Court of Justice of the European Communities (including Court of First Instance Decisions)

(State aid Existing aid or new aid Firm in difficulty Principle of legal certainty Principle of the protection of legitimate expectations Private investor test Compatibility with the common market Conditions)

In Case T-20/03,

Kahla/Thüringen Porzellan GmbH, established in Kahla (Germany), represented by M. Schütte and S. Zühlke, lawyers,

applicant,

supported by

Freistaat Thüringen (Germany), represented initially by A. Weitbrecht and A. van Ysendyck, and subsequently by A. Weitbrecht and M. NúñezMüller, lawyers,

and by

Federal Republic of Germany, represented by W.'D. Plessing and M. Lumma, acting as Agents,

interveners,

Commission of the European Communities, represented by V. Kreuschitz and V. Di Bucci, acting as Agents, assisted by C. Koenig, professor,

defendant,

APPLICATION for annulment of Commission Decision 2003/643/EC of 13 May 2003 on the State aid implemented by Germany for Kahla Porzellan GmbH and Kahla/Thüringen Porzellan GmbH (OJ 2003 L 227, p. 12), in so far as that decision concerns the financial assistance granted to Kahla/Thüringen Porzellan GmbH,

composed of M. Vilaras, President, M.E. Martins Ribeiro, F. Dehousse, D. Šváby and K. Jürimäe, Judges,

Registrar: K. Andová, Administrator,

having regard to the written procedure and further to the hearing on 19 October 2006,

gives the following

Factual background

1. The undertaking Kahla Porzellan GmbH ('Kahla I') produced porcelain dishes and china in the Land of Thuringia, one of the regions eligible for aid under Article 87(3)(a) EC.
2. Kahla I was created in 1990 by transforming a combine in the former German Democratic Republic (GDR), VEB Vereinigte Porzellanwerke Kahla, into two companies, one of which became Kahla I, which in turn was privatised in April 1991 by the Treuhandanstalt ('the THA'). Kahla I declared itself insolvent on 9 August 1993 and liquidation proceedings were opened on 29 September 1993.
3. The undertaking Kahla/Thüringen Porzellan GmbH ('Kahla II' or 'the applicant') was created in November 1993 by G. R. In January 1994, it took over the immovable property, machinery and plant as well as 380 employees of Kahla I which was in liquidation.
4. The sale of the immovable property of Kahla I was approved by the THA, to which that property had been reassigned, and by its legal successor, the Bundesanstalt für vereinigungsbedingte Sonderaufgaben (the BvS).
5. The contract for the sale of the assets of Kahla I provided for a total price of DEM 7.391 million. The cost of DEM 2.05 million for plant was to be financed by a grant of DEM 2.5 million from the Land of Thuringia. Legal rights, trade marks, registered patterns and know-how were transferred for the nominal sum of DEM 1, while the list of customers and the order book were handed over free of charge. The price for stock amounted to DEM 2.136 million and the immovable property was to be sold free of charges for DEM 3.205 million. Following a subsequent reduction in the price for stock, the total price paid amounted to DEM 6.727 million.
6. On 5 March 1994, the State-owned undertaking Thüringen Industriebeteiligungs GmbH & Co. KG ('TIB'), controlled by the Land of Thuringia, acquired a 49% stake in the applicant. On 31 December 1999, TIB sold that stake to G. R. and his son, H. R., for a price that was higher than the price TIB had paid in March 1994.
7. After receiving complaints, and following correspondence and meetings with representatives of the Federal Republic of Germany, on 15 November 2000 the Commission initiated the procedure provided for under Article 88(2) EC in relation to ad hoc aid granted to Kahla I and the applicant. The Commission's decision to initiate the procedure was notified to the Federal Republic of Germany on 9 January 2001 and published in the Official Journal of the European Communities of 30 June 2001 (OJ 2001 C 185, p. 45). The Commission requested the Federal Republic of Germany to submit all documents, information and data necessary to assess the compatibility of the aid. In particular, it requested information that would allow it to determine whether Kahla I and the applicant were independent undertakings or whether the applicant had to be regarded as the successor to an undertaking or as an 'Auffanglösung' ('successor solution'). In addition, it requested information that would allow it to determine whether some of the aid measures complied with the terms of approved aid schemes. Finally, it requested all the existing restructuring plans for Kahla I and the applicant, including a description of the investments made or planned and all other restructuring costs financed by State aid, comments on the balance sheets and the profit and loss accounts (for Kahla I), a description of developments in capacity and information to show whether the investor made a contribution. The Commission invited interested parties to submit comments on the aid at issue.
8. By letter of 26 March 2001, the Federal Republic of Germany replied to the request by submitting information on the aid at issue and informing the Commission of further aid. On 28 May 2001, the Commission requested additional documentation, which it received on 30 June 2001 and 9 August 2001. On 31 July 2001, the Commission received comments from the applicant.
9. By letter of 28 November 2001 (OJ 2002 C 26, p. 19), the Commission notified the Federal Republic of Germany of its decision to extend the formal investigation procedure to include those aid measures which did not comply with the terms of approved aid schemes and those aid measures of which the Commission had not previously been informed. The Commission invited interested parties to submit their comments.
10. On 10 December 2001, the case was discussed with representatives of the Federal Republic of Germany and of the company.
11. On 30 January 2002, the Federal Republic of Germany commented on the decision to extend the formal investigation procedure and produced detailed information. By letter of 28 February 2002, the applicant submitted its comments to the Commission.
12. Having received a new complaint alleging that the applicant had received further aid, the Commission, by letter of 30 April 2002, requested additional information from the Federal Republic of Germany, which it received on 29 May 2002.
13. Following a meeting on 24 July 2002 with representative of the Federal Republic of Germany, the latter submitted further comments on 7 August 2002. On 30 July 2002, the applicant sent its comments and, by letter of 1 October 2002, the Federal Republic of Germany submitted further comments.
14. At the end of the formal investigation procedure, the Commission adopted, on 30 October 2002, Decision C (2002) 4040 final on the State aid implemented by Germany for Kahla I and Kahla II, which was notified to Germany on 4 November 2002 and communicated to the applicant on 12 November 2002.
15. After the present action was brought (see paragraph 39 below), the Commission informed the Federal Republic of Germany by letter of 13 May 2003 that it had amended the decision of 30 October 2002, and in particular Article 1 of that decision, in so far as the order to recover aid referred to measure 22, recitals 34, 37, 99, 101, 103 and 171, concerning measure 16, and recitals 146 and 147, concerning measure 32. Consequently, the Commission adopted a new decision, namely Decision 2003/643/EC of 13 May 2003 on the State aid implemented by Germany for Kahla I and Kahla II ('the contested decision'). The contested decision was communicated to the applicant on 16 May 2003 and published on 11 September 2003 (OJ 2003 L 227, p. 12).

The contested decision

16. In the contested decision, the Commission conducts a separate assessment of the financial assistance granted by the public authorities to Kahla I and to the applicant. The Commission notes, in recital 85 of the contested decision, that in extending the investigation procedure it concluded that Kahla I and the applicant were different legal entities and that the latter was regarded as an 'Auffanggesellschaft' (successor company), as it had been created by G. R. as a 'shell company' to continue the activities and to take over the assets of Kahla I in liquidation.
17. As regards Kahla I, the Commission states in recital 22 of the contested decision that, from the moment it was created until its winding-up, the public authorities granted it financial assistance totalling DEM 115.736 million (measures 1 to 10).
18. As regards the applicant, the Commission identifies 23 items of financial assistance which the applicant was granted between 1994 and 1999, amounting to a total of DEM 39.028 million (measures 11 to 33). Those measures, set out in recitals 34 to 59 of the contested decision, include, in particular, the following:

measure 11: a 49% stake in the applicant, which TIB took on 5 March 1994, for the payment of DEM 1.975 million;

measure 12: a shareholder loan of DEM 6 million granted by TIB in March 1994;

measure 13: a credit guarantee provided by the Land of Thuringia in March 1994 in respect of investment credits, which covered the loans that constitute measures 18 to 22;

measure 14: a 90% guarantee provided by the Land of Thuringia, in 1994 to cover working capital credits of DEM 6.5 million granted by a private bank in September 1995;

measure 15: an investment grant in the amount of DEM 2 million, subsequently increased to DEM 2.5 million, disbursed in May 1994 by the Land of Thuringia;

measure 16: an equity loan by a public bank of DEM 0.2 million ('the EKH loan') granted in June 1994 to G. R. in the context of the creation of the applicant;

measure 21: an investment loan of DEM 3.45 million granted in April 1995;

measure 23: a guarantee mentioned under measure 13 which covered a loan of DEM 1 million granted in February 1996 by a private bank;

measure 26: employment promotion grants linked to environmental protection investments, which amounted to DEM 1.549 million and were granted by the Federal Labour Office (Bundesanstalt für Arbeit) from 1994 to 1996;

measure 27: various grants for fair attendance, advertising, research and development (R&D) and employee integration, granted between 1994 and 1996 and amounting to DEM 0.492 million;

measure 30: a guarantee mentioned under measure 13 which covered a loan of DEM 2.32 million, made by a private bank in May 1999;

measure 32: various grants for fair participation, advertising, employee integration and R&D related personnel costs, granted between 1997 and 1999 and amounting to DEM 0.352 million.

19. First, the Commission takes the view that the financial assistance granted to the applicant constitutes aid within the meaning of Article 87(1) EC and finds, in that context, that the public bodies did not behave like private investors in a market economy.
20. By way of a general comment, the Commission states, in recitals 94 to 97 of the contested decision, that two consultants' reports, namely, the report by Rölfs Bühler Stümpges Hauck & Partner ('RBSH&P'), of November 1993, and the report by Arthur Andersen ('AA'), of January 1994, show that the objective of the Government of the Land of Thuringia and its financial institutions was to save jobs. In addition, the consultants forecast losses for at least two years and did not analyse any potential quid pro quos for the public authorities' participation.
21. As regards, more particularly, the 49% stake taken by TIB in the applicant (measure 11), the Commission states, in recitals 98 and 99 of the contested decision, that, according to the consultants, the potential risks were high. The Commission notes in this respect that no measures were taken to address those risks and that no analysis of future revenue was undertaken. In addition, the terms of TIB's participation were not comparable to the terms granted to G. R. In that context, the Commission states that, contrary to the claims made by the Federal Republic of Germany, G. R. did not invest DEM 2.055 million in the applicant, but only DEM 0.055 million. The remaining DEM 2 million came from State resources in the form of two loans granted to G. R., which the Commission regards as two aid measures in favour of the applicant (see paragraph 24 below), one of which was backed by a State guarantee to the granting bank (measure 16) while the other was secured by a charge on the applicant's immovable property (loan of DEM 1.8 million, which is covered by measure 17). The risk assumed by TIB, which made DEM 1.975 million available to the applicant in the form of a capital stake, was therefore much higher than that assumed by the private investor. In addition, the latter had the right to cancel the agreement if TIB's stake or other measures did not materialise.
22. As regards the other measures in favour of the applicant, the Commission observes, in recital 100 of the contested decision, that in the light of the particular situation of the undertaking and the fact that it operated in a market suffering from structural overcapacity, a market economy investor would have granted financial support only under conditions which reflected those facts.
23. Thus, as regards, in particular, the shareholder loan from TIB (measure 12), the Commission states in recital 102 of the contested decision that the agreed interest rate was 12%, but that the loan had been granted without TIB demanding any security and that it was subject to 0% interest for at least two years, with the amount of interest capped at 50% of annual profits. In addition, the loan did not give TIB any additional voting rights and no risk premium was agreed to compensate for the risks forecast by the consultants.
24. As regards the various loans granted by public banks (including the two loans made to G. R. and measure 21), the Commission notes, in recital 102 of the contested decision, that they were all granted below the reference interest rate and that, moreover, when security was provided, it either came from the public authorities or the same assets were used, repeatedly, to secure different loans. As regards, more particularly, the EKH loan (measure 16), the Commission notes in recital 103 of the contested decision that it was secured by a State guarantee and not by a personal guarantee and that, even if a personal guarantee had been given, it would have ranked lower than every other security and would have covered only an extremely small part of the potentially high risk of non-payment. In recital 130 of the contested decision, the Commission notes that, even though it was granted directly to G. R., the purpose of the loan was to support an undertaking and it must therefore be regarded as aid to the applicant.
25. Second, the Commission examines the applicant's difficulties.
26. To begin with, the Commission states, in recitals 106 and 107 of the contested decision, that the applicant is an 'Auffanglösung' ('successor solution'), namely, a newly created company in eastern Germany which has taken over the assets of a company in liquidation. According to the Commission, 'Auffanglösungen' are not comparable to other newly created companies because such undertakings which take over the assets of a company in liquidation and continue its business, usually without undergoing any acceptable restructuring inherit a number of structural deficiencies and require substantial changes if they are to operate in a market economy. The Commission explains that, taking into account the specific situation in the former eastern Germany, it adopted a flexible, generous approach allowing 'Auffanglösungen' to benefit from restructuring aid and notes that that approach was codified in footnote 10 of Commission Notice 1999/C-288/02 concerning Community Guidelines on State aid for rescuing and restructuring firms in difficulty (OJ 1999 C 288, p. 2, 'the 1999 Guidelines on aid for rescuing and restructuring firms in difficulty').
27. Next, the Commission explains, in recitals 108 to 118 of the contested decision, that the applicant was in difficulty from 1994 to the end of 1996, when, most probably thanks to the aid injected, a slightly positive result was achieved for the first time and the share of own capital began to increase.
28. The Commission notes, in recitals 108 and 109 of the contested decision, that the general criterion set out in paragraph 2.1 of Commission Notice 94/C-368/05 concerning Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ 1994 C 368, p. 12, 'the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty') is fulfilled and recalls that a firm in difficulty is defined as a firm unable to recover through its own resources or by raising the funds it needs from shareholders or borrowing. According to the Commission, the fact that the company found itself in that situation is, first, documented, as regards the time when the applicant was created and when the aid was awarded, by the reports prepared by RBSH&P and AA, which consider the applicant to be a firm in difficulty and describe a restructuring, and, second, confirmed by the fact that the undertaking never obtained any financial assistance from private banks without State support.
29. Having recalled, in recital 110 of the contested decision, that some of the indicators set out in the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty are not applicable to newly created companies, the Commission states, in recitals 111 to 113, that the low net asset value, the excessive size of the workforce, the cash-flow and the substantial debt of the undertaking show that the applicant was in difficulty at the moment the aid was granted. In addition, the Commission explains, in recital 114 of the contested decision, that, even though application of a special depreciation regime (measure 33) might have led to higher losses, without State support the company would have incurred much higher losses and would probably have disappeared from the market.
30. The Commission notes, in recitals 115 and 116 of the contested decision, that its conclusion cannot be altered, ex post, by the fact that, thanks to substantial aid awards, the applicant's difficulties were overcome within a short space of time. Consequently, the Commission challenges the findings of a report of 21 January 2002 provided by the Federal Republic of Germany and recalls that the reports available in 1994 found that State support was absolutely essential to restore the company's viability.
31. Third, the Commission examines whether the aid granted to the applicant is covered by the approved aid schemes which the Federal Republic of Germany referred to.
32. At the end of that assessment, the Commission concludes, in recital 148 of the contested decision, that several of the measures in favour of the applicant, including measure 17 (see paragraph 21 above), constitute existing aid which the Commission does not need to reassess.
33. By contrast, the Commission finds, in recitals 128 and 129 of the contested decision, that the investment grant by the Land of Thuringia (measure 15) is not covered by the aid scheme under which it was allegedly granted, given that, at the time of the grant, the applicant was a firm in difficulty. The Commission explains that, in its decision to extend the formal investigation procedure, it erroneously stated that the approved scheme was intended only for small and medium sized undertakings (SMEs), but that the Federal Republic of Germany correctly pointed out that large companies were also eligible for aid under that scheme under certain circumstances. The Commission notes that, on the other hand, the scheme expressly excluded firms in difficulty from its scope and recalls that it adopted a negative decision on that scheme on grounds of misuse, since it had been used for, among others, firms in difficulty, contrary to the specific provisions approved by the Commission (Commission Decision 2003/225/EC of 19 June 2002 on the programme of the Land of Thuringia for investments by small and medium-sized enterprises and its implementation (OJ 2003 L 91, p. 1)).
34. As regards the EKH loan (measure 16), the Commission explains, in recital 130 of the contested decision, that it is not covered by the equity loan scheme under which it was allegedly granted, since the applicant was not a SME.
35. As regards the grants for the promotion of employment in connection with environmental protection investments (measure 26), the Commission states, in recitals 134 to 139 of the contested decision, that they do not fall within the scope of Paragraph 249h of the Arbeitsförderungsgesetz (Law on the promotion of employment, 'the AFG'), a scheme which the Commission approved as non-aid. The Commission notes that, as the Federal Republic of Germany explained in its letter of 29 July 1994, first, the measures laid down in Paragraph 249h of the AFG concerning environmental rehabilitation and improvement are directed at public law entities and, in particular, regional or local authorities (cities, districts, municipalities etc.) and companies owned by the THA and, second, measures that are implemented for the benefit of a private company cannot receive support. At the moment the grant was made, the applicant was a private undertaking. In addition, the Commission notes that part of the support was granted by the Land of Thuringia, even though only the Federal Labour Office was entitled to award such grants. Moreover, the grants conferred an advantage on the applicant since they were awarded for the removal of old installations. In addition, according to the Commission, the German law involves a clear element of selectivity, which means that the measure cannot be considered to be a general measure.
36. Fourth, the Commission assesses the measures claimed to be 'de minimis'. As regards, in particular, the period from 1997 to 1999 (recitals 152 to 154 of the contested decision), the Commission disputes that measure 30 and part of measure 32 fall within the scope of the rules on 'de minimis' aid. Therefore, they constitute aid within the meaning of Article 87(1) EC.
37. Fifth, as regards the compatibility of the aid with the common market, the Commission recalls, in recitals 157 to 174 of the contested decision, so far as concerns aid granted until the end of 1996, that the applicant was a firm in difficulty until 1996. The Commission finds that, therefore, that aid is not regional aid compatible with the common market. The Commission finds, further, that the conditions laid down by the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, which the Federal Republic of Germany relies upon as recital 80 of the contested decision shows, are not fulfilled in the present case. The Commission explains that, despite repeated requests, the Federal Republic of Germany never submitted the final version of any restructuring plan or indicated which restructuring measures were in fact implemented and that the private contribution to the overall costs of the restructuring cannot be regarded as substantial, with DEM 0.055 million contributed by G. R as the only truly private contribution. As regards ad hoc aid granted after 1997, the Commission finds, in recitals 175 to 184 of the contested decision, that it cannot be considered to be compatible with the common market for the purposes of the Guidelines on national regional aid (OJ 1998 C 74, p. 9).
38. In view of all of the foregoing, in Article 1(2) of the contested decision, the Commission declares the following to be incompatible with the common market: a capital participation by and a shareholder loan from TIB (measures 11 and 12), 90% guarantees given by the Land of Thuringia (measures 13, 14, 23 and 30), a grant from the Land of Thuringia (measure 15), an equity loan from a State-owned bank (measure 16), a loan from a State-owned bank (measure 21), employment promotion grants (measure 26), measures for employee integration, fair attendance and advertising (measure 27) and measures for research and development, employee integration, fair attendance and cost reduction (measure 32). In Article 2(1) of the contested decision, the Commission orders the Federal Republic of Germany to take all necessary measures to recover the aid referred to in Article 1(2) of the decision from the recipient.

Procedure and forms of order sought by the parties

39. By application lodged at the Registry of the Court of First Instance on 22 January 2003, the applicant brought the present action.
40. By a document lodged at the Registry of the Court of First Instance on 30 April 2003, the Federal Republic of Germany sought leave to intervene in support of the form of order sought by the applicant.
41. By a document lodged at the Registry of the Court of First Instance on 5 May 2003, the Land of Thuringia (Freistaat Thüringen) sought leave to intervene in support of the form of order sought by the applicant.
42. By order of 9 July 2003, the President of the Fifth Chamber, Extended Composition, granted those requests.
43. Following the amendments to the Commission decision of 30 October 2002, the applicant, by a document lodged at the Registry of the Court of First Instance on 16 July 2003, submitted a reply taking into account those amendments.
44. The Federal Republic of Germany submitted its statement in intervention on 25 August 2003.
45. The Land of Thuringia submitted its statement in intervention on 10 September 2003.
46. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Fifth Chamber, Extended Composition) decided, first, to adopt measures of organisation of procedure by requesting that the parties provide written answers to questions and produce documents and, secondly, to open the oral procedure. The parties complied with the Court's request within the period allowed.
47. The parties presented oral argument and their answers to the questions put by the Court at the hearing on 19 October 2006.
48. The applicant claims that the Court of First Instance should:

annul Article 1(2) of the contested decision;

annul Article 2 of the contested decision, in so far as it concerns the measures referred to in Article 1(2) of the contested decision;

order the Commission to pay the costs;

order the Commission to pay the costs arising from the amendments to the decision of 30 October 2002, irrespective of the outcome of the proceedings.

49. The Federal Republic of Germany, an intervener, claims that the Court of First Instance should:

annul Articles 1(2) and 2(1) of the contested decision, at least in so far as they concern the grant from the Land of Thuringia;

order the Commission to pay the costs.

50. The Land of Thuringia, an intervener, claims that the Court of First Instance should:

annul Article 1(2) of the contested decision;

annul Article 2 of the contested decision, in so far as it concerns the measures referred to in Article 1(2) of the decision;

order the Commission to pay the costs;

order the Commission to pay the costs arising from the amendments to the decision of 30 October 2002, irrespective of the outcome of the proceedings;

order the Commission to pay the costs of the intervention.

51. The Commission contends that the Court of First Instance should:

dismiss the action as unfounded;

order the applicant to pay the costs.

Law

52. The applicant raises four pleas in support of its action for annulment.
53. The first three pleas allege, respectively, an infringement of Articles 87 EC and 88 EC, of the principle of legal certainty and of the principle of the protection of legitimate expectations, as regards the investment grant by the Land of Thuringia (measure 15) and the employment promotion grants linked to environmental protection investments (measure 26).
54. The fourth plea alleges, in essence, errors of fact and manifest errors of assessment. The applicant divides the fourth plea into six parts, relating, first, to material inaccuracies in the facts; second, to the classification of the undertaking as a firm in difficulty; third, to the assessment of TIB's actions in light of the private investor test; fourth, to the guidelines on State aid for rescuing and restructuring firms in difficulty; fifth, to the recovery of the loan that constitutes measure 22; and, sixth, to the 'de minimis' aid for the period from 1997 to 1999 (measure 32). However, by adopting the contested decision, the Commission has, in particular, withdrawn the order to recover the loan that constitutes measure 22 (see paragraph 15 above). In addition, following adoption of the contested decision, the parties agreed on the calculation of the grants that constitute measure 32. In response to a question from the Court of First Instance, the parties confirmed that there were no longer any points at issue regarding measure 32 ('de minimis' aid between 1997 and 1999), and this was recorded in the minutes of the hearing. Consequently, there is no need to examine the last two parts of the fourth plea.
55. The Court will examine the first three pleas which only affect measures 15 and 26 together, followed by a separate examination of the fourth plea, which affects the other measures referred to in the contested decision.

A The first, second and third pleas, alleging infringement of Articles 87 EC and 88 EC, the principle of legal certainty and the principle of the protection of legitimate expectations

1. The investment grant by the Land of Thuringia (measure 15)

a) Arguments of the parties

Infringement of Articles 87 EC and 88 EC

56. The applicant submits that the investment grant by the Land of Thuringia was made under an authorised general aid scheme and thus constitutes existing aid. It contends that the Commission retroactively introduced additional conditions into the authorised scheme and, alternatively, that it could not be considered to be a firm in difficulty.

Conditions for the application of the scheme

57. The applicant submits that the programme of the Land of Thuringia for investments by SMEs applied without reservations to all undertakings, and, therefore, also to firms in difficulty and 'Auffanglösungen'. Reservations cannot be inferred from the Commission's authorisation letter of 26 November 1993, nor from the information published in abbreviated form in the Official Journal. On the contrary, that publication shows that the programme was aimed precisely at newly created undertakings, such as the applicant, and that one of the objectives was to provide start-up aid.
58. The applicant submits that the information provided by the Federal Republic of Germany in a letter of 26 August 1993 was only intended to explain the notified scheme and could not change the clear wording of the programme itself. If the Commission considered that the notified text covered some situations that it did not wish to authorise, it should have opened the formal investigation procedure and should, in that context, have required amendments to the scheme or inserted provisions requiring individual notification. In any event, the letter of 26 August 1993 does not preclude the programme from being applied to cases such as that of the applicant, which acquired the assets of an undertaking and modernised them.
59. According to the applicant, a restriction of the programme can also not be inferred from it having been authorised as a regional aid scheme. On the contrary, in accordance with the decision-making practice of the Commission, and as shown by the contested decision, firms in difficulty can receive regional aid (Commission Decision 1999/157/EC of 22 April 1998 on State aid for Triptis Porzellan GmbH (in liquidation), Thuringia (OJ 1999 L 52, p. 48) and Commission Decision 2003/383/EC of 2 October 2002 on State aid measure C-44/01 (ex NN 147/98) implemented by Germany for Technische Glaswerke Ilmenau GmbH (OJ 2003 L 140, p. 30)). Likewise, an 'Auffanglösung' falling within the scope of footnote 10 of the 1999 Guidelines on aid for rescuing and restructuring firms in difficulty could have claimed a grant from the Land of Thuringia, since that footnote does not preclude newly created undertakings from receiving regional aid. The applicant notes, in that context, that it did not receive the investment grant for the purposes of the restructuring, but to make eligible investments in accordance with the authorised programme.
60. The applicant also submits that, as is clear from the contested decision, the programme, notwithstanding its name, was likewise not limited to SMEs, given that the Commission had authorised it for larger undertakings.
61. As regards Decision 2003/225 concerning the improper application of the scheme, the applicant submits that the Commission expressly reserved for the contested decision examination of the application of the scheme to the applicant and that one cannot therefore raise Decision 2003/225 against the applicant.
62. Finally, the applicant submits that the Commission's examination has to be limited to checking whether the assessment by the national authorities of the compatibility of aid with the scheme under which it was granted is vitiated by a manifest error.
63. The Federal Republic of Germany submits that, even if the letter from the German Government of 26 August 1993 excluded rescue and restructuring aid, the Commission still has not established that the contested grant did not comply with the conditions of the authorised aid programme. According to the Federal Republic of Germany, it must be checked whether, from the ex ante perspective of May 1994, the contested investment grant can be classified as rescue and restructuring aid which is excluded from the application of the programme. The Federal Republic of Germany submits, in this respect, that, if one is dealing with a newly created undertaking which, because it is not a firm in difficulty, cannot receive restructuring aid, then the award of the investment grant complied with the conditions of the programme, because it did not constitute restructuring aid.
64. The Land of Thuringia fully supports the applicant's position and criticises, in particular, the fact that the Commission creates an artificial distinction between regional aid and restructuring aid.
65. The Commission replies that the Federal Republic of Germany explicitly stated in the letter of 26 August 1993 that firms in difficulty were excluded from the application of the scheme and that the notified scheme itself, as well as the notice published in the Official Journal, showed clearly that rescue and restructuring aid were not included.

Classification of the applicant as a firm in difficulty

66. The applicant contends that it is a newly created undertaking which never was, either in terms of its business plan, or in terms of its actual development, a firm in difficulty.
67. The applicant submits, first, that, according to the principle consistently applied by the Commission, a newly created company cannot be considered to be a firm in difficulty, even if it takes over the assets of an insolvent company. Moreover, footnote 10 of the 1999 Guidelines on aid for rescuing and restructuring firms in difficulty cannot lead to all 'Auffanglösungen' being classified as firms in difficulty. According to the applicant, to consider that all 'Auffanglösungen' in eastern Germany which have acquired assets following a judicial liquidation are firms in difficulty would be manifestly wrong and would lead to discrimination between newly created undertakings in eastern Germany and the rest of the European Union.
68. The applicant submits, second, that it was created by an independent investor, a recognised expert in his field, who had nothing to do with Kahla I's difficulties. The Commission has not provided any evidence to back up its claim that the applicant in fact 'inherited' the difficulties of the insolvent company Kahla I. According to the applicant, there is no material evidence to support a finding that the applicant belonged to the same 'aggregate of things' ('Sachgesamtheit') as Kahla I. Moreover, in accordance with the case-law, one cannot consider two undertakings as being, without distinction, one and the same 'legal entity'. The applicant submits that it did not carry on the activities of the insolvent undertaking, but that it simply acquired certain assets at market price during insolvency proceedings and used them as part of a coherent and sensible business plan, concerning an entirely different market, requiring an entirely different structure and a very different marketing strategy, and targeting a very different set of customers. Moreover, the fact that the applicant continued to invest in machines that it bought second-hand does not prove either that the applicant 'inherited' Kahla I's difficulties.
69. The applicant submits, third, that the reports drawn up by RBSH&P and AA describe the creation of a new undertaking. Those reports do not constitute restructuring plans and therefore cannot substantiate the argument that the applicant was created from the outset as a firm in difficulty. According to the applicant, the business plans show that it was not envisaged that the new undertaking would encounter difficulties. On the contrary, the consultants found ex ante that the business plan was realistic from an economic perspective. Those assessments were correct, and even very modest, given that the undertaking was far more successful than initially anticipated, as confirmed by the expert's report prepared by the firm of auditors Saale/Revision. The applicant requests in its reply that an expert instructed by the Court of First Instance be heard in relation to this question.
70. The applicant submits, fourth, that an examination of the criteria laid down in paragraph 2.1 of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty or point 4 et seq. of the 1999 Guidelines on aid for rescuing and restructuring firms in difficulty shows that it was not a firm in difficulty.
71. By not examining those criteria in detail, the Commission did not act in accordance with its own consistent decision-making practice. According to the applicant, the Commission in fact did recognise that most of the criteria in the guidelines on aid for rescuing and restructuring firms in difficulty, such as lower profitability, increasing losses, declining cash-flow and rising interest charges, were not fulfilled in the present case or state that they were not decisive when it comes to assessing a newly created undertaking.
72. The applicant argues that, contrary to the Commission's claim, the information in the business plan does not fit some of the criteria in the guidelines on aid for rescuing and restructuring firms in difficulty. Rather, as the expert's report prepared by Saale/Revision shows, the net book value, the cash-flow and the interest charges all evolved in the manner envisaged by the business plan.
73. As regards the net book value, the Commission has not provided evidence that it was unusually low for a healthy company. The applicant has already shown that the net book value did not reveal any financial or economic difficulties. The applicant asserts that it has proved that the assets it acquired allowed it to build a profitable undertaking, both on the basis of its business plans (ex ante) and by way of the even more promising figures representing its actual results (ex post). According to the applicant, the method by which the assets were financed provides no indication as to whether the net book value developed negatively or whether, from the outset, it was too low for a viable undertaking. Moreover, the Commission found that the assets had been bought at market price and has not explained how that net book value could be too low even though it corresponded to the market value.
74. In addition, the cash-flow and the interest charges forecast in the business plan have to be regarded as normal. The business plan certainly did not anticipate that the cash-flow would dwindle or that the interest charges would become too burdensome.
75. As regards the cash-flow, the applicant submits that, for a 'start-up', it is always weak at the beginning and might even be negative. Moreover, there is no evidence that, in light of the applicant's operational activities, the cash-flow was too low. Liquidity problems had not been anticipated and did not in fact arise when the business plan was implemented. Moreover, contrary to the Commission's opinion, the company's cash-flow came from its operational activities and not from aid and, in any event, the source of the cash'flow cannot prove that that cash-flow was too weak since, even after all aid had been deducted, the undertaking still had a positive cash-flow.
76. As regards interest charges, the applicant submits that they did not result from loans that had to be taken out because of past economic problems, which is the assumption on which the criteria in the guidelines on aid for rescuing and restructuring firms in difficulty are based. On the contrary, those charges resulted only from investments in productive fixed assets that, in the context of a good corporate strategy, become profitable in a short space of time, as the actual development of its activities showed. The Commission attempts to ignore that fact by referring to the alleged need for an ex ante assessment.
77. The applicant also challenges the Commission's claim that the workforce was too large. The applicant recalls that, when it resumed operations, the company only took on 380 of the 696 employees employed by Kahla I in 1993. The slight reduction in the workforce to 322 employees at the beginning of 1996 was not the result of economic problems, but of a more efficient running of the company following the initial phase of activities and following a first series of investments.
78. As regards the losses which the consultants envisaged for the years 1994 to 1996, the applicant alleges that the Commission did not examine whether those losses were connected with the structure of the undertaking and submits that the losses were linked to the starting up of activities. According to the applicant, the implementation of the business plan was not accompanied by any operational losses; the only losses that were recorded constituted accounting losses resulting from special depreciation under an authorised aid scheme. If the applicant had written down its assets under the general rules on depreciation, it would have recorded a profit starting with the first year of operations. According to the applicant, this is clear from the explanations that it gave during the formal investigation procedure and the report of an accounting expert that it submitted.
79. The applicant submits, fifth, that a firm is also not in difficulty simply because it receives public funds. That vicious circle would end up turning any undertaking receiving investment aid to acquire second-hand assets into a firm in difficulty. If one is dealing with a plan that includes a financing programme making adequate provisions for foreseeable risks, so that, following the start-up phase, the undertaking can survive without aid, such an undertaking cannot be regarded as a firm in difficulty.
80. Moreover, TIB and G. R. made available to the undertaking substantial amounts of their own funds, which cannot be treated as aid. As regards the funds contributed by G. R., the applicant contends that, in order to assess whether an undertaking is a firm in difficulty, the question of how the person who invests in the undertaking obtains finance is not decisive. As regards the funds contributed by TIB, the applicant takes the view that they cannot be regarded as aid and submits that classification of those funds as State aid cannot, in any event, affect the legality of other grants or the compatibility of the investment grant with the scheme under which it was granted.
81. The Land of Thuringia submits, in particular, that the phase during which the applicant allegedly found itself in difficulty was particularly short and explains, moreover, that the applicant's name was added inadvertently to a list of firms in difficulty in the context of a different procedure, a mistake which the Federal Republic of Germany subsequently corrected.
82. The Commission contends that the arguments put forward by the applicant and the Land of Thuringia must, in their entirety, be rejected as unfounded.

Infringement of the principle of legal certainty

83. The applicant submits that the Commission subsequently introduced new conditions into an authorised scheme that were unfavourable for the applicant and that, therefore, the Commission retroactively changed the applicant's legal position to its detriment, in breach of the principle of legal certainty. Given that the aid awarded in the context of an authorised programme does not require authorisation, any restrictions have to appear either in the scheme itself or in the decision authorising it.
84. The Federal Republic of Germany submits that it is contrary to the principle of legal certainty for the Commission to disagree, ex post, with the interpretation, informed by the relevant ex ante perspective, given by the national authority concerned which based its views on the State aid law in force at the moment the aid was granted. In that context, the Federal Republic of Germany submits that it was reasonable, from the ex ante perspective of May 1994, to treat the applicant as a newly created undertaking which did not fall within the scope of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty and which, therefore, did not receive restructuring aid in the form of an investment grant. In addition, in accordance with point 18(i) of the Annex, entitled 'Methods for implementing the principles of coordination of regional aid systems', to the Communication from the Commission of 1979 (OJ 1979 C 31, p. 9), 'investment in fixed assets by way of take-over of an establishment which has closed or which would have closed had such take-over not taken place, may also be deemed to be initial investment'. Finally, given that the applicant acquired the assets at market price, the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty do not preclude the contested investment grant awarded for the acquisition of those assets from being classified as regional aid.
85. The Land of Thuringia supports the applicant's argument and adds that, in accordance with the principle of legal certainty, the Commission must limit itself to finding whether the national authority wrongly applied the approved programme.
86. The Commission contends that the contested decision did not retroactively change the applicant's legal position, given that the scope of the measure had been limited from the outset.

Infringement of the principle of the protection of legitimate expectations

87. The applicant submits that there has been an infringement of the principle of the protection of legitimate expectations in so far as the Commission does not take into account that the authorisation of the programme, as published, did not reveal the significant restrictions that the Commission applied in the context of the contested decision. The applicant submits that the operator of a business exercising all reasonable and usual care can assume that aid is existing aid if it fulfils all the conditions of an authorised programme.
88. Given that neither the text of the programme nor the authorisation contained any reservations, the applicant could not detect any such reservation, even by displaying the necessary care and attention. The available publication in the Official Journal provided the applicant with no reason to call into question the content of the authorised programme. Hence, the applicant had no reason and was under no legal obligation to ask the Commission whether the conditions of the programme were actually fulfilled.
89. Moreover, the applicant submits that a diligent economic operator could not anticipate that the Commission, in derogation from its own constant practice and in breach of the actual wording of the guidelines it had published, would classify a newly created undertaking as a firm in difficulty.
90. The Commission disputes all the arguments put forward by the applicant.

b) Findings of the Court

Infringement of Articles 87 EC and 88 EC

91. In essence, the applicant takes issue with the Commission's assessment that the investment grant which constitutes measure 15 is not covered by the Land of Thuringia's investment programme for SMEs.
92. By way of a preliminary point, it must be recalled that, according to consistent case-law, once a general scheme of aid has been approved, the individual implementing measures do not need to be notified to the Commission, unless the Commission has issued certain reservations to that effect in the approval decision. Since the individual grants of aid are merely individual measures implementing the general aid scheme, the factors to be taken into consideration by the Commission in assessing that aid are the same as those which it applied on examining the general scheme. It is therefore unnecessary for the individual grants of aid to be subject to examination by the Commission (Case C-47/91 Italy v Commission [1994] ECR I-4635, paragraph 21).
93. Aid which constitutes the strict and foreseeable application of the conditions laid down in the decision approving the general aid scheme is thus considered to be existing aid, which does not need to be notified to the Commission or examined in the light of Article 87 EC (Case C-321/99 P ARAP and Others v Commission [2002] ECR I-4287, paragraph 83, and Case T-176/01 Ferriere Nord v Commission [2004] ECR II-3931, paragraph 51).
94. By contrast, if the measures are not covered by the general schemes relied on they constitute new aid measures whose compatibility with the common market has to be examined by the Commission.
95. In addition, a Commission decision ruling on whether an aid measure is consistent with the relevant scheme falls within the scope of the Commission's obligation to ensure the application of Articles 87 EC and 88 EC. Consequently, the Commission's examination of the consistency of an aid measure with that scheme does not constitute a step that exceeds its powers. Therefore, contrary to what the applicant claims, the Commission's assessment cannot be limited by the assessment of the national authorities that granted the aid.
96. The Court takes the view that the examination of the other claims alleging an infringement of Articles 87 EC and 88 EC must be carried out in two steps. First, the exact scope of the programme set up by the Land of Thuringia must be determined, and then, in the light of that examination, it is to be checked whether the aid granted to the applicant fulfilled the conditions for granting aid laid down in that programme.

The scope of the authorised scheme

97. The programme of the Land of Thuringia for investments by SMEs was notified by the Federal Republic of Germany on 1 July 1993 as a regional aid scheme.
98. According to the directive governing the programme of the Land of Thuringia and the information set out in the notification form for that programme, beneficiaries eligible under that scheme were, as a general rule, SMEs in the manufacturing sector and other comparable undertakings in the Land of Thuringia. However, notwithstanding the rule set out above, larger undertakings could receive aid under the programme.
99. According to the abovementioned directive, that aid covered investments of any type and for any purpose, except research and development aid. Eligible costs under the programme, as set out in paragraph 11 of the notification form, covered both productive investment (except the purchase of land) and investments made under a restructuring programme.
100. The wording of the directive and the notification form also shows that the aid was plan-related and that it could be granted only on condition that there was a 'solid, long-term plan taking account of grants paid out under the directive, as confirmed by the undertaking's bank in the context of the overall financing'.
101. In the notification of the programme, the Federal Republic of Germany referred to Article 87(2)(c) EC in conjunction with Article 87(3)(a) EC, and argued that the aid was compatible with the common market by referring to the specific difficulties encountered by SMEs in eastern Germany because of the transition to a market economy. It explained in that context that '[t]he dilapidated state of the buildings and facilities inherited from the former planned economy and the general lack of capital reserves [gave] rise to disproportionate financial needs for the [SMEs] of Thuringia and thus [prejudiced] ... their access to the market under fair conditions'. In that context, the measures sought to rebuild the traditional structure of SMEs in the Land of Thuringia.
102. Finding that additional explanations were necessary as regards the concept of a 'restructuring programme' referred to in paragraph 11 of the notification form (see paragraph 99 above), the Commission, by letter of 3 August 1993, requested additional information from the Federal Republic of Germany.
103. In response to that request, the Federal Republic of Germany stated the following in its letter of 26 August 1993 ('the letter of 26 August 1993'), which the Commission received on 30 August 1993:

'As regards paragraph 11 of the notification (notion of a 'restructuring'), there has clearly been a misunderstanding. The [German] Government explains that this aid programme does not permit the grant of rescue and restructuring aid. For those particular purposes, the Land of Thuringia has already notified two separate directives ... The conditions of eligibility for the aid correspond to the spirit and the letter of the regulations concerning the Community's structural funds. ... As already stated in the [notification] of 1 July 1993, the purpose of this measure is to support, in their necessary investments and in their efforts to adapt to the higher demands of the market, [SMEs] privatised after 1989 which, even though they are healthy, mostly find themselves in a financially precarious situation. The 'restructuring programme' must be seen in that context as an investment aid programme for the purposes of creating new undertakings, and expanding and modernising undertakings.'

104. Finally, by letter of 26 November 1993, the Commission decided, referring explicitly to the letter of 26 August 1993, not to raise objections to the implementation of the notified programme.
105. It follows from the above that, before the Commission approved the scheme, the Federal Republic of Germany had given the Commission information, first, as regards the financial situation of the beneficiaries which the programme addressed, by explaining that it was aimed at undertakings that were privatised after 1989 which, 'even though they [were] healthy, mostly [found] themselves in a financially precarious situation'.
106. It must be held that the reference to the 'financially precarious situation' of the eligible undertakings, interpreted strictly in the light, in particular, of its wording, the context in which it is placed and its objectives (see, to that effect, Case C-277/00 Germany v Commission [2004] ECR I-3925, paragraphs 20 and 21, and the case-law cited there), cannot be regarded as a reference to the situation of firms in difficulty. As the Federal Republic of Germany explained in the notification of the scheme, the undertakings in the Land of Thuringia like, moreover, most undertakings in the former GDR encountered particular difficulties because of the transition from a planned to a market economy. The reference to the 'financially precarious situation' in which the beneficiaries eligible under the programme might find themselves must be understood in that context. The expression 'financially precarious situation' thus refers to the difficulties that come with the transition from a planned to a market economy and not to those that are characteristic of a firm in difficulty. That is also clear from the inseparable link between the expressions 'financially precarious situation' and 'healthy undertaking' used in the same sentence. The expression 'healthy undertaking' is clearly intended to show that the financial precariousness of the eligible undertakings cannot be such that the undertakings cease to be regarded as healthy.
107. It must also be noted that, in its letter of 26 August 1993, the Federal Republic of Germany had provided information, second, as regards the nature of the aid granted under the scheme, by specifying that '[the] programme [did] not permit the grant of rescue and restructuring aid'.
108. That explanation, connected to the fact that the Land of Thuringia had also notified a programme specifically designed for the rescue and restructuring of firms in difficulty, must be interpreted, in the circumstances of the present case, as an indication confirming that the programme excluded firms in difficulty. It would not be logical to find that the Federal Republic of Germany did not intend to exclude firms in difficulty from the programme even though it explicitly excluded aid specifically targeting such firms.
109. Therefore, it is not important to establish whether, as the applicant and the Federal Republic of Germany claim, investment aid in favour of firms in difficulty could, at the time, be granted under a regional aid scheme, since, by stating in its letter of 26 August 1993 that the scheme targeted healthy undertakings, and that it did not permit the grant of rescue and restructuring aid, the Federal Republic of Germany explicitly excluded firms in difficulty from the scheme.
110. The applicant nevertheless submits that the letter of 26 August 1993 cannot change the text of the programme as notified to the Commission on 1 July 1993. However, the letter of 26 August 1993 is part of the authorised programme, since the Commission considered the additional information and the explanations in the letter relevant for deciding that it would not raise objections to the implementation of the notified project. Therefore, the Commission was not required to open the formal investigation procedure, as the applicant claims, in order to demand in that context changes to the programme or the notification of certain cases in which it was applied. Given that the Federal Republic of Germany had provided explanations that allowed the Commission to be convinced, following an initial examination, that the notified project was compatible with the Treaty, opening the formal investigation procedure would have been unnecessary, and even nugatory.
111. In the light of the above, it must be held that the Commission was right to consider that firms in difficulty were excluded from the scope of the programme of the Land of Thuringia.

The grant awarded to the applicant

112. The contested decision shows that the Commission takes the view that the grant awarded to the applicant did not fulfil the conditions of the programme of the Land of Thuringia, because the applicant was in difficulty from 1994 until the end of 1996, when it recorded, for the first time, a slightly positive result and the share of own capital began to increase (recitals 118 and 129 of the contested decision).
113. In the contested decision, the Commission states that, in the light of the reports available at the relevant time, and pursuant to its consistent practice, it considered the applicant, which was an 'Auffanglösung', to be a firm in difficulty (recital 116 of the contested decision).
114. By contrast, the applicant submits that it received the grant to help it with starting up the undertaking and that it was, from the beginning, economically viable.
115. It should be borne in mind at the outset that the investigation which the Commission must conduct involves the consideration and assessment of economically complex facts and circumstances. Since the Community judicature may not substitute its assessment of economically complex facts and circumstances for that of the Commission, the Court's review must be limited to verifying compliance with procedural rules and the obligation to state reasons, as well as the material accuracy of the facts, and ensuring that there has been no manifest error of assessment or misuse of powers (see Joined Cases T-111/01 and T-133/01 Saxonia Edelmetalle v Commission [2005] ECR II-1579, paragraph 91, and the case-law cited).
116. In the present case, the financial situation of the applicant at the moment when the aid in question was granted is assessed in the contested decision on the basis of two reports by consultancy firms that were available at the time when the applicant was created, namely the report by RBSH&P, of 29 November 1993, and the report by AA, of 11 January 1994.
117. The report by RBSH&P aimed to draw up a business plan, with a view to putting in place an 'Auffanglösung' for the failed company Kahla I which would commence its activities on 1 January 1994. Drawn up in collaboration with G. R., the plan was to provide the basis for discussions between the court-appointed liquidator, the Land of Thuringia, the Federal Government, the banks and the potential investors.
118. The business plan had several distinguishing features. In particular, it was intended that the 'Auffanglösung' would take over the core commercial operations of Kahla I, namely the manufacture of household porcelain, and develop those operations to move into the two sectors of top-of-the-range household porcelain and hotel porcelain. The business plan envisaged that the new company would take over the entire stock and 380 employees and would use those of Kahla I's fixed assets (land, buildings, machinery and plant) deemed necessary for the proper running of the 'Auffanglösung'. On that last point, the consultants stated that, in order to allow it to get through the necessary restructuring phase while waiting for a potential investor, the fixed assets had to be made available to the future company free of charge during the first four years. In addition, the business plan envisaged that a first series of investments would be made, in order to replace, enlarge and rationalise. Finally, the report was based on the participation of G. R. as a reference shareholder who would contribute DEM 50 000, as well as on the contribution of DEM 9.5 million by a shareholder without voting rights.
119. The report by AA was prepared at the request of TIB in order to assess its participation as a potential shareholder in the 'Auffanglösung'. The report examined the business plan drawn up by RBSH&P, taking into consideration the substantial changes in the underlying structure that had occurred in the meantime. In particular, the business plan was based on the assumption, first, that TIB would acquire non-voting shares and make a financial commitment of DEM 7.95 million which would, if the project succeeded, enable 365 jobs to be safeguarded until at least 1997 and, second, that the fixed assets of Kahla I referred to in the first report would be acquired for a total amount of DEM 5.2 million. It was envisaged in this report that part of the fixed assets, namely the plant and the machinery needed for the company to operate, would be financed by the investment grant by the Land of Thuringia at issue in the present proceedings.
120. It must be noted that, in contrast to the applicant's claims, the consultants rated the risks associated with the business plan as high. As the report by RBSH&P shows, several structural elements still had to be defined, and the consultants stressed the very great difficulties faced by the plan. The view was taken in the report prepared by AA that the goals that had been set for the undertaking were very ambitious and that there were many risks that could cause the plan to fail. According to the consultants who prepared the second report, the analyses showed that even a slight divergence from the targeted figures could put an end to the plan to continue operations.
121. In the light of those reports, the Court of First Instance holds that the Commission did not commit a manifest error of assessment by finding, in recital 117 of the contested decision, that State support was decisive for ensuring, following a restructuring process, the viability of the applicant.
122. As the report prepared by RBSH&P clearly states, the undertaking '[was] not in a position to bear on its own the costs of financing connected with the restructuring process (need for investments, new plans for the premises, oversized production installations, etc.) which were very high compared with the estimated turnover'. In addition, the consultants stressed that 'the need for this restructuring process [arose] in the past and that the 'Auffanglösung' [could] not therefore be responsible for it' and that 'State support, at the moment when a capital injection was necessary, in the form of regional guarantees from the Land or in other forms, [was] a necessary condition for adapting the structures of [Kahla] to the requirements of a market economy'.
123. The applicant's argument that it was a newly created company which only took over some parts of Kahla I and whose activities took on a new direction cannot invalidate the finding that the applicant had to undergo a restructuring to ensure its viability. The two reports show that redirecting the company's activities towards the more profitable sectors of top-of-the-range household porcelain and hotel porcelain required, in particular, prior investments to replace, enlarge and rationalise. The consultants themselves classified that four-year adaptation process as a restructuring.
124. The applicant's argument that, in essence, first, the company had substantial funds of its own without resorting to aid and, second, the public funds were allocated within the framework of approved schemes cannot be accepted.
125. First, it should be noted that, as the Commission has found in the contested decision, without being contradicted on that point by the applicant, the total cost of the necessary measures proposed by the consultants amounted, according to the report by RBSH&P, to DEM 30.945 million and, according to the report by AA, to DEM 27.727 million (recital 167 of the contested decision). It follows that the total cost of the measures proposed in order to ensure the viability of the applicant was considerably higher than the funds contributed by its shareholders (see paragraph 118 above, at the end).
126. Second, the alleged compatibility with the common market of the subsidies awarded to the applicant cannot invalidate the finding that the viability of the applicant depended on State support. In this respect, it must be stated that the Commission did not deduce that the firm was in difficulty from the fact that it received aid. By contrast, the Commission found that that fact only confirmed that the applicant was in difficulty. Moreover, the fact that the applicant was not able to obtain financial assistance from banks without State aid (see paragraphs 24 and 28 above), which the applicant does not contest, shows that, because of the company's situation, financial institutions were not willing to provide it with funds on market terms. Also, as regards the private investor, G. R.'s contribution was not certain, given that he had the right to terminate the contract if the company did not receive assistance as planned.
127. As regards the rules applicable at the time when the investment grant was awarded by the Land of Thuringia, it is common ground that the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, which the Commission applied in the present case, reflect the Commission's usual practice concerning restructuring aid, as defined in paragraphs 227, 228 and 177 of the Commission's Eighth Report on Competition Policy (1979) and endorsed by the Court of Justice (see Case 323/82 Intermills v Commission [1984] ECR 3809; Case 234/84 Belgium v Commission [1986] ECR 2263; and Case C-301/87 France v Commission [1990] ECR I-307).
128. In the light of the above, the Court of First Instance holds that the Commission rightly found that the definition in paragraph 2.1 of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, according to which a firm in difficulty is 'unable to recover through its own resources or by raising the funds it needs from shareholders or borrowing', corresponded to the facts in the present case.
129. As regards the applicant's argument based on the indicators mentioned in the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, it must be recalled that the importance which the Commission attaches to trend indicators does not necessarily make other kinds of indicators unsuitable (Case T-171/02 Regione autonoma della Sardegna v Commission [2005] ECR II-2123, paragraph 111).
130. Therefore, the Commission could, without committing a manifest error of assessment, rely on indicators such as the low net asset value and the cash-flow or the substantial debt to find that the applicant was a firm in difficulty. Having regard to the total cost of the necessary measures which the consultants proposed in their respective reports, the assessment that the net asset value and the cash'flow were too low to ensure the financing of those measures and, consequently, the viability of the applicant cannot be regarded as manifestly wrong. Likewise, the applicant has not shown that the Commission committed a manifest error of assessment when it found that, without State support, the applicant would not have been able to bear such financial burdens.
131. As regards the workforce of the new undertaking, the consultants' reports considered it to be compatible with the success of the applicant's business plan. However, as the Commission stated in recital 112 of the contested decision, State support was linked to keeping the workforce. Moreover, it is clear from the two consultants' reports that the level of the workforce was influenced by social considerations. The report by RBSH&P indeed states that the turnover per employee that the applicant was to achieve in the first year was lower than that achieved by the ceramics industry in the previous years. Thus, it was below average. That is not characteristic of the approach taken by a new company seeking profitability.
132. Finally, as regards the losses envisaged by the consultants, it must be noted that the Commission stated, in recital 114 of the contested decision, that 'without State support, the company would certainly have incurred much higher losses and would probably have been driven out of the market' and that, therefore, the fact that application of a special depreciation regime might have led to higher losses is of no account. In those circumstances, the applicant's claim that it would have recorded a profit starting with the first year if it had written down its assets under the general rules on depreciation is of no relevance. Moreover, that claim contradicts the assertion that the losses were connected with the starting up of activities.
133. It follows from all of the above that the Commission has not committed a manifest error of assessment in finding that the applicant was a firm in difficulty.
134. Therefore, the Court of First Instance holds that the Commission was entitled to find that the conditions permitting the grant of investment aid to SMEs were not fulfilled in the present case and that the payment by the Land of Thuringia of the sum of DEM 2.5 million in the form of a grant did not comply with the decision approving the scheme. Consequently, the Commission rightly found that that grant had to be classified as new aid for the purposes of Article 88(3) EC.
135. Therefore, as regards the investment grant by the Land of Thuringia (measure 15), all arguments concerning the infringement of Articles 87 EC and 88 EC must be rejected.

Infringement of the principle of legal certainty

136. It must be recalled that the fundamental requirement of legal certainty, in its various forms, aims to ensure that situations and legal relationships governed by Community law remain foreseeable (Case C-63/93 Duff and Others [1996] ECR I-569, paragraph 20; and Case T-73/95 Oliveira v Commission [1997] ECR II-381, paragraph 29).
137. The Court of First Instance finds, in the present case, that there has been no infringement of the principle of legal certainty.
138. First, the applicant's claim that the Commission, by way of the contested decision, retroactively introduced conditions that were additional to those featuring in the decision authorising the programme of the Land of Thuringia for investments by SMEs is unfounded. Paragraphs 97 to 111 above show that the Commission strictly limited itself, in its assessment of whether the grant that constitutes measure 15 was compliant, to the conditions laid down in the decision of 26 November 1993 authorising the programme of the Land of Thuringia.
139. Second, the Court of First Instance must reject the argument put forward by the Federal Republic of Germany that, in essence, the Commission disagreed, ex post, with the interpretation, informed by the relevant ex ante perspective, given by the national authority concerned which had based its views on the State aid law in force at the moment the aid was granted and had reasonably considered the applicant to be a newly created undertaking which did not fall within the scope of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty.
140. In this respect, the context in which the Commission approved the programme of the Land of Thuringia should be remembered. In particular, it must be recalled that, by specifying, first, that the programme targeted healthy undertakings and, second, that it did not permit the grant of rescue and restructuring aid, the Federal Republic of Germany explicitly excluded firms in difficulty from the scheme (see paragraph 109 above).
141. Therefore, even if, as the Federal Republic of Germany claims, investment aid could be granted to firms in difficulty under the programme which had been notified as a regional aid scheme, it was clear that, in the light of the letter of 26 August 1993, firms in difficulty could not benefit from aid under the approved programme.
142. Likewise, the fact that new undertakings are not generally eligible for rescue and restructuring aid cannot, following the letter of 26 August 1993, constitute an element of uncertainty as regards the scope of the programme, which excludes firms in difficulty from its ambit, irrespective of whether they are newly created undertakings.
143. In any event, the alleged lack of clarity, even if proved, cannot, given its very limited extent, adversely affect legal certainty.
144. It follows that the Commission did not act in a manner that infringes the principle of legal certainty when it found that the grant awarded to the applicant did not fulfil the conditions of the programme of the Land of Thuringia because the applicant was, at that time, a firm in difficulty.
145. Consequently, as regards the investment grant by the Land of Thuringia (measure 15), all arguments concerning the infringement of the principle of legal certainty must be rejected.

Infringement of the principle of the protection of legitimate expectations

146. It must be recalled that, according to settled case-law, the right to rely on the principle of the protection of legitimate expectations, which constitutes one of the fundamental principles of the Community, extends to any individual who is in a situation in which it is clear that the Community authorities have, by giving him precise assurances, led him to entertain legitimate expectations. Regardless of the form in which it is communicated, information that is precise, unconditional and consistent and comes from an authorised and reliable source constitutes such assurance (Joined Cases T-66/96 and T-221/97 Mellett v Court of Justice [1998] ECR-SC I'A'449 and II'1305, paragraphs 104 and 107). However, a person may not plead infringement of the principle unless he has been given precise assurances by the authorities (Case T-290/97 Mehibas Dordtselaan v Commission [2000] ECR II-15, paragraph 59, and Case T-273/01 Innova Privat'Akademie v Commission [2003] II'1093, paragraph 26).
147. In the present case, the applicant pleads, essentially, that it entertains legitimate expectations because the aid is existing aid.
148. In this respect, it must be recalled that the Court of First Instance has held that it cannot be accepted that the Commission can require recovery of aid to the detriment of a recipient of the aid who has complied with the aid conditions laid down by the Commission in the authorising decisions (Joined Cases T-227/99 and T-134/00 Kvaerner Warnow Werft v Commission [2002] ECR II-1205, paragraph 92).
149. However, as previously stated in paragraph 134 above, the investment grant awarded to the applicant does not strictly fulfil the conditions laid down in the decision approving the programme of the Land of Thuringia.
150. The absence of explicit restrictions in the scheme at issue, as published in the Official Journal, could not give rise to legitimate expectations on the part of the applicant that the investment grant by the Land of Thuringia was lawful. The applicant remained under an obligation to keep itself informed as to whether the grant of the aid that it had been awarded was lawful. In any event, the circumstance cited by the applicant can in no way be treated in the same way as precise assurances from the Commission to the effect that the programme at issue was applicable to firms in difficulty.
151. As regards the argument that newly created undertakings could not, at the time, be considered to be firms in difficulty, it must be held that that must not be interpreted to mean that newly created undertakings cannot find themselves in a difficult situation, as in the present case.
152. It follows that, as regards the investment grant by the Land of Thuringia, all arguments concerning the infringement of the principle of the protection of legitimate expectations must be rejected as unfounded.

2. The employment promotion grants linked to environmental protection investments (measure 26)

a) Arguments of the parties

Infringement of Articles 87 EC and 88 EC

153. The applicant disputes, first, the Commission's assessment that the measures implemented by the applicant do not comply with the scheme under Paragraph 249h of the AFG.
154. The applicant claims that, in accordance with the unequivocal terms of Paragraph 249h of the AFG, those measures could be implemented by private undertakings, and not just undertakings owned by the THA. That is confirmed by provisions that the Commission was aware of, such as the implementing regulations of 27 January 1993 and the third subparagraph of Paragraph 92(2) of the AFG. According to the applicant, a limitation of the scope of the scheme exclusively to companies owned by the THA does not emerge from the Commission's authorisation decision, from the reference published in the Official Journal or from the letter of the Federal Republic of Germany of 29 July 1994, the explanations in which cannot, in any event, change the unequivocal effect of the legislation setting up the scheme. That would have required either an express amendment by the Federal Republic of Germany or the opening of the formal investigation procedure.
155. With its reply, the applicant submits an expert's report to support its argument that it was entitled to implement measures under Paragraph 249h of the AFG, which it did in order to employ workers who were previously unemployed, and therefore in the public interest. The applicant requests that the director, at the time, of the Arbeitsamt Jena (Jena Employment Office) be heard on this point.
156. Second, the applicant submits that the measures it implemented under Paragraph 249h of the AFG do not constitute State aid.
157. By way of a first argument, the applicant claims that a State measure cannot constitute State aid on account of the fact that it was implemented by a private and not a public undertaking. According to the applicant, the undertakings owned by the THA also implemented measures under Paragraph 249h of the AFG on their own sites.
158. Further, the applicant disputes that implementation of the measures gave it an advantage and requests that G. R. be heard in this respect. According to the applicant, under those measures, it was reimbursed only for the costs of the wages paid solely to workers involved in the implementation of those measures or for the material used. The measures were carried out to help the unemployed and would not have been implemented if it had not been for Paragraph 249h of the AFG. It has also not been established that the applicant received an indirect advantage. Only part of the clearing-up works was required to prepare for investments and, moreover, the cost of carrying out those works was much lower than the amount contributed by the applicant itself (DEM 613 031.01), so that any possible advantage was already offset. As regards the clearing-up works which were not needed, the applicant would either not have carried them out at all or would have carried them out over a longer period without incurring additional costs. In addition, the applicant disputes that those works had already been carried out by Kahla I. According to the applicant, it suggested that the Commission visit the site or arrange some other form of evaluation to determine whether it really received an advantage. The Commission's representatives confirmed, however, that they had all the information needed for the purpose. According to the applicant, the expert report that it submits contradicts the Commission's general and unsubstantiated claims.
159. The applicant adds that, pursuant to Paragraph 242s of the AFG, the same scheme applied to undertakings in the former western Germany and that, therefore, Paragraph 249h in conjunction with Paragraph 242s of the AFG constitutes a general measure.
160. Finally, the applicant submits that the fact that, in 1997, the Commission authorised the amended Paragraph 249h of the AFG as State aid cannot be cited as evidence that all measures under Paragraph 249h of the AFG contain State aid.
161. The Commission responds that the measures do not fall within the scope of Paragraph 249h of the AFG since the applicant was not one of the bodies referred to in the letter of the German Government of 29 July 1994 which stated, in addition, that the measures could not be linked to the interests of any particular person. The Commission contends that the applicant implemented the measures at issue in order to clean up its own land and that those measures constitute State aid in the applicant's favour.

Infringement of the principle of legal certainty

162. The applicant submits that the Commission subsequently introduced new conditions into an authorised scheme that were unfavourable to the applicant and that, therefore, the Commission retroactively changed the applicant's legal position to its detriment, in breach of the principle of legal certainty. Given that the aid awarded in the context of an authorised programme does not require authorisation, any restrictions have to appear either in the scheme itself or in the decision authorising it.
163. The Commission disputes the applicant's line of argument in its entirety.

Infringement of the principle of the protection of legitimate expectations

164. The applicant claims that, given that the Commission had found that Paragraph 249h of the AFG did not involve aid, a diligent operator was entitled, when implementing measures adopted under that provision, to be confident that the measures did not contain aid elements requiring an individual authorisation from the Commission.
165. The applicant submits that all the conditions of Paragraph 249h of the AFG and the provisions governing the application of that paragraph were observed and asks for the appointment of an expert in case of doubts in this respect. According to the applicant, the Commission itself created a situation of expectation since it should have expressly mentioned, in its authorisation letter or in the notice published in the Official Journal, that that provision was limited to undertakings owned by the THA. As regards the fact that the applicant received grants from the Land of Thuringia in addition to those from the federal State, the applicant submits that, given that the measures adopted by the federal State did not contain aid elements, a reasonable industrialist could assume that the situation was the same for funds from the Land of Thuringia.
166. The Commission disputes the applicant's line of argument in its entirety.

b) Findings of the Court

Infringement of Articles 87 EC and 88 EC

Compliance with the scheme under Paragraph 249h of the AFG

167. As regards the question whether the employment promotion grants awarded to the applicant constitute a measure in implementation of Paragraph 249h of the AFG, it must be noted, by way of a preliminary point, that by adopting that provision, which entered into force on 1 January 1993, the German legislature adopted new rules concerning the creation of employment, limited to the territory of the former GDR.
168. According to the first subparagraph of Paragraph 249h of the AFG, '[the Federal Labour Office] may promote, by awarding grants to employers, the employment of unemployed persons in tasks whose implementation ... aims to improve the environment, social services or youth services'.
169. According to the third subparagraph of Paragraph 249h of the AFG, 'tasks aimed at environmental rehabilitation or improvement of the environment, social services or youth services may be supported, in accordance with the present provisions, through grants contributing to the labour costs for workers whom the employment office has placed with employers, where those tasks must be carried out quickly because of the nature of the need to rehabilitate or improve and they cannot be carried out without the support provided for by the present provision .... In general, in the area of environmental rehabilitation or improvement of the environment, the only tasks that may be supported are those that are entrusted to an industrial or commercial undertaking; this is particularly true for tasks of public law entities. Exceptionally, the responsible body can receive support for tasks it carries out itself, if those tasks would not otherwise be carried out.'
170. Following several requests for information, the Commission was informed, in particular by a letter of the Federal Republic of Germany of 2 December 1992, of the components of these rules.
171. The Federal Republic of Germany also forwarded to the Commission, by letter of 11 May 1993, the directive of the executive council of the Federal Labour Office 'promoting employment through measures for the improvement of the environment, social services and youth services' of 27 January 1993, which contains a catalogue of examples of measures that are eligible for support under Paragraph 249h of the AFG.
172. In addition, supplementary information concerning the scheme under Paragraph 249h of the AFG was submitted by the letters of the Federal Republic of Germany of 4 October 1993 and 29 July 1994.
173. It is in the light of the above information that the Commission decided, by letter of 13 January 1995, not to raise objections to the implementation of those measures 'since those measures [did] not fall within the scope of the provisions of Article [87](1) EC'.
174. The applicant submits, in essence, that it implemented measures for the promotion of employment on the basis of the provisions of Paragraph 249h of the AFG and that, in that context, unemployed persons were hired for environmental rehabilitation works, such as clearing away scrap iron and rubble resulting from the activities of the former conglomerate, VEB Vereinigte Porzellanwerke Kahla.
175. However, in the contested decision the Commission found, in the light of the letter from the Federal Republic of Germany of 29 July 1994, that private undertakings were not eligible for the measures set out in Paragraph 249h of the AFG and that measures carried out in the interests of an undertaking could not benefit from support under that provision (recital 134 of the contested decision).
176. The applicant's argument that, in essence, the Commission had no right to take into account the letter of the German Government of 29 July 1994 must be rejected right away. The matters referred to above show that the additional information and the explanations contained in that letter, which was explicitly referred to in the authorisation decision, were taken into account by the Commission, which considered them to be relevant to finding that the measures examined did not constitute aid within the meaning of Article 87 EC. Therefore, that information and those explanations are relevant to determining the exact scope of the authorised scheme. The Commission was thus not under an obligation to open the formal examination procedure, as the applicant claims, in order to demand amendments to the notified scheme in that context. Given that the Federal Republic of Germany had provided explanations allowing the Commission to be convinced, following an initial examination, that the measures it had examined did not constitute aid within the meaning of Article 87 EC, opening the formal investigation procedure would have been unnecessary and even nugatory.
177. Therefore, it has to be examined, in the light of the letter of 29 July 1994, whether the tasks carried out by the applicant could benefit from the support envisaged by Paragraph 249h of the AFG.
178. First, it must be stated that the Federal Republic of Germany indicated in its letter of 29 July 1994 that 'the bodies responsible for measures adopted under Paragraph 249h of the AFG in the area of environmental rehabilitation and environmental improvement are public law entities, in particular regional and local authorities (including cities, districts and municipalities) as well as undertakings owned by the [THA] and other establishments, such as, for example, organisations running reconstruction projects (Aufbauwerke) or organisations promoting employment and occupation. The undertaking entrusted with the measure by award of a contract is not the body responsible for the measure. Measures that benefit a particular person in other words, measures that confer an advantage on the body responsible for them cannot be promoted under the AFG.'
179. In addition, the letter of 29 July 1994 shows that 'responsible bodies' had to entrust performance of the works to an undertaking, as the Federal Republic of Germany had previously explained, in particular in its letter of 4 October 1993, which is also referred to in the Commission's authorisation decision. The Federal Republic of Germany explained in that letter that '[a]ccording to the third sentence of Paragraph 249h(3) of the AFG, the sole works eligible for aid in the area of environmental rehabilitation and improvement (remediation of contaminated sites) [were], as a rule, works whose implementation [was] entrusted to an industrial or commercial undertaking (Wirtschaftsunternehmen); as a rule, the works [were] subject to a call for tenders issued by the responsible body (for example, the Land, a municipality, or one of the undertakings owned by the THA)'.
180. The above shows directly that private undertakings were not eligible to be 'responsible bodies' for measures adopted under Paragraph 249h of the AFG in the environmental field. That provision concerned private undertakings only indirectly, in so far as 'responsible bodies' were required to entrust the implementation of works to an industrial or commercial undertaking.
181. Second, it must be pointed out that the Federal Republic of Germany explained, in its letter of 29 July 1994, that those 'measures do not serve the interests of a particular person, in other words, they are additional and in the general interest. ... This means that measures adopted in the interests of an undertaking are not eligible.' Further, the Federal Republic of Germany explained that the 'examples listed in the catalogue concern activities that serve to avert direct danger to the population (e.g. rehabilitation of commercial parks) and/or to improve the quality of life of the population (demolition, removal of contaminated construction waste with the help of recycling facilities that operate only for this purpose as part of the rehabilitation measure ...). Those measures are necessary with a view to cleaning up and preparing industrial sites, so as to limit or eliminate direct risks. They are carried out prior to the actual development of industrial sites; without those measures, given the environmental risks involved, those industrial sites would not be developed.'
182. Therefore, measures eligible under the scheme were works in the general interest that would not have been carried out if it had not been for the measures of support provided for in Paragraph 249h of the AFG.
183. The applicant puts forward no evidence allowing the Court of First Instance to establish the basis on which it was awarded employment promotion grants, but simply submits, in essence, that under those measures it only obtained reimbursement of the cost of paying wages to the workers hired for the purposes of carrying out the works eligible under Paragraph 249h of the AFG.
184. However, the Court of First Instance finds that the applicant does not belong to the category of 'responsible bodies' in respect of measures under Paragraph 249h of the AFG and that, therefore, the contested grants could not be awarded to the applicant pursuant to that provision. As a private undertaking, the applicant could only have benefited from the support provided for under Paragraph 249h of the AFG in so far as it had carried out works in the general interest entrusted to it by a responsible body.
185. Therefore, it is not important to establish whether, as the applicant claims, it implemented the contested measures in order to employ previously unemployed workers. In addition to the social objective of Paragraph 249h of the AFG, this provision required that the works for which unemployed persons were hired also be of general interest.
186. Moreover, the works carried out by the applicant on its own site cannot be considered to have been works serving to avert direct danger to the population and/or to improve the quality of life of the population and, consequently, to be measures in the general interest for the purposes of Paragraph 249h of the AFG. The fact that the directive of 27 January 1993 mentioned the clearing away of rubble and scrap iron from industrial, commercial and manufacturing sites as a measure eligible for support under Paragraph 249h of the AFG cannot invalidate the finding that the works carried out by the applicant were not in the general interest. The catalogue of examples of measures eligible for support under Paragraph 249h of the AFG as referred to in the directive of 27 January 1993 shows that, in the environmental field, measures concerning undertakings such as the environmental rehabilitation of buildings and other structures, clearing-up works, the dismantling of installations and the demolition of structures, foundations and buildings were linked to the rehabilitation of abandoned sites.
187. Finally, as regards the expert's report which the applicant submitted with its reply, it must be found that since that information had not been submitted and was, for that reason, not taken into consideration when the contested decision was drafted, it cannot be relied on in the context of discussing the lawfulness of that decision (see Belgium v Commission, paragraphs 11 and 16).
188. Therefore, it must be held that the Commission was right to consider that the contested grants did not comply with the scheme provided for in Paragraph 249h of the AFG.

Classification of the employment promotion grants as State aid

189. It must be recalled that the aim of Article 87 EC is to prevent trade between Member States from being affected by advantages granted by the public authorities which, in various forms, distort or threaten to distort competition by favouring certain undertakings or the production of certain goods (Case 173/73 Italy v Commission [1974] ECR 709, paragraph 13).
190. Therefore, the employment promotion grants at issue must be examined in the light of the conditions under Article 87(1) EC on which the classification of a national measure as State aid depends, namely the financing of such a measure by the State or through State resources, the presence of an advantage for an undertaking, the selectivity of the measure, and the effect of that measure on trade between Member States and the distortion of competition it may bring about.
191. At the outset, the line of argument alleging that Paragraph 249h of the AFG does not fall within the scope of Article 87(1) EC must be rejected. As paragraphs 167 to 188 above show, the grants awarded to the applicant do not comply with Paragraph 249h of the AFG, which is the only measure that the Commission regarded as not constituting State aid.
192. As regards, first, the requirement that the aid must be granted through State resources and be imputable to the State, it is not disputed that this condition is satisfied in the present case since the applicant received DEM 1.549 million from the Federal Labour Office and the Land of Thuringia, in other words, public authorities.
193. As regards, second, the presence of an advantage for some undertakings, it must be recalled that, according to consistent case-law, the concept of aid is wider than that of a subsidy because it embraces not only positive benefits, such as subsidies themselves, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which, without being subsidies in the strict sense of the word, are therefore similar in character and have the same effect (see Case C-387/92 Banco Exterior [1994] ECR I-877, paragraph 13, and Case C-200/97 Ecotrade [1998] ECR I-7907, paragraph 34).
194. It follows that action by the public authorities intended to relieve the undertaking of that financial burden amounts to an economic advantage of the kind referred to in Article 87(1) EC (see, to that effect, Case C-126/01 GEMO [2003] ECR I-13769, paragraph 33). In the present case, this is what happened with the financial burden of clearing away rubble and scrap iron, which must be considered to be a cost inherent in the economic activity of the undertaking.
195. In addition, it must be noted, as the Federal Republic of Germany stated in its letter of 29 July 1994, that 'a call for tenders for measures falling within the scope of Paragraph 249h of the AFG is issued in accordance with the legal provisions in force ... . The contract is awarded to the party making the best offer. The body responsible for the measure is under an obligation to justify the entire financing. Aid under Paragraph 249h of the AFG [allocated by the Federal Labour Office] is given to the responsible body, which disburses the wage subsidy for the workers who have been hired ... to the undertaking that carries out the measure. Hence, there is no advantage for the undertaking carrying out the rehabilitation works'.
196. In the present case, the applicant did not carry out works in the general interest, entrusted to it by a responsible body in the context of a call for tenders, but, on the contrary, was relieved of some of the financial burden (wage costs) relating to works that it carried out in its own interest. The fact that it may have implemented those measures in order to employ previously unemployed workers cannot turn the works that it carried out into works in the general interest.
197. Moreover, irrespective of the question whether the measures implemented by the applicant could be equated to measures adopted under Paragraph 249h of the AFG, it must be noted that the social character of State intervention is not sufficient to exclude it outright from being categorised as aid for the purposes of Article 87 EC (Case C-310/99 Italy v Commission [2002] ECR I-2289, paragraph 50).
198. The fact that the applicant may have contributed to the financing of the works to clear away rubble and scrap metal from its site is not relevant here. As the Commission submits, irrespective of the fact that, as the applicant claims, it may have financed part of the works, it remains the case that it did not actually bear the part of the costs corresponding to the amount of the grant it received.
199. As regards, third, selectivity, the applicant's argument that the same scheme applied to undertakings in the former western Germany must be rejected. By that argument, the applicant tries, in actual fact, to show that Paragraph 249h of the AFG is a general measure. However, the question that arises in the present case is whether the grants awarded to the applicant outside any scheme were selective measures. In those circumstances, it suffices to note that, as the Commission submits, the applicant benefited from a reduction in costs which other undertakings were not able to enjoy.
200. As for the requirement that, fourth, the aid scheme must affect trade between Member States and distort or threaten to distort competition, it is clear from recital 91 of the contested decision that the Commission has found, without being contradicted by the applicant, that the porcelain market was a highly competitive European product market suffering from overcapacity and that, therefore, financial advantages favouring one undertaking over its competitors threatened to distort competition and affected trade between Member States.
201. Consequently, it must be held that the employment promotion grants awarded to the applicant constitute State aid within the meaning of Article 87 EC.
202. In the light of all the foregoing considerations, those grants had to be classified as new aid for the purposes of Article 88(3) EC.
203. It follows that, as regards the employment promotion grants that are the subject'matter of measure 26, the arguments concerning the infringement of Articles 87 EC and 88 EC must be rejected, in their entirety, as unfounded.

Infringement of the principle of legal certainty

204. The applicant claims that, by the contested decision, the Commission retroactively introduced conditions that were additional to those featuring in the authorisation decision for Paragraph 249h of the AFG.
205. Paragraphs 167 to 188 above show that that claim is unfounded. The Commission limited itself strictly to assessing whether the employment promotion grants of measure 26 complied with the conditions laid down in the decision of 13 January 1995 authorising Paragraph 249h of the AFG. It must be noted, in this respect, that the Commission explicitly referred in that decision to the letters of the Federal Republic of Germany which explain the scope of Paragraph 249h of the AFG in particular the letter of 29 July 1994 and which, in the contested decision, it interpreted and applied to the grants at issue correctly.
206. It follows that, as regards the employment promotion grants that are the subject-matter of measure 26, the argument concerning infringement of the principle of legal certainty must be rejected.

Infringement of the principle of the protection of legitimate expectations

207. The applicant submits, in essence, that the grants under measure 26 fall within the scope of Paragraph 249h of the AFG. However, as held in paragraphs 167 to 188 above, the employment promotion grants under measure 26 do not comply with the conditions laid down in the approval decision for Paragraph 249h of the AFG.
208. As regards the claim that there are no explicit restrictions in Paragraph 249h of the AFG and in the notice published in the Official Journal, the Court of First Instance holds, having regard to the principles set out in paragraph 146 above, that this cannot give rise to a legitimate expectation on the part of the applicant that the award of the grants under measure 26 was lawful. The absence of restrictions can in no way be treated in the same way as any precise assurances from the Commission to the effect that private undertakings could receive aid under Paragraph 249h of the AFG.
209. It follows that, as regards the employment promotion grants that are the subject'matter of measure 26, the argument concerning an infringement of the principle of the protection of legitimate expectations must be rejected.

B The fourth plea, alleging manifest errors of fact and law

1. Incorrect finding of facts

a) Arguments of the parties

210. The applicant submits that the contested decision is vitiated by errors of fact that influenced the assessment that TIB did not act like a private investor and the assessment that G. R's personal contribution to the cost of the restructuring was not substantial.
211. First, the applicant disputes the Commission's assertion that no consideration was envisaged for TIB's participation in the undertaking (measures 11 and 12) and submits that this is contrary to the Commission's own findings in the contested decision. As regards, more particularly, the taking of a 49% stake in the applicant (measure 11), the applicant claims that, in accordance with the articles of association ('Gesellschaftsvertrag') of 23 March 1994, G. R. was given the right to buy back TIB's stake in return for interest payments of 6% per annum from the date of payment, which is what happened at the end of 1999. As regards the shareholder loan granted by TIB (measure 12), the applicant states that it was subject to interest payments of 12% per annum, capped at half the annual net profit, and that these interest payments were made by the applicant until redemption of the loan at the end of 1999.
212. Second, the applicant claims that the contested decision is vitiated by errors of fact as regards the funds that G. R. made available to the company. The applicant states that the finding is incorrect that the loan of DEM 0.2 million (measure 16) taken out by G. R. to finance his acquisition of a stake in the applicant benefited from a State guarantee. Such a guarantee never existed; in fact, G. R. and his wife were personally, and jointly and severally, liable for that loan. Moreover, G. R. financed the interest payments and the redemption of the capital under that loan and did the same for the loan of DEM 1.8 million that he also took out to finance his participation in the undertaking this ought to have greater value than a simple guarantee. In its reply, the applicant notes that the Commission has acknowledged that the 90% guarantee in favour of the applicant did not cover the loan, but that, none the less, the Commission fails to have regard to the fact that the federal State had agreed to provide that guarantee to the bank financing the entire programme.
213. The Commission disputes the arguments put forward by the applicant in their entirety.

b) Findings of the Court

214. As regards, first, the funds which TIB made available to the applicant (measures 11 and 12), it must be noted at the outset that the Commission stated, in recital 97 of the contested decision, that 'the reports ... [did] not analyse any potential quid pro quos for the authorities' participation, something that would have been a must for any private investor'.
215. Even though it is true that the wording used may lead to confusion by suggesting that no consideration was envisaged for TIB's involvement (measures 11 and 12), it must be held that that passage refers, in a general sense, to the financial support granted to the applicant by all the public financial institutions, whereas the funds made available by TIB are examined, specifically, in recital 98 et seq. of the contested decision (see paragraphs 20 and 21 above).
216. As regards, in particular, consideration for the 49% stake in the share capital of the applicant (measure 11), the Commission stated, in recital 98 of the contested decision, that the fact that TIB sold its stake five years later to G. R. and his son for more than it had paid in 1994 did not change the fact that TIB had not acted like a private investor. In addition, the Commission explained that the risks were high, that future revenue had not been analysed and that the profit actually made by TIB was small.
217. It follows that the Commission took the view that G. R.'s purchase of TIB's stake did not constitute sufficient consideration for the purposes of the private investor test. It follows that the applicant's argument that the Commission found in the contested decision that no consideration had been envisaged for TIB's stake in the undertaking is unfounded.
218. As regards consideration for the shareholder loan which TIB granted to the applicant (measure 12), the Commission stated the following in recital 102 of the contested decision:

'[I]t is noted that the agreed rate of interest was 12% but that the amount of interest was capped at 50% of annual profits. The reports had already pointed out that [the applicant] would not generate any profits during at least the first two years, which is what in fact happened. No increased interest rate was agreed to compensate for the years for which interest payments were improbable. Consequently, TIB knowingly granted a shareholder loan which did not give it any additional voting rights, without demanding any security and at 0% interest for at least two years. No risk premium was agreed to offset the risks forecast in the report on the basis of which the shareholder loan ... was agreed.'

219. That passage shows that the Commission took the view that an interest rate of 12% per annum did not constitute sufficient consideration for the shareholder loan granted by TIB for the purposes of the private investor test. It follows that the applicant's argument that the Commission found in the contested decision that consideration had not been envisaged for the shareholder loan that TIB granted to the applicant is unfounded.
220. As regards, second, the funds contributed to the undertaking by G. R., it must be recalled that the Commission took the view in the contested decision that the two loans granted to G. R. for a total amount of DEM 2 million constituted two aid measures in favour of the applicant (see paragraphs 21 and 24 above).
221. The applicant claims, in essence, that the loan that constitutes measure 16 did not benefit from a guarantee in favour of the applicant and that G. R. himself was responsible for paying interest on and redeeming the two loans which he had taken out and which he used to finance his stake in the applicant.
222. It must be noted that the Commission admitted in its pleadings that it wrongly found, in the decision of 30 October 2002, that the loan that is the subject-matter of measure 16 was covered by the 90% guarantee from the Land of Thuringia (measure 13). The Court of First Instance finds that that error is corrected in the contested decision, in which the Commission states, in recital 99, that the loan that is the subject-matter of measure 16 'was included in a Federal Government guarantee to the granting Deutsche Ausgleichsbank'.
223. As regards the applicant's claim that G. R. made the interest payments on those two loans and redeemed the capital, it must be noted that the Commission never claimed that G. R. was not liable for those loans. On the contrary, the Commission stated that the loans were granted to G. R. Therefore, it appears obvious, as the Commission rightly notes, that G. R. was liable for interest payments and redemption of the capital.
224. As regards the applicant's other claims, the Court of First Instance finds that they really allege that the Commission erred in its assessment regarding TIB's involvement in the undertaking and the application of the guidelines on aid for rescuing and restructuring firms in difficulty and therefore must be examined in the context of the other parts of the plea.
225. In the light of the above, the first part of the plea must be rejected as unfounded.

2. Classification of the undertaking as a firm in difficulty

a) Arguments of the parties

226. The applicant submits that, even though its classification as a firm in difficulty is particularly relevant when assessing the investment grant (measure 15), that classification also affects the assessment of other aid measures, in particular TIB's stake and its shareholder loan (measures 11 and 12). According to the applicant, that appraisal is also the reason why the Commission refused to apply the guidelines on regional aid.
227. The Commission contends that, as regards the classification of the applicant as a firm in difficulty, its assessment is not wrong and refers to the explanations previously given.

b) Findings of the Court

228. It must be noted that the applicant does no more than point out the effect that its classification as a firm in difficulty had on the examination of several aid measures and on the applicability of the guidelines on regional aid in this case.
229. It is enough to recall, as was stated in paragraph 133 above, that the Commission did not commit a manifest error of assessment in finding, in recital 118 of the contested decision, that the applicant was a firm in difficulty from 1994 to the end of 1996.
230. Consequently, the second part of the plea must be rejected.

3. Incorrect assessment of TIB's involvement in the undertaking (measures 11 and 12)

a) Arguments of the parties

231. The applicant submits that the contested decision, which stated that TIB did not behave like a private investor, is vitiated in this respect by a manifest error of assessment.
232. The applicant submits that TIB decided in favour of the investment after the firms RBSH&P and AA had prepared detailed experts' reports on the business plan. According to the applicant, those experts' reports obviously took into account the economic risks associated with the creation of a company and set out the investments and organisational measures that would be required to guarantee the company's success, as shown by the applicant's economic situation today. If it had doubts in this respect, the Commission could have instructed an independent expert. The applicant submits that saving jobs was only a secondary aim for TIB, which was admittedly emphasised in AA's report because, for a public undertaking, it plays an important role. Therefore, the reports did not recommend a restructuring and, in any event, even if they had done so, this would not have precluded TIB's involvement from being consistent with the conditions of a market economy. Moreover, according to the applicant, this is a vicious circle since the Commission concluded that there was a need for restructuring from the fact that the funds that TIB contributed to the undertaking constituted State aid.
233. The applicant submits that, contrary to what the Commission claims, the articles of association ('Gesellschaftsvertrag') of 23 March 1994 envisaged that TIB's involvement would be for suitable consideration. First, G. R. was given the right to buy back TIB's stake (measure 11), in return for interest payments of 6% per annum from the date of payment. This is in fact what happened at the end of 1999. Second, the shareholder loan (measure 12) required interest payments of 12% per annum. The applicant explains that capping interest payments at half the annual net profit is a common clause that is normal in the case of shareholder loans to avoid burdening the undertaking, during the start-up phase, with interest payments that could jeopardise its success. The low rate of interest is compensated, as in the present case, by a higher interest rate in profitable years. That cap thus reflected TIB's interest, as a shareholder, in the economic success of the applicant and was matched by the absence of interest and dividends payments to G. R. Given that the agreed interest rate was 12%, the applicant submits that the Commission cannot claim that the parties did not make provisions for a risk premium. TIB received high interest payments from the applicant until redemption of the loan at the end of 1999.
234. The applicant also challenges the Commission's assessment that G. R.'s participation in the applicant did not take place on the same conditions as TIB's. G. R. invested DEM 2.055 million in the undertaking, of which DEM 2 million were financed with two loans he had taken out (measures 16 and 17). According to the applicant, those funds, and not just the amount of DEM 0.055 million, must be taken into consideration when it comes to assessing the participation of the private investor. As regards the loan that is the subject-matter of measure 16, the applicant submits that it was not covered by a State guarantee and that G. R. bore the entire risk associated with the loan's repayment. As regards the loan that is the subject-matter of measure 17, for which G. R. was personally liable together with the applicant, the applicant submits that the fact that the loan was backed by a charge on the applicant's land is irrelevant, given that it was not backed by a charge on State resources. Moreover, the applicant complains that, since the two loans were granted under start-up aid programmes which the Commission had authorised, the Commission cannot argue later that businessmen who relied on that aid are not proper investors. According to the applicant, the fact that aid was granted is secondary when compared to the wholehearted commitment of an investor whose own existence is at risk. For that reason, G. R. is better suited to serve as a 'comparable investor' than a large undertaking whose existence is not under threat if the project fails.
235. The Commission contends that the arguments put forward by the applicant regarding TIB's involvement in the undertaking must be rejected as unfounded in their entirety.

b) Findings of the Court

236. According to settled case-law, investment by public authorities in the capital of undertakings, in whatever form, may constitute State aid (see Case T-152/99 HAMSA v Commission [2002] ECR II-3049, paragraph 125, and the case-law cited).
237. In order to determine whether TIB's acquisition of a 49% stake in the share capital of the applicant (measure 11) and the shareholder loan of DEM 6 million it granted to the applicant (measure 12) constitute State aid, it is appropriate to apply the criterion, referred to in the contested decision, of the private investor, a test which moreover is not contested by the applicant. Thus, it is necessary to consider whether in similar circumstances a private investor of a size comparable to that of the public investor might have been prompted to engage in a transaction of such an extent.
238. It has been stated in that regard that although the conduct of a private investor with which the intervention of a public investor pursuing economic policy aims must be compared need not be the conduct of an ordinary investor laying out capital with a view to realising a profit in the relatively short term, it must at least be the conduct of a private holding company or a private group of undertakings pursuing a structural policy whether general or sectoral and guided by prospects of profitability in the longer term (see HAMSA v Commission, paragraph 126, and the case-law cited). In addition, the comparison between the conduct of public and private investors must be made by reference to the attitude which a private investor would have had at the time of the transaction in question, having regard to the available information and foreseeable developments at that time (Joined Cases T-228/99 and T-233/99 Westdeutsche Landesbank Girozentraleand Land Nordrhein-Westfalen v Commission [2003] ECR II-435, paragraphs 244 to 246).
239. It must also be recalled that the assessment by the Commission of the question whether a measure satisfies the test of a private operator in a market economy involves a complex economic appraisal. Where the Commission adopts a measure involving such an appraisal, it enjoys a wide discretion and, even though judicial review is in principle a comprehensive review of whether a measure falls within the scope of Article 87(1) EC, review of that measure is limited to establishing whether there has been compliance with the rules governing procedure and the statement of reasons, whether any error in law has been made, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers. In particular, the Court is not entitled to substitute its own economic assessment for that of the author of the decision (see Case T-198/01 Technische Glaswerke Ilmenau v Commission [2004] ECR II-2717, paragraph 97, and the case-law cited).
240. It is in the light of those principles that the contested decision must be examined.
241. In the first place, it cannot be held against the Commission that it found, in light of two consultants' reports available at the time the applicant was created, namely the report by RBSH&P, of 29 November 1993, and the report by AA, of 11 January 1994, that TIB's aim was to save jobs.
242. According to the report by AA, which was intended to give TIB the opportunity to evaluate its participation in the undertaking, TIB's aim was to save jobs and, as the applicant indeed admits, the consultants had been instructed to draw up the business plan with that objective in mind. Admittedly, nothing precludes public undertakings from taking into consideration social, regional or sectoral policies. However, a subscription of capital by public authorities must be assessed in the light of the private investor test, leaving aside all social, regional policy and sectoral policy considerations (see, to that effect, Joined Cases T-129/95, T-2/96 and T-97/96 Neue Maxhütte Stahlwerke and Lech-Stahlwerke v Commission [1999] ECR II-17, paragraph 120, and the case-law cited).
243. In the second place, it must be observed that, in order to reach the conclusion that TIB's stake and shareholder loan were not consistent with the behaviour of a private investor, the Commission rightly examined both the situation of the applicant at the moment when the public intervention took place and the company's economic outlook.
244. In this regard, the Court of First Instance observes that, contrary to the applicant's claims, the Commission correctly assessed the situation of the undertaking at the moment TIB intervened. It is clear from paragraphs 116 to 133 above, which concern classification of an undertaking as a firm in difficulty, that, as the consultants found at the time, the applicant had to undergo a restructuring to ensure its viability.
245. Even though, as the applicant submits, the fact that the applicant had to undergo a restructuring to ensure its viability cannot in itself establish that TIB's intervention was inconsistent with market conditions, it is still true that, where capital is contributed to a firm in difficulty, the risk of the investment in question is affected by the difficulties in which such a firm finds itself.
246. In this context, the applicant submits that TIB's involvement occurred following a detailed expert's report on the business plan and that the consultants, having examined the risks, reached the conclusion that the project had every chance of succeeding. In this respect, it must be noted, first, that according to the consultants the success of the applicant's business plan depended to a large extent on the decision of the regional authorities, in the context of the structural policy of the Land of Thuringia, to support economically the only porcelain manufacturer in the region, namely the applicant. In addition, the Court of First Instance notes that, even though the reports by RBSH&P and AA envisaged measures intended to ensure the viability of the undertaking, the two reports also show that the consultants considered the business plan to be very risky. Moreover, contrary to what the applicant claims, the risks identified by the consultants were not those that had existed prior to the implementation of the measures. The consultants took the view that numerous risks remained and that the success of the business plan was not entirely certain. In addition, it is clear that the consultants' assessments in their respective reports largely concerned considerations pertaining to the undertaking's viability rather than the considerations pertaining to profitability that normally guide the industrial and commercial strategy of private operators (see, to that effect, Case T-296/97 Alitalia v Commission [2000] ECR II-3871, paragraph 84).
247. In the light of, first, the situation of the undertaking at the moment the measures concerned were granted and second, the development prospects, one may take the view that TIB was motivated by social and regional considerations which are characteristic of the behaviour of the State as a public authority and not as a market player.
248. In the third place, the Commission found, having regard to the economic prospects of the applicant at that point, that the consideration for TIB's involvement in the undertaking was not sufficient. That finding cannot be described as a manifest error.
249. As regards, first, the 49% stake in the share capital of the applicant (measure 11), the Commission rightly found that future revenue had not been analysed. In this respect, it must be recalled that the consultants' assessments in the reports made available to TIB before TIB acquired a stake in the applicant did not include considerations pertaining to profitability. Accordingly, the Court of First Instance finds that the consultants' reports did not analyse potential revenue.
250. The argument put forward by the applicant that, pursuant to the articles of association ('Gesellschaftsvertrag') of 23 March 1994, G. R. was given the right to buy back TIB's stake in return for interest payments of 6% per annum cannot weaken the Commission's finding. That situation cannot be equated with an analysis of future revenue, since the applicant does not claim that G. R. committed himself to acquiring that stake under any circumstances. In addition, the applicant does not put forward any concrete information capable of calling into question the Commission's assessment that the actual profit made by TIB was small. In this respect, the Court of First Instance notes, first, that the reference rates given in recital 101 of the contested decision for the various loans granted to the applicant are above 6%. Second, as the Commission stated in recital 99 of the contested decision, the amount of DEM 1.975 million which TIB made available to the applicant in the form of a holding constitutes capital which in the event of insolvency would be treated as junior ranking debt. It follows that a profit amounting to an annual interest payment of 6%, as is provided for in the articles of association ('Gesellschaftsvertrag') of 23 March 1994, cannot be considered to be sufficient consideration for TIB's acquisition of a stake in the applicant.
251. As regards, second, the consideration envisaged for the shareholder loan (measure 12), the Commission stated in recital 102 of the contested decision that, even though the agreed interest rate was 12%, that loan had been granted without any security being demanded and at 0% interest for at least two years. The Commission also noted that the amount of interest was capped at 50% of annual profits. The two reports forecast that profits would not be generated for at least the first two years. No increased interest rate was agreed to compensate for the years during which interest payments were unlikely. Moreover, the loan did not give TIB any additional voting rights and no risk premium was agreed to offset the risks forecast by the consultants.
252. The applicant has not adduced any evidence or arguments that would permit taking the view that the Commission manifestly erred in its assessment when it found that such consideration was not sufficient. First of all, the applicant cannot claim, without contradicting itself, that agreeing an interest rate of 12% made it possible, on the one hand, to compensate for loss-making years and, on the other hand, to take account of the risks of the project. It is clear that, in the light of the turnover forecast for the first profitable years and the fact that the amount of interest was always capped at 50% of annual profits, it would not have been possible to envisage such compensation. Further, it must be noted that the Commission also took into consideration that no security had been provided and that the loan did not confer additional voting rights, which the applicant does not contest.
253. In the fourth place, the Commission stated that it was not possible to regard G. R. as a private investor to whom TIB might be compared (recital 99 of the contested decision).
254. It must be recalled in this respect that, according to the Commission's practice, which has been upheld by the case-law, where an intervention by public authorities takes place at the same time as a significant intervention by private operators and under comparable conditions, no State aid is involved (Case T-358/94 Air France v Commission [1996] ECR II-2109, paragraphs 148 and 149). However, both the Court of Justice and the Court of First Instance have held that, where private investments in the same undertaking occur only after the allocation of public funds, the presence of aid cannot be ruled out (see, on this point, France v Commission, paragraph 40).
255. In the present case, the applicant claims essentially that G. R. invested DEM 2.055 million in the applicant, of which DEM 2 million were financed by two loans that he had taken out.
256. In this respect, it must be recalled that, as recitals 102 and 130 of the contested decision show, the Commission found a finding which the applicant did not dispute that those two loans had not been granted under market conditions and that, even though they had been granted to G. R., they were really intended to support the applicant. The classification of the two loans as aid granted to the applicant (measures 16 and 17) rules out the possibility of considering those funds to be a contribution financed by G. R through his own resources. Therefore, G. R.'s contribution through his own resources amounted to DEM 0.055 million only.
257. It must be recalled that the Commission also took into consideration, on the one hand, the fact that TIB contributed DEM 1.975 million in the form of a stake and, on the other hand, the fact that G. R. had the right to cancel the agreement a right TIB did not have if TIB did not acquire a stake in the undertaking and grant the shareholder loan and, in general, other aid measures did not materialise.
258. Therefore, it can be held that the contribution of private capital came about more as a result of economic support by the State than as a result of a decision to invest taken by a well-informed investor convinced that his investment would be profitable (see, to that effect, Alitalia v Commission, paragraph 93). Under those circumstances, it is not possible to find that the contribution of public funds satisfies the private investor test.
259. The fact that G. R. had to pay back the two loans cannot weaken that finding. First, as stated in paragraph 256 above, the applicant does not put forward any arguments seeking to call into question the Commission's assessment that those two loans, even though they were granted to G. R., constitute two aid measures in favour of the applicant. Second, even if that fact had to be interpreted as meaning that the private investor took a certain risk by acquiring a share in the undertaking, paragraphs 256 and 257 show that that risk was ultimately smaller than the risk taken by TIB.
260. In the light of all of the above, it must be held that the Commission did not commit a manifest error of assessment when it found, in recital 98 of the contested decision, that TIB did not act like a private investor in a market economy and, as a consequence of that finding, classified TIB's acquisition of a stake (measure 11) and the shareholder loan (measure 12) as State aid in favour of the applicant.
261. Consequently, the third part of the plea must be rejected.

4. Assessment of the aid under the guidelines on aid for rescuing and restructuring firms in difficulty

a) Arguments of the parties

262. The applicant submits that the contested decision, in so far as it finds that the measures granted from 1994 to the end of 1996 are not compatible with the guidelines on aid for rescuing and restructuring firms in difficulty, is vitiated in this respect by a manifest error of assessment.
263. As regards, first, the assertion that there was no restructuring plan, the applicant submits, first of all, that that assessment is incompatible with the finding that the consultants' reports that were available at the time described a restructuring. According to the applicant, the Commission should have relied on the business plan which had been drawn up, prior to the applicant's creation, by RBSH&P by common accord with G. R. and which was reviewed by AA. Moreover, that plan was implemented successfully. Further, the applicant submits that the Commission was aware of all the criteria of the business plan, in particular: a detailed analysis of the market situation, the products and the customers which the new company sought to attract; concrete forecasts for estimated turnover and actual turnover; a number of different 'cash-flow' scenarios taking into account various financing combinations; all planned and all implemented financing measures, including contributions through public and private funds; planned and implemented investments; and, finally, use of funds as shown by the company's annual reports. As regards the financing envisaged for the creation of the company, the applicant submits that on 15 March 2001 the Federal Republic of Germany sent an investment plan to the Commission concerning the investments made between 1994 and 2000 and that its letter of 1 October 2002 explained in greater detail the content of the plan drawn up by RBSH&P. According to the applicant, the small changes to the overall financing plan resulted from the decision to acquire rather than rent the fixed assets.
264. If the Commission found aspects difficult to understand, it could have called on an expert or could have requested explanations from the German Government or the applicant. However, during the entire formal investigation procedure, the Commission did not ask a single specific question relating to difficulties in understanding individual aspects of the business plan or its overall context. Moreover, the director general for competition expressly confirmed in June 2002 that he had all the information needed to examine the case.
265. As regards, second, the Commission's assessment of the private contribution to the total cost of the restructuring, the applicant submits that TIB, G. R. and the applicant itself made a significant contribution. First, the applicant submits that TIB took a stake in the applicant under market conditions and that, therefore, the funds that it made available to the applicant (measures 11 and 12) should have been regarded as a contribution made through private funds. The applicant submits, further, that the Commission should have taken into consideration as a personal contribution by G. R. not only DEM 0.055 million but also the funds provided in the form of loans amounting to DEM 2 million, since G. R. was liable for them. Moreover, the fact that G. R. did not ask the applicant to make the interest payments should also be taken into consideration. According to the applicant, those interest payments have been proven. Finally, the applicant submits that the Commission should have taken into account that the positive cash-flow of the undertaking was according to the business plans and in actual fact crucial to the undertaking's successful development. Those were funds that, according to the business plan, the applicant had to generate itself by selling its products and which were available for the purposes of building the company, given that G. R. had waived his right to dividend payments until 1999.
266. The Commission denies that it committed an error of assessment in finding that there was no credible and coherent restructuring plan based on realistic assumptions concerning the conditions under which the undertaking would be run in the future and contends that aid measures also could not be authorised in view of the undertaking's negligible contribution to the restructuring costs.

b) Findings of the Court

267. Essentially, the applicant takes issue with the Commission's finding that the measures from which the applicant benefited between 1994 and the end of 1996 are not compatible with the common market in the light of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty.
268. First, it must be recalled that, in accordance with settled case-law, Article 87(3) EC confers on the Commission a wide discretion to allow aid by way of derogation from the general prohibition laid down in Article 87(1), since the determination in such a case of the question whether State aid is or is not compatible with the common market raises problems which presuppose the examination and appraisal of complex economic facts and conditions (Case C-39/94 SFEI and Others [1996] ECR I-3547, paragraph 36). Since it is not for the Community judicature to substitute its own assessment of the facts, particularly the economic circumstances, for that of the author of the decision, the Court must, in such a context, confine its review to determining whether the Commission complied with the rules governing procedure and the provision of the statement of reasons, whether the facts are accurately stated and whether there has been any manifest error of assessment or misuse of powers (Case T-126/99 Graphischer Maschinenbau v Commission [2002] ECR II-2427, paragraph 32, and Case T-137/02 Pollmeier Malchow v Commission [2004] ECR II-3541, paragraph 52).
269. It should also be recalled that, in accordance with settled case-law, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted and the complex assessments made by the Commission must be examined solely on the basis of the information available to it at the time when those assessments were made (Case T-123/97 Salomon v Commission [1999] ECR II-2925, paragraph 48, and Graphischer Maschinenbau v Commission, paragraph 33).
270. Finally, the Commission may adopt a policy as to how it will exercise its discretion in the form of measures such as the guidelines in question, in so far as those measures contain rules indicating the approach which the institution is to take and do not depart from the rules of the Treaty (see Case C-278/00 Greece v Commission [2004] ECR I-3997, paragraph 98, and the case-law cited). Therefore, it is in the light of those rules that the contested decision must be examined.
271. In the present case, the Commission examined the aid granted to the applicant in the light of the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, which define the criteria to be used in the evaluation of the compatibility of aid for restructuring firms in difficulty.
272. The guidelines stipulate that restructuring aid must be granted under a plan, which is approved only if three substantive conditions are satisfied: the plan must restore the firm's viability, avoid undue distortions of competition and ensure that the aid is in proportion to the restructuring costs and benefits. Therefore, such aid must be linked to a genuine restructuring plan and can only be granted if it can be shown that keeping an undertaking going and returning it to profitability are in the Community's best interest.
273. It is for the Court of First Instance to check whether, in the present case, those requirements were met.
274. It is apparent from the contested decision that, in finding that the conditions laid down in the guidelines on aid for rescuing and restructuring firms in difficulty had not been fulfilled, the Commission relied, first, on the fact that there was no restructuring plan.
275. It must be noted, in this respect, that a restructuring plan must contain precise and reliable information as well as all the explanation for assessing whether it fulfils the substantive conditions laid down in the guidelines on aid for rescuing and restructuring firms in difficulty.
276. In the contested decision, the Commission explained that 'despite repeated requests from the Commission, [the Federal Republic of Germany] ... never submitted the final version of a restructuring plan ... or indicated which restructuring measures were effectively implemented' (recital 169). Moreover, in recital 167 of the contested decision, the Commission set out several findings justifying this conclusion. Accordingly, the Commission noted that the first report had been drawn up before the asset sale had taken place and that the second was intended only for TIB to help it decide whether to acquire a stake in the company. Moreover, the Commission noted that the proposed measures and their costs differed from one report to the other and that they also did not match the costs which the Federal Republic of Germany described in the 'investment plan' and those set out in detail in Table 5 of the contested decision, on the basis of which the aid was allegedly granted. In addition, the Commission found that, in the two reports, the list of measures intended for the financing of those costs failed to mention numerous aid measures that had actually been granted to the undertaking (Table 4 of the contested decision), something which also held true for the 'investment plan'. Therefore, the Commission stated that either the plan was not the final plan or the undertaking received too much aid.
277. The Commission's analysis in this respect is not vitiated by a manifest error of assessment.
278. The file shows that the reports by RBSH&P and AA differ in respect of the analysis of the costs of the proposed measures and that they do not take into consideration all the financial aid actually granted to the applicant during the period in which it was in difficulty. Moreover, the consultants' assessments do not accord with the costs mentioned by the Federal Republic of Germany in the 'investment plan'. Under those circumstances, the Commission was justified in finding that the aid granted to the applicant was not linked to a restructuring plan.
279. The applicant has not put forward any argument that could cast doubt on that finding and simply mentions, in a general manner, the elements that, according to it, take the place of a restructuring plan, without however specifying where among the documents they may be found. Moreover, the applicant has not explained at all the inconsistencies in the three documents that the Commission examined in the contested decision.
280. Contrary to the applicant's claims, the finding that there was no restructuring plan is not inconsistent with the Commission's finding that the applicant had undergone a restructuring. The fact that the Commission may have found that the reports by RBSH&P and AA envisaged measures for the restructuring of the undertaking cannot render those reports exhaustive. Moreover, aid granted to a firm in difficulty cannot be declared compatible with the common market on the sole ground that restructuring was envisaged, even if the restructuring ends up being successful, as in the present case. It must be stated, in this respect, that in order for the Commission to be in a position to assess whether the aid at issue can encourage the beneficiary undertakings to act in a way that contributes to achieving the aim set out in Article 87(3)(c) EC, it must first check whether the restructuring plan fulfils all the substantive conditions laid down in the guidelines on aid for rescuing and restructuring firms in difficulty.
281. It is also necessary to reject the applicant's argument that, if the Commission found that the information it had was incomplete, it should have asked the German authorities for additional explanation. In this respect, it must be emphasised that, by its decision opening the formal investigation procedure in respect of the aid granted to the applicant, the Commission invited the Federal Republic of Germany to provide it with a restructuring plan (see paragraph 7 above) for the applicant. In addition, in its decision to extend the formal investigation procedure (see paragraph 9 above), the Commission noted that the applicant had not submitted a restructuring plan. As a consequence, the Commission repeated the doubts it had already expressed when it opened the formal investigation procedure. Therefore, it must be held that the Commission's assessment that there was no restructuring plan does not in any way signal that the Commission did not have the necessary information to assess the compatibility of the aid, but underlines that the conditions which must be satisfied in order for restructuring aid to be authorised in accordance with the guidelines in particular the requirement for a coherent restructuring plan at the moment the aid is granted were not fulfilled. Under those circumstances, the argument has no factual basis.
282. The Commission found, second, that the private contribution to the total cost of the restructuring could not be considered to be substantial.
283. The applicant does not dispute that, under the 1994 Guidelines on aid for rescuing and restructuring firms in difficulty, beneficiaries must normally make a substantial contribution to the restructuring through their own resources or through external financing secured under market conditions.
284. Here, the Commission based its decision, first, on the fact that, in the absence of a precise breakdown of the restructuring costs, it could not be concluded that the private contribution was substantial and, second, on the finding that only the sum of DEM 0.055 million could be considered to have been contributed by a private investor.
285. The Court of First Instance finds that that assessment is not vitiated by a manifest error.
286. First, it is clear that, in the absence of a coherent and credible restructuring plan, the Commission was not in a position to assess the size and the nature of the personal contribution to the total cost of the restructuring. Further, the arguments put forward by the applicant cannot call into question the Commission's assessment, in recital 171 of the contested decision, that only G. R.'s contribution of DEM 0.055 million was strictly private.
287. As regards the applicant's argument that the funds contributed by TIB must be considered to be a private contribution, it suffices to note, as paragraphs 236 to 260 above show, that TIB's involvement in the applicant was not subject to conditions that would have been reasonable for a private investor and that, therefore, the funds that TIB contributed to the applicant (measures 11 and 12) must be considered to be State aid. As regards the cash-flow, it cannot be equated with a contribution of the beneficiary undertaking. In the context of a restructuring of a firm in difficulty, a positive cash-flow is merely the result of the aid granted to the beneficiary and cannot, for that reason, be considered to be a contribution to the cost of the restructuring. Further, as regards the funds that were allegedly contributed by the private investor, it is enough to recall that the applicant has not shown that the two loans with which G. R. financed his participation in the applicant (measures 16 and 17) did not constitute State aid in favour of the applicant. Finally, the applicant did not submit any evidence during the administrative phase of the investigation or during the present proceedings to prove that the private investor waived his right to interest payments. Therefore, the Commission was right not to regard this as a proven fact.
288. It follows from the above that the applicant has not demonstrated that the Commission's findings regarding the proportionality of the aid to the cost of the restructuring were manifestly wrong.
289. Consequently, in the light of all the above, it must be held that the Commission was justified in considering that the conditions laid down in the guidelines on aid for rescuing and restructuring firms in difficulty were not fulfilled.
290. It follows that the fourth part of the plea must be rejected.
291. Consequently, the fourth plea must be rejected as a whole and the entire application dismissed.

Measures of organisation of procedure requested by the applicant

292. The applicant requested, first, that an expert be heard on the question whether the business plans drawn up by the independent consultants at the time when the applicant was set up forecast difficulties, second, that the director, at the time, of the Jena Employment Office be heard on the purpose of the measures implemented by the applicant under Paragraph 249h of the AFG and, third, that the applicant's shareholder and manager be heard on whether, in connection with implementation of the measures under Paragraph 249h of the AFG, the applicant bore some of the cost itself, the measures would have been implemented in the absence of that provision and the works had already been carried out before the applicant was created.
293. The Commission did not express a view in this respect.
294. The Court considers, in the present case, that it has sufficient information from the evidence in the file and finds that there is accordingly no need to order the requested measures of organisation of procedure.

Costs

295. Pursuant to Article 87(3) of the Rules of Procedure of the Court of First Instance, where the circumstances are exceptional, the Court may order that the costs be shared or that each party bear its own costs. In the present case, it must be noted that, while the applicant fails in its pleas seeking the annulment of the contested decision, after the action had been brought the Commission amended its decision of 30 October 2002 to which the application for annulment referred and adopted a new decision, which constitutes the contested decision. Consequently, the applicant partly reworked its reasoning and amended the form of order it sought. Moreover, following adoption of the contested decision, the parties reached an agreement concerning the amount of the grants that are the subject-matter of measure 32. Following a question asked by the Court of First Instance, the applicant and the defendant confirmed that, in respect of that measure, there were no longer any points of issue between the main parties.
296. In the circumstances of the present case, the Court will make an equitable assessment in holding that the applicant is to bear its own costs and pay a third of the costs incurred by the Commission. Consequently, the Commission is to bear two thirds of its own costs.
297. The Land of Thuringia is to bear its own costs.
298. Under the first subparagraph of Article 87(4) of the Rules of Procedure, the Member States which have intervened in the proceedings are to bear their own costs. It follows that the Federal Republic of Germany must be ordered to bear its own costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition)

hereby:

1. Dismisses the action;

2. Orders Kahla/Thüringen Porzellan GmbH to bear its own costs and to pay a third of the costs incurred by the Commission, and the Commission to bear two thirds of its own costs;

3. Orders the Land of Thuringia and the Federal Republic of Germany to bear their own costs.

Vilaras

Martins Ribeiro

Dehousse

Šváby

Jürimäe

Delivered in open court in Luxembourg on 24 September 2008.

E. Coulon

M. Vilaras

Registrar

President

Table of contents


Factual background

The contested decision

Procedure and forms of order sought by the parties

Law

A The first, second and third pleas, alleging infringement of Articles 87 EC and 88 EC, the principle of legal certainty and the principle of the protection of legitimate expectations

1. The investment grant by the Land of Thuringia (measure 15)

a) Arguments of the parties

Infringement of Articles 87 EC and 88 EC

Conditions for the application of the scheme

Classification of the applicant as a firm in difficulty

Infringement of the principle of legal certainty

Infringement of the principle of the protection of legitimate expectations

b) Findings of the Court

Infringement of Articles 87 EC and 88 EC

The scope of the authorised scheme

The grant awarded to the applicant

Infringement of the principle of legal certainty

Infringement of the principle of the protection of legitimate expectations

2. The employment promotion grants linked to environmental protection investments (measure 26)

a) Arguments of the parties

Infringement of Articles 87 EC and 88 EC

Infringement of the principle of legal certainty

Infringement of the principle of the protection of legitimate expectations

b) Findings of the Court

Infringement of Articles 87 EC and 88 EC

Compliance with the scheme under Paragraph 249h of the AFG

Classification of the employment promotion grants as State aid

Infringement of the principle of legal certainty

Infringement of the principle of the protection of legitimate expectations

B The fourth plea, alleging manifest errors of fact and law

1. Incorrect finding of facts

a) Arguments of the parties

b) Findings of the Court

2. Classification of the undertaking as a firm in difficulty

a) Arguments of the parties

b) Findings of the Court

3. Incorrect assessment of TIB's involvement in the undertaking (measures 11 and 12)

a) Arguments of the parties

b) Findings of the Court

4. Assessment of the aid under the guidelines on aid for rescuing and restructuring firms in difficulty

a) Arguments of the parties

b) Findings of the Court

Measures of organisation of procedure requested by the applicant

Costs

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* Language of the case: German.