine, in the present appeal, what requirements regarding the observance of the right to good administration must be complied with by the Commission when making use of that possibility, the appellant’s argument that the decision at issue must be annulled simply because it was issued after the expiry of that two-month period must be set aside.
51In that regard, the appellant maintains that the adoption of the first negative decision precludes the application in the present case of the considerations set out in paragraphs 49 and 50 above. In its view, it follows from the order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), that the fact that the first negative decision was adopted within the prescribed two-month period means that it cannot be held that there was an implicit rejection decision pursuant to Article 22(1) of Regulation No 58/2003.
52However, contrary to what the appellant seems to infer by its line of argument in that regard, the decision that there is no need to adjudicate made by the General Court in the order of 30 April 2015, Ertico – ITS Europe v Commission (T‑499/14, not published, EU:T:2015:285), is based, as is apparent, in particular, from paragraphs 7 and 11 of that order, on the withdrawal of the first negative decision, that decision being the subject of the action for annulment giving rise to that order. Moreover, neither that lack of need to adjudicate nor the reasoning developed by the General Court in support thereof means that the result of that withdrawal was a failure by the Commission to reply within the prescribed period.
53Furthermore, the Commission’s right to withdraw the first negative decision is not, as such, in any way contested in the present appeal.
54Accordingly, in the light of the withdrawal of the first negative decision and even assuming that Article 22 of Regulation No 58/2003 was applicable to the review proceedings instituted by the appellant in respect of the decision refusing SME status, it must in any event be considered that there was a ‘failure by the Commission to reply’ within the prescribed period for the purposes of the third subparagraph of Article 22(1) of that regulation, such a failure to reply being equivalent to an implicit rejection of the proceedings pursuant to that provision. It should also be observed that, as can be seen from paragraphs 20 to 22 above, that withdrawal took place before the adoption of the decision at issue and the bringing by the appellant of its action for annulment of that decision.
55Given that the mere fact that the decision at issue was adopted after the expiry of the two-month period for the Commission to reply to proceedings instituted on the basis of Article 22(1) of Regulation No 58/2003 cannot entail annulment of that decision, the appellant’s line of argument seeking to demonstrate that that provision is applicable to the review proceedings which it instituted in respect of the decision refusing SME status is ineffective and must, therefore, be set aside.
56Lastly, regarding the line of argument that the REA did not mention that Article 22 of Regulation No 58/2003 was the basis of a remedy available to the appellant, whereas it should have done so if the proceedings referred to in that provision were separate from those referred to in sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838, it should be observed that, in the present appeal, the appellant does not argue that the failure by the REA to fulfil its alleged obligation to indicate the available remedies is grounds, in itself, for annulment of the decision at issue, but confines itself to asserting that the existence of that obligation and the fact that the REA did not mention Article 22 of Regulation No 58/2003 as a basis for an alternative remedy shows, in its view, that that article and sections 1.2.6 and 1.2.7 of the Annex to Decision 2012/838 must be regarded as providing a single remedy. Accordingly, in reality, it is the failure to observe the two-month deadline laid down in that article which, in the appellant’s view, is grounds for annulment of the decision at issue and confirmation of its SME status. However, it is apparent from the foregoing that the annulment of that decision cannot be justified on that ground.
57In the light of all the foregoing considerations, the first ground of appeal must be set aside in its entirety.
The third ground of appeal
Arguments of the parties
58By its third ground of appeal, which must be examined second, the appellant asserts that the General Court made a manifest error of assessment, in particular in paragraphs 56, 59, 139 to 146, 148, 150, 151 and 171 of the judgment under appeal, inasmuch as it concluded that the appellant did not have to contend with the handicaps usually faced by SMEs and that, accordingly, it was not an SME in the light of the purpose and spirit of the SME Recommendation.
59Although there are some large businesses and public bodies among its shareholders, the appellant’s situation is in no way different from that of other SMEs. In particular, it is manifestly incorrect to consider, as the General Court did in paragraph 145 of the judgment under appeal, that the appellant’s articles of association enable it to access resources, coming from its members, which are larger than those of an SME and enable it to cover its expenditure.
60In the first place, the General Court wrongly disregarded the fact that the appellant’s shares were held by 110 different shareholders at the date of delivery of the judgment under appeal and those shareholders could leave at any time.
61In the second place, the General Court wrongly disregarded the fact that each of the appellant’s shareholders, first, holds an equal number of shares and voting rights and, second, has equal voting rights at the appellant’s General Assembly. Accordingly, none of them has an interest in providing the appellant with funds, because they cannot simply determine the way in which those funds will be allocated and what the purpose of those funds will be.
62In the third place, the contribution of the appellant’s shareholders is strictly limited to their annual membership fees, the level of which has not changed in 20 years. As the General Court rightly indicated in paragraph 144 of the judgment under appeal, the amount of the annual membership fee is determined by the appellant’s supervisory board, which is composed of representatives of the various sectors represented within the appellant – all of which have divergent interests – and which had 20 members at the date of that judgment. However, contrary to what was stated by the General Court in paragraphs 144 and 145 of that judgment, it is in practice very difficult for the supervisory board to decide to increase the annual membership fees, because, first, the supervisory board takes its decisions unanimously or, if there is no consensus, by a majority of three quarters of the votes of the members who are present or represented, and, second, each member of the supervisory board has one vote.
63The finding by the General Court, in paragraph 142 of the judgment under appeal, that it follows from Article 3 of the appellant’s articles of association that it acts principally on behalf of its members, is completely irrelevant. All enterprises act in the interest of their shareholders. That finding is, moreover, based on an incorrect interpretation of the content of the appellant’s articles of association. In fact, Article 3 of those articles of association indicates that the appellant must mainly act for its members. In addition, although the appellant primarily provides services to its shareholders, that does not make it less vulnerable than another SME. The uncertain nature of the appellant’s income is also confirmed by the fact that it is regarded as an SME by its bank and that even the Commission considers it to be financially weak and therefore requires it to provide a bank guarantee in order to obtain pre-financing on EU grants.
64The same is true of the finding set out in paragraph 143 of the judgment under appeal that, under Article 5 of the appellant’s articles of association, its authorised capital is unlimited. That article simply means that, legally, there is no limit on the maximum amount of share capital that the appellant is authorised to raise. That specification is important for practical reasons because, without it, the appellant would be obliged to amend its articles of association when new members wish to join, given that the authorised share capital can be increased only with the approval of the shareholders. The authorised share capital does not therefore provide any indication as to the appellant’s financial strength.
65Consequently, the General Court erred when it held, in paragraph 143 of the judgment under appeal, that the authorised share capital was a guarantee to the appellant’s partners and potential lenders and that a large share capital facilitated the appellant’s relations with third parties. More relevant in that regard is the paid-up share capital, namely the amount paid to a company by its shareholders in exchange for shares in its stock, to which the General Court referred when it mentioned, in that paragraph, the total amount of contributions received by the appellant from its members. Thus, contrary to what was stated in that paragraph, the concept of authorised capital does not correspond to the total amount of contributions received by the appellant from its members.
66In the appellant’s case, the paid-up share capital is EUR 68200, as 110 shareholders have each paid in EUR 620. This in no way suggests that the appellant’s financial situation is stronger than that of another SME.
67The Commission contends that the third ground of appeal must be set aside as manifestly inadmissible, given that the appellant is merely challenging findings of fact made by the General Court. In any event, that ground of appeal must be set aside as unfounded.
Findings of the Court
68It should be borne in mind that it is apparent from Article 256 TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union that the appeal is limited to points of law. The General Court thus has exclusive jurisdiction to find and appraise the relevant facts. The appraisal of those facts thus does not, save where they are distorted, constitute a point of law which is subject, as such, to review by the Court of Justice on appeal (judgment of 26 March 2019, Commission v Italy, C‑621/16 P, EU:C:2019:251, paragraph 97 and the case-law cited).
69According to the settled case-law of the Court, the distortion must be obvious from the documents in the case file without there being any need to carry out a new assessment of the facts and the evidence (judgments of 6 November 2018, Scuola Elementare Maria Montessori v Commission, Commission v Scuola Elementare Maria Montessori and Commission v Ferracci, C‑622/16 P to C‑624/16 P, EU:C:2018:873, paragraph 86 and the case-law cited, and of 14 January 2021, ERCEA v Aristoteleio Panepistimio Thessalonikis, C‑280/19 P, not published, EU:C:2021:23, paragraph 46).
70Moreover, the General Court’s examination of a contractual term cannot be considered to be an interpretation of law and cannot therefore be reviewed in the context of an appeal without encroaching upon the jurisdiction of the General Court to establish the facts (judgments of 29 October 2015, Commission v ANKO, C‑78/14 P, EU:C:2015:732, paragraph 23, and of 14 January 2021, ERCEA v Aristoteleio Panepistimio Thessalonikis, C‑280/19 P, not published, EU:C:2021:23, paragraph 43 and the case-law cited).
71In addition, it is apparent from Article 256 TFEU, the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union and Article 168(1)(d) and Article 169(2) of the Rules of Procedure of the Court of Justice that an appeal must indicate precisely the contested elements of the judgment that the appellant seeks to have set aside and also the legal arguments specifically advanced in support of the appeal, failing which the appeal or the ground of appeal in question will be dismissed or rejected as inadmissible (judgments of 12 January 2017, Timab Industries and CFPR v Commission, C‑411/15 P, EU:C:2017:11, paragraph 140 and the case-law cited, and of 24 January 2018, EUIPO v European Food, C‑634/16 P, EU:C:2018:30, paragraph 63).
72It should be noted that, using manifest errors of assessment by the General Court as a pretext, the appellant is in fact contesting the value or relevance assigned by the General Court to the various factual circumstances characterising its situation and to the provisions of its articles of association. The appellant is thus seeking, by the entirety of its arguments, to have the Court of Justice itself assess the allegedly uncertain nature of its income. However, as is apparent from the case-law cited in paragraphs 68 to 71 above, save where they have been distorted, the General Court has exclusive jurisdiction to appraise the facts and to examine the appellant’s articles of association.
73Accordingly, the third ground of appeal must be set aside as inadmissible.
The second ground of appeal
Arguments of the parties
74By its second ground of appeal, the appellant argues that, in particular in paragraphs 59 and 97 to 153 of the judgment under appeal, the General Court disregarded the SME Recommendation and infringed the fundamental principles of legal certainty and the protection of legitimate expectations, inasmuch as it denied the appellant SME status by relying on the purpose and spirit of that recommendation, although the appellant formally met that recommendation’s criteria.
75In particular, the General Court confirmed or, at the very least, did not dispute, first, that the appellant was an enterprise within the meaning of Article 1 of the Annex to the SME Recommendation, second, that it formally met the independence criterion set by that recommendation and was thus an autonomous enterprise within the meaning of Article 3(1) of the Annex to that recommendation, and, third, that it formally met the staff headcount and financial ceilings criteria set out in Article 2 of that annex. Instead of concluding from this that the appellant was an SME within the meaning of the SME Recommendation, the General Court concluded that it had to be regarded as not meeting either the independence criterion or the staff headcount and financial ceilings criteria, as it did not, in fact, face the ‘handicaps typical’ of SMEs and thus did not constitute an SME in the light of the purpose and spirit of that recommendation.
76The infringement by the General Court of the SME Recommendation and of the fundamental principles of legal certainty and the protection of legitimate expectations is confirmed by the following elements.
77In the first place, as can be seen from recital 1 of the SME Recommendation, the aim of that recommendation is to guarantee legal certainty. This is also confirmed by the User Guide to the SME definition, which emphasises, on page 3 thereof, that the SME definition is a practical tool designed to help SMEs identify themselves so that they can receive the full support of the European Union and its Member States.
78In the second place, the wording of the SME Recommendation is unambiguous and, thus, leaves no room for interpretation. The conclusion drawn from that wording cannot be challenged in the light of the alleged purpose and spirit of that recommendation, as this would result in that wording being deprived of all effectiveness. In addition, it is apparent from the case-law of the Court derived from, inter alia, the judgment of 15 July 2010, Commission v United Kingdom (C‑582/08, EU:C:2010:429, paragraph 51), that the Court cannot, in the face of the clear and precise wording of a provision, interpret that provision with the intention of correcting it.
79In the third place, the General Court incorrectly interpreted recitals 9 and 12 of the SME Recommendation, as well as the case-law of the EU judicature.
80Regarding recitals 9 and 12 of the SME Recommendation, it is settled case-law, as can be seen from, inter alia, the judgment of 10 January 2006, IATA and ELFAA (C‑344/04, EU:C:2006:10, paragraph 76), that the preamble to an EU act has no binding legal force and cannot be relied on as a ground either for derogating from the actual provisions of the act in question or for interpreting those provisions in a manner clearly contrary to their wording.
81In addition, it is clear from reading recitals 9 and 12 of the SME Recommendation that those recitals merely explain the content of that recommendation. Thus, recital 9 of that recommendation merely sets out the reason why Article 3 of the Annex thereto distinguishes between ‘autonomous enterprises’, ‘partner enterprises’ and ‘linked enterprises’. That recital in no way suggests that it is not sufficient for an enterprise to meet the criteria laid down by that recommendation in order to be regarded as an SME. Similarly, recital 12 of the SME Recommendation merely explains the reason why Article 3(3) of the Annex to that recommendation provides that enterprises may also be ‘linked’ by means of a natural person or a group of natural persons acting as one. In addition, page 24 of the User Guide to the SME definition argues for a broad application of that definition.
82The three cases referred to by the General Court in the judgment under appeal, namely those giving rise to the judgments of 29 April 2004, Italy v Commission (C‑91/01, EU:C:2004:244), and of 27 February 2014, HaTeFo (C‑110/13, EU:C:2014:114), as well as the judgment of the General Court of 14 October 2004, Pollmeier Malchow v Commission (T‑137/02, EU:T:2004:304), in fact concerned the interpretation of specific provisions of the SME Recommendation which neither the Validation Panel nor the General Court applied in the present case, rather than a mere derogation from that recommendation. In addition, the facts of the present dispute are completely different from those which gave rise to those three cases, all of which related to a situation in which the enterprise or enterprises concerned were directly or indirectly controlled by an upstream shareholder and were integrated into a larger group.
83The Czech Republic endorses the arguments relied on by the appellant in the second ground of appeal. In particular, that Member State submits that the General Court erred in law in its assessment of the independence criterion, inter alia in paragraphs 100 to 109 and 135 to 146 of the judgment under appeal.
84The Commission contends that the second ground of appeal must be set aside.
Findings of the Court
85Regarding the appellant’s line of argument that the General Court was wrong to find that the decision at issue was well founded even though the appellant formally met the SME Recommendation’s criteria, it should be borne in mind that the Commission is bound, first, by the guidelines and notices that it issues in the area of supervision of State aid where they do not depart from the rules in the FEU Treaty and are accepted by the Member States (judgment of 29 April 2004, Italy v Commission, C‑91/01, EU:C:2004:244, paragraph 45 and the case-law cited).
86In that regard, the Court has observed that the Commission takes a favourable approach to State aid to SMEs on account of the market failures which result in them having to contend with a number of handicaps which limit their socially and economically desirable development (see, to that, effect, judgments of 29 April 2004, Italy v Commission, C‑91/01, EU:C:2004:244, paragraph 46, and of 24 September 2020, NMI Technologietransfer, C‑516/19, EU:C:2020:754, paragraph 31).
87However, the Court has also held that the SME Recommendation must be interpreted by taking into account the reasons for its adoption (judgment of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraph 30).
88In that regard, as is apparent from recitals 9 and 12 of the SME Recommendation and from Article 1(1) thereof, that recommendation aims to adopt an SME definition used in the EU policies applied within the European Union and the EEA which takes into account the real economic position of SMEs in order to remove from that category groups of enterprises whose economic power may exceed that of genuine SMEs, with a view to ensuring that only those enterprises which really need the advantages accruing to SMEs from the different rules or measures in their favour actually benefit from them (see, to that effect, judgments of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraph 31, and of 24 September 2020, NMI Technologietransfer, C‑516/19, EU:C:2020:754, paragraph 34).
89As the General Court observed, in essence, in paragraph 100 of the judgment under appeal, the advantages afforded to SMEs are in most cases exceptions to the general rules, such as for example in the area of State aid, and therefore the definition of an SME must be interpreted strictly (judgments of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraph 32, and of 24 September 2020, NMI Technologietransfer, C‑516/19, EU:C:2020:754, paragraph 65).
90On this view, the purpose of the independence criterion is to ensure, as the General Court correctly noted in paragraphs 102 and 149 of the judgment under appeal, that the measures intended for SMEs genuinely benefit enterprises for which size represents a handicap and not enterprises belonging to a large group which, as a result, have access to funds and assistance not available to competitors of equal size. In those circumstances, in order to include only enterprises that are genuinely independent SMEs, it is necessary to examine the structure of SMEs which form an economic group, the power of which exceeds the power of an SME, and to ensure that the SME definition is not circumvented by purely formal means (see, to that effect, judgments of 29 April 2004, Italy v Commission, C‑91/01, EU:C:2004:244, paragraph 50, and of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraph 33).
91Accordingly, the independence criterion must be interpreted in the light of that purpose, as the General Court recalled in paragraph 103 of the judgment under appeal, so that an enterprise which formally meets the criterion, but in reality belongs to a large group of enterprises, may not nevertheless be regarded as meeting that criterion (see, to that effect, judgment of 29 April 2004, Italy v Commission, C‑91/01, EU:C:2004:244, paragraph 51). Article 3 of the Annex to the SME Recommendation must thus be interpreted in the light of that purpose (see, to that effect, judgment of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraph 34).
92In the light of the case-law recalled in paragraphs 85 to 91 above, it cannot be held that the General Court introduced a new criterion to the SME Recommendation, pursuant to which it must be ascertained whether the entity concerned has to contend with the handicaps usually faced by SMEs and that, by so doing, the General Court infringed that recommendation and the principle of legal certainty or the principle of the protection of legitimate expectations.
93On the contrary, the General Court correctly applied the existing case-law on the subject in holding, in particular in paragraphs 106, 107, 140, 148 and 151 of the judgment under appeal, that the Validation Panel was able, without erring in law, to take into account, in its analysis, the purpose and spirit of the SME Recommendation in order to consider that, even if the appellant formally met the independence criterion laid down by that recommendation, it was still necessary to examine whether it had to contend with the handicaps usually faced by SMEs.
94Moreover, in so far as the third ground of appeal has been set aside and in the light of the case-law set out in paragraphs 87 to 91 above, the General Court was also fully entitled to consider, in paragraphs 106, 107, and 140 to 146 of the judgment under appeal, that the independence criterion, as laid down by the SME Recommendation, had been correctly applied by the Validation Panel in the decision at issue, inasmuch as the Validation Panel had indicated, first, that, even if the appellant formally met that criterion, the fact remained that, from an economic standpoint, it belonged de facto to a large economic group, and, second, that, given the organisational links between the appellant and its partners or members, the appellant had access to funds, credit and assistance and, therefore, did not have to contend with the handicaps usually faced by SMEs, which meant that it could not be classified as an SME within the meaning of that recommendation.
95It also follows from the conclusion drawn in the preceding paragraph that the General Court did not err in law in setting aside, in paragraph 108 of the judgment under appeal, the alleged infringement of the principles of legal certainty and sound administration, which was based on a potential infringement of the SME Recommendation.
96In addition, in the light of the case-law recalled in paragraphs 85 to 91 above, the General Court correctly held, in paragraph 150 of the judgment under appeal, that the appellant cannot derive its SME status from the fact that it formally meets the staff headcount and financial ceilings criteria laid down in Article 2 of the Annex to the SME Recommendation if, in fact, it does not have to contend with the handicaps usually faced by SMEs, and, in paragraph 152 of the judgment under appeal, that those staff headcount and financial ceilings criteria cannot be determined on the basis of data relating solely to the appellant, because it is not an independent enterprise and its members are enterprises that are not SMEs.
97The other arguments relied on by the appellant cannot affect the foregoing considerations.
98In the first place, the argument that no intention to circumvent the SME definition has been established on the part of the appellant in the present case does not enable it to be shown that the General Court erred in law in its assessment of that definition. Whether the condition that, from an economic standpoint, an enterprise belongs de facto to a large economic group and, as a result, has access to funds and assistance not available to competitors of equal size is satisfied depends on the circumstances of the case, and is not necessarily conditional on a finding that that enterprise intended to circumvent the SME definition (see, to that effect, judgment of 27 February 2014, HaTeFo, C‑110/13, EU:C:2014:114, paragraphs 35 and 39).
99In the second place, the argument that it is necessary to distinguish between the present case and the judgments of the Court of Justice and of the General Court referred to in paragraph 82 above, on the ground that those judgments concern the interpretation of specific concepts of the SME Recommendation, rather than a mere derogation from that recommendation, and that the facts of the cases giving rise to those judgments are different from those of the present case, cannot succeed either.
100Regarding, first, the subject of interpretation in the judgments of the Court referred to in paragraph 82 above, which are part of the case-law on which the considerations set out in paragraphs 85 to 91 above are based, it should be pointed out that they also concerned the independence criterion as defined either by the SME Recommendation or by the recommendation which preceded it, Recommendation 96/280, and that the appellant has not relied on any argument capable of showing that the reasoning followed by the Court in those judgments – according to which that criterion cannot be regarded as having been met if, despite the entity concerned formally satisfying the conditions laid down by the recommendation concerned, the economic reality tends to support the exclusion of that entity from the advantages reserved for SMEs alone – is not applicable in the circumstances of the present case.
101Concerning, secondly, the appellant’s argument seeking to distinguish the facts of the present dispute from those of the preceding cases, it should be noted, first, that the appellant has not explained the reasons why the fact – assuming it to be established – that it is not controlled by an upstream shareholder should be regarded as precluding the approach adopted by the Court in the cases giving rise to the case-law set out in paragraphs 85 to 91 above and referred to in the preceding paragraph from also being followed in the present case.
102Second, as can be seen from the foregoing assessments relating to the second and third grounds of appeal, the appellant has not adduced any evidence to show that the General Court erred in law when it held, in paragraphs 106 and 107 of the judgment under appeal, that the Validation Panel had not infringed the SME Recommendation by noting that the appellant belonged de facto to a large economic group and that, because of the organisational links between the appellant and its partners or members, it could not be regarded as having to contend with the handicaps usually faced by SMEs.
103In the light of all the foregoing considerations, the second ground of appeal must be set aside as unfounded and, consequently, the appeal must be dismissed in its entirety.
Costs
104Under Article 184(2) of the Rules of Procedure, where the appeal is unfounded, the Court is to make a decision as to the costs.
105Under Article 138(1) of the Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
106Since the Commission has applied for costs to be awarded against the appellant and the latter has been unsuccessful, the appellant must be ordered to bear its own costs and to pay those incurred by the Commission.
107In accordance with Article 140(1) of the Rules of Procedure, under which the Member States and institutions which have intervened in the proceedings are to bear their own costs, the Czech Republic must be ordered to bear its own costs.
Operative part
On those grounds, the Court (Fifth Chamber) hereby:
1.Dismisses the appeal;
2.Orders European Road Transport Telematics Implementation Coordination Organisation – Intelligent Transport Systems & Services Europe (Ertico – ITS Europe) to bear its own costs and to pay those incurred by the European Commission;
3.Orders the Czech Republic to bear its own costs.
Delivered in open court in Luxembourg on 10 March 2021.
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