Brussels, 02/09/2010 (Agence Europe) - In its ruling issued on Thursday 2 September in case C -290/07 P, the European Court of Justice followed the advocate general's recommendations and quashed the European Court of First Instance's ruling of 29 March 2007 (T-366/00), which itself quashed part of a decision by the European Commission of 12 July 2000 instructing France to recover some of the aid granted in the form of a preferential price for the sale of public land to the company Scott Paper SA for it to build a factory, and reduced clean-up charges for the company. The Commission took the Court of First Instance's ruling to the Court of Justice, accusing it of overshooting its jurisdiction and failing to meet its duty of diligence in not taking account of all the elements provided to it to determine the value of the land in question and thereby the amount of aid granted.
Chronology
The case goes back to August 1987, when the city of Orleans in France and the département of Loiret signed an agreement with the Bouton Brochard Scott SA company (a subsidiary of Scott Paper Company - USA) for the sale to the company of land in the region on which to build a factory. The agreement included aid for the company from the département and from the city of Orleans of the equivalent of €12.2 million in the form of a contribution to some of the building work on the site. In January 1998, the company Kimberley-Clark Corp, which bought up Scott in 1996, announced the closure of the plant in question, which had been bought in June 1998 by the company Procter & Gamble.
Following the publication in 1996 of a report by the French Court of Auditors and the lodging of a complaint, the Commission requested in a letter sent on 17 June 1997 that the French government provide information about the deal and, on 20 May 1998, around ten years after the granting of the aid, opened a formal investigation. In a decision of 12 July 2000 (2002/14/EC), the Commission says that the aid for Scott provided by France was incompatible with the common market. It estimated the aid as being worth €12.3 million in accounting value, which it said should be repaid by the recipient, along with interest payments dating back to the date when it was provided. In a ruling on 6 October 2006 (case C-232/05), the Court of Justice found France guilty of failing to recover the aid within the set deadline.
In parallel, the case was examined in detail by the Court of First Instance, at which two requests for quashing the Commission's decision were lodged, one by Scott (case T-366/00) and one by the département of Loiret (case T-369/00). In its ruling of 29 March 2007 (T-366/00), the Court of First Instance quashed Article 2 of the Commission's decision, which required the French government to recover the aid set out in Article 1 of the same decision on the grounds that the Commission had not carried out the investigation phase with due diligence and had used imprecise information. In the ruling, the Court pointed out that the Commission had committed errors of calculation and methodology when determining the sale price of the land by the city of Orleans and in estimating the value of the clean-up work for the land in question.
On 14 June 2007, the Commission appealed at the Court of Justice against the Court of First Instance's ruling in order to clarify the role of beneficiaries of aid during the formal investigation of state aid and, more generally, the limits of the due diligence obligation on the Commission in this procedure. The Court examined the arguments made by the Commission in today's ruling.
The ruling
In its ruling, the Court of Justice quashes the Court of First Instance's ruling of 29 March 2007 and sends the case back to the Court of First Instance because it has not demonstrated that the Commission committed manifest errors of judgement in determining the value of the land in question and the value of the clean-up work, and it overshot the limits of its power in believing that the Commission violated its duty of due diligence. The Court of Justice explained that 13 years after the sale of the land, the Commission would only be able to make an approximate estimate of the value of the land at the time, and while it decided to use the costs of buying and cleaning up the land in question to make an approximation, rather than using independent expertise, the Court of First Instance did not demonstrate that the elements ignored by the Commission would have led to a different estimate of the value of the aid. Moreover, in its ruling, the Court of First Instance did not identify any manifest error of judgement on the part of the Commission. (F.G./transl.fl)