Contents
Judgment of the General Court (Second Chamber, Extended Composition)21 December 2022note(State aid — Framework system to grant support for uncovered fixed costs in the context of the COVID‑19 pandemic in Germany — Decision not to raise any objections — Temporary Framework for State aid measures — Individual examination of the aid scheme notified — Measure aimed at remedying a serious disturbance in the economy of a Member State — Proportionality)In Case T‑306/21,Falke KGaA, established in Schmallenberg (Germany), represented by R. Velte and W. Meilicke, lawyers,vEuropean Commission, represented by V. Bottka, G. Braga da Cruz and C. Kovács, acting as Agents,Federal Republic of Germany, represented by P.-L. Krüger and J. Möller, acting as Agents,THE GENERAL COURT (Second Chamber, Extended Composition),composed, at the time of the deliberations, of V. Tomljenović, President, F. Schalin, P. Škvařilová-Pelzl, I. Nõmm (Rapporteur) and D. Kukovec, Judges,Registrar: P. Cullen, Administrator,having regard to the written part of the procedure,further to the hearing on 14 September 2022,gives the following
Judgment
1By its action under Article 263 TFEU, the applicant, Falke KGaA, seeks the annulment of Commission Decision C(2020) 8318 final of 20 November 2020 on State aid SA.59289 (2020/N) – Germany COVID‑19 – Support for uncovered fixed costs (OJ 2022 C 124, p. 1), as amended by Commission Decision C(2021) 1066 final of 12 February 2021 on State aid SA.61744 (2021/N) – Collective notification of a modification adapting aid schemes approved under the Temporary Framework, in particular following the fifth amendment to the Temporary Framework (OJ 2021 C 77, p. 18) (‘the contested decision’).
Background to the dispute
2The applicant is the operating company of the Falke Group, which is active, inter alia, in the manufacture, wholesaling and retailing of clothing. With regard to its retail activities, it markets its products through various sales outlets and an online shop.
3On 19 March 2020, the European Commission adopted a Communication entitled ‘Temporary Framework for State aid measures to support the economy in the current COVID‑19 outbreak’ (OJ 2020 C 91 I, p. 1; ‘the Temporary Framework’), which was amended for the first time on 3 April 2020 (OJ 2020 C 112 I, p. 1), for the second time on 8 May 2020 (OJ 2020 C 164, p. 3), for the third time on 29 June 2020 (OJ 2020 C 218, p. 3) and for the fourth time on 13 October 2020 (OJ 2020 C 340 I, p. 1).
4Paragraphs 17 to 19 of point 2 of the Temporary Framework, entitled ‘Applicability of Article 107(3)[(b) TFEU]’, are worded as follows:17. Pursuant to Article 107(3)(b) TFEU the Commission may declare compatible with the internal market aid “to remedy a serious disturbance in the economy of a Member State”. In this context, the Union courts have ruled that the disturbance must affect the whole or an important part of the economy of the Member State concerned, and not merely that of one of its regions or parts of its territory. This, moreover, is in line with the need to make a strict interpretation of any exceptional provision such as Article 107(3)(b) TFEU. … This interpretation has been consistently applied by the Commission in its decision-making. …18. Considering that the COVID‑19 outbreak affects all Member States and that the containment measures taken by Member States impact undertakings, the Commission considers that State aid is justified and can be declared compatible with the internal market on the basis of Article 107(3)(b) TFEU, for a limited period, to remedy the liquidity shortage faced by undertakings and ensure that the disruptions caused by the COVID‑19 outbreak do not undermine their viability, especially of SMEs.19. The Commission sets out in this Communication the compatibility conditions it will apply in principle to the aid granted by Member States under Article 107(3)(b) TFEU. Member States must therefore show that the State aid measures notified to the Commission under this Communication are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned and that all the conditions of this Communication are fully respected.’
5The Communication making the fourth amendment to the Temporary Framework states as follows in paragraph 11:‘… as a result of the COVID‑19 outbreak, many undertakings temporarily face lower demand that does not allow them to cover part of their fixed costs. In many instances, demand is expected to recover over the coming months, while it may not be efficient for those undertakings to downsize if doing so entails significant restructuring costs. Supporting those undertakings by contributing to part of their fixed costs on a temporary basis may be an efficient way of bridging the gap, thereby avoiding the deterioration of their capital, maintaining their business activity and providing them with a strong platform from which to recover.’
6The Communication making the fourth amendment to the Temporary Framework introduced a point 3.12 into that document, entitled ‘Aid in the form of support for uncovered fixed costs’, containing points 86 and 87, with the following wording:86. Member States may envisage contributing to the uncovered fixed costs of those undertakings for which the COVID‑19 outbreak resulted in the suspension or reduction of their business activity.87. If such measures constitute aid, the Commission will consider them compatible with the internal market on the basis of Article 107(3)(b) TFEU provided the following conditions are met:a. The aid is granted no later than 30 June 2021 and covers uncovered fixed costs incurred during the period between 1 March 2020 and 30 June 2021, including such costs incurred in part of that period (“eligible period”);b. The aid is granted on the basis of a scheme to undertakings that suffer a decline in turnover during the eligible period of at least 30% compared to the same period in 2019; …c. Uncovered fixed costs are the fixed costs incurred by undertakings during the eligible period which are not covered by the profit contribution (i.e. revenues minus variable costs) during the same period and which are not covered by other sources, such as insurance, temporary aid measures covered by this Communication or support from other sources. … The aid intensity shall not exceed 70% of the uncovered fixed costs, except for micro and small companies (within the meaning of Annex I of the General Block Exemption Regulation), where the aid intensity shall not exceed 90% of the uncovered fixed costs. For the purpose of this point, the losses of undertakings from their profit and loss statements during the eligible period … are considered to constitute uncovered fixed costs. The aid under this measure may be granted based on forecasted losses, while the final amount of aid shall be determined after realisation of the losses on the basis of audited accounts or, with appropriate justification provided by the Member State to the Commission (for example in connection with the characteristics or size of certain type of undertakings) on the basis of tax accounts. Any payment exceeding the final amount of the aid shall be recovered;d. In any event, the overall aid shall not exceed EUR 3 million per undertaking. The aid may be granted in the form of direct grants, guarantees and loans provided the total nominal value of such measures remains below the overall cap of EUR 3 million per undertaking; all figures used must be gross, that is, before any deduction of tax or other charge;e. The aid under this measure shall not be cumulated with other aid for the same eligible costs;f. Aid may not be granted to undertakings that were already in difficulty (within the meaning of the General Block Exemption Regulation …) on 31 December 2019. In derogation to the above, aid can be granted to micro or small enterprises (within the meaning of Annex I of the General Block Exemption Regulation) that were already in difficulty on 31 December 2019 provided that they are not subject to collective insolvency procedure under national law, and that they have not received rescue aid … or restructuring aid. …’
7On 17 November 2020, the Federal Republic of Germany notified the Commission, in accordance with Article 108(3) TFEU, of an aid scheme to grant support to companies in Germany to cover uncovered fixed costs in the context of the COVID‑19 outbreak on its territory.
8On 20 November 2020 the Commission adopted Decision C(2020) 8318 final.
9In Decision C(2020) 8318 final, the Commission, first, described the essential characteristics of the aid scheme notified, stating, in particular, that individual aid measures may only be granted to undertakings that suffer a decline in turnover of at least 30% (recital (17)). Second, it emphasised that the scheme notified fell under Article 107(1) TFEU, in so far as it conferred a selective advantage on its beneficiaries and was therefore liable to distort competition (recitals (31) to (33)). Third, it held that the aid scheme in question was compatible with the internal market in application of Article 107(3)(b) TFEU based on the criteria laid down in point 87 of its Temporary Framework (recitals (35) to (41)). It therefore did not raise any objections to that aid scheme.
10The aid scheme authorised by Decision C(2020) 8318 final concerned aid amounts capped at EUR 3 million per undertaking (recital 20).
11On 28 January 2021, the Commission made a fifth amendment to its Temporary Framework (OJ 2021 C 34, p. 6), which, in particular, amended letter (d) of point 87 of that framework, increasing the aid ceiling to EUR 10 million per undertaking. It also amended letter (a) of point 87, extending the initial period, set between 1 March 2020 and 30 June 2021, to 31 December 2021.
12On 2 February 2021, the Federal Republic of Germany notified the Commission of an amendment to its aid scheme, increasing the aid ceiling to EUR 10 million and extending it until 31 December 2021.
13By Decision C(2021) 1066 final, the Commission approved various amendments made by Germany to the notified aid schemes, including the amendment authorised by Decision C(2020) 8318 final (‘the contested aid scheme’).
14In Decision C(2021) 1066 final, the Commission, in particular, first, reiterated the analysis contained in its previous decisions, in order to highlight the existence of State aid within the meaning of Article 107(1) TFEU and the compatibility of that aid with the internal market under Article 107(3)(b) TFEU (recitals (15) and (17)), and, second, considered that the extension of the duration of the aid scheme notified and approved under the Temporary Framework and the increase in its ceiling were compatible with Article 107(3)(b) TFEU (recital (18)).
Forms of order sought
15The applicant claims that the Court should:– annul the contested decision;– order the Commission to pay the costs.
16The Commission contends that the Court should:– dismiss the application as inadmissible or, in the alternative, unfounded;– order the applicant to pay the costs.
17During the hearing, the Commission indicated that it waived its claim as to the inadmissibility of the application, and this was noted in the record of the hearing.
18The Federal Republic of Germany claims that the Court should:– dismiss the application;– order the applicant to pay the costs.
Law
19In support of the action, the applicant puts forward two pleas in law alleging infringement of Article 107 and Article 108(2) TFEU respectively.
The first plea in law, alleging infringement of Article 107 TFEU
20The applicant submits, in essence, that the Commission was wrong to consider that the aid scheme at issue could be declared compatible with the internal market on the basis of Article 107(3)(b) TFEU. This plea is divided into two parts.
21By the first part of this plea, the applicant submits that the contested decision infringes the principle of proportionality, in so far as it approves an aid scheme with an eligibility criterion based on the turnover of the undertaking (‘the eligibility criterion at issue’). By the second part of the plea, the applicant claims that the Commission breached its duty to carry out an individual examination of the notified aid scheme and its duty to state reasons.
22The Commission, supported by the Federal Republic of Germany, claims that that plea should be dismissed.
23Under Article 107(3)(b) TFEU, ‘the following may be considered to be compatible with the internal market: … aid … to remedy a serious disturbance in the economy of a Member State’.
24According to the case-law, it is clear from the general scheme of the Treaty that the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the Treaty. Accordingly, State aid, certain conditions of which contravene other provisions of the Treaty, cannot be declared by the Commission to be compatible with the internal market. Similarly, State aid, certain of the conditions of which contravene the general principles of EU law, cannot be declared by the Commission to be compatible with the internal market (see, to that effect, judgments of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraphs 50 and 51, and of 22 September 2020, Austria v Commission, C‑594/18 P, EU:C:2020:742, paragraph 44).
25It must be observed that, in the application of Article 107(3) TFEU, the Commission enjoys wide discretion, the exercise of which involves complex economic and social assessments (see judgment of 29 July 2019, Bayerische Motoren Werke and Freistaat Sachsen v Commission, C‑654/17 P, EU:C:2019:634, paragraph 80 and the case-law cited), such that judicial review is confined to establishing that the rules of procedure and the rules relating to the duty to give reasons have been complied with, and to verifying that the facts relied on are accurate and that there has been no error of law, manifest error in the assessment of the facts or misuse of powers (see judgment of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 78 and the case-law cited).
The first part of the first plea in law, alleging breach of the principle of proportionality
26The applicant considers, in essence, that the eligibility criterion at issue is disproportionate and gives rise to unequal treatment to the detriment of undertakings with several activities, only some of which were affected by the COVID‑19 pandemic. Thus, because that criterion would result in those undertakings being excluded from the aid scheme at issue or obtaining a reduced benefit from that aid scheme, it would oblige them to resort to cross-financing of their affected activities, unlike their competitors active exclusively in the physical retail sector, who would have been able to benefit fully from the scheme.
27The Commission and the Federal Republic of Germany submit that that part of the present plea is unfounded. The Commission also submits, as a preliminary point, that that part of the present plea must be rejected from the outset, on the ground that no plea of illegality within the meaning of Article 277 TFEU has been raised by the applicant against the Temporary Framework, which is the basis on which the contested decision has been applied.
–The plea of inadmissibility raised by the Commission, alleging the absence of a plea of illegality against the Temporary Framework
28The Commission, first, points out that the contested decision correctly applied the eligibility criterion in question, which is laid down in point 87 of the Temporary Framework, second, maintains that the applicant did not raise any plea of illegality in respect of that framework and, third, infers that the validity of that framework must be presumed and cannot be called into question in the context of the challenge to the merits of the contested decision.
29Such an argument cannot be accepted.
30In the first place, while it is true that the application does not contain any explicit reference to a plea of illegality or to Article 277 TFEU, it must be observed that there is no requirement under EU law for a plea of illegality to be raised formally. Case-law gives grounds for considering that a plea of illegality has been raised implicitly where it is relatively clear from the application that the applicant is in fact making such a plea (see, to that effect, judgment of 27 November 2018, Mouvement pour une Europe des nations et des libertés v Parliament, T‑829/16, EU:T:2018:840, paragraph 66 and the case-law cited).
31That is the situation in the present case.
32First, certain passages in the application directly challenge the validity of point 87 of the Temporary Framework. It is thus stressed that the ‘criterion laid down in letter b. of [point] 87 of the Temporary Framework in its fourth amendment version … is not an appropriate criterion for reducing or eliminating distortions of competition’. Similarly, it is asserted that letter c. of point 87 of the Temporary Framework is the cause of an ‘unjustified difference in treatment’.
33Second, in view of the circumstances of the case, the existence of an incidental challenge to the validity of the Temporary Framework by the applicant also necessarily follows from its entire argument under this part of the present plea. Both the aid scheme at issue and the contested decision approving it adopted an eligibility criterion originating in point 87 of the Temporary Framework. Consequently, the Commission could not fail to understand that the applicant’s argument that the decision was unlawful because of the disproportionate nature of that criterion also called into question the validity of that paragraph.
34In the second place, and in any event, in so far as the Commission maintains that the absence of a plea of illegality against the criterion originating in point 87 of the Temporary Framework means that the validity of that criterion could not be called into question by the applicant, it misunderstands the legal scope of the acts, such as the Temporary Framework, that it adopts for the purpose of limiting the exercise of its discretion.
35According to settled case-law, the legal acts of the European Union are presumed to be lawful, and they therefore produce legal effects until such time as they are withdrawn, annulled in an action for annulment or declared invalid following a reference for a preliminary ruling or a plea of illegality or unless they have been the subject of a suspension of implementation or other interim measures imposed by the Courts of the European Union under Articles 278 and 279 TFEU (see, to that effect, judgments of 14 June 2012, CIVAD, C‑533/10, EU:C:2012:347, paragraph 39 and the case-law cited, and of 2 April 2020, Commission v Poland, Hungary and Czech Republic (Temporary mechanism for the relocation of applicants for international protection), C‑715/17, C‑718/17 and C‑719/17, EU:C:2020:257, paragraph 140). Observance of that presumption of legality may prevent an examination of the merits of a decision that constitutes the mere application of a measure of general application where the validity of that measure has not been challenged (see, to that effect, judgments of 21 December 2021, P. Krücken Organic v Commission, C‑586/20 P, not published, EU:C:2021:1046, paragraph 69, and of 2 February 2012, Hellenic Republic v Commission, T‑469/09, not published, EU:T:2012:50, paragraph 57). Only acts of EU institutions, bodies, offices and agencies that are final and have legal effect vis-à-vis third parties and that may be the subject of an action for annulment thus benefit from that presumption. That is not the case for an act where the Commission adopts rules of conduct for the purpose of limiting the exercise of its own discretion.
36Of course, the fact that the Commission imposes a limit on the exercise of its discretion implies that it cannot, as a general rule, depart from the guidelines it has set, at the risk of being found to be in breach of general principles of law, such as equal treatment (see judgment of 29 July 2019, Bayerische Motoren Werke and Freistaat Sachsen v Commission, C‑654/17 P, EU:C:2019:634, paragraph 82 and the case-law cited). However, the adoption of such guidelines does not relieve the Commission of its obligation to examine the individual circumstances of the case, which might lead it to a decision not to apply those guidelines if the specific circumstances of the case so require (see, to that effect, judgment of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 41). It follows that, unlike the legal acts referred to in paragraph 35 above, acts by which the Commission adopts only a rule of conduct do not in themselves produce binding legal effects.
37This absence of intrinsic binding legal effects is particularly important in view of the nature of the powers conferred on the Commission in the area of State aid monitoring. To accept that the Temporary Framework itself produces binding legal effects and has a presumption of legality would thus be tantamount to recognising that it has a legal nature identical to that of a regulation, an act that the Commission does not have powers to adopt under the section of the TFEU dealing with ‘aids granted by States’, apart from the situations enumerated in Article 108(4) TFEU.
38It follows that, notwithstanding the fact that the eligibility criterion applied by the Commission originates in point 87 of the Temporary Framework and in the absence of any plea of illegality raised in relation to that point, the applicant is still entitled to challenge the manner in which the Commission made use, in the contested decision, of its discretion under Article 107(3)(b) TFEU, in declaring the aid scheme at issue compatible and, in that context, declaring that the eligibility criterion it applied was well-founded.
–The scope of the applicant’s arguments
39By the first part of the present plea in law, the applicant asserts that the eligibility criterion appearing in letters (b) and (c) of point 87 of the Temporary Framework, applied in the contested aid scheme and endorsed by the Commission in the contested decision, is disproportionate. In that regard, it invokes several complaints and also refers to a breach of the principle of equal treatment.
40More specifically, the applicant contests the use, in letters (b) and (c) of point 87 of the Temporary Framework, of the loss of turnover assessed for the undertaking, rather than only losses incurred in the business areas affected by the COVID‑19 pandemic, as the eligibility criterion for aid for uncovered fixed costs.
41In that regard, it must be observed that the consideration of the loss of turnover for the undertaking follows from letter (b) of point 87 of the Temporary Framework, which specifies that aid is granted on the basis of a scheme supporting ‘undertakings that suffer a decline in turnover during the eligible period of at least 30% [between 1 March 2020 and 30 June 2021]’. It also follows from letter (c) of point 87 of that framework that the definition of ‘uncovered fixed costs’ excludes costs covered by the profit contribution or by other sources.
42First it must be borne in mind that the principle of proportionality, which is laid down in Article 5(4) TEU, requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question (judgment of 17 May 1984, Denkavit Nederland, 15/83, EU:C:1984:183, paragraph 25). Where there is a choice between several appropriate measures, recourse must be had to the least onerous measure and the disadvantages caused must not be disproportionate to the aims pursued (judgment of 30 April 2019, Italy v Council (Fishing quota for Mediterranean swordfish), C‑611/17, EU:C:2019:332, paragraph 55).
43Compliance of a measure with the principle of proportionality thus includes three components. The first component relates to its appropriateness, namely whether it is able to achieve the legitimate objective pursued. The second component concerns its necessity and implies that the legitimate objective in question cannot be achieved by less restrictive but equally appropriate means (see, to that effect, judgment of 26 September 2013, Dansk Jurist- og Økonomforbund, C‑546/11, EU:C:2013:603, paragraph 69). Lastly, the third component, sometimes referred to as ‘proportionality in the strict sense’, relates to its proportionality, namely the absence of disproportionate disadvantages in relation to the aims pursued (see, to that effect, judgments of 7 March 2013, Poland v Commission, T‑370/11, EU:T:2013:113, paragraph 89, and of 26 September 2014, Romonta v Commission, T‑614/13, EU:T:2014:835, paragraph 74).
44Second, the applicant also appears to be advancing a complaint alleging breach of the principle of equal treatment. It contends that the eligibility criterion in question gave rise to unequal treatment, to the detriment of undertakings with some activities not affected by the COVID‑19 pandemic, by forcing them to resort to cross-financing of their affected activities because they were unable to benefit, or could only benefit to a more limited extent, from the aid scheme at issue, which was endorsed by the Commission.
45According to settled case-law, the principle of equal treatment requires that comparable situations should not be treated differently and that different situations should not be treated in the same way, unless such treatment is objectively justified (judgment of 15 April 2008, Nuova Agricast, C‑390/06, EU:C:2008:224, paragraph 66; see also, to that effect, judgment of 5 June 2018, Montero Mateos, C‑677/16, EU:C:2018:393, paragraph 49).
46The elements which characterise different situations, and hence their comparability, must in particular be determined and assessed in the light of the subject matter and purpose of the EU act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account (judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 26).
47It must be observed that such an argument against a decision applying Article 107(3)(b) TFEU overlaps with the applicant’s complaints alleging a breach of the principle of proportionality in its various components.
48Article 107(3)(b) TFEU permits a derogation from the general principle laid down in Article 107(1) TFEU that State aid is incompatible with the internal market. It follows, on the one hand, that its purpose is to make it possible to declare compatible State aid that, by its very definition, involves the granting of a selective advantage to certain undertakings, which could be classified as discriminatory (see, to that effect, judgment of 21 December 2016, Commission v World Duty Free Group and Others, C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraphs 54 and 55), and, on the other hand, that it is to be interpreted strictly (see judgment of 9 April 2014, Greece v Commission, T‑150/12, not published, EU:T:2014:191, paragraph 146 and the case-law cited).
49Therefore, the fact that the eligibility criterion in question leads to the undertakings being treated differently depending on whether all or only part of their activities were affected by the COVID‑19 pandemic does not, in itself, imply that it is unlawful. On the other hand, the Court must determine whether that difference in treatment is justified under Article 107(3)(b) TFEU, which presupposes that that criterion is appropriate, necessary and proportionate to remedy a serious disturbance in the economy of the Member State concerned.
–The complaint alleging that the eligibility criterion at issue is not appropriate
50The applicant submits, in essence, that the eligibility criterion at issue is not suitable for achieving the objective of Article 107(3)(b) TFEU, in that it distorts competition without mitigating the effects of the COVID‑19 pandemic and is contrary to paragraph 11 of the Communication making the fourth amendment to the Temporary Framework, which refers to the need to avoid the deterioration of the capital of undertakings. On that point, the applicant argues that the effects of the pandemic on the physical retail trade were such that it cannot be ruled out that undertakings that are not covered by the aid scheme at issue because of their other activities might withdraw from the sector. It adds that the use of that eligibility criterion in the contested aid scheme renders it unfit to achieve its objective, since it excludes a whole category of undertakings, even though they are affected by the pandemic.
51Such an argument cannot be accepted.
52First, it is not disputed that the COVID‑19 pandemic caused serious disruption to the German economy. Therefore, it falls within the scope of Article 107(3)(b) TFEU.
53Second, it is stated in point 18 of the Temporary Framework, reproduced in paragraph 4 above, that the purpose of that framework is to make compatible with the internal market aid, and in particular aid in the form of support for uncovered fixed costs, which is intended to remedy the liquidity shortage faced by undertakings as a result of the COVID‑19 outbreak and ensure that the disruptions caused by the COVID‑19 outbreak do not undermine their viability.
54Similarly, as stated in paragraph 11 of the Communication making the fourth amendment to the Temporary Framework, set out in paragraph 5 above, supporting undertakings temporarily unable to cover part of their fixed costs is intended to bridge the gap, thereby avoiding the deterioration of their capital, maintaining their business activity and providing them with a strong platform from which to recover.
55Third, it must be observed such an objective, which involves taking account of the difficulty which an undertaking may have in covering its fixed costs as a result of the COVID-19 pandemic, is consistent with the objective of Article 107(3)(b) TFEU and forms part of the implementation of the broad discretion that the Commission derives from that provision, as recalled in paragraph 25 above.
56Fourth, it must be observed that a criterion allowing undertakings with their turnover reduced by more than 30% as a result of the COVID‑19 pandemic to obtain financial assistance is fully in line with the aim, stated in paragraphs 53 and 54 above, of ensuring the viability and continuity of undertakings during that pandemic.
57That finding is not called into question by the applicant’s allegation that certain undertakings not benefiting from the contested aid scheme, or benefiting to a more limited extent, because they pursue business activities not affected by the COVID‑19 pandemic, such as online trade, could be led to withdraw from the physical retail sector. The same applies to the applicant’s allegation that the use of that eligibility criterion in the contested aid scheme excludes an entire category of undertakings, even though they are affected by the pandemic.
58In that regard, it must be observed that Article 107(3)(b) TFEU does not require that the aid scheme in question be capable, in itself, of remedying the serious disturbance in the economy of the Member State concerned. Once the Commission has established the reality of a serious disturbance in the economy of a Member State, that State could be authorised, if the other conditions laid down in that article are also satisfied, to grant State aid, in the form of aid schemes or individual aid, which help to remedy that serious disturbance. It could therefore involve a number of aid schemes, each contributing to that end. Therefore, there cannot be a requirement that an aid scheme, in order to be validly based on that provision, must in itself remedy a serious disturbance in the economy of a Member State.
59Furthermore, the Commission could, without disregarding the limits of the broad discretion it enjoys under the case-law cited in paragraph 25 above, consider that it was appropriate to ensure the viability of undertakings where a substantial part of their business had been affected by the COVID‑19 pandemic, rather than the viability of any business affected by that pandemic, irrespective of the undertaking’s overall situation.
60That complaint must therefore be dismissed.
–The complaint alleging that the eligibility criterion at issue is not necessary
61The applicant submits that the application of an alternative criterion taking into account the losses incurred in the business areas affected by the COVID‑19 pandemic, without taking into account the situation of the undertaking concerned as a whole, would have been more likely to achieve the objective of Article 107(3)(b) TFEU, since it would not have had the restrictive effect on competition generated by the contested eligibility criterion. It points out that that alternative criterion has been applied by the Commission in other decisions.
62The Commission replies, in particular, that it was not required to make a decision in the abstract on every alternative measure conceivable in place of the contested aid scheme. It adds that the comparison made by the applicant with some of the decisions it adopted as a result of the COVID‑19 pandemic is irrelevant, as those decisions do not have the same legal basis.
63It is true that, in principle, it is not for the Commission to make a decision in the abstract on every alternative measure conceivable since, although the Member State concerned must set out in detail the reasons for adopting the aid scheme at issue, in particular in relation to the eligibility criteria used, it is not required to prove, positively, that no other conceivable measure, which by definition would be hypothetical, could better achieve the intended objective. If that Member State is not subject to such an obligation, an applicant cannot be entitled to ask the General Court to require the Commission to take the place of the national authorities in this task of legislative exploration in order to examine any conceivable alternative measures (see judgment of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraph 94 and the case-law cited).
64However, it must be observed that such case-law is not relevant in the circumstances of that case. It is based on the dual premiss that, first, the eligibility criteria of an aid scheme are determined by the Member State concerned and, second, the Commission is only required to examine whether those criteria are necessary based on the explanations provided by that State. In the present case, it is common ground that, on the one hand, the eligibility criterion contained in the contested aid scheme actually originates in the Commission’s Temporary Framework and, on the other hand, the alternative criterion suggested by the applicant has been applied by the Commission in other decisions for the purpose of declaring compatible certain aid schemes adopted as a result of the COVID‑19 pandemic.
65The fact remains that this complaint cannot be accepted.
66First, as pointed out in paragraphs 25, 55 and 58 above, the Commission has wide discretion in the implementation of Article 107(3)(b) TFEU. Therefore, only if the alternative criterion put forward by the applicant were to clearly demonstrate that there is no need for the eligibility criterion in question could the present complaint be upheld.
67Second, it must be observed that the alternative criterion put forward by the applicant differs from the eligibility criterion applied in terms of the extent of its budgetary impact for the Member State concerned. It would result in public resources being disbursed to any undertaking that has suffered losses due to the pandemic, regardless of its overall financial situation. Conversely, the eligibility criterion applied in the present case by the Commission limits the budgetary impact of such aid by excluding payment of the aid scheme at issue, or limiting the amount of such payments, for undertakings that have other sources of income and have thus seen their overall financial situation affected to a more limited extent by the COVID‑19 pandemic.
68Third, and consequently, the applicant is wrong to argue, in essence, that the alternative criterion it has put forward constitutes an ‘equally appropriate’ measure, within the meaning of the case-law cited in paragraphs 42 and 43 above, capable of demonstrating that the eligibility criterion in question was not necessary.
69This conclusion is not contradicted by the applicant’s argument that the Commission agreed to apply a criterion based on the business areas affected by the COVID‑19 pandemic in two decisions declaring aid schemes compatible on the basis of Article 107(2)(b) TFEU.
70In that regard, it is sufficient to point out that the fact that the Commission was able, on the basis of Article 107(2)(b) TFEU – which concerns automatically compatible aid to make good the damage caused by natural disasters or exceptional occurrences – to authorise aid schemes involving compensation for losses incurred as a result of the closure orders linked to the COVID‑19 pandemic without taking account of the overall financial situation of the beneficiaries, does not imply that it was required to follow an equivalent approach when exercising its wide discretion under Article 107(3)(b) TFEU to declare compatible aid intended to remedy a serious disturbance in the economy of a Member State.
–The complaint alleging that the eligibility criterion at issue is not proportionate
71The applicant argues, in essence, that the eligibility criterion in question is disproportionate in relation to the restrictive effects on competition that it has caused for undertakings for which only certain activities were affected by the COVID‑19 pandemic. It points out that it was required to support those activities rather than make new investments, unlike its competitors fully benefiting from the contested aid scheme. It notes, in essence, that the Commission could not be unaware of the extent of the restrictive effects on competition resulting from the eligibility criterion at issue since the ceiling was raised to EUR 10 million by the Communication introducing a fifth amendment to the Temporary Framework.
72Without it being necessary to rule on whether the Commission was required to balance the beneficial effects of a contested aid scheme against its negative effects on the maintenance of undistorted competition when implementing Article 107(3)(b) TFEU, it is sufficient to note that the eligibility criterion at issue does not, in any event, give rise to restrictive effects on competition that are manifestly disproportionate to the objective pursued by the aid scheme at issue, namely to ensure the viability of undertakings affected by the COVID‑19 pandemic.
73The fact that the applicant had to devote some of its resources from activities not affected by the COVID‑19 pandemic to the financing of activities affected by the pandemic, rather than making new investments, cannot be said to affect its competitive position in such a way that the derogation envisaged in Article 107(3)(b) TFEU could not apply. In that regard, it is important to note that the applicant’s competitors benefiting fully from the contested aid scheme also have to bear some of the losses caused by the pandemic, since the contested decision states, in accordance with letter (c) of point 87 of the Temporary Framework, that the aid intensity may not exceed 70% of the uncovered fixed costs, except in the case of micro and small enterprises, for which the threshold is 90% of such costs.
74Furthermore, the applicant’s argument seems to be based on the assumption that the aid scheme would enable its beneficiaries to invest in the development of their existing activities, or in new activities, thus giving them a competitive advantage over undertakings with business models implying that they do not benefit from that scheme, or only benefit from it to a more limited extent. Such an assumption does not in fact apply, since the scheme in question only makes it possible to ensure the survival of undertakings that have been severely weakened by the COVID‑19 pandemic, and not undertakings with activities that were not substantially affected by the pandemic. It cannot therefore be reasonably argued that the scheme in question will enable them to develop their business activities to the detriment of those of their competitors.
75In view of the above, the present complaint and, consequently, the first part of the first plea in law must be dismissed.
The second part of the first plea in law, alleging failure to carry out an individual examination of the contested aid scheme and failure to state reasons
76The applicant, first, points out that the adoption of the Temporary Framework by the Commission did not exempt the latter from carrying out an individual examination of the aid scheme at issue and, second, criticises the Commission for not having carried out such an examination in the present case. It refers, in that regard, to the fact that the sole basis provided for the contested decision is that framework and that it was adopted within a period of only three days following the notification of the aid scheme. The applicant adds that that decision is vitiated by a failure to state reasons, because the Commission merely referred to the Temporary Framework in the decision.
77The Commission, supported by the Federal Republic of Germany, argues that it carried out an examination of the aid scheme at issue, which showed that there was no reason to depart from the Temporary Framework. Furthermore, it refutes any allegation of failure to state reasons for the contested decision.
78For the reasons already set out in paragraphs 36 and 37 above, the applicant is right to argue that the adoption of the Temporary Framework by the Commission did not exempt it from carrying out an individual examination of the aid scheme in question.
79However, it cannot be held in the present case that the Commission failed to fulfil its obligation to examine the aid scheme at issue individually.
80First, it is clear from paragraphs 9 and 14 above that the Commission explained the characteristics of the aid scheme at issue both in Decision C(2020) 8318 final and in Decision C(2021) 1066 final.
81Second, in its pleadings, the applicant has not demonstrated the existence of exceptional circumstances specific to the contested aid scheme that would have justified the Commission not applying point 87 of the Temporary Framework. It is clear from an examination of the first part of the present plea that the various criticisms put forward concern the validity of the eligibility criterion in question as set out in that point and as applied in the contested decision, but that they are not specific to that aid scheme.
82In that regard, it must be observed that the existence of undertakings with a business model implying that they carry out, at the same time, activities affected by the COVID‑19 pandemic and others protected from it is not a consideration specific to the contested aid scheme that the Commission should have taken into account in the contested decision. The same applies to the fact that the communication introducing a fifth amendment to the Temporary Framework raised the maximum aid ceiling to EUR 10 million per undertaking.
83Third, and consequently, in so far as the applicant has failed to demonstrate any exceptional circumstances that could imply that the Commission deviated from the rules it had laid down in the Temporary Framework, the fact that it was able to adopt a decision within three days of the notification of the aid scheme cannot be regarded as indicative of a failure to carry out an individual examination of the aid scheme at issue.
84Fourth, in the absence of circumstances specific to the aid scheme at issue, the Commission did not breach its obligation to state reasons by referring, in the contested decision, to the reasons laid down in the Temporary Framework in order to explain the basis for its decision to declare the aid scheme at issue compatible with the internal market under Article 107(3)(b) TFEU.
85Furthermore, it is clear from all the above assessments that, on the one hand, the applicant was able to understand the reasoning set out in the contested decision and, on the other hand, the General Court was able to review it on its merits, so that it must be held that the decision was adequately reasoned.
86In the light of the above, the second part of the first plea must be dismissed, as must the first plea in law in its entirety.
The second plea in law, alleging infringement of Article 108(2) TFEU
87The applicant submits that, in so far as the question of the compatibility of the aid scheme at issue with the internal market raised serious difficulties, the Commission was obliged to initiate the formal examination procedure and that the contested decision therefore infringed its procedural rights under Article 108(2) TFEU. The applicant argues, in essence, that the argument on the first plea in law shows that the Commission has failed to consider the implications of an approach based on the assessment of the effects of the COVID‑19 pandemic on undertakings where they are active in several business areas. Following the fifth amendment to the Temporary Framework, the Commission realised the importance of providing aid to large undertakings, but it did not draw any conclusions from this when examining the amendment to the original aid scheme. This indicates an insufficient and incomplete examination and therefore the existence of serious difficulties that could raise doubts as to the compatibility of the contested scheme with the internal market. Finally, the applicant considers that the present plea has independent content compared to the first plea.
88The Commission submits that the present plea, in relation to the first, does not have independent content, and therefore the dismissal of the first plea automatically entails the dismissal of this plea.
89It must be observed that the present plea, relating to the safeguarding of the applicant’s procedural rights by reason of the failure of the Commission to initiate a formal examination procedure despite the alleged existence of serious doubts, is in fact subsidiary in nature, in the event that the General Court did not examine the merits of the assessment of the aid as such. According to settled case-law, the aim of such a plea is to enable interested parties to be held to have standing, in that capacity, to bring an action under Article 263 TFEU, which otherwise would be unavailable to them (see, to that effect, judgments of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 48, and of 27 October 2011, Austria v Scheucher-Fleisch and Others, C‑47/10 P, EU:C:2011:698, paragraph 44). In so far as this plea, which relates to the correctness of the assessment of the aid as such, has been examined, it is deprived of its stated purpose.
90Furthermore, it must be observed that this plea lacks any independent content. In order to preserve its procedural rights in the context of the formal examination procedure, the applicant may rely solely on evidence to show that the assessment of the information and elements that the Commission had or could have had at its disposal during the preliminary examination phase of the notified measure should have raised doubts as to its compatibility with the internal market (see, to that effect, judgments of 22 December 2008, Régie Networks, C‑333/07, EU:C:2008:764, paragraph 81; of 9 July 2009, 3F v Commission, C‑319/07 P, EU:C:2009:435, paragraph 35; and of 24 May 2011, Commission v Kronoply and Kronotex, C‑83/09 P, EU:C:2011:341, paragraph 59), such as the inadequacy or incompleteness of the Commission’s examination in the preliminary examination procedure or the existence of complaints from third parties. It must be observed that this plea repeats in condensed form the arguments raised under the first plea, without identifying specific evidence relating to potential serious difficulties.
91Consequently, in so far as the first plea has been examined on the merits, there is no need to examine the present plea.
92In the light of the foregoing, the action must be dismissed.
Costs
93Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
94Since the applicant has been unsuccessful and the Commission has applied for costs, the applicant must be ordered to pay the costs.
95Under Article 138(1) of the Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. The Federal Republic of Germany must therefore bear its own costs.
Operative part
On those grounds,THE GENERAL COURT (Second Chamber, Extended Composition)hereby:
1.Dismisses the action;
2.Orders Falke KGaA to bear its own costs and to pay those incurred by the European Commission;
3.Orders the Federal Republic of Germany to bear its own costs.
Delivered in open court in Luxembourg on 21 December 2022.
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.