JUDGMENT OF CASE C-169/84 Concrete example about State Aid decision

2 EU LAW - Art. 288 TFEU Regulations Directives Decisions

3 Regulation an EU law (EC initiative, EP+EU council decision) directly applicable in all its elements in all the Member States without any need of transposition into domestic law.

4 Directive EU law (EC initiative, EP+EU council decision) which lays down the results to be achieved but leaves it to the Member States to choose the means/measures/etc. to be taken to achieve these results (in a given time).

5 Decisions Not general application, single cases Competition / State Aids

6 EC decision on competition Commission's decision of April 1984 adopted under the Art. 107 TFEU concerning the tariff structure applied in The Netherlands for the supply of natural gas to Dutch ammonia producers.

7 REASON? for the annulment of the Commission's decision of 17 April 1984 adopted under Art. 108 TFEU concerning the tariff structure Applied in the Netherlands for the supply of natural gas to NL ammonia producers

8 Ammonia Chemistry Ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to food and fertilisers it is a basis for the synthesis of many pharmaceuticals; present in commercial cleaning products. In 2006, production was estimated around 150 Mio tonnes all around the world (146,5).

9 Subject: Tariff system for natural gas prices in the NL. The aid scheme in question originally consisted of a system whereby the Netherlands Government, through Gasunie, a company owned directly or indirectly as to 50% by the NL State, granted special rebates to Dutch ammonia producers by means of a two-tier tariff structure which had the effect of reducing the cost of natural gas used as a feedstock by those producers. (COMPETIVENESS DISTORTION)

10 Schema NL GOV GASUNIE 50% direct/indirect

11 Facts 1983, the EC decided to initiate the procedure under Art. 107 TFEU following a complaint lodged by various French nitrate fertilizer producers against the application by the Netherlands of a preferential tariff system for Dutch fertilizer producers for the supply of natural gas intended for the manufacture of ammonia.

12 European Commission opinion Firstly the EC delivered a reasoned opinion in which it found that that tariff structure constituted a State aid within the meaning of Article 107 TFEU and did not qualify for any of the derogations. (EC decision fwk)

13 The Netherlands vs.deductions Netherlands Government informed The EC that Gasunie had abolished the contested tariff and introduced to its industrial tariff structure, with retroactive effect to 1 November 1983, a new tariff tariff F known as tariff F for very large industrial users established in the Netherlands, other than those in the energy industry…

14 The new “tariff F” NL Fulfilled the following conditions users: (a) consume at least 600 million m3(cubic)/year; (b) have a load factor of at least 90%; (c) agree to total or partial interruption of supplies at the discretion of Gasunie; (d) accept supplies of gas of varying calorific values.

15 Even less… However, it emerged during the proceedings that the minimum annual consumption required of tariff F users is 500 Mio m3. (instead of 600 Mio m3).

16 EC final decision The Commission considered that Gasunie's new tariff system was compatible with the common market. terminate The EC therefore decided to terminate the procedure initiated against Gasunie under the former Article 93(2) of the EEC Treaty

17 EC informed The Commission informed the applicants that after a detailed examination of the technical aspects of the new tariff it had reached the conclusion that “tariff F” did not discriminate between sectors = no elements of State aid

18 EC 1st reason… EC considered that Gasunie achieved considerable savings on the cost of supply by reason of the high load factor and the supply conditions applicable to very large industrial users… (not only ammonia producers)

19 EC 2nd reason EC considered that the “tariff F” price level did not fully reflect the total value of the supply savings accruing to Gasunie by virtue of such contracts.

20 EC final decision - reasons The European Commission stated that “tariff F” was justified from the economic and commercial points of view when compared with the prices invoiced to other large consumers.

21 Proceeding by the Court - CJUE It was against the EC decision to terminate the procedure that the FR applicants Instituted the proceedings, claiming that it was vitiated by manifest mistakes made by the EC in the assessment of Essential information

22 Reasons The applicants allege that “tariff F” was introduced solely for Dutch ammonia producers, so that it is specific to a single industrial sector and is discriminatory in character. = not economic nor commercial justification

23 Reason 1) special The FR applicants claimed that the qualifying conditions for “tariff F” were chosen deliberately in favour to Dutch producers of ammonia intended for the manufacture of nitrate fertilizers, since only undertakings of that kind are in a position to consume at least 500 million m3 of gas/year and also fulfil the other conditions*. (*90% load factor requirement)

24 The EC contested that argument… contending that a contract for the application of that tariff exists between Gasunie and undertakings which do not produce ammonia. Since the tariff is generally applied there can be no question of any State aid, stated that the former Art. 92 of the Treaty applies only to aid granted by States or through State resources which favours certain undertakings or the production of certain goods.

25 Additionally… EC -The Dutch ammonia producers which benefited from the previous tariff system all continue to benefit from that tariff; -“tariff F” continues to be applied to four of those producers even though their annual consumption of gas is less than 500 Mio. m3; -… reviewing of some contracts “tariff F” with some important customers.

26 CJUE stated that: It is apparent from the foregoing considerations that the applicants‘ submission that “tariff F” is sectoral in nature since it applies only to certain undertakings, namely Dutch ammonia producers, must be upheld.

27 JUDGMENT OF THE COURT 12 July 1990 Société CdF Chimie azote et fertilisants SA Toulouse, France & Société chimique de la Grande Paroisse (SCGP) SA based in Paris vs. European Commission

28 CJUE decision - p.14 1) Declares void the Commission's decision of 17 April 1984 terminating the procedure initiated under Article 107(2) TFEU with regard to the tariff structure for natural gas prices in NL, which was brought to the applicants' notice by a letter from the Commission dated 24 April 1984; 2) Orders the Commission to pay the costs, including two-thirds of those incurred in respect of the experts' report prepared in accordance with the order of 27 February The CJUE decided about the validity or not of the EC decision. (NOT) Fines could not be given by the CJUE, the Commission is the only competent authority for sanctioning

29 Thanks for your attention