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Cite as: [2008] EUECJ C-214/07_O, [2008] EUECJ C-214/7_O

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OPINION OF ADVOCATE GENERAL

SHARPSTON

delivered on 12 June 2008 (1)

Case C-214/07

Commission of the European Communities

French Republic

(State aids Commission Decision 2004/343/EC Recovery of aid Absolute impossibility Sale of assets by companies liable to repay aid Obligations under Article 10 EC)

In these proceedings under Article 88(2) EC, the Commission contends that France, in failing to recover sums accorded to companies taking over the activities of firms in difficulty, has failed to implement Commission Decision 2004/343/EC (2) ('the decision') within the prescribed time period. The Commission therefore seeks a declaration that France is in breach of its obligations under Articles 5 and 6 of that decision, the fourth paragraph of Article 249 EC and Article 10 EC.

France contests neither the decision which declared the State aids in question illegal, nor that it is in principle obliged to recover them. It nevertheless maintains that it is not in breach of its obligations under Community law.

France's defence is that its authorities have done all that they can to recover the aid concerned, and that to ask them to recover the aid any faster would be to demand the impossible. That is particularly the case where the companies which received the aid have subsequently ceased to trade, or have sold their assets.

Legal framework

Treaty provisions

Article 10 EC provides:

'Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community's tasks.

They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.'

Article 87(1) EC sets out the conditions under which a State aid is in principle incompatible with the common market. Article 87(3) EC indicates a number of circumstances where such aid may nevertheless be considered to be compatible.

Article 88(2) EC provides:

'If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the common market ... it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.

If the State concerned does not comply with this decision within the prescribed time, the Commission or any other interested State may, in derogation from the provisions of Articles 226 and 227, refer the matter to the Court of Justice direct. ...'

The fourth paragraph of Article 249 EC states:

'A decision shall be binding in its entirety upon those to whom it is addressed.'

Council Regulation No 659/1999

The general legislative framework for the recovery of State aids is found in Council Regulation (EC) No 659/1999 (3) ('Regulation No 659/1999'). This regulation sets out the principle that aid which is incompatible with the common market should be recovered from the beneficiaries without delay, in order to restore effective competition. (4)

The decision

Article 44 septies of the French General Tax Code (5) provided for a two-year exemption from corporation tax for companies created to take over the activities of industrial firms in difficulty. Articles 1383 A and 1464 B and C further extended to such companies the benefit of a two-year exemption from business tax and property tax, subject to the agreement of the competent local authorities.

By letter of 12 September 2001, the Commission requested information from France concerning the tax exemption provided for in Article 44 septies of the General Tax Code. The Commission subsequently initiated a formal investigation procedure, by letter dated 19 August 2002, on the grounds that the exemption might amount to aid falling under Article 87(1) EC.

The French authorities responded by letter of 13 December 2002. They argued that the arrangement did not constitute State aid within the meaning of Article 87 EC or that, if it did, it was justified under the Community guidelines on State aid for rescuing and restructuring firms in difficulty. (6)

However, the Commission concluded that the fiscal exemptions in question were unlawful State aids within the meaning of Article 87(1) EC. Accordingly, on 16 December 2003 it adopted the decision.

The operative part of that decision provides:

'Article 1

The State aid scheme provided for in Article 44 septies of the General Tax Code in the form of a scheme of tax exemptions for companies taking over the assets of firms in difficulty that France has implemented in breach of Article 88(3) of the Treaty is incompatible with the common market, without prejudice to Articles 2 and 3.

Article 2

The exemptions granted under the scheme referred to in Article 1 [do] not constitute State aid if they fulfil the conditions laid down by Regulation (EC) No 69/2001 [(7)] or by the de minimis rules applicable at the time of grant.

Article 3

Aid granted under the scheme referred to in Article 1 which fulfils the conditions laid down by the 1979 communication on regional aid systems or by the 1998 guidelines on national regional aid or by Regulation (EC) No 70/2001 [(8)] is compatible with the common market to the amount of the admissible intensities.

Article 4

France shall abolish the aid scheme referred to in Article 1.

Article 5

France shall take all necessary measures to recover from its beneficiaries aid granted under the scheme referred to in Article 1, other than that referred to in Articles 2 and 3, and unlawfully made available to those beneficiaries.

Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of this Decision. ...

Article 6

France shall inform the Commission, within two months of notification of this Decision, of the measures taken and to be taken in order to comply with it.

Article 7

France ... shall draw up an exhaustive list of companies granted exemption under the scheme referred to in Article 1 and of the amounts paid in each case.

France shall draw up a list of companies in receipt of aid under the scheme referred to in Article 1 which does not fulfil the conditions [for exemption referred to in Articles 2 and 3 of the Decision]. The list shall also specify the amount of aid each company has received ...'

France did not challenge the validity of the decision. Rather, Article 44 septies was initially suspended by Administrative Instruction 4 H-2-04 of 4 March 2004. (9) It was subsequently modified by Article 41 of Law 2004-1485 of 30 December 2004. (10) The modified version was accepted by the Commission. (11)

Developments following the decision

Between December 2003 and July 2006, the Commission and France exchanged a series of letters and memoranda concerning the decision. Three meetings between officials to discuss the recovery process also took place. However, the correspondence and the meetings did not lead to the recovery of any of the unlawful aid.

The exchanges between the Commission and the French authorities are set out chronologically in the Annexes to the Commission's application. I find it more helpful to summarise them by reference to the arguments raised by each of the parties.

The number of companies affected

The first issue to be determined was how many companies were affected by the decision. Initially the French authorities estimated that about 2000 companies might be concerned. A month or so later, France sent the Commission preliminary data, indicating that around 4000 companies might have benefited from aid under those fiscal provisions. By the time the Commission commenced proceedings, France had submitted three lists of beneficiaries. (12)

Aids granted before the 1994 fiscal year

At the initial meeting, the French authorities indicated that the obligation under national law to keep financial records was limited to 10 years. There were therefore no records for the period up to the end of fiscal year 1993. The Commission accepted that aids granted before 1994 were impossible to recover. Those aids form no part of the present proceedings.

Beneficiaries which have ceased to trade

At the initial meeting, France indicated that some beneficiaries might have ceased to trade. Ten months later France stated that these beneficiaries were around 140 in number. At the third meeting between the parties, the Commission agreed that the decision could be considered as implemented where a company had ceased to be economically active.

Prioritisation

In respect of beneficiaries who had transferred assets to other companies, the Commission proposed that France should confine its investigations to the largest companies, by reference to whether the assets had been sold under market conditions.

More generally, the Commission proposed that the French authorities should address the largest distortions of competition first when recovering the unlawful aids. France accepted this proposal but indicated that it would separate the beneficiaries into two groups one to be exempted from repayment completely, the other to be examined thoroughly in order to determine the exact amount to repay.

On 16 March 2005 France supplied the Commission with a list of the 55 beneficiaries it had identified as each owing more than EUR 1 million.

The grant of new aids to certain beneficiaries

France proposed granting new aids to certain beneficiaries. The Commission replied that there should be no link between new grants of aid and the obligation to repay monies granted under the takeover aid scheme. On 7 July 2006 France sent the Commission a list showing the beneficiaries which were due to repay sums under EUR 200 000, and proposed to make new grants of aid to them in order to cover their liabilities to repay the unlawful aid. (13)

The definition of SMEs

France asked to be allowed to apply a simplified definition of SMEs. The Commission pointed out that focusing on SMEs ran counter to its order of priority for recovering the aid. It eventually agreed, exceptionally, to simplify the normal conditions defining a SME for the purposes of exemption from the recovery obligation.

Legal basis for recovery

At the second meeting, France explained that it was encountering difficulties in finding an appropriate legal basis in national law for the recovery procedure and that a regulatory act or a legislative modification would be needed in order to require the beneficiaries to repay the aid. It does not appear that any modification of national law was in fact enacted. Instead, the French authorities undertook to recover the unlawful aid on an ad hoc basis.

This ad hoc procedure required the cooperation of the beneficiaries. Moreover, certain procedural steps had to be taken before the unlawful aid could be recovered. France stressed the importance of determining the precise amount of aid to be recovered before sending out orders for the recovery of that aid, and referred to the scale of the administrative work this required. France also stressed the need to avoid post-recovery actions against the State from beneficiaries.

Timetable for recovery

The Commission asked the French authorities to provide a timetable for recovery from the larger enterprises located outside regional aid zones. This was not forthcoming.

Explanations for the delays in recovery

France gave a number of political explanations for the delays in recovering the unlawful aid: the reactions of the companies involved; the potential damage to businesses from recovery of the aid; the risk that jobs might be affected and the possible adverse impact that large-scale recovery of the unlawful aids might have during the run-up to the French referendum on the Treaty establishing a Constitution for Europe.

The amount of aid to be recovered

The Commission asked France to explain how it intended to calculate the amount of aid to be recovered from each of the beneficiaries. France explained that its calculation would be based on the benefit each company actually derived from the aid. The Commission had already indicated that such a basis was conceptually incorrect and therefore rejected France's proposed method of calculating the sums to be recovered.

Recovery of the aid

The Commission asked France to set out its proposed procedure for recovering the unlawful aid. It does not appear that this was done.

In January 2006, the Commission asked France to send out recovery orders to the companies which it had already identified and the extent of whose unlawful aid it had already calculated. Two months later the Commission asked for confirmation that the orders had been sent. When the present proceedings were initiated in April 2007, France had not yet sent out the orders for recovery.

The Commission began to indicate its concern in August 2004 at the continuing lack of any effective recovery of the sums due. In January 2005, the Commission indicated that the recovery process should start by April, and threatened action under Article 88(2) EC. France responded to that letter in the middle of March. A year later (in March 2006) the Commission again threatened action under Article 88(2) EC. France replied in July 2006 emphasising the difficulties it was facing and attaching two lists of companies that had nothing to repay.

Following receipt of that letter, the Commission instigated proceedings before the Court of Justice under Article 88(2) EC.

The procedure before the Court

The Commission seeks a declaration that France is in breach of its obligations under Articles 5 and 6 of the decision, the fourth paragraph of Article 249 EC and Article 10 EC.

The Commission considers that France is in breach of its obligation immediately and effectively to recover the unlawful aid. France has not recovered any of the sums due. Nor has it taken any steps towards actually recovering those sums. France has not demonstrated that it is absolutely impossible for it to recover the unlawful aid. Rather, its conduct has been such as to breach its duty of loyal cooperation under Article 10 EC.

France contends that it has had to take a number of steps in order to recover sums under the decision. Throughout the process, it has highlighted and explained the difficulties which its authorities have encountered. Those difficulties amount to a situation in which it has, thus far, been absolutely impossible to recover the unlawful aid. France maintains that it has been active in the recovery process; that the Commission has seriously underestimated the difficulties France faces; and that it is not in breach of its obligations under Article 10 EC.

The Commission and France have both submitted full written pleadings. No hearing was held.

The obligations of Member States

The nature of the obligation

Member States are in principle obliged to recover unlawful State aid. This general obligation stems from Article 88(2) EC and from Regulation No 659/1999. The individual decision which declares a particular form of State aid to be unlawful imposes a more specific obligation on the Member State to which it is addressed. The decision is binding on its addressee.

Those obligations serve to restore the status quo insofar as possible and to eliminate anti-competitive advantages created by unlawful State aids. (14)

France is the addressee of the decision. Although the decision did not prescribe a specific time period for recovery of the unlawful aid, it required France to effect recovery 'without delay' (Article 5). It is common ground that no recovery took place before the Commission initiated these proceedings. France has therefore not complied with the obligation as to result set out in the decision.

Article 5 of the decision also imposes an obligation regarding the manner in which that result is to be achieved. It requires France to take 'all necessary measures' and states that recovery must be 'effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of [the decision]' (15)

In my view, a detailed analysis of the manner in which a Member State has attempted to effect recovery is irrelevant when the Member State in question has wholly failed to meet its obligation as to result.

The defence of absolute impossibility

The Court has consistently stated that only absolute impossibility excuses a failure to recover unlawful State aid. (16) The Court construes that defence strictly, refusing to accept that 'mere apprehension of internal difficulties' amounts to absolute impossibility. (17)

It is important to stress that the defence of absolute impossibility attaches to the result to be achieved: the recovery of the unlawful aid. If it could be invoked in respect of the manner in which recovery were effected, it would be all too easy for a Member State to choose a process for recovering the unlawful aid that proved impossible and then claim that it was absolved from its obligation to recover the aid.

Certain complementary duties arise if a Member State encounters difficulties in recovering the aid. Thus, the Court has consistently stated that if the Member State merely informs the Commission of the legal, political or practical difficulties involved in implementing the decision, without taking any real steps to recover the aid from the undertakings concerned, and without proposing to the Commission any alternative arrangements for implementing the decision which could have enabled the difficulties to be overcome, the conditions of absolute impossibility will not be satisfied. A Member State may rely on the defence of absolute impossibility only if it has brought these problems to the attention of the Commission and has tried to resolve the difficulties it is facing. (18)

Thus, a Member State may not argue that it has 'done all it can' to recover the sums in question unless the circumstances amount to a situation of objective absolute impossibility. (19) It cannot base the defence upon its own, subjective perception of what is impossible.

The obligation under Article 10 EC

Article 10 EC imposes a general duty of sincere cooperation upon Member States.

Naturally that duty continues to apply where a Member State encounters difficulties in the recovery of unlawful aid. The specific obligation to execute a decision regarding the recovery of State aids and the more general obligation under Article 10 EC are closely entwined; and Article 10 EC shapes the way in which a Member State must act during the recovery process. (20)

The Court has, indeed, been quite explicit as to the requirements that flow from Article 10 EC if or when a Member State encounters difficulties in recovering unlawful State aid. In Commission v Spain the Court stated that '... when, during the implementation of a Commission decision on State aid, a Member State encounters unforeseen and unforeseeable difficulties or becomes aware of consequences unforeseen by the Commission, it must submit those problems to the Commission for its assessment, proposing appropriate amendments to the decision in question. In such a case, under the rule imposing on Member States and Community institutions reciprocal duties of genuine cooperation which underlies in particular Article 10 EC, the Commission and the Member State must work together in good faith with a view to overcoming the difficulties whilst fully observing the provisions of the Treaty and in particular those on aid.' (21)

I shall therefore examine the conduct of the French authorities in two stages. First, has France shown that it was absolutely impossible for it to recover the unlawful aid? Second, has France met its obligations under Article 10 EC in the way in which it has sought to deal with the difficulties that it has encountered?

The alleged absolute impossibility of recovering the unlawful aid

France has made reference to a number of specific circumstances which, it argues, produced a situation of absolute impossibility.

First, France argues that it was absolutely impossible to identify the beneficiaries of aid granted before the end of the 1993 fiscal year, because financial records are only kept for a period of 10 years. The Commission accepted that argument and recovery of that aid forms no part of the Commission's application. (22)

Second, the French authorities identified 204 companies which have ceased to trade since receiving aid under the takeover aid scheme. France argues that it is absolutely impossible to execute the recovery decision in respect of these companies.

Where a company simply vanishes, leaving behind only an empty shell on the register of companies, it becomes in practical terms impossible to recover the unlawful aid. Where a company is wound up, however, the liability relating to the repayment of the unlawful aid can be registered in that company's schedule of liabilities. The Court has stated that in principle that suffices to re-establish the status quo and to eliminate the distortion of competition which arose from the aid. (23)

When a company is liquidated by judicial process and the unlawful aid is taken into account by the court whilst so doing, the obligation to recover the unlawful aid will either be fulfilled (if the company has sufficient assets to repay the aid at that point) or will cease when the company is wound up and the distortion to competition is consequently eliminated.

Where an original beneficiary continues to trade, and its assets are sold to another company, (24) the Court has stated that the Member State is required to ascertain that the buyer has bought those assets under market conditions (25) and with no intention to evade the obligation to repay the unlawful aid.

The Commission has referred in its pleadings to the test set out in Banks, (26) which does not include assessing whether the sale was made in order to evade the obligation to repay the unlawful aid. However, that particular case concerned the sale of shares. The present case is concerned with assets, and the proper test is that set out in Germany v Commission. In its judgment, the Court adopted the approach set out in Banks, (27) modified that approach to the peculiarities of a purchase of assets rather than shares (28) and applied the modified approach to a sale of assets. (29) I see no reason to depart from the approach set out in Germany v Commission.

France states that it may sometimes be impossible to determine whether the liability to repay the unlawful aid lies with the original beneficiary or with the company that bought its assets. In certain circumstances the assets being sold may be so unusual that a comparator cannot be found, so that the hypothetical market price for the asset cannot be established.

I cannot accept that argument.

The Court has been unreceptive to the suggestion that a unique situation may pose insurmountable problems. (30) Moreover, it would (presumably) be fairly unusual for the assets disposed of truly to be unique. If this is a merely hypothetical objection, France may not rely on it. France has not shown that such circumstances exist in respect of any, let alone a majority or all, of the companies in question.

Nor has France shown that its authorities lack the means to investigate such sales, or that such an investigation has been attempted. I add that, if the competent authorities were to place on the companies making the asset acquisition the evidential burden of showing that the sale took place under normal market conditions, the necessary material to evaluate individual transactions might be forthcoming.

France also argues that, where a buyer of assets was unaware of the state aid liability at the time of purchase, it cannot be held liable to repay the unlawful aid even if the sale was below market price. France asserts that an action for recovery of such aid from the buyer would lack a legal foundation in national law.

As the Commission has rightly pointed out, this would encourage buyers to avoid becoming aware of such liabilities. Furthermore, the absence of an existing legal foundation for recovery in national law cannot amount to absolute impossibility.

I regard the specific situations described above as falling within the category of internal difficulties. France has not therefore made out the defence of absolute impossibility in those respects.

France's more general pleas of impossibility are predicated upon the assumption that it is entitled to rely upon the difficulties it encountered, at each stage, in recovering the aid, which have slowed down the process. As I have indicated above, (31) the manner in which a Member State may have set about the recovery process cannot be taken into account when considering absolute impossibility, if it has in fact failed to recover the unlawful aid at all.

In taking steps to implement the decision, France has in fact identified the major beneficiaries due to repay the unlawful aid. It has determined the amount of money each beneficiary owes. And I can see no tangible reason still less an insurmountable obstacle that prevents the French authorities from sending out recovery orders to those beneficiaries.

I therefore conclude that France has not rebutted the case made out by the Commission and has not established the defence of absolute impossibility in respect of aid given to companies from the 1994 fiscal year onwards. France is therefore in breach of its obligations under Articles 5 and 6 of that decision, and (as a necessary consequence) of its obligations under the fourth paragraph of Article 249 EC.

Article 10 EC

The duty of loyal cooperation between the Member State and the Commission during the recovery process stems from the need to ensure the immediate and effective execution of the decision and the recovery of the sums paid out in unlawful aid, which is to be effected without delay.

The decision is dated 16 December 2003. The French authorities have recovered none of the unlawful aid. Nor have the steps taken been effective steps to obtain its recovery.

France's approach towards recovering the sums due has more closely resembled the antithesis of the approach that would have led to rapid recovery, at least in part, of the unlawful aid.

First, the French authorities spent much time and effort on minimising both the number of companies that would be obliged to make repayments and the amounts to be repaid. In contrast, no effort was made to recover aid from beneficiaries that were clearly identifiable, from quite early on, as owing very substantial sums. (32)

Second, France chose to apply an ad hoc recovery procedure, which required the beneficiaries actively to participate and cooperate in the recovery process. Unsurprisingly, its (attempted) use of such a procedure caused a number of problems. The beneficiaries in question were reluctant to identify themselves and to give access to company accounts and to other information in their possession. As and when recovery orders are sent out, it may well be that further difficulties will emerge. (33)

The Commission has suggested that the need for such extensive cooperation could have been avoided if the French authorities had simply required payment of the tax from which the beneficiaries had originally been exempted and left it to the beneficiaries to adduce the necessary evidence to demonstrate that some or all of that amount fell within the categories of compatible State aid identified in Articles 2 and 3 of the decision. I agree.

The procedure followed by the French authorities also apparently required recovery orders to be grouped by 'département' before they could be issued. France has not explained why that should be the case.

France has contended that its authorities were obliged to use an ad hoc procedure in order to surmount two problems.

First, France argues that it lacks a proper legal basis in national law for the recovery of those debts. As I have already indicated, this argument is without merit. If a Member State's domestic legal order lacks the necessary mechanisms to enable it to fulfil its Community law obligations, it is for the Member State to put them in place. This is a logical consequence of the binding nature of decisions under Article 249 EC.

Second, France argues that these debts cannot be recovered using the procedures which are used for the recovery of ordinary fiscal debts, because a three-year limitation period would then apply. Consequently, an ad hoc procedure had to be used and such a procedure requires the cooperation of the beneficiaries.

I do not accept that argument. As a matter of Community law, France is obliged to recover the unlawful aid irrespective of whether it is classified in national law as a fiscal debt. A Member State cannot avoid its obligation to recover unlawful aid by seeking to invoke the legitimate expectations of the beneficiaries. (34)

If the French authorities take the view that national law obliges them to use an ad hoc procedure, they must apply one that leads to the immediate and effective recovery of the unlawful aid. A procedure which is ad hoc in form does not necessarily mean using a procedure which requires the beneficiaries' cooperation. The French authorities were free to choose what recovery procedure to use, subject to their overriding duty to use one that enabled France to comply with its obligations. The procedure selected appears, however, to have been singularly ineffective, and to have led to difficulties which France made no real attempt to resolve. It is difficult to regard such an approach as falling within the spirit of cooperation required by Article 10 EC.

I also note that France intends to make new grants of aid to beneficiaries identified as owing under EUR 200 000, (35) thereby taking advantage of the fact that, during the years that have elapsed between the notification of the decision and the initiation of these proceedings, the deminimis threshold has been raised from EUR 100 000 to EUR 200 000. Such an approach likewise does not strengthen the impression of a Member State acting in the spirit of loyal cooperation.

It is common ground that France is in breach of its obligation to provide information within the deadline set in Article 6 of the decision. Although the Commission did not set a prescribed time period for recovery under Article 5 of the decision, during the protracted exchanges with the French authorities, the Commission did impose a number of deadlines. (36) None were met.

The fact that when the Commission initiated proceedings three years and four months after the decision was published not a cent of the original aid had been recovered is also eloquent.

I therefore conclude that France is likewise in breach of its obligations under Article 10 EC.

Conclusion

I therefore suggest that the Court should hold that, in failing to recover sums accorded to companies taking over the activities of firms in difficulty, France has failed to implement Commission Decision 2004/343/EC and that it is in breach of its obligations under Articles 5 and 6 of that decision, under the fourth paragraph of Article 249 EC and under Article 10 EC.

1 Original language: English.

2 Decision of 16 December 2003 on the aid scheme implemented by France for the takeover of firms in difficulty (OJ 2004 L 108, p. 38).

3 Regulation of 22 March 1999 laying down detailed rules for the application of Article [88] of the EC Treaty (OJ 1999 L 83, p. 1). The provisions relevant to the present case have remained in force and unchanged.

4 See, in particular, recital 13 in the preamble to, and Article 14 of, Regulation No 659/1999.

5 Introduced by Article 14A, Law 88-1149 of 23 December 1988 (loi de finances pour 1989), Journal Officiel de la République Française, 28 December 1988. Article 44 septies was amended five times before being suspended and replaced by a provision which the Commission accepted as being in conformity with the common market (see point 14 below).

6 OJ 2004 C 244, p. 2.

7 Regulation of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid (OJ 2001 L 10, p. 30).

8 Regulation of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises (OJ 2001 L 10, p. 33). This sets out a specific regime for awards of State aid to small and medium-sized enterprises ('SMEs'). In particular, it imposes a number of conditions which such aid must fulfil.

9 Bulletin Officiel des Impots, No 43 of 4 March 2004. The Commission was notified by letter of 26 April 2004.

10 Loi de finances rectificative pour 2004, Journal Officiel, 31 décembre 2004.

11 Decision N553/04 of 1 June 2005 approving the new Article 44 septies, (OJ 2005 C 242, p. 5). The same decision accepts that Articles 1383A and 1464B are likewise compatible with Community law.

12 France submitted a further list of beneficiaries as an annex to its rejoinder. In those four lists, the French authorities identified 721 companies in total. Of these, 143 were liable to repay over EUR 200 000 of unlawful aid. The discrepancy in numbers between the first estimates and the lists provided is (perhaps) explained if the French authorities confined their investigations to the companies whose tax returns were subject to the 'régime réel normal' (involving sums above the de minimis threshold for that regime), and correspondingly disregarded companies whose returns were subject to the 'régime simplifié', and those which were granted exemptions which fell below the de minimis threshold.

13 There is an apparent disparity between the maximum for deminimis aid in Regulation No 69/2001 and that cited by France. The former sets an upper limit of EUR 100 000. Regulation No 1998/2006 (OJ 2006 L 379 p. 5) which has applied since 1 January 2007 increased the maximum to EUR 200 000. While that change cannot affect the classification of the original grants of aid paid, the new maximum will apply to new grants of State aid.

14 Case C-419/06 Commission v Greece [2008] ECR I-0000, paragraphs 53 and 54 and the case-law cited therein.

15 In imposing those obligations, Article 5 of the decision echoes Article 14 of Regulation No 659/1999, which obliges Member States to execute the decision immediately and effectively, recovering without delay sums unlawfully paid as State aids. The Court has consistently emphasised the need for the immediate and effective execution of the decision in question. See Case C-209/00 Commission v Germany [2002] ECR I-11695, paragraphs 33 and 34; Case C-232/05 Commission v France [2006] ECR I-10071 paragraphs 49 and 50 and Commission v Greece, cited above in footnote 14, paragraphs 57 to 61.

16 Commission v Greece, cited above in footnote 14, paragraph 39 and the case-law cited therein.

17 Case C-404/00 Commission v Spain [2003] ECR I-6695, paragraph 55.

18 See most recently Commission v Greece, cited in footnote 14, paragraph 40 and the case-law cited therein.

19 It is settled case-law that Member States cannot invoke the particularities of their own legal systems in order to found an argument of absolute impossibility. See Case 225/86 Commission v Italy [1988] ECR 2271, paragraph 10 and Case C-183/91 Commission v Greece [1993] ECR I-3131, paragraph 17. At point 72 of his Opinion in Commission v France, cited above in footnote 15, Advocate General Ruiz-Jarabo Colomer rejected (in my view, entirely correctly) an argument which was probably implicitly based upon limitations arising from within the legal system of the Member State in question

20 This has been settled case-law since Case 52/84 Commission v Belgium [1986] ECR 89, paragraph 16. It was most recently reiterated in Case C-415/03 Commission v Greece [2005] ECR I-3875, paragraph 42.

21 Case C-499/99 Commission v Spain [2002] ECR I-6031 paragraph 24.

22 France may only rely upon the defence of absolute impossibility in respect of financial records which, at the time the decision took effect, had already been deleted following the expiry of the 10 year retention obligation. Financial records for the 1994 fiscal year and afterwards must, as a corollary, be deemed to have been available to the French authorities at the start of the recovery process.

23 Case C-277/00 Germany v Commission [2004] ECR I-3925, paragraph 85 and the case-law cited therein.

24 Or companies if more than one company has bought assets then the analysis is unaffected, although the level of practical difficulty encountered in tracing the liability may increase.

25 Germany v Commission, cited in footnote 23, paragraph 86.

26 Case C-390/98 [2001] ECR I-6117.

27 Paragraph 80 of the judgment.

28 Paragraph 86 of the judgment.

29 Paragraphs 92 and 93 of the judgment.

30 In Case C-328/99 Italy and SIM 2 Multimedia v Commission [2003] ECR I-4035, the Court evaluated the review of market conditions conducted by the Commission. It referred to a hypothetical 'private investor' to evaluate the actions of the actual investor concerned (paragraphs 37 to 40 of the judgment) and accepted the use of an independent expert to evaluate the price paid (paragraph 72 of the judgment).

31 At point 42.

32 Namely, the 55 companies that owe more than EUR 1 million each, whose identity had been established by March 2005.

33 The Commission expressed doubts regarding the alleged need for cooperation. In particular, the Commission questions whether the cooperation of all companies was necessary.

34 Case C-372/97 Italy v Commission [2004] ECR I-3679, paragraph 112.

35 The Commission's position is that new grants of aid should not be linked to the repayment of old grants of aid that have been declared illegal. Since these matters fall outside the scope of the present proceedings, I shall not comment further.

36 These were, in order, the deadline for receipt of information about the proposed recovery measures (late March 2004); the deadline for receipt of a list of the beneficiaries owing more than EUR 1 million (1 October 2004); the deadline for receipt of a timetable for recovery (1 March 2005); the deadline for starting to recover the aid (1 April 2005); the further deadline for information (mid June 2005); the deadline for issuing the recovery orders (early February 2006) and the deadline for providing a list of beneficiaries owing more than EUR 100 000 (7 June 2006). France itself proposed a deadline for issuing recovery orders (31 May 2006), which it likewise failed to meet.