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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Italy v Commission (State aid) [2004] EUECJ C-91/01 (29 April 2004) URL: https://www.bailii.org/eu/cases/EUECJ/2004/C9101.html Cite as: [2004] EUECJ C-91/01, [2004] EUECJ C-91/1 |
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JUDGMENT OF THE COURT (Fifth Chamber)
29 April 2004
(1)
(State aid - Recommendation concerning the definition of small and medium-sized enterprises - Guidelines for State aid to small and medium-sized enterprises - Independence criterion - Protection of legitimate expectations - Legal certainty)
In Case C-91/01, Italian Republic, represented by I. M. Braguglia, acting as Agent, and by D. Del Gaizo, avvocato dello Stato, with an address for service in Luxembourg,applicant,
v
Commission of the European Communities, represented by V. Di Bucci and J.M. Flett, acting as Agents, with an address for service in Luxembourg,defendant,
APPLICATION for annulment of Commission Decision 2001/779/EC of 15 November 2000 on the State aid which Italy is planning to grant to Solar Tech Srl (OJ 2001 L 292, p. 45), in so far as it did not allow the application to that aid of the bonus of 15% gross grant equivalent provided for for small and medium-sized enterprises,THE COURT (Fifth Chamber),
having regard to the Report for the Hearing,
after hearing oral argument from the parties at the hearing on 5 June 2003,after hearing the Opinion of the Advocate General at the sitting on 18 September 2003,
gives the following
'... independence is also a basic criterion in that an SME belonging to a large group has access to funds and assistance not available to competitors of equal size; ... there is also a need to rule out legal entities composed of SMEs which form a grouping whose actual economic power is greater than that of an SME; ... in respect of the independence criterion, the Member States, the EIB and the EIF should ensure that the definition is not circumvented by those enterprises which, whilst formally meeting this criterion, are in fact controlled by one large enterprise or jointly by several large enterprises; ... stakes held by public investment corporations or venture capital companies do not normally change the character of a firm from that of an SME, and may therefore be disregarded; the same applies to stakes held by institutional investors, who usually maintain an "arm's-length" relationship with the company in which they have invested; ... a solution must be found to the problem of joint stock enterprises which, although they are SMEs, cannot state with any accuracy the composition of their share ownership due to the way in which their capital is dispersed and the anonymity of their shareholders and cannot therefore know whether they meet the condition of independence'.
'... fairly strict criteria must be laid down for defining SMEs if the measures aimed at them are genuinely to benefit the enterprises for which size represents a handicap'.
'Member States, the European Investment Bank and the European Investment Fund are invited: - to comply with the provisions set out in Article 1 of the Annex for their programmes directed towards "SMEs" ...'.
'1. Small and medium-sized enterprises, hereinafter referred to as "SMEs", are defined as enterprises which: - have fewer than 250 employees, and - have either, - an annual turnover not exceeding ECU 40 million, or - an annual balance-sheet total not exceeding ECU 27 million, - conform to the criterion of independence as defined in paragraph 3. - ... 3. Independent enterprises are those which are not owned as to 25% or more of the capital or the voting rights by one enterprise, or jointly by several enterprises, falling outside the definition of an SME or a small enterprise, whichever may apply. This threshold may be exceeded in the following two cases: - if the enterprise is held by public investment corporations, venture capital companies or institutional investors, provided no control is exercised either individually or jointly, - if the capital is spread in such a way that it is not possible to determine by whom it is held and if the enterprise declares that it can legitimately presume that it is not owned as to 25% or more by one enterprise, or jointly by several enterprises, falling outside the definitions of an SME or a small enterprise, whichever may apply.'
'At its meeting in Cannes in June 1995, the European Council emphasised in its conclusions that SMEs "play a decisive role in job creation and, more generally, act as a factor of social stability and economic drive". But it is generally accepted that SMEs suffer from a number of handicaps that can slow down their development. One of the main such handicaps is the difficulty in obtaining capital and credit, the chief causes of which are imperfect information, the risk-shy nature of financial markets and the limited guarantees that SMEs are in a position to offer; SMEs limited resources also restrict their access to information, notably regarding new technology and potential markets. The introduction of new regulatory arrangements often entails higher costs for SMEs. The imperfections in the market which limit the socially desirable development of SMEs justify the favourable consideration which the Commission has traditionally been prepared to give to State aid to SMEs, provided that such aid does not affect trade to a disproportionate extent relative to the contribution it makes to the achievement of Community objectives allowed by Article 92(3)(c) of the EC Treaty ...'.
'For the purpose of applying the guidelines, an SME is defined in accordance with the [SME] recommendation' ... ... The three tests - workforce, turnover or balance-sheet total, and independence - are cumulative: all three must be satisfied. The independence test, according to which a large enterprise must not hold 25% or more of the SME's capital, is based on practice in a number of Member States where this percentage is the threshold at which supervision becomes possible. In order to ensure that only genuinely independent SMEs are included, there has to be a way of eliminating legal arrangements in which SMEs form an economic group much stronger than an individual SME. In calculating the thresholds referred to above, it is therefore necessary to cumulate the relevant figures for the beneficiary enterprise and for all the enterprises which it directly or indirectly controls through possession of 25% or more of the capital or of the voting rights.'
'In assisted areas, the Commission may approve aid to SMEs which exceeds the level of regional investment aid it has authorised for large enterprises in the area: ... - by 15 percentage points gross in areas covered by Article 92(3)(a) [of the Treaty], provided the total does not exceed 75% net.'
'Under this framework the Commission will decide on a case-by-case basis a maximum allowable aid intensity for projects which are subject to the notification requirement. This might lead to aid intensities below the applicable regional ceiling. ...'
'(34) Point 1.2 of the SME guidelines states that SMEs play a decisive role in job creation but suffer from a number of handicaps that can slow down their development. Those handicaps include the difficulty in obtaining capital and credit, the difficulty in gaining access to information, new technology and potential markets, and the costs of complying with new regulatory requirements. (35) The bonus, or increase in the amount of aid allowable, for SMEs is therefore justified not only by the contribution which they make to objectives in the common interest, but also by the need to compensate for the handicaps they face, given the positive role they play. It is necessary, however, to make sure that the bonus is indeed granted to enterprises suffering from such handicaps. In particular, the SME definition used has to circumscribe the concept of a small or medium-sized enterprise so as to include therein only those enterprises which generate the positive externalities envisaged and suffer from the abovementioned handicaps. It should not therefore extend to the many larger firms which do not necessarily produce the positive external effects or suffer from the handicaps typical of SMEs. Aid granted to such firms is liable to result in further distortion of competition and intra-Community trade. That principle is set out in the 22nd recital to the [SME Recommendation] ... . (36) It is consequently in the light of those principles that the Commission has to determine whether Solar Tech falls within the scope of the definition of SMEs. Solar Tech does not fulfil the necessary conditions to qualify for the bonus for SMEs. This is because, from an economic standpoint, Solar Tech has to be regarded as belonging to the Permasteelisa Group, a large firm, despite the fact that the latter holds only 24% of its shares. Thanks to the economic, financial and organisational links between the two companies, Solar Tech does not have to contend to any great extent with the handicaps from which SMEs usually suffer and which constitute a fundamental justification for the increase in the maximum amount of aid allowable for such enterprises.'
- the founder and reference shareholder of the Permasteelisa Group, who acts as the group's chief executive officer, holds 46% of the shares in Solar Tech and is the sole director of that company, - the chairman of the Permasteelisa Group holds 15% of the shares in Solar Tech, - one of the members of the board of directors of Permasteelisa, who is also chairman of one of the companies in the group, also holds 15% of the shares in Solar Tech.
- first, it has access to partners with the necessary technology, and - second, as regards product distribution, the Italian Republic has stated that Solar Tech will sell part of its production (20 to 30%) to Permasteelisa and will be able to benefit from the latter's contacts with a number of clients in the property sector, which will enable Solar Tech to supply the worldwide market.
'The State aid which Italy is planning to grant to Solar Tech Srl, amounting to EUR 42 788 290, is incompatible with the common market in so far as its intensity exceeds the maximum allowable in the case in point (40% nge [net grant equivalent]). The aid may accordingly not be implemented by Italy to the extent that it exceeds an intensity of 40% nge.'
- annul the contested decision, in so far as it did not allow the bonus of 15% gross grant equivalent provided for for SMEs to be applied to the aid granted; - order the Commission to pay the costs.
- dismiss the action as unfounded; - order the Italian Republic to pay the costs.
Findings of the Court
Findings of the Court
Findings of the Court
On those grounds,
THE COURT (Fifth Chamber)
hereby: 1) Dismisses the action; 2) Orders the Italian Republic to pay the costs.
Timmermans |
Rosas |
von Bahr |
R. Grass |
V. Skouris |
Registrar |
President |
1 - Language of the case: Italian.