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

ORDER OF THE GENERAL COURT (First Chamber)

31 January 2020 (*)

(Action for annulment — State aid — Tax advantages granted by Ireland to fossil fuel producers — Letter from the Commission — Act not open to challenge — Inadmissibility)

In Case T‑6/19,

Irish Wind Farmers’ Association Clg, established in Kilkenny (Ireland),

Carrons Windfarm Ltd, established in Shanagolden (Ireland),

Foyle Windfarm Ltd, established in Dublin (Ireland),

Greenoge Windfarm Ltd, established in Bunclody (Ireland),

represented by M. Segura Catalán and M. Clayton, lawyers,

applicants,

v

European Commission, represented by L. Grønfeldt, K. Herrmann and S. Noë, acting as Agents,

defendant,

APPLICATION under Article 263 TFEU for the annulment of the Commission’s letter of 25 October 2018 concerning State aid allegedly granted by Ireland to fossil fuel producers,

THE GENERAL COURT (First Chamber),

composed of H. Kanninen, President, N. Półtorak (Rapporteur) and M. Stancu, Judges,

Registrar: E. Coulon,

makes the following

Order

 Background to the dispute

1        Carrons Windfarm Ltd, Foyle Windfarm Ltd, Greenoge Windfarm Ltd and the Irish Wind Farmers’ Association (‘the IWFA’), are the applicants in the present case, with the three abovementioned companies being members of the IWFA.

2        The IWFA is Ireland’s representative body and lobby group for independent windfarm developers. The association has approximately 30 members. In addition to the members with operational windfarms, the IWFA has members with future projects.

3        Carrons Windfarm operates a windfarm with two turbines situated on a farm in Shanagolden (Ireland). Operations on the windfarm commenced in December 2010 with full operation in 2011. Property taxes due amounted to approximately EUR 84 000 in 2018.

4        Foyle Windfarm operates a windfarm with four turbines in County Kilkenny (Ireland). Operations on the windfarm commenced in 2017. Its property taxes were set at a total of over EUR 127 000 for 2018.

5        Lastly, Greenoge Windfarm Ltd operates a small windfarm with four turbines in County Carlow (Ireland). Operations on the windfarm commenced in 2004. In 2018, the total amount of property taxes due amounted to over EUR 106 000 per year.

6        In 2001, the Valuation Act was adopted in Ireland. It repealed all the previous Valuation Acts and provides for the revaluation of all Irish companies by the Valuation Office (Ireland) from 2005 onwards for the purposes of determining the amount of the Irish business rate.

7        On 4 February 2016, in the context of the revaluations provided for in the Assessment Act, the IWFA lodged a complaint with the European Commission regarding alleged State aid granted in Ireland to fossil fuel producers of electricity by means of reduced business rates (‘the measure at issue’).

8        The Commission forwarded the complaint to the Irish authorities, who, on 9 June 2016, submitted their observations and provided information contesting the very existence of State aid in view of the application of a general scheme and the existence of an objective justification for the application of different methods.

9        By letter of 15 July 2016, the Commission informed the IWFA of its preliminary assessment of the complaint, namely that the measure at issue did not constitute State aid within the meaning of Article 107(1) TFEU. The Commission stated that that was not a definitive position and that the IWFA could challenge that assessment or provide further new information that might be useful. It also informed the IWFA that, in the absence of any reaction on the part of the IWFA within 1 month, it would deem the complaint to have been withdrawn.

10      By letter of 4 August 2016, the IWFA provided the Commission with additional information and requested the Commission to adopt a formal decision.

11      By letter of 12 January 2017, the Commission replied to the complainant stating that it considered that there was no selective advantage that would make it possible to characterise the measure at issue as State aid. The Commission stated that that was not a definitive decision and that the IWFA could challenge that assessment or provide further new information that might be useful. It also informed the IWFA that, in the absence of any reaction on the part of the IWFA within 1 month, it would deem the complaint to have been withdrawn.

12      By letter of 12 February 2017, the IWFA submitted a 16-page document containing additional information to the Commission. By the latter, it reiterated its position that the measure at issue constituted State aid that could not be justified. It also requested the Commission to adopt a decision on that matter.

13      In an exchange of emails with the Commission on 5 April 2017, the IWFA again provided additional information.

14      By email of 23 May 2017, the IWFA asked the Commission to suspend the case temporarily until November 2017, pending the publication of Valuation Certificates in September 2017, which could provide useful additional information for the case. By email of 24 May 2017, the Commission granted the requested suspension.

15      By letter of 31 October 2017, the IWFA submitted updated information to the Commission. It included a table showing the differences in valuation of fossil fuel producers of electricity and other competitors in one of the Irish counties as an example. By that letter, the IWFA reiterated its position as to the classification of the measure at issue as State aid and invited the Commission to reconsider its position.

16      The Commission sent a third letter to the IWFA on 25 October 2018 (‘the letter at issue’), stating that the additional information provided by the IWFA did not contain any basis for reversing its previous conclusion. It therefore maintained its view that the measure at issue did not constitute State aid. The Commission also noted that the IWFA could challenge that assessment or provide further new information that would allow the measure at issue to be regarded as State aid. It also informed the IWFA that, in the absence of any reaction on the part of the IWFA within 1 month, it would deem the complaint to have been withdrawn.

17      By letter dated 23 November 2018, the IWFA submitted further comments to the Commission. In those observations, IWFA clarified certain elements of its complaint and also referred to the analysis of the results of the assessment it had submitted on 31 October 2017. Finally, the IWFA asked the Commission to reconsider the qualification of the measure at issue and not to consider the complaint to have been withdrawn.

 Procedure and forms of order sought

18      By application lodged at the Court Registry on 4 January 2019, the applicants brought the present action.

19      By separate document lodged at the Court Registry on 2 April 2019, the Commission raised a plea of inadmissibility under Article 130 of the Rules of Procedure of the General Court. The applicants lodged their observations on that plea on 14 May 2019.

20      On 21 May 2019, the Commission forwarded to Ireland the comments submitted by the IWFA on 23 November 2018 and requested Ireland to submit additional information. Ireland sent its response to the Commission on 9 June 2019, which it confirmed and supplemented on 14 June 2019.

21      By Decision C(2019) 5257 of 9 July 2019 on State aid SA.44671 (2019/NN) granted by Ireland to the fossil fuel sector in the form of reduced business rates (‘the decision of 9 July 2019’), the Commission found that the measure at issue did not constitute State aid within the meaning of Article 107(1) TFEU.

22      By letter of 18 July 2019, the Commission forwarded to the applicants a non-confidential version of the decision of 9 July 2019.

23      On 30 September 2019, by a measure of organisation of procedure adopted under Article 89(3) of the Rules of Procedure, the Court asked the Commission to state whether a decision on the measure at issue in Case SA.44671, Ireland, had been adopted. By the same measure of organisation of procedure, the Court invited the parties, in the event that such a decision had been adopted, to submit their observations on the consequences that should be drawn therefrom in the context of the present proceedings. More specifically, the applicants were asked to state whether, in the light of the adoption of such a decision, they intended to maintain their appeal. The Commission and the applicant sent their replies to the Court on 24 and 28 October 2019 respectively.

24      Following a change in the composition of the Chambers of the General Court, pursuant to Article 27(5) of the Rules of Procedure, the Judge-Rapporteur was assigned to the First Chamber, to which the present case was accordingly allocated.

25      In their application the applicants claim that the Court should:

–        annul the letter at issue;

–        order the Commission to pay the costs.

26      In its plea of inadmissibility, the Commission claims that the Court should:

–        dismiss the action as inadmissible;

–        order the applicants to pay the costs.

27      In their observations on the plea of inadmissibility the applicants claim that the Court should:

–        reject the plea of inadmissibility and continue the main procedure;

–        in the alternative, consider the question of admissibility together with the substance;

–        order the Commission to pay the costs.

 Law

28      Pursuant to Article 130(1) and (7) of the Rules of Procedure, the Court may, if the defendant so requests, rule on the question of admissibility without considering the merits of the case.

29      In the present case, as the Commission has requested a ruling on inadmissibility, the Court, finding that it has sufficient information from the documents in the case file, has decided to rule on that application without taking further steps in the proceedings.

30      According to the Commission, the action is inadmissible. In that regard, the Commission submits that the letter at issue does not constitute a challengeable act within the meaning of Article 263 TFEU. In essence, the Commission argues that the letter at issue does not contain a final position on the part of the Commission on the property tax rates applied to the fossil fuel sector in Ireland. Rather, it is merely a preliminary assessment of the measure at issue. In the letter at issue, the Commission does not definitively reject the complaint and is simply offering the complainant the possibility of submitting new evidence or of contesting the preliminary assessment.

31      In view of these considerations, it is useful to recall that, under settled case-law, any provisions adopted by the institutions of the European Union, whatever their form, which are intended to have binding legal effects, are regarded as ‘actionable acts’, within the meaning of Article 263 TFEU. In order to ascertain whether or not an act which has been challenged produces such effects it is necessary to look to its substance. Those effects must be assessed in accordance with objective criteria, such as the contents of that act, taking into account, as appropriate, the context in which it was adopted and the powers of the institution which adopted the measure (see judgments of 13 February 2014, Hungary v Commission, C‑31/13 P, EU:C:2014:70, paragraphs 54 and 55 and the case-law cited, and of 25 October 2017, Romania v Commission, C‑599/15 P, EU:C:2017:801, paragraphs 47 and 48).

32      Furthermore, in the case of an action for annulment brought by a natural or legal person, as in the present case, the binding legal effects of the act being challenged must be capable of affecting the interests of the applicant by bringing about a distinct change in the applicant’s legal position (see, to that effect, judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 37 and the case-law cited).

33      It must be noted that, in the case of acts or decisions adopted by a procedure involving several stages, and particularly where they are the culmination of an internal procedure, it is only those acts which definitively determine the position of the institution upon the conclusion of that procedure which are open to challenge (judgments of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 10; of 18 December 1992, Cimenteries CBR and Others v Commission, T‑10/92 to T‑12/92 and T‑15/92, EU:T:1992:123, paragraph 28; and order of 21 November 2005, Tramarin v Commission, T‑426/04, EU:T:2005:405, paragraph 25). In that regard, an act may be classified as preliminary or preparatory if it is followed, in the context of the administrative procedure which has been initiated, by another act amenable to annulment proceedings (see, to that effect, judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 54). Furthermore, it is also apparent from the case-law that an intermediate act is not capable of forming the subject matter of an action if it is established that the illegality attaching to that act may be relied on in support of an action against the final decision for which it represents a preparatory step. In such circumstances, the action brought against the decision terminating the procedure will provide sufficient judicial protection (see judgment of 15 March 2017, Stichting Woonpunt and Others v Commission, C‑415/15 P, EU:C:2017:216, paragraph 46 and the case-law cited).

34      An action for annulment against acts expressing a provisional opinion of the Commission might make it necessary for the EU judicature to arrive at a decision on questions on which the institution concerned has not yet had an opportunity to state its position and would as a result anticipate the arguments on the substance of the case, confusing different procedural stages both administrative and judicial (see judgment of 15 March 2017, Stichting Woonpunt and Others v Commission, C‑415/15 P, EU:C:2017:216, paragraph 45 and the case-law cited).

35      In relation to State aid, in order to determine whether an act adopted by the Commission constitutes a decision taken under Article 4 of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down the detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9), it is necessary, in accordance with the case-law, to examine the substance of that act. The formal presentation of the act, namely, whether it is duly named by its author, whether it is sufficiently reasoned, and whether it mentions the provisions providing its legal basis, is, in principle, irrelevant for its classification. In principle, whether the act is described as a ‘decision’ is also irrelevant (judgment of 17 July 2008, AthinaïkiTechniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 44).

36      Furthermore, it should be noted that, pursuant to the second subparagraph of Article 12(1) of Regulation 2015/1589, the Commission must examine without delay any complaint submitted by any interested party concerning alleged unlawful aid. Upon receipt of such a complaint, the Commission must initiate the preliminary examination stage provided for in Article 108(3) TFEU. In that context, it must examine whether the measure at issue constitutes aid and, if so, whether that aid is compatible with the internal market (see, to that effect, order of 10 October 2017, Alex v Commission, T‑841/16, not published, EU:T:2017:724, paragraph 29 and the case-law cited).

37      In accordance with Article 15(1) of Regulation 2015/1589, that preliminary examination stage must be concluded by a Commission decision. Under Article 4(2) to (4) of that regulation, that decision may, as appropriate, find that the measure at issue does not constitute aid, state that the Commission raises no objections to the measure or declare that the formal investigation procedure is to be initiated (see judgment of 18 November 2010, NDSHT v Commission, C‑322/09 P, EU:C:2010:701, paragraph 50 and the case-law cited).

38      It follows from those provisions that the Commission is not allowed to perpetuate a state of inaction during the preliminary examination stage. In accordance with the case-law, the Commission is bound, in due course, either to initiate the next stage of the procedure or to adopt a definitive decision rejecting the complaint (judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 40).

39      In the present case, since the form of the letter at issue, namely, the fact that it is not in the form of a formal decision within the meaning of Article 4 of Regulation 2015/1589, is not decisive, it is necessary to examine the substance of that letter in order to assess whether it constitutes an expression of the Commission’s final position and whether it produces legally binding effects vis-à-vis the applicants, taking account of objective criteria such as its wording, content, context and the intention of its author.

40      In that respect, it is, in particular, necessary to assess, in the light of the case-law cited in paragraphs 31 to 38 above, whether, in the present case, the Commission, in the letter at issue, established, at the end of the preliminary examination stage, its position on the property tax rates applied to the fossil fuel sector in Ireland. Therefore, it must be ascertained whether, as the applicants submit, the Commission definitively concluded that those property tax rates did or did not constitute aid and that they did or did not give rise to doubts as regards their compatibility with the internal market, thereby adopting a decision under Article 4 of Regulation 2015/1589.

41      In the first place, as regards the wording and content of the letter at issue, it should be noted, first, that it is apparent from the reasoning, and in particular from the subheading ‘Assessment of the last submissions’, that that letter is intended to respond to the IWFA’s latest communications by analysing the information that the latter had most recently provided. Those findings are confirmed by the statement that ‘the information sent to our services, since our last letter dated 15 July 2016, does not bring additional elements which would enable us to change our assessment’.

42      Next, the preliminary and provisional nature of the assessment made in the letter at issue is expressly emphasised by the Commission. That preliminary and provisional nature is confirmed by the statement that ‘the Commission services consider, based on preliminary assessment, that all of the relevant requirements for the existence of State aid pursuant to Article 107(1) TFEU have not been satisfied’. It is, moreover, confirmed by the clear possibility given to the complainant either to contest that preliminary assessment or to inform the Commission services of any new evidence that could establish a breach of the State aid rules.

43      In the second place, with regard to the context of the letter at issue, it should be noted that, by forwarding the letter in question, and, as pointed out in paragraph 41 above, the Commission sought to respond to the complainant’s latest communications by analysing the information that it had most recently provided.

44      It must be stated in that regard that the applicants themselves acknowledge that the complainant regularly provided the Commission, via letters and emails, with additional information and analysis concerning the measure at issue throughout the administrative procedure that preceded the letter at issue being sent. Likewise, it has also been established that, by an email of 23 May 2017, the complainant submitted a request for suspension of the procedure until November 2017, which was accepted by the Commission, for the purposes of gathering new information which it considered to be essential to the case. In addition, the complainant submitted new information to the Commission on 23 November 2018, that is to say after the sending of the letter at issue.

45      It should be noted in that respect that, having communicated its first preliminary analysis of the complaint by its letter of 15 July 2016, in the light of the evidence that it had received up until that time, the Commission did not close the administrative procedure at that stage. The Commission in fact examined the new information submitted by the complainant. Similarly, having issued a second preliminary analysis of the case on 12 January 2017, taking into account the new evidence submitted by the complainant, it is indisputable that the Commission did not close the administrative procedure at that time either. On the contrary, it continued to respond to the complainant’s regular requests, including accepting the provisional suspension of the complaint as requested by the complainant, while it continued to investigate the case. It cannot therefore be held that, in reality, by the letter at issue, which takes a position on the new information and arguments submitted by the complainant in accordance with the method followed hitherto, the Commission sought to close the complaint lodged by the complainant.

46      In the third place, as regards the Commission’s intention when it communicated the letter at issue to the complainant, it is apparent from both the wording and the content of the letter as well as from the context in which it was sent, namely to make a preliminary assessment of new evidence and information submitted by the complainant, that the Commission’s intention was to continue the bilateral contact that had taken place with the complainant up to that time in the context of the preliminary analysis of the measure at issue.

47      In particular, and as already established in paragraph 41 above, it is apparent that the Commission intended to respond to the complainant’s observations on the new information and arguments submitted by the complainant throughout the administrative procedure.

48      In addition, it cannot be disputed that the Commission gave the complainant the opportunity to challenge the assessment in the letter at issue, for the reasons set out in paragraphs 42 to 45 above.

49      In the light of the foregoing considerations, it is evident that the letter at issue may not be regarded as containing a final assessment on the part of the Commission on the measure at issue in the present case under Article 4 of Regulation 2015/1589.

50      It must therefore be held that the letter at issue constitutes a preparatory act within the meaning of Article 24(2) of Regulation 2015/1589 and therefore does not constitute a challengeable act (see, to that effect, judgment of 18 November 2010, NDSHT v Commission, C‑322/09 P, EU:C:2010:701, paragraph 48, and order of 9 January 2012, Neubrandenburger Wohnungsgesellschaft v Commission, T‑407/09, not published, EU:T:2012:1, paragraphs 29 to 33).

51      In that respect, it is important to note that the present case differs from those which gave rise to the judgments of 17 July 2008, Athinaïki Techniki v Commission (C‑521/06 P, EU:C:2008:422); of 18 November 2010, NDSHT v Commission (C‑322/09 P, EU:C:2010:701); of 31 May 2017, DEI v Commission (C‑228/16 P, EU:C:2017:409); and the order of 10 October 2017, Alex v Commission (T‑841/16, not published, EU:T:2017:724), which are relied upon by the applicants in their observations on the plea of inadmissibility. In each of the abovementioned cases, unlike the present instance, the Commission had clearly decided to terminate the administrative procedure by the acts in dispute. It follows that no act susceptible to judicial review was to be adopted subsequent to the acts at issue, as is apparent from paragraph 54 of the judgment of 17 July 2008, Athinaïki Techniki v Commission (C‑521/06 P, EU:C:2008:422); paragraph 58 of the judgment of 18 November 2010, NDSHT v Commission (C‑322/09 P, EU:C:2010:701); paragraphs 30 and 31 of the judgment of 31 May 2017, DEI v Commission (C‑228/16 P, EU:C:2017:409); and paragraph 38 of the order of 10 October 2017, Alex v Commission (T‑841/16, not published, EU:T:2017:724). However, that is not the case in the present instance, as already noted in paragraph 50 above.

52      Moreover, while it is apparent from the case-law that the Commission is not allowed to perpetuate a state of inaction during the preliminary examination stage and that it is required, in due course, either to initiate the next stage of the procedure or to adopt a definitive decision rejecting the complaint (judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 40), that obligation may not be interpreted as meaning that any correspondence following the lodging of a complaint on the basis of Article 24(2) of Regulation 2015/1589 is necessarily to be regarded as a challengeable act within the meaning of Article 263 TFEU. Since it is not apparent from the act in question that, by that act, the Commission intended definitively to terminate the administrative procedure and, given that the circumstances of the case justified continued bilateral exchanges in order to deal with the complaint, the Commission may not be prevented from communicating a preliminary assessment of new arguments and evidence submitted by the complainant in the course of an administrative procedure.

53      Furthermore, it must be noted that the considerations relating to the length of the administrative procedure, as raised by the applicants in their observations on the plea of inadmissibility, are irrelevant, in the context of the present action for annulment, for the purpose of determining if the letter at issue may be regarded as a legally binding act within the meaning of the relevant case-law.

54      Similarly, in so far as the applicants seek, by their action, to challenge the Commission’s practice of communicating a preliminary assessment to the complainant by inviting it to submit new information in support of its complaint, and subsequently communicating a further preliminary assessment relating to that information, it must be stated that that is not the object of the procedure laid down in Article 263 TFEU, which is intended solely to review the legality of acts of the European Union that are intended to produce legal effects.

55      Lastly, in relation to the denial of access to justice alleged by the applicants in their observations on the plea of inadmissibility, it is appropriate to bear in mind the premiss referred to in paragraph 52 above, to the effect that, the Commission is required, in due course, either to initiate the next stage of the procedure or to close the case by adopting a definitive decision rejecting the complaint. In the present case, it must be pointed out that the Commission never called into question that obligation, which follows from both Articles 4 and 24 of Regulation 2015/1589 and the case-law referred to in paragraphs 31 to 38 above, and from which it is apparent that the Commission was required to adopt a formal decision on the complaint lodged by the IWFA. On the contrary, in its written pleadings, the Commission pointed out that such a decision was being prepared and would soon be adopted. The Commission also stated therein that, in accordance with the requirements of Article 24(2) of Regulation 2015/1589, that decision would be communicated to the complainant after its adoption. It is clear that the Commission complied with the abovementioned obligations by adopting the decision of 9 July 2019, which is susceptible to judicial review, and subsequently by transmitting a non-confidential version to the applicants on 18 July 2019.

56      Accordingly, the present action must be dismissed as inadmissible.

 Costs

57      Under Article 135(2) of the Rules of Procedure, the Court may order a party, even if successful, to pay some or all of the costs, if this appears justified by the conduct of that party, including before the proceedings were brought, especially if that party has made the opposite party incur costs which the Court holds to be unreasonable or vexatious.

58      In accordance with the case-law, that provision should be applied where the dispute is in part attributable to the conduct of an EU institution or body (see judgment of 8 July 2015, European Dynamics Luxembourg and Others v Commission, T‑536/11, EU:T:2015:476, paragraph 391 (not published) and the case-law cited).

59      In the light of the circumstances of the case, the Court considers that the emergence of the present dispute is in part attributable to the conduct of the Commission.

60      In particular, it should be noted that in its letters of 4 August 2016 and 12 February 2017, the IWFA expressly requested the Commission to adopt a formal decision in response to its complaint of 4 February 2016. For the purposes of making an order as to the costs, it must be noted that such a decision was not adopted until 9 July 2019.

61      In those circumstances, although the applicant has been unsuccessful, the Court considers that proper account of all the circumstances of the present case will be taken by deciding that each party should bear its own costs.

On those grounds,

THE GENERAL COURT (First Chamber)

hereby orders:

1.      The action is dismissed as inadmissible.

2.      Each party shall bear its own costs.

Luxembourg, 31 January 2020.

*      Language of the case: English.

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