Ekobulkos EOOD v European Commission (T-702/21)

Contents

Judgment of the General Court (First Chamber)21 December 2022^note(State aid — Production of electricity from renewable sources — Complaint — Action for failure to act — Call to act — Admissibility — Obligation to act — None)In Case T‑702/21,Ekobulkos EOOD, established in Todorichene (Bulgaria), represented by M. Dimitrov, lawyer,vEuropean Commission, represented by C.-M. Carrega and C. Georgieva, acting as Agents,THE GENERAL COURT (First Chamber),composed of D. Spielmann (Rapporteur), President, R. Mastroianni and I. Gâlea, Judges,Registrar: E. Coulon,having regard to the written part of the procedure,having regard to the fact that no request for a hearing was submitted by the parties within three weeks after service of notification of the close of the written part of the procedure, and having decided to rule on the action without an oral part of the procedure, pursuant to Article 106(3) of the Rules of Procedure of the General Court,gives the following

Judgment

1By its action under Article 265 TFEU, the applicant, Ekobulkos EOOD, requests that the General Court declare that the European Commission unlawfully failed to adopt a position on its complaint, submitted on 21 February 2020, concerning an alleged State aid measure granted by the Republic of Bulgaria and favouring certain producers of electricity from renewable sources.

Background to the dispute

2The applicant is an electricity producer operating in the territory of Bulgaria and owns a photovoltaic plant which was put into operation on 19 May 2012.

3By Decision C(2016) 5205 final of 4 August 2016 in Case SA.44840 (2016/NN) (‘the decision in Case SA.44840’), the Commission took the view that the Bulgarian aid scheme for renewable energy production, notified by the Bulgarian authorities and consisting of the Zakon za energiata ot vazobnovyaemi iztochnitsi (ZEVI) (Law on energy from renewable sources), in force since 3 May 2011 (DV No 35 of 3 May 2011), and two regulations of 18 March 2013 on the regulation of electricity prices and of 20 February 2004 on the regulation of electricity prices, was compatible with the internal market in accordance with Article 107(3)(c) TFEU, and decided not to raise any objections.

4On 21 February 2020, the applicant submitted a complaint to the Commission, registered under reference SA.56620, in which it claimed that the Republic of Bulgaria had granted producers of electricity from renewable sources State aid that was unlawful and incompatible with the internal market, in the form of preferential purchase prices for electricity produced from renewable sources. In its complaint, the applicant explained that the aid resulted from an amendment introduced by Paragraph 18 of the Zakon za izmenenie i dopalnenie na Zakona za energetikata (ZID-ZE) (Law amending and supplementing the Law on Energy) of 24 July 2015 (DV No 56 of 24 July 2015; ‘the amending law’), which departed considerably from the measure previously authorised by the Commission. In its view, the amendment introduced by Paragraph 18 of the amending law established, between identical producers which had made investments of the same amount, had put their installations into operation at the same time and had received aid of the same amount, a distinction on the basis of the date on which the application for aid was submitted. Thus, some producers received four times the amount of aid than others, on the ground that they had submitted an application for aid under national or EU aid schemes after 3 May 2011, which was alleged to be contrary in particular to the principle of equal treatment.

5The Commission acknowledged receipt of that complaint on 6 March 2020.

6On 7 October 2020, the Commission sent the applicant a letter stating inter alia that, as was stated in paragraphs 27 and 28 of the decision in Case SA.44840, under the anti-cumulation rules and paragraph 129 of the Guidelines on State aid for environmental protection and energy 2014-2020 (OJ 2014 C 200, p. 1), investment aid previously received had to be deducted from operating aid with the same objective. According to the Commission, since investment aid granted before 3 May 2011, the date of entry into force of the Law on energy from renewable sources, had not been deducted from operating aid, Paragraph 18 of the amending law remedied that difference in treatment in order to eliminate the overcompensation of producers that had received aid before 2011. In doing so, the Bulgarian support scheme for renewable energy sources was, in its view, consistent with the decision in Case SA.44840, which had declared the Bulgarian scheme compatible with the internal market and paragraph 29 of which had stated that, ‘where the investment aid [had] not [been] initially deducted when setting the level of support, the preferential purchase price [had been] reduced by the amendment of ZEVI of 24 July 2015 to ensure that cumulation rules are respected and the risk of overcompensation is eliminated’. The Commission stated that it had thus approved the amending law, including Paragraph 18 thereof, and that, on the basis of the information provided in the complaint, it did not identify any misapplication of the aid authorised by the decision in Case SA.44840, or any new measures that would constitute State aid. It concluded that it was unable correctly to identify the measure alleged to constitute aid and the circumstances relevant to the assessment of that measure. Lastly, it asked the applicant to send it, if necessary, further evidence in support of its complaint within a period of one month, failing which its complaint would be deemed to have been withdrawn.

7By letter of 7 November 2020 addressed to the Commission, the applicant maintained the arguments put forward in its complaint.

8In the first place, the applicant stated that it had received a (de minimis) non-repayable grant from the EU budget on the basis of the rural development programme 2007-2013, adopted pursuant to Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (OJ 2005 L 277, p. 1). It stated that that subsidy had been granted for the purpose of achieving the objectives of the European Union’s rural development policy aimed at creating new jobs in non-agricultural micro-enterprises in rural areas and promoting entrepreneurship in those areas, which was not investment aid and which had a different objective. The applicant submitted that it is not appropriate for funds allocated to the European Union’s rural development policy objective of the ‘creation of employment opportunities and conditions for growth’ under the common agricultural policy (CAP) to be treated as funds intended to achieve the indicative share of renewable energy in gross final energy consumption under the European Union’s environmental policy. It stated that point 190 of the 2008 EU State aid guidelines for environmental protection allowed for the cumulation of investment and operating aid where it was granted in pursuit of different objectives of different EU policies, provided that the total did not exceed the ceilings imposed by the legislation. In addition, it submitted that, even assuming the aid might be investment aid, the Bulgarian authorities had failed to comply with the rules on the cumulation of aid, in particular as they had not deducted the investment aid from the operating aid, but had, without justification, reduced the operating aid four times before deducting the investment aid. Furthermore, the prices imposed by Paragraph 18 of the amending law did not correspond, in the applicant’s submission, to what was stated in paragraphs 16 to 19 of the decision in Case SA.44840.

9In the second place, the applicant argued that Paragraph 18 of the amending law was contrary to the principle of equal treatment since it led to preferential prices favouring certain producers over others which were in a situation that was similar in its essential features, without that being justified on objective grounds. First, that discrimination was alleged to manifest itself between the individual entities coming within the scope of Paragraph 18 of the amending law since the entities owning energy installations which had been constructed and put into operation at different times, at different investment costs and at different rates of return (the price of the voltaic installations having fallen sharply between 2009 and 2014) were alleged to benefit from the same preferential purchase price for electricity. Second, that discrimination was alleged to manifest itself with regard to the owners of energy installations whose applications for aid had been submitted after the entry into force of the Law on energy from renewable sources and with regard to other categories of renewable energy producers which also had received aid before the entry into force of the Law on energy from renewable sources. Paragraph 18 of the amending law was therefore alleged to breach the principle of equal treatment and the principle of non-discrimination guaranteed by Article 20 of the Charter of Fundamental Rights of the European Union.

10By letter of 22 June 2021 addressed to the Commission, the applicant reiterated its arguments seeking to demonstrate that Paragraph 18 of the amending law introduced a new measure which constituted unlawful aid, imposing discriminatory conditions on a group of producers which had applied for aid before 3 May 2011. It submitted that the amending law had not been referred to in the decision in Case SA.44840 and that it was contrary to the Law on energy from renewable sources and the rules on cumulation of aid. It stated that the Republic of Bulgaria had infringed Article 72(a) of Regulation No 1698/2005 and Article 175 TFEU by failing to comply with the objectives of the European Union’s rural development policy. Relying on Article 13(1) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 TFEU (OJ 2015 L 248, p. 9), it asked the Commission to adopt a decision suspending the application of the measure referred to in Paragraph 18 of the amending law pending a final decision on its compatibility with the internal market and stated that its letter constituted a call to act for the purposes of the second paragraph of Article 265 TFEU.

Forms of order sought

11The applicant claims that the Court should:– declare that the Commission failed to take action in that it did not take a decision on the complaint registered under reference SA.56620;– order the Commission to pay the costs, including if it adopts a decision after the action has been brought.

12The Commission contends that the Court should:– dismiss the action as inadmissible and unfounded;– order the parties to bear their own costs.

Law

13The applicant submits that the Commission did not examine its complaint in good time, as provided for in the second subparagraph of Article 12(1) of Regulation 2015/1589, and that it did not take a decision, as provided for in Article 4 and Article 15(1) of that regulation.

14The Commission contends that the action is inadmissible and unfounded.

Admissibility of the action

15The Commission submits that the action is inadmissible. It claims that formal notice is an essential procedural requirement which has the effect inter alia of delimiting the scope of a possible action for failure to act. In the present case, it submits that the content of the call to act of 22 June 2021, based on the infringement of Article 72(a) of Regulation No 1698/2005 and of Article 175 TFEU, is different from the subject matter of the application, which is based on Articles 12, 13 and 15 of Regulation 2015/1589.

16That applicant submits that its action is admissible since, following the additional information and arguments it provided, the Commission did not close the complaint procedure, which meant that the applicant had to reiterate its arguments in the context of the call to act of 22 June 2021. The applicant states that, although that call to act referred only to Article 13(1) of Regulation 2015/1589, it was clear that it sought a decision on the compatibility of the measure and not on its temporary suspension.

17It should be recalled that, under the second paragraph of Article 265 TFEU, an action for failure to act is admissible only if the institution in question has first been called upon to act. It is settled case-law that giving the institution formal notice is an essential procedural requirement the effects of which are, first, to cause the two-month period within which the institution is required to define its position to begin to run and, second, to delimit any action that might be brought should the institution fail to define its position. Whilst there is no particular requirement as to form, the notice must be sufficiently clear and precise to enable the Commission to ascertain in specific terms the content of the decision which it is being asked to adopt and must make clear that its purpose is to compel the Commission to state its position (judgments of 3 June 1999, TF1 v Commission, T‑17/96, EU:T:1999:119, paragraph 41, and of 29 September 2011, Ryanair v Commission, T‑442/07, not published, EU:T:2011:547, paragraph 22). However, the wording of an action for failure to act and of the formal notice must not be identical (judgment of 10 March 2021, ViaSat v Commission, T‑245/17, EU:T:2021:128, paragraph 39).

18In the present case, it must be stated that, as the Commission claims, there is a discrepancy between, on the one hand, the claim made in the call to act of 22 June 2021, which delimits the scope of the present action and, on the other, the action brought before the Court. First, the applicant’s letter of 22 June 2021 calls on the Commission to adopt a decision suspending the application of Paragraph 18 of the amending law pending a final decision on its compatibility with the internal market, in accordance with Article 13(1) of Regulation 2015/1589, which allows the Commission to require the Member State concerned to suspend any unlawful aid until it has taken a decision on the compatibility of that aid with the internal market. Second, in its application, the applicant alleges infringement of provisions on State aid, namely Articles 107 and 108 TFEU and Articles 4, 12 and 15 of Regulation 2015/1589, and thus seeks a declaration that the Commission has failed to act in not adopting a decision on the lawfulness or compatibility of Paragraph 18 of the amending law in the light of State aid law.

19Nevertheless, such a discrepancy between the call to act, which delimits the scope of the dispute, and the present action, as defined by the application, is not such as to render the present action inadmissible, in accordance with the case-law cited above (see paragraph 17 above).

20It follows from the applicant’s complaint of 21 February 2020, to which it refers at the beginning of its call to act, that it alleged in essence that Paragraph 18 of the amending law constituted inter alia aid that was unlawful and incompatible with the internal market. That is also apparent from the letter of 7 November 2020 from which it is clear that the applicant sought not only to suspend the implementation of Paragraph 18 of the amending law, but also to obtain a decision on the compatibility of the measure with the internal market, which is confirmed by the applicant in its reply before the Court.

21Moreover, as is apparent from paragraph 10 above, in the call to act, the applicant admittedly seeks in its claim only the suspension of the measure at issue pending a final decision on its compatibility with the internal market. That said, it reiterates its analysis that Paragraph 18 of the amending law introduces a new measure constituting unlawful aid, which is alleged in particular to be contrary to the rules on the cumulation of aid granted with a view to achieving different objectives of different EU policies, and that the aid is unlawful and imposes discriminatory conditions on a group of producers.

22Furthermore, a suspension of the measure at issue by the Commission, as requested in the call to act, appears at first sight to be necessarily linked to the substantive examination of the lawfulness and compatibility of that measure in the light of State aid law.

23Therefore, despite the fact that the call to act of 22 June 2021 requests that the Commission suspend the application of Paragraph 18 of the amending law on the basis of Article 13 of Regulation 2015/1589, in the light of the information in the file and in particular the administrative procedure which preceded it, that call to act, which refers to the complaint and the expectation of a decision on compatibility with the internal market, was sufficiently clear and precise to enable the Commission to ascertain in specific terms the content of the decision which it was being asked to adopt, namely not only to suspend the measure in question, but also to take a position on its compatibility in the light of State aid law.

24Therefore, the present action must be declared admissible in so far as it seeks a declaration that the Commission unlawfully failed to adopt a decision on whether Paragraph 18 of the amending law constituted an aid measure that was unlawful or incompatible with the internal market.

Merits of the action

25The applicant claims that Paragraph 18 of the amending law introduces a method of purchasing electricity from renewable energy sources which constitutes aid that is unlawful and incompatible with the internal market. It submits that that provision was not taken into account in the decision in Case SA.44840. It states that, following its complaint, it provided additional information by the letter of 7 November 2020 and that, without any reply from the Commission, it sent a call to act on 22 June 2021. In essence, it submits that the Commission failed to examine its complaint concerning possible unlawful aid in good time, in breach of the second subparagraph of Article 12(1) of Regulation 2015/1589, that it did not take a decision, in breach of Article 15(1) and (2) and Article 4 of that regulation, that it did not send it a copy of its decision and that it did not take appropriate measures. In its submission, the Commission was required to take a position on the compatibility of Paragraph 18 of the amending law with the FEU Treaty and the Commission’s analysis in the letter of 7 October 2020 did not constitute a final opinion or a final position on its complaint. It claims that the Commission failed to act.

26The Commission disputes those arguments.

27It should be recalled that it is settled case-law that, in order to rule on the substance of a claim for a declaration that the Commission has failed to act, it is necessary to determine whether, at the time when the Commission was formally called upon to act within the meaning of Article 265 TFEU, it was under a duty to act (judgments of 15 September 1998, Gestevisión Telecinco v Commission, T‑95/96, EU:T:1998:206, paragraph 71; of 19 May 2011, Ryanair v Commission, T‑423/07, EU:T:2011:226, paragraph 25; and of 29 September 2011, Ryanair v Commission, T‑442/07, not published, EU:T:2011:547, paragraph 28).

28In the field of State aid, the situations in which the Commission is required to act in respect of aid that is unlawful or incompatible with the internal market are governed by Regulation 2015/1589.

29It should be recalled that, as regards unlawful aid, the second subparagraph of Article 12(1) of Regulation 2015/1589 provides inter alia that the Commission is to examine without undue delay any complaint submitted by any interested party, in accordance with Article 24(2) of that regulation. That provision, relating to the rights of interested parties, provides inter alia that, if the facts and points of law put forward by the interested party do not provide sufficient grounds to show, on the basis of a prima facie examination, the existence of unlawful State aid or misuse of aid, the Commission is to inform the interested party thereof and call upon it to submit comments within a prescribed period which is not normally to exceed one month. If the interested party fails to make known its views within the prescribed period, the complaint is to be deemed to have been withdrawn.

30The first sentence of Article 15(1) of Regulation 2015/1589 provides that the examination of possible unlawful aid is to result in a decision pursuant to Article 4(2), (3) or (4) of that regulation, according to which the Commission is to examine the notification as soon as it is received and take either (i) a decision finding that the measure does not constitute aid, (ii) a decision not to raise objections if the measure does not raise doubts as to its compatibility with the internal market, or (iii) a decision to initiate the formal investigation procedure if that measure raises doubts as to its compatibility with the internal market.

31It must therefore be ascertained whether, in the present case, the Commission received a complaint or was provided with information concerning aid that was allegedly unlawful or incompatible with the internal market, facts which should have been followed by a decision based on those provisions.

32It must be stated that, in its decision in Case SA.44840, the Commission took account of the amendments made to the Law on energy from renewable sources and in particular the amending law at issue in the present case.

33First, that follows from footnote 2 of the decision in Case SA.44840, which refers to the amending law. Second, that follows from paragraph 29 of that decision, which states that, where the investment aid was not initially deducted when setting the level of support, the preferential purchase price was reduced by the amending law to ensure that cumulation rules are respected and the risk of overcompensation eliminated. That is specifically the subject matter of the amendment introduced by Paragraph 18 of the amending law. Third, as stated in paragraph 40 of the decision in Case SA.44840, during the analysis of the scheme notified by the Republic of Bulgaria, the Commission had received complaints from a Bulgarian photovoltaic association and small producers concerning in particular the amendment introduced by Paragraph 18 of the amending law. Fourth, it is apparent from paragraph 46 of the decision in Case SA.44840 that the levels of aid to installations were reduced in order to correct irregularities found during an audit carried out under the rural development programme 2007-2013. As the Commission submits, that amendment to the legislation, introduced by Paragraph 18 of the amending law, sought to reduce the levels of aid for certain installations in order to remedy the irregularities found by the Bulgarian authorities. That correction concerned the beneficiaries of investment aid under the rural development programme referred to by the applicant, who benefited fully from preferential prices and from funding under national and EU aid schemes. The introduction of the amendment provided for in Paragraph 18 of the amending law thus corrected the existing overcompensation granted to producers that had submitted applications for aid before the entry into force of the Law on energy from renewable sources, namely, before 2011, which the Commission explained to the applicant in its letter of 7 October 2020 in response to its complaint (see paragraph 6 above).

34Therefore, contrary to what is claimed by the applicant, it is apparent from the decision in Case SA.44840 that the Commission had taken into account Paragraph 18 of the amending law in the context of that decision and had therefore also taken a decision on the compatibility of that provision with State aid law.

35There is no provision in Regulation 2015/1589 which creates an obligation for the Commission to adopt a new decision on the compatibility of a measure of State aid with the internal market on which it has already taken a decision. As the Commission states, such an obligation would allow interested parties to challenge its analysis as to the compatibility of State aid with the internal market, including after the expiry of the period for bringing an action for annulment laid down in Article 263 TFEU.

36Moreover, following the applicant’s complaint of 21 February 2020, the Commission replied to it by letter of 7 October 2020. After having recalled the content of its decision in Case SA.44840, it stated that, in that decision, it had examined the provisions of the amending law, including Paragraph 18 thereof. It added that, on the basis of the applicant’s complaint, it was not possible to identify any misapplication of that provision (see paragraph 6 above).

37The applicant has in no way established, before the Court, that that assessment is incorrect or how Paragraph 18 of the amending law introduced another aid measure which was not examined in the decision in Case SA.44840 and on which the Commission should have taken a decision.

38In addition, as the Commission submits, the decision in Case SA.44840 has the sole object and effect of authorising an aid scheme by declaring it compatible with the internal market and the Member State may refuse to grant aid or reduce it without that leading to the establishment of new State aid.

39It follows from all the foregoing that, at the time when the Commission was sent the call to act, it was under no obligation to act within the meaning of the applicable case-law, cited in paragraph 27 above, with the result that it cannot be criticised for failing to act in the present case.

40As regards the applicant’s argument concerning the Commission’s failure to act with regard to the period for examining its complaint, in view of the fact that the Commission was under no obligation to act, such a failure cannot be established.

41It follows that the present action for failure to act must be dismissed.

Costs

42Under 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.

43Since the applicant has been unsuccessful, it must be ordered to bear its own costs.

44In accordance with the form of order sought by the Commission, it must be ordered to bear its own costs.

Operative part

On those grounds,THE GENERAL COURT (First Chamber)hereby:

1.Dismisses the action;

2.Orders Ekobulkos EOOD and the European Commission each to bear their own costs.

Delivered in open court in Luxembourg on 21 December 2022.