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Citation: 2006 Eur. St. Aid L.Q. 269 2006

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STANDING OF THIRD PARTIES IN ST TE AID CASES - EStAL 212 6 269

The Standing of Third Partiesin State Aid CasesThe Lessons to be Drawn From the Judgment in Case C 78/03 P,Aktionsgemeinschaft Recht und Ligentum v. Commission ichaelHonor

I. IntroductionCompanies wishing to bring proceedings against aCommission decision must first satisfy the conditionsof standing laid down in Article 230(4) of the ECTreaty by demonstrating that they are directly andindividually concerned by the decision in question.

As regards the notion of individual concern in thefield of State aid, the case law of the Community courtshas since the rulings of the European Court of JusticeECJ) n Cases Cook and Matra2 operated a formal distinction between the conditions of standing that mustbe fulfilled by third parties in respect of, on the onehand, decisions adopted by the Commission after apreliminary examination of the aid pursuant to Article88(3) of the EC Treaty (Phase I ) and, on the ot rhand, decisions adopted by the Commission at the endof the formal investigation procedure provided for inArticle 88 2) of the EC Treaty (Phase II ). Whereas, inrelation to challenges brought against Phase I deci-sions, it suffices for a claimant to demonstrate that itretains the status of interested party , a stricter test of

The authors omer ieferendaire at he ourt f irstnstancendis ow work-ing s ssociaten Bech ruun law irm,openhagen. Thanks re due to HansPetelell 0r hisomments on an earlierraft.lliewsxpessed remain per-sonal o he uthor.

1 Case -198/91 Cook v Commission,[1993]CR 124872 Case -225/91atra v. ommission,[1993]CRI 3203.3 Case -/8/03 P Commissionv. ktionsgemeinschaffecht nd igentum,

judgment of13 ecember 2005,no yet epo tedhe Opinion f dvocateGeneralacobs was ceiveredn 4 February005.Case 69/84 - CofazndOthers v Commission, 1986] ECR 391.

5 The rulingppears n this ointo be in ine ith he udgment in ase106/98 P - Colite entreorise de la ocitetrancaisee producti .o .Commission,E R2000 I-3659,here the CJmade a similaristinctionbetween the ase t and and he iuings in an der ooy and iR S (seeparagraphs3-44 of he dgment .

6 indeed,n ase -398/94 - Kahn cheal v. ommission,[1996]CRuparagraphs6 et eq.,he FIield hat n elationo eneralid chemes whereno beneficiariesere at identifiable,here coulde no competing i retakings,which ould nvokehe roceduraluaranteesnder rticle8 2) EC, and heretore he udgmentsn Cook and atra ould o be nvoked in uch ircumstan-

This ulingightave found some supportn he f 0 Septembr1992 n ase -295/92 - Landbouwschapv. ommission,[1992]CK 1-5003at aragraph2 nd in ase -82/96- ARAPa.o.v.ommission,F1999]ECR II1889, paragiaphs8-40 rhe uling in ahn as oundittle suppo tn e.g aseT 86/96 Arbeirsgemeinschatteitscheruitfahrntenehmen a.o.v.ormmission,1999] ECK 11-179nd ase -188/95 Waterleidingth ppjNordest Brabant. ommission,[1999 CR II 713.ee lso heCoulon/Cras,Contentieie Ia galiteans le domaine des aides d etat:srecentesvolutionsans lapplicationes rtcle73 t175 u tate E ,ahiersde diot uiopeen 999,4 (9 et eq The RE-caseas also oncernedithgeneralid scheme. Stilloday,ome commentatorsee he ahnjudgments

standing must be met by claimants seeking to challenge decisions adopted at the end of Phase II.

In Case C-78/03 P Commission v. Aktionsgemein-schaft Recht und Eigentum (ARE 3, the Commission

supported by Advocate General Jacobs contendedthat the judgments in Cook and Matra had becomeunnecessarily generous to third parties challengingPhase I decisions. They therefore invited the ECJ toabandon once and for all the approach adopted inthese judgments and to rule that the same strict test ofindividual concern should apply in all situations. Byjudgment of 3 December 5 in the said case, theECJ s Grand Chamber firmly rejected this invitationand thereby confirmed that the judgments in Cookand Matra remain good law This aspect of the case iscommented upon in section III of this article.

importantly, the E J in the ARE judgment establishes a link between the status of the claimant andthe type of legal pleas that the latter may expect theCommunity judiciary to examine. It appears from thejudgment that the Community judge is limited in itsexamination of the pleas made by the claimant wherethe latter retains a mere status as interested party . Inaddition, the judgment shows that the Communityjudge is at least in some situations restricted inits possibility of reinterpreting the legal pleas raisedby the applicant. These questions are looked into insection IV below.

Moreover, the judgment offers some indications asto when a claimant may be individually concerned bya Phase decision. In this context, the judgmentmight signal a relaxation of the two-prong test con-tained in the Cofaz judgment by possibly abandoningthe so-called condition of procedural involvement. Sec-tion V of this article involves a discussion of this issue.

Before these aspects are addressed in the followingsections, it should be mentioned that the judgmentalso sheds some light on the case law on standing ofassociations, by setting out some of the distinct fea-tures of the judgments in Cases Van der Kooy andCIRFS cases? The judgment might also offer furtherguidance as to the possibility of third parties beingindividually concerned by decisions relating to general aid schemesc. However these two latter aspects willnot be discussed any further in this article.

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II. Summary of the caseThe judgment in the ARE case involves a land acqui-sition scheme enacted by the Federal Republic ofGermany. The scheme was intended, inter alia, torestructure agriculture in the new Lander and to cornpensate successors of land owners who were expropriated between 1945 and 1949 or during the periodof the German Democratic Republic GDR). Under thescheme, various categories of eligible persons couldacquire certain agricultural land situated in the formerGDR for less than half its actual market value.The land acquisition scheme had not been notifiedto the Commission. Following various complaints, theCommission initiated, on i8 March 1998, the formalreview procedure under Article 88(2) EC. One of theparties actively taking part in this procedure wasAktionsgeineinschahft Recht und Eigenteum (ARE), anassociation concerned with issues relating to propertyownership in the agricultural and forestry sectors andwhose members include former owners of land in theformer GDR. The ARE had submitted scientific reportsand participated in informal discussions with the Cornmission with the purpose of demonstrating, inter alia,that the land acquisition scheme contained discriminatory elements which were contrary to the interests ofits members.

By decision of 20 January 1999 ( Decision 1999/268 , ,7the Commission found that parts of the said schemeconstituted State aid that was incompatible with thecommon market. More in particular, the Commissionfound that a requirement, whereby interested partiescould only benefit from the land acquisition schemeon the condition that they had been residing in theGDR on 3 October 199o , amounted to discriminationon the basis of nationality liable to contravene Articles43 to 48 of the EC Treaty. The legality of Decision19991268 was not challenged before the Communitycourts within the two month time limit laid down inArticle 230 EC.Following Decision 1999/268, the German legislature produced a new draft law abolishing andamending some of the detailed rules of the landacquisition scheme, in accordance with Decision19991268. The new draft law was notified to the Corn-mission, which authorised it by decision of 22 De-cember 1999, without initiating the procedure underArticle 88 2) EC.On 2 May 2000 ARE brought proceedings beforethe Court of First Instance CFI) whereby it challengedthe Commission's decision of 22 December 1999 ('thecontested decision'). In its application to the CFI, AR Econtended in particular that the land acquisitionscheme still contained elements that contravened theprohibition of discrimination on grounds of nationality and therefore should not have been approved bythe Commission.

The Commission, supported by Germany, submittedthat the action should be declared inadmissible as thecontested decision was not of direct and individualconcern to ARE.

By judgment of 5December 2002 the CFI dismissedthe Commission's objection of inadmissibility.8 TheCFI observed that the contested decision was taken atthe end of its preliminary examination and that AREtherefore should be considered directly and individual-ly concerned by the contested decision if irst it isseeking to safeguard the procedural rights provided forby Article 88(2) EC and, second, if it appears that it hasthe status of a 'party concerned' within the meaning ofthat paragraph'. The CFI noted that the applicant hadnot expressly alleged infiingement by the Commissionof the obligation to initiate the formal review proce-dure. Nevertheless, the CFI held that the pleas forannulment put forward by the applicant, and in p rticul r the plea based on breach of the prohibition of discrimination on grounds of nationality, 'must ...e con-strued as alleging that the Commission failed, despitethe serious difficulties posed by the assessment of thecompatibility of the aid in question, to initiate the formal review procedure provided for by Article 88(2) ECand as seeking, in the fin l analysis, to safeguard theprocedural rights conferred by that paragraph.'

The CFI then examined if ARE was a 'party con-cerned' within the meaning of Article 88(2) EC andwhose procedural rights under that article could therefore have been violated. It found that this was thecase, noting that some of ARE s members were economic operators w o could be regarded s direct corn-petitors of the beneficiaries of the aid at issue' .

The CFI went a step further and held that AR Ecould also be considered to be individually concernedby the contested decision inasmuch as it claimed aspecific leg l interest in bringing proceedings since itsnegotiating position was affected by that decision .

applicablehen he contestedid as een rantedo ndidual undetakingspursuanto ener ale cheme (see,nter lia,oltesziBieesz udicialeviewof tateaid ecs ons ,uopean Competitionaw Review 004, i33 i4 142);FlynnRemedies n the uropeanourts ,n: iondi l.eds.),-e aw ofStateidn the U, Oford 2004, page 83. Yet,neither the I nor he CJseem to tibuteny importanceo he aspectn heirssessmentf headmissibilityf he ction.his ighte interpreted as he Community coutseffectely abandoninghe ositiondoptedy the FI n ahn.Qi 1999 L 107/22.Case - 14/00 Aktonsgemeinschaftecht nd Eigentum v Commission,F2002]CR I 5121.

9 bd,paicgraph5.10 bd pacigraph9.11 bid aragraph3 where the FI hatRE mustbe consideredo be ntied

to btinghe resentction tor annulment n behalff uch embers who, aspaitiesoncernedithin the eaning of Article8 2) EC could ave one soindividually.

1 o ieachhis finding,he ibserved n articulaihat the pplicantlayednactivear in he ormaleviewrocedure which edo the doption ofDecision999/268]nd in he nformaliscussionselatingo tsmplementation,oing o n many differentctiveays and producingcientificepo)tsnsuppoitf tsase ,nd that[t]he Commission itself conceded thathe appli-cant nfluencedhe ecisionakin processnd hat itas a usefulourcefinformationibid,aragraph 65

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On 19 February 2003 the Commission brought anappeal against the judgment of the CFI. In support ofits appeal, the Commission put forward seven pleasalleging that the CFI erred in law by holding that theaction introduced by ARE was admissible.In its judgment delivered on 13 December 2005 theECJ s Grand Chamber, before explicitly addressing the

legal pleas raised by the Commission, made a series ofimportant preliminary observations. After havingquoted the test of individual concern laid down inPlaumann and later cases the Court observed as follows: 1

34. In the case of a Commission decision on Stateaid, it must be borne in mind that, in the con-text of the procedure for reviewing State aidprovided for in Article 88 EC, the preliminarystage of the procedure for reviewing aid underArticle 88(3) EC which is intended merely toallow the Commission to form a prima facieopinion on the partial or complete conformityof the aid in question, must be distinguishedforn the examination under Article 88(2) EC.It is only in connection with the latter examination, which is designed to enable the Com-mission to be fully informed of all the facts ofthe case, that the EC Treaty imposes an obliga-tion on the Commission to give the parties con-cerned notice to submit their comments .

35. Where, without initiating the formal reviewprocedure under Article 88(2) EC, the Commission finds, on the basis of Article 88(3) EC,that aid is compatible with the common mar-ket, the persons intended to benefit from thoseprocedural guarantees may secure compliancetherewith only if they are able to challenge thatdecision before the Community judicature" .For those reasons, the Court declares to beadmissible an action r the annulment of such

13 Reference is mace by the E Jo its JudgmentsCommission, [1963 ECR95; Cook, paragraphv Commission, [2004] ECR1-4087, paragiaph

14 Commission v. Aitonsgemeinschaft Recht und15 Reference is made by the ECJo its Judgments

paragraph 16 and Case C-367/95 P CommiFrance, [1998] ECR 1-1719 aragiaph 38.16 Reference is made by the ECJo its Judgmentspciagicph 1Z and Commission v. Sytraval and17 Reference is made by the ECJo its Judgments

Matra, paragraphs 17-2018 Reference is made by the ECJo its JudgmentsBink s France aragraph 41

in Case 25/62 Plaumann v.0, and Case C 298/00 P ItalyEigentum, paragraphs 34-37.in Cook, paragraph 22 Matra,sion v. Sytval and Brinksin Cook, paragraph 23 atra, ns Fiance, pcacgraph 40.in Cook, paragraph 2 26 andin Commission v. Sytal and

19 Reference is made by the ECJo its Judgment in Case 169/84 Cofaz andOthers v Commission, [1986] ECR 9i, paragraphs 22-25, and the Ordei inCase C-406/96 P - Sveriges Betodlaies [Centraforening] and Fenrikson vCommission, [199/] ECR /531 paragraph 45 .

20 See Commission v AKtionsgene nschaft Recht und Eigentum, paiagiap 30 toia summary of the seven pleas made by the Commission.

21 ibid, pcicgraph 4 .22 ibid, pcicgraph 4723 bid, paragraph 48.

a decision brought by a person who is concerned within the meaning of Article 88(2) ECwhere he seeks, by instituting proceedings, tosafeguard the procedural rights available tohim under the latter provision

36. The parties concerned, within the meaning ofArticle 88(2) EC who are thus entitled underthe fourth paragraph of Article 230 EC to insti-tute proceedings r annulment are those per-sons, undertakings or associations whose inter-ests might be affected by the grant of the aid,in particular competing undertakings andtrade associations"' .

37. On the other hand, if the applicant calls inquestion the merits of the decision appraisingthe aid as such, the mere fact that it may beregarded as concerned within the meaning ofArticle 88(2) EC cannot suffice to render theaction admissible. It must then demonstratethat it has a particular status within the mean-ing of the Plaumann v Commission case-law.tThat applies in particular where the applicant'smarket position is substantially affected by theaid to which the decision at issue relates"

In its assessment of the pleas made by the Commis-sion, the Court limited itself to examine the fourthand the fifth pleas.

In its fourth plea, the Commission had contendedthat the Ci was wrong to consider that ARE hadimplicitly put forward a plea alleging failure by theCommission to fulfill its obligation to initiate the for-mal review procedure provided for in Article 88(2) EC.The E J agreed with the Commission, stressing theparticular circumstances of the case at hand. The EC]observed in particular that (a) ARE was able to anddid, submit observations in the context of the formalreview procedure which led to the adoption of thedecision of 2 January 1999 and that it was open tothat association to argue, in that context, that the aidscheme set up by the EALG was incompatible with thecommon market [...],2; that (b) an explanation of thebasis for such an interpretation of those pleas was particularly necessary since [...] ARE claimed, in its appli-cation, that it had a particular interest in annulment ofthe contested decision [...] giving the impression thatthe plea alleging breach of the prohibition of all discrimination on grounds of nationality related to thesubstance of the contested decision and not to the failure to initiate the formal review procedure providedfor by Article 88(2) EC ; and that (c) the Commissionwas not in this case given an opportunity to respondto the plea alleging breach of ARE s proceduralrights.23

As regards the fifth plea, the Commission had heldthat the factors identified by the CFI as rendering AR Ecapable of being regarded as a person individually

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concerned by the contested decision were insufficientto establish any such standing. Again the Court agreedwith the Commission, pointing to the fact that ARE srole in the formal review procedure leading to theadoption of the decision of 2 January 1999 went nofurther than exercise of the procedural rights grantedto parties concerned by Article 88(2) EC. By making adistinction between the present case on the one handand the judgments in Van der Kooy and CIRFS 24 onthe other hand, the Court held that the CFI had erredin law by finding that ARE s position as negotiatorwas affected by the contested decision 2 5.On that basis, the E J set aside the judgment of theCFI and declared the action by ARE to be inadmissi-ble, without considering any of the other five pleas inlaw advanced by the Commission.

II. The Cook and Matra case lawremains applicable

In the Cook case, the applicant had challenged aCommission decision by which the Commission hadapproved certain aids granted to one of its coinpetitors, the Spanish company PYRSA.

In his opinion in the case, Advocate GeneralTesauro suggested to the Court that the conditions se tout in Cofaz should not apply to asituation such as thepresent where the Commission had not initiated theprocedure under Article 88 2) E and where it wouldtherefore be difficult if not impossible for thirdparties to have participated actively in the procedureleading to the adoption of the final decision .The Court seems to have been persuaded by the rea-soning. Instead of relying on the Cofaz case law, itheld that where, without initiating the procedureunder Article [88] 2), the Commission finds, on thebasis of Article [88](3), that an aid is compatible withthe common market, the persons intended to benefit

from those procedural guarantees may secure compli-ance therewith only if they are able to challenge thatdecision by the Commission before the Court. TheCourt held that the application was admissible, notingthat the applicant was a pary concerned for the pur-poses of Article 88(2) EC

In the Matra case decided less than a month later,on 5 June 1993, the applicants challenged the validityof a Commission decision approving an aid grantedby the Portuguese authorities for a joint venture se tup by Ford and Volkswagen. Applying the samelanguage as in Cook, the Court held that the applica-tion was admissible since Matra must be consideredan interested party within the meaning of Article88(2) ECFollowing the judgments in Cook and Matra, theCommunity courts have consistently applied a morelenient test of standing when dealing with actions

brought against Phase I decisions compared to actionsbrought against Phase II decisions28In the second and third pleas of its appeal to the

E J in ARE, the Commission maintained that the CFIhad erred in law by relying on the Cook and Matracase law in its judgment. According to the Commission, the relevant test in relation to all actions broughtagainst Commission decisions (both Phase I and PhaseII decisions) should be whether there is an apprecia-ble adverse effect on the competitive position of theapplicant (in accordance with the test laid down inCofaz).The criticism raised by the Commission was echoedin the opinion of Advocate General Jacobs, deliveredon 24 February 2005, who in remarkably strong termscriticised the case law originating from Cook andMatra as plainly unsatisfactory, being complex, apparently illogical, and inconsistent 29. In his opinion, theAdvocate General observed as follows:

139 It must, I think, be acknowledged that the dif-ficulties seem to have their origin in the deci-sions of the Court of Justice in Cook andMatra. Those decisions were intended to givefuller protection to competitors where theCommission decides not to initiate the Article88 2) procedure - a protection considered tobe justified on the ground that in such casesthe applicant might have insufficient informa-tion to establish individual concern. The aimwas apparently to compensate for the applicant s lack of procedural status under Article88(3) by giving it the procedural rights of par-ties concerned under Article 88(2). The resulthowever has been, somewhat confusingly, toconflate the test of standing under Article88(2) and 88(3), and thus to confer standingon a very wide category of persons; clearlymany persons could claim that they wouldhave been parties concerned if the Article88(2) procedure had been initiated. The doorwhich was thus opened too wide under Article88(3) then had to be partially closed by varioussubsequent refinements of the case law whichmade that case-law increasingly complex andincoherent.

140. Moreover it is not clear, in my view, that thedeparture from the terms of the fourth para24 joined Cases 67/85, 68/85 nd 70/85 - ander Kooy nd Other v.

Commission, [1988] ECR 19, nd Case C-313/90 CIRFS and Others v.Commission, [1993] ECRI 125.25 Commission v. Ai:onsgemeinschaft Recht und Eigentum, p r gr phs53-K.26 Opinion by Advocate General lesauo of 31 Maich 1993 in Cook27 Cook pia graph528 To give an overview of these cases, reference i made to 7able I placed at the

end of this article29 Commission v. AKi nsge einschaft Recht und Eigentum, per AGJacobs para

giap i3

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graph of Article 230 EC is justified in thesecases. It is of course true that, because the deci-sion under Article 88(3) is taken at an earlystage, a person potentially affected by the pro-posed aid may have little information about itslikely effect. He may therefore not have sufficient information, when challenging a decision under Article 88(3), to establish individ-ual concern in the application which initiatesproceedings before the Court of First Instance.But in the course of those proceedings sufficient information will surely be produced bythe Commission (and possibly by the MemberState concerned, if it intervenes), if necessaryin response to inquiries made and questionsput by he Court, to enable the Court to decidewhether the requirement of individual concern is satisfied.

141. The best solution in my view would be to revertto the terms of Article 230(4) EC and to apply,in all cases where the applicant challenges adecision under Article 88(3), the test of direct

30 This erm as used y he ommission (see he pinionf AdvocateeneralJacobs,aragraph01).31 in rticle0 of Regulation59P999, he erm interestedarty; s pplied,whereashe erm oparts oncened is ppliedn ost judgments.or hesakef thisrticle, the two erms re sed ynonymously.32 As explainedythe CJ n aragraph6 of the udgment interestedartieswithinhe eaning of rticle8 2) EC 'arehoseeisons,ndertakingslassociationsiose inteirests mght be ffectedy heiant ofhe aid,n artic-

ularompetingndertakings andr de association'.ee he efinitiondoptedin ase23/82 IntermillsCommission, F1984]CR809 paragraph6.See lsorticle(h)f Regulationo. 59/999.As egardsompeti, theCFi as eld hat company only tainshe tatusf pdityoncerned'where it emonstrateshat itsompettiveositioinhe arketaffectedythe rantf he id,. ase 188/95 -WatereidingaatschappiNordVestBiabant'v.ommison [i998]CR I-371, pciagcph 62 and ase T-69/96Hrambugei Haten-nd agerhaus Artiengeseschft v Commisson, 2001] ECRI1-037, paragraph 41

33 See inter alia Solt4_sziBielesz, Judicial review of State aid decisions , EuropeanCompetitionaw Review004, 33 (141),here the uthorsoncludehat anapplicantust demonstate that ts arket ositionsignificantlyffectedythe iantfhe aIdn uestion,rrespectivef hetheihe ecisiont ssuewas takenurther to the reliminarynvestigationrhe tormalnvestigationprocedure.

34 indeed,pplicantshallengingommisson decisonsertainngo the compati-bilityf the easure must adduce facualvidencesufficiento asteriousdoubt'n he lementsontainedn hatecision,ee ase 266/94Skibsvaerftsfoeningeno v Commisson, ECR 1996 1i-1599,aragraphs7and 95.ee lsoeppenne, Guide es ides'etatn drcitommunautaie,Brussels99 pages58 ot seq.35 Case -269/90 -]echnischeniversitatunchen,[1991]CR -5496,pals-graph 14.ccoring to he Cj hoseuaranteesnclude,n articular,he utyof he ompetentnstitutiono xaminearefullynd mpariallyllhe elevant

aspectsf he ndividualase,he rightf the ersononcernedo ke hisvews known and o ave n dequatelyeasonedecison.nly n hisay-an the ourterifyhetherhe actualnd egalleents upon which heexercisef theower of appraisalepends were present.See lsohe onclusionsf dvocateeneralsaueonCases-68/94 andC-0/95 - France,CPA and MC v.ommission, [1998]-i375concerningthe reaf nit ).n the pinionf dvocateeneralesauro,thewofoldnaturef he ommission'sunctionspower of inquirynd nvestigation,coupledith decision-makingower shouldmpose on tn ventricterobligation to respect the light to a fair heaing (palcgraph 21).

36 judgment of 1 aich 3 in Case50/00 P- UnionequenosAgicultores v Commission, 2 2] ECR i-667737 See interliaase 263/02 P - Commission v. ego-Queie,2004] ECR I-

3425, and ase -167/02 - Rothleyo v. ommisson, [2004]CR 1-3149.

and individual concern, irrespective of thegrounds on which the action is brought. [...] .

It is thus clear that, in the case before it, the Court wasstrongly encouraged to depart from the approachadopted in cases Cook and Matra and to rule once andfor all 31 that the test of standing is the same regardless of whether the contested decision was adopted atthe end of Phase I or Phase II. It is also clear that,according to both the Commission and the AdvocateGeneral, the stricter test laid down in Cofaz shouldapply.

Although the Court in its judgment does not explicitly deal with the second and third plea of theCommission, by way of the preliminary findings madein paragraphs 35-36 of the judgment (quoted above)the ECJ leaves no doubt that the Matra and Cook caselaw stands.

Accordingly, applicants challenging a decisionadopted at the end of Phase II are individually con-cerned by a Commission decision adopted without theopening of Phase II provided that they retain the sta-tus of parties concerned (or interested parties )1within the meaning of Article 88(2) EC (and providedthat they seek, by instituting proceedings, to safeguardtheir procedural rights under the latter provision, cfr.infra).The Court in the ARE judgment thus makes it clearthat it suffices for an applicant to be an interestedparty32 and not as suggested by the Commission andAdvocate General )acobs substantially affected bythe grant of the aid in question.

This aspect of the case is important.Firstly, it is expected that the Court s clear validationof the Cook and Matra case law will dissipate anydoubts that have remained until now as to its applicability in future cases, Thus, the judgment is likely toincrease legal certainty in the area.

Secondly, the judgment underpins the importanceof protecting the procedural rights of third parties inthe area of State aid. In this sense, the judgmentembodies the legal principle that a right can be exercised only if there is a means of protecting it (ubi jus,ibi remedium). In this context, it is observed that anadequate protection of the procedural rights of thirdparties is an important and necessary corollary to theconsiderable power of appraisal enjoyed by the Coinmission in the field of State aid.3 As is clear from thejudgment in Case C 269/9o, Technische UniversititMunchen, respect for the rights guaranteed by theCommunity legal order in administrative proceduresis of even more fundamental importance where theCommunity institutions have a power of appraisal.

Thirdly, the judgment signals a small but noteworthy departure from the approach adopted incase Union Pequefios Agricultores 3 and subsequentcases,,/ where the ECJ adopted a very strict interpre-

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tation of the notion of individual concern underArticle 23o EC. t annot be excluded that it was n thelight of the ruling in Union Pequefios Agricultoresthat the Commission in the ARE case considered ittimely to encourage the Court to abandon the Cookand Matra case law.In this context, it is interesting to note that the ECperhaps somewhat surprisingly went further interms of guaranteeing the procedural rights of thirdparties than its Advocate General. It is recalled that itwas Advocate General Jacobs who in his landmarkopinion in Case Union Pequeios Agricultores made asignificant effort to convince the Court to relax thetest of individual concern under Article 230 4) ECholding that the traditional test of standing in accor-dance with the judgment in Plaumann) was excessive-y strict and had become increasingly untenable interalia in the light of the principle of effective judicialprotection.39 As it is well known, the Court in theUnion Pequefnos Agricultores case did not follow theinvitations of its Advocate General and held that thePlaumann test should apply. Although it is under-standable that Advocate General Jacobs would not, inopinions following the judgment in Case UnionPequeios Agricultores, reiterate a position that theCourt had already rejected, it was hardly expected thatthe Advocate General in a ater case would go so far asdirectly urging the Court to narrow the categories ofpersons being individually concerned by a Cornmission decision.0

To sum up t follows from the ECJ's judgment inARE that adistinction must be drawn between, on theone hand, challenges brought against final decisionsadopted by the Commission without opening the for-me l investigation procedure under Article 88(2) EC bywhich the applicant seeks to protect its proceduralrights under the latter provision and, on the otherhand, all other situations (both when the applicantchallenges a decision adopted under Article 88 2) ECand when the applicant calls in question the merits ofthe decision adopted pursuant to Article 88(3) EC)).Whereas, in the former case, it suffices that aparty isan interested party (seeking to protect its proceduralrights), in the latter case, the party must be substan-tially affected' by the aid in question.

IV. The test of individual concernin actions brought against Phase Idecisions

In addition to the above he ARE case makes it clearthat the scope of the test carried out by the ommunity courts in relation to Phase I decisions dependsboth on the status of the applicant and the legal pleasadvanced by the latter infia, section IV.i. . Secondly,

the judgment shows that the Community courts' possibility of reinterpreting such legal pleas may be limit-ed infra, section IV.2.).

i. The conditions of standing depend onthe legal pleas raised by the applicantThe judgment in ARE shows that the conditions ofstanding that must be fulfilled by the applicantdepend on the legal pleas made by the latter.Indeed, s is clear from paragraphs 35 and 37 of theARE judgment, applications made by interested parties are only admitted where these parties seek to safe-guard the procedural rights that are available to themunder Article 88(2) EC. If it appears from the applica-tion that if the applicant does not merely seek to safeguard its procedural rights under Article 88 2) EC butrather calls in question the merits of the decisionappraising the aid s such, it must satisfy the condi-tions of individual concern laid down in Cofaz.The judgment thus restricts the possibility of theCommunity judiciary to uncritically examine all thepleas in law raised by the applicant. Indeed, unless thelatter fulfills the conditions laid down in Cofaz, theCommunity judge is limited to examine if the Com-mission should have entertained such serious doubts s to the qualification of the measure or its compati-bility with the common market that it should haveopened the formal investigation procedure. Follow-ing the judgment in ARE, it would therefore be unwisefor claimants challenging Phase I-decisions not alwaysto include a plea in law alleging an infringement oftheir procedural rights s interested parties owing tothe Commission's failure to initiate the formal investigation procedure. 2

It follows that, while recognising a wide notion ofstanding in relation to interested parties challenging

38 Opinion of Advocate General jacobs of T March 2002 in CaseC 50/00 PUnion Pequenos Agricultoies v. Commisson (see in paiticular paragiaphs 59 etseq).

-9 ibid, paragiaph 9840 It may be queried, moreover, if he solution advocated by AGJacobs wouldbring about the desired effect Indeed, given the lack of precse infoimation

about the aid at issue during Phase i, third parties may still biing the samenumber of proceedings before the CFI,which in turn would force the CA todedicate considerable time and effort to examine in each case if he applicantsfufil the conditions of individual concern laid down in Cofaz As iecognised byAG acoDs, nquiies and questions put by the Couit would probably be neededin such cases (see paragraph 140 of the Opinion).

4i Under Article (4) of Regulation 659/1999 the Commission must initiate thefomal investgtiton procedure where it finds that doubts are raised as to thecompatibility with the common market of a notified measure. however, in hevast majoity of cases, the Community courts iequire the presence of seriousdificulties (see intei alia Case 84/82 - Germany v Commisson, [i984] ECR1451, aragraph 15 C C-367/95 P Commission v. Sytraval and Brink sFrance, F1998]ECR 1-1719 aragraph 9 and Case C-204/9/ -Potugal v.Comm sion, [200i] ECR1-3i75, p r gr ph 33 .

42 However, itmay still be queried to which extent the Community judge will beallowed to ieinterpret the pleas in l w i ised y the ciaimants. Ihis aspect shallbe dealt with in the following secton.


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Phase Idecisions (cfr. above), the ARE judgment at thesame time restricts the legal pleas which the Coin-munity judge may admit. It is obvious, however, thatthe admissibility of legal pleas in future cases to a argeextent will be dependent on the possibility of theCommunity judge to reinterpret the legal pleas raisedby the applicants. This aspect is dealt with in the following section.At this stage, it is observed that the judgment alsoconstitutes a significant step towards enhancing con-sistency of acase law that has at times been heading invarious directions. Indeed, although the Court in paragraph 35 of ts ruling in ARE refers to its earlier rulingsin Cook and Matra, it is submitted that dicta of theCourt in that paragraph have so far only appeared in afew judgments from the CFI and thus cannot be in-ferred from any previous judgments of the ECJ. Moreover, a study of the case law in this field reveals thatboth Community courts over the years have shownoften uneven degrees of self-restraint in their examina-tion of the pleas raised by applicant companies. Toillustrate the various approaches adopted by the E Jand the FJ in a series of cases, a ist of cases involvingchallenges brought by third parties against Phase Idecisions is given at the end of this article (Table i .

As it appears from that list of cases, already inMatra, the E J did not limit itself to merely examinethe plea alleging an infringement of the proceduralrights of the applicant company first plea in law), butalso carried out an assessment of the remaining twopleas relating to the substance of the case before finally dismissing the action as unfounded. It should be

43 The Court refers to Cook, paragraphs 23-26, and Matra, paragraph 17-20.44 Case C-225/91 -Matra v. Commission, [ECR] 1993 1-3203. In that case, theapplicants challenged the valicity of a Commission decision approving an aidgianted by the Portuguese authorities for a jont venture set up by Foid and

Volkswagen. Referring to its judgment in Cook, the Court held that the applica-tion was admissible since Matra must be considered an interested party withinthe meaning of Ar cle 88(2) EC.

45 One might even interpret the language applied by the ECJ n Cook, paragraph39...witut there being any need to consider the other pleas relied upon byCook) as the Court leaving open the poss lity of examining other pleas cisedby the applicant, if need be. it is observed, howeve that the EC did not exam-ne if the applicant could ave satisfied the stiter test laic down in Cofaz,although this may well have been the case, as in Matra.

46 Case T 95/94 Sytraval and Brink s France . Commission, [1995] ECR 12651,and Commission v. Sytava[ and Brink s France. in that case, the applicants contested a Comasson decis on accoiding to which certain capita injectionsmade by a Fiench State owned company (Sofipost ) to its subs diary(ISccuripost ) did not constitute State aid. Te CF in its judgment of 28September 1995 annulled te ecision for lack of adequate reasoning since theCo[mission had tailed to iespod in the contested decision to the objectionsraised by the applicants in their complaint On appeal, the ECJheld that the CR

ac erred in aw in fining that the contested decision constituted a decisionaddiessed not to that State but to the complainants. The ECJbserved, however that the contested decis on was of direct and individual concern to the com-plainants snce the Commission by its decis on implicitly refused to initiate theformal investigation procedure an since the applicants were early parriescered under Artcle 88(2) EC. e error of l w committe y the CFI astherefoie no found to invalidate the contested judgment As regaids the sub-stance of the case, the ECagieed with the CR that the ieasons given in thecontested decision were inadequate and on that basis dismissed the appeal.

7Case T-82/96 - AIRAPc v Commisson, ECR 1999 i-1889, paragraphs 38-40. In that case, the Commission ciacuthorised a general relief tax scheme

noted, however, that the Court did not examine if theapplicant could have satisfied the stricter test laiddown in Cofaz, although this may well have been thecase.

Similarly, in Sytraval and Brink s France decidedby the EC on 2 April 1998 , the Community courtsexamined the legal plea alleging infringement ofArticle 253 of the EC Treaty (lack of adequate reason-ing) before annulling the contested decision.t6 Intheir application for annulment, the claimants had intheir first plea alleged infringement of Article 88 2)E owing to the Commission s failure to open Phase11 However, neither the CFI nor the ECI examinedthis plea. Nothing in the judgment seems to suggestthat the applicants were affected as more than inter-ested parties.

The judgments delivered by the FJ and the ECJ on17 June 1999 and 16 May 2 2 in the ARAP case go

even further since none of the pleas submitted by theapplicant alleged an infringement of its proceduralrights owing to the Comm ission s failure to open theArticle 88 2) EC procedure.4 Nevertheless, the CFI didnot limit itself to assess if the Commission shouldhave opened the phase 11procedure. The judgmentwas upheld by the ECJ on appeal. 3Another lucid example is offered by the CFI s rulingin Danske Busvognmrnd (judgment of 16 March2004 , where the CFI made no examination of the pleaalleging an infringement of the procedural rights ofthe applicant but instead conducted a full assessmentof the substance of the case, at the end of which itannulled the contested decision.49

enacted by Portugal in favour of certain Portuguese sugar produceis. Uponcomplaint trom the applicants, certain individual tax ieiefs granted undei thesaid scheme were examined by the Commas on which, without opening PhaseI found that those reliefs fell under the general relief scheme and thereoreconstituted existing aid. T e CF dmitted the application challenging those findings of the Commiss on. The Court iuled that the applicants, which wer com-petil to the beneficiary, must be consdered inteted thid parties within themeaning of Article 88 2) EC.The Court explained this ruling by stating that thegeneral tax relief scheme at issue had been approved bythe Commission without iecouise to the Article 88 2) ECproceduie. oe the contested dec -son was in any event the only means by which the applicants could appraisethe extent to which then interests are affected. The applicants cannot thereforesecure compliance with the procedural guarantees afforded them by Articie88 2) EC s inteiested thid parties unless they have an opportunity to cha-lenge that decis on before the Court Interestingly, the CH also admitted andexamined the applicants plea of illegality under Ar cle 241, challenging the onginal decision authorising the general aid scheme (see paragraphs 43 68).

48 CaseC-321/99 P AA P a.o.v. Commission, ECR2002 -4287.49 Case 1-7/0i - Danske Busvognmaend v Commission, [2004] ECR 1-917 n

that the Commission had, without opening the foimal investigation procecure, adopted a decision whereby it approved aid granted by the Danish authorites to a private bus opectoi, Combus A/S. That decis on was chalienged bythe applicant, a rade association iepresentng the inteiests of the majolity ofDanish bus companies. The CF hld that the applicant must be considered aninterested party under Article 88(2) EC noting that i) the applicant was com-painant; ii) the applicant had influenced the couse of the administrative pro-cedure befoie the Commisson; and iii) at least some of its member we e incompet on with the aid beneficiary. It appears from the judgment (paragraph41 hat the applicants had criticised the Commission for not having openedthe Phase iiprocedure rhe CF annulled the contested decision, aftei havingconducted a fuIf ssessment of the substance of the case, at the end of whichitconcluded that the Commission had wrongly authorised the varous financialmeasure, undertaken by the Danish authorities.


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In other cases, the CFI has adopted a more cautiousapproach, limiting itself to examine the plea allegingan infringement of the applicants' procedural rightsunder Article 88(2) EC. Examples include cases SIDE,BP Chemicals, SIC, Prayon Rupel and arguablyThermenhotel Stoiser and Kronofrance.The judgment of 18 September 1995 in SIDEinvolved a Commission decision approving an aidgranted by the French authorities to CELF, a coopera-tive society involved in the publication and distribu-tion of books. The aid was a public service measureintended to facilitate CELF s handling of small ordersfrom booksellers established abroad. The CH admitted the application lodged by the claimant, an exporterof French books, noting that the Commission had notdisputed that the applicant fulfilled the criteria set outin Cofaz. 0 in its assessment of the first plea in lawalleging infringement of the rules of procedure owingto the Commissions failure to open the procedureunder Article 88(3) EC the CFI examined the infor-mation which the Commission had relied upon in itsdecision and found that the Commission should haveopened Phase ii. The Court annulled the contesteddecision, having examined a limited part of the pleasrelating to the substance of the case

In BP Chemicals v Commission (judgment of 15September 1998), a UK company challenged a Com-mission decision concerning certain individual aidmeasures (three capital injections) granted by an Itahlan State owned company ENI) to one of its subsidiaries, a producer of chemical products (ENIChem).In the contested decision, the Commission had foundthat the third capital injection did not constitute Stateaid (applying the private investor test , while the firstand second capital injections were found to be com-patible with the common market following a Phase Iiprocedure. As regards the decision on the non existence of aid (in relation to the third capital injection),the Court held that, as the Commission had made thisfinding already at the end of its preliminary examination of the third injection pursuant to Article 88(3) EC,the Commission 'impliedly refused to open the procedure provided for in Article [88(2) EC] [ Since itwas an interested party within the meaning of Article88(3) EC, the applicant was considered individuallyconcerned by the contested decision in relation to thethird injection. In its assessment of the substance ofthe case, the Court annulled the decision, limitingitself to examining the plea alleging infringement ofArticle 88(2) EC owing to the failure to open the for-mal investigation procedure?'

In SIC (judgment of 1o May 2000 following a com-plaint from the applicant, a commercial televisioncompany operating in Portugal, the Commission hadadopted a decision whereby it found that the fundspaid by the Portuguese Government to the public tele-vision operator, RTP, did not constitute State aid.

Without explicitly ruling on the standing of the applicant, the CFI agreed with the applicant that the Commission, when concluding its initial examination ofthe measure, was in fact confronted with serious diffi-culties of assessment which should have led it to initiate the formal investigation procedureIn Prayon Rupel (judgment of 15 March 2001 , concerning aid granted by the Germany State to a manu-facturer of chemical products, the CFI was asked toassess the legality of a Commission decision authoris-ing the aid5 . It appears from the case that the applicant was a competitor to the aid beneficiary and hadsent certain information to the Commission during itspreliminary examination of the measure. In its judg-ment, the CFI without examining whether the appli-cants were individually affected by he contested deci-sion, directly examined if the Commission shouldhave initiated Phase ii.he Court found that this wasthe case, having regard inter alia to the length of timetaken by nd the particular circumstances of, the pre-liminary procedure 7.The Court annulled the decisionon that ground alone.

In its judgment of 13 January 2004 in Thermenhotel Stoiser, the CFI was concerned with a Commissiondecision authorising aid granted by the Austrianauthorities for the purpose of the construction of afive-star hotel in Austria? The CFI admitted the appli-cation, observing that the applicants were direct com-petitors of the hotel owners receiving the aid in question. In rder to ascertain the first plea of the applicants alleging an infringement of their proceduralrights owing to the Commission's failure to openPhase II, the Court examined each of the seven sub-stantial pleas made by the applicants (the second toeight plea). Having come to the conclusion that noneof these pleas showed any serious difficulty whichwould have r quired the Commission to open the formal investigation procedure, it dismissed the applica-tion as unfounded.

In Kronofrance (judgment of 1 December 2004 ,concerning a Commission decision approving aidgranted by the German authorities to a national com-

50 Case 48/93 SI Ev. ommission, [1995]CR 11-2501,aragraph4.5i Ibid,aragraphs 58/652 ibid, paragiaphs 83-865 ibid, arag phs 88 and 165, referlingo Commission v Sytravalnd Brink s

Fiance, cicgraph 1754 Accordingo he Court,he Commission sould have entertainedoubts s o

the uestionhethei he hirdnfectioni)as sufficientlyistinctlor hetwo firstnjectonsnd ii)onstitutedtateid. Ibid, paragraphs 164 t eq.

5- Case -46/97 SIC Commisson, 2000] ECR 1i-212556 Case -73/98 - Prayon-Rupel v. ommission, [200i]CR 11-8675 T e Court obsered that,uring the oursef the ightonths between notifi

cationnd he ontested decision,he ommission made thiee se)aratefficialiequests to omation of he Geima n Government nd two coi peito smade theironcernsnown (see aragraph 107 .

58 Case r-158/99 - eeimenhote Stoiser.o Commission, 2 4] 1-1.

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pany to assist its construction of a wood processingcentre he CFI annulled the contested decision, seem-ingly on the ground that the Commission should haveopened the Phase II procedure.

The approach adopted by the EC n ARE is bestreflected in the CFI's ruling in Skibsv-rftsforeningen.Indeed, in Skibsverftsforeningen (judgment of 22October 1996), the CFI found that at least two of theten applicants were individually concerned by a Commission decision approving aid granted to Germanshipbuilding companies.'o The Court stressed that i)two of the applicants were in direct competition withthe beneficiary; ii) one of the applicants belonged toa very limited number of shipyards in the Communitycapable of building tankers similar to those construct-ed by the beneficiary; and that (iii) the latter appli-cant's facilities were compared on several occasionswith those of the beneficiarv during the administrative procedure.>' It is noteworthy that the contesteddecision was adopted without opening Phase II, bu tthe CFI nevertheless stressed that the applicants hadto demonstrate that they complied with the test laiddown in the Plaumann judgment since they had 'notsought annuhent [of the decision] on the ground thatthe Commission was in breach of the obligation toinitiate the procedure provided for in Article [88] 2) oron the ground that the procedural safeguards provid-ed for by Article [88] 2) were infringed .62 As regardsthe substance of the case, the Court examined thepleas raised by the applicants and dismissed the application as unfounded.A similar reasoning was applied by the CFI in CaseWaterleiding concerning a Dutch tax scheme provid-ing for certain exemptions in relation to the tax ongroundwater.1

-9 Case -27/02 KronofranceCommission udgment 1 December 2004not et eported.ee n aticulararagraphs8-56, which owever find omention n he onclusionsf he udgment(see aragraph i09).

60 Case 266/94 Skibwsvftsoreningen.o.. Commission 1996]ECR 11-1399.61 bid, aragraph6.62 ibid,accgraph5.63 Case i88/95 - W\teileIdingaatscappijNord-Westlatant .

Commission [1998]CR 11-3713,aragraphs 53-54.n xaminig whete heapplicant was ndividuallv affectedy he ontestedecision,he ourt instobservedhat he cheme was of generalaturewith eferenceo he ulingin Kahn).he ourt everthelesseld hat tas necessaryo examinedespitehe eneralature of he id,he pplicantad he tatusf n intel-estedaty withinhe eaningof rticle88] 2)C.Te Court ound hat,nrelationo wo spectsf the id,he pplicant's competitveositionn themaiket ould e affectedy heax measune and hatttheieforeas individu-allyoncerned n elationo hese ais f he ecision.he Court ismissedthe ction,owever holdinghat he ontestedecisionas purelyonfimatory f reviousommission decisionshich ad ot een challengedn ime.Cf. lso,nhe Contextf roceedingsroughtyaid eneficiaries,ase 1-

212/00 - Nuove industrieolisaneCommission 2002] ECR I-34 p -graph 44.

64 See ommissionv Artionsgeneschaftecht nd Eigentum,aragiaphs47 and 8.

65 See ArtionsgeeinschafRecht nd Eigentum. ommissionparagraphs8 69.

66 See ommissionv Artionsgeneschaftecht nd Eigentum,aragiaph 44

2. The Community judge s possibilityof reinterpreting the legal pleas raised ythe applicants

It is recalled that the E J annulled the CFI's judgmentin ARE, holding that the CFI was wrong to considerthat ARE had implicitly put forward a plea allegingfailure by the Commission to fulfill its obligation toinitiate the formal review procedure provided for inArticle 88(2) EC.The question is which lessons may be drawn fromthe judgment in ARE in this respect.Indeed, it would seem that the reasoning of the ECleading to the annulment of the contested judgment isclosely linked to the specific circumstances of the case.In its judgment, the E J itselfhighlights at least threefeatures which may be considered specific to the

case.Firstly, the ECJ stresses the fact that ARE had

already been amply involved in the course of the for-mal review procedure which led to the adoption of thefirst decision of 20 January 1999, resulting in theCommission s decision to block the notified aid measure. In this context, it is important to note that the CFIin its judgment explicitly pointed to the direct connection between the decision of 20 January 1999 andthe contested decision.)Secondly, by claiming in its application that it hada particular interest in annulment of the contesteddecision, ARE had given the impression that the pleaadvanced by it (alleging breach of the prohibition ofall discrimination on grounds of nationality) related tothe substance of the contested decision and not to thefailure to initiate the formal review procedure provid-ed for by Article 88 2) EC.

Thirdly the E J observes in its judgment thatthe Commission was not given an opportunity torespond to the plea alleging breach of ARE's proce-dural rights.

All three aspects were explicitly mentioned by theECJ in its judgment before concluding that in thosecircumstances' there appeared to be no objective basisfor the findings of the CFI.Accordingly, the E J was careful to limit its find-ings to the specificities of the case before it. For thatreason, it is uncertain to which extent the ruling willlimit the CFI's possibility of reinterpreting the pleas inlaw advanced by the applicants in future cases. Itremains to be seen whether the special circumstancesunited in ARE must also be present in future casesbefore it precludes the CFI from freely reinterpretingthe pleas in law advanced by the applicant.

In this context, it may be queried whether in futurecases the contested decisions must necessarily bepreceded by Phase II decisions during which the applicants have submitted comments to the Commis-sion. If this is the case, must there be a direct connec-


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tion between the two decisions and, if so, how directmust this connection be? In addition, it might beasked if the fact that the applicant in ARE almostinsisted on challenging the substance of the case wasdecisive to the ECJ. Finally, would the assessment ofthe ECJ in ARE have been different if the Commission(as well as the other parties involved in the procedure)had been given the opportunity to present its writ-ten) observations on the pleas as reinterpreted by theCFI?It may be useful to recall that the EC) itself, in theCIRFS case, made a reinterpretation of the plea madeby the applicant. 7 In its application, the applicant hadclaimed that the aid in question should have beennotified pursuant to Article 88(3) EC and that theCommission had wrongly dispensed the MemberStates from this obligation. Interestingly, the Courtreinterpreted the plea made by the applicant, by stating that [t]he application must therefore be interpreted as seeking the annulment of the CommissionIsrefusal to initiate the procedure provided for in Article[88] 2) [...1 .68 The Court annulled the decision appar-ently on the ground that the Commission had failed toinitiate the latter procedure .

Similarly, the CFI in Kahn Scheepvahrt reinterpreted the plea made by the applicant and stated that theapplication, which seeks annulment of the contesteddecision, is to be interpreted as also seeking annul-ment of the Commission s refusal to initiate the procedure provided for in Article [88(2) EC].

A further example is offered by the CFI s ruling inCase Thermenhotel Stoiser where the CFI engaged inan assessment of seven legal pleas (the second toeighth plea) in order to reach a conclusion in relationto the first plea alleging an infringement of the procedural guarantees of the applicant. In its judgment, theCFI interpreted each of the pleas as aiming to demonstrate that the Commission would have been requiredto open the formal investigation procedure.

In the light of the above case law, it seems unlikelythat the judgment in ARE will have the effect of preventing the CFI from reinterpreting the pleas in lawraised by the applicants in all future cases.

It is interesting to note that the CFI in its judgmentof 26 January 2oo6 in Case T-92/02, StadtwerkeSchwabisch Hall a.o. v Commission has once againreinterpreted the pleas in law made by the applicants.In that case, concerning a German tax regime to facilitate the elimination of nuclear waste, the CFI foundthat the applicant by its two pleas in law in realitysought to demonstrate the existence of serious diffi-culties in the Commission s assessment of the saidmeasure which should have induced the Commissionto open of Phase 11.72

This judgment suggests that the CFI has alreadyadopted a liberal interpretation of the ECJ s judgmentin ARE.

V The test of individual concernin actions brought against Phase IIdecisions

Whilst the judgment of the ECJ in ARE does not bringany new elements to the test of standing that shouldapply in relation to Phase I decisions (pertaining tothe notion of interested parties 7), it is suggested thatthe judgment does provide some indications as to thetest of standing that should apply in relation toPhase ii decisions.

One of the leading cases governing the question ofstanding in relation to Phase II decisions is the Court sruling in Cofaz on 28 January 1988.74 The case con-cerned a preferential gas tariff granted by the Nether-lands Government through the public gas operator,Gasunie, to producers of nitrate fertilizers establishedin the Netherlands. The applicants, in their capacity ascompetitors to the beneficiary, sought the annulmentof the Commission s decision approving the aid. TheCourt declared their application admissible. In doingso t referred to the criteria of standing laid down inits Timex judgment of 2 March 1985 in the area ofanti dumping and observed that i) the applicantswere at the origin of the complaint which led to theopening of the investigation procedure; (ii) theirviews were heard during that procedure and iii) theconduct of the procedure was largely determined by

67 Case 315/90 CIRFS Commission ECR 1993 -125.in hat ase,heapplicanthallenged an aid ranted bythe renchovernmentforhe stab-lis-mentf hgh stengtholyesternit n ne of its egionsy particularundertaking (Allied). The ECJ eclaredhe pplicationdmissible,oldinghatthe pplicant,hich as an associationf he main nternationalroducersfsyntheticibies,ad een he Commission snteiocutoind had negotiatedwith t ertainspectselatedo the disciplineoverninghe id n uestion.

68 od, paragraph8, .also he perativeart f he udgment69 See n diticularc agcph 5i f the udgment70 Case 398/94 cKahnchepvaat. Commission ECR 1996 11-4/7,aragraph

47 inhat case,he pplicantshallenged a Commission decisionuthoisingcertainid chemes for hipbuildingnd aiius axelief schemes put n laceby he erman legislature.

71 See n diticulardiagiph 9i here the Fi ods thatinrdero rule n hefirstleana apprpiate to onsiderhe pplicantsther leas n awagainsthe ontestedecision,hether hey nableny ifficultyo e dentified hich hould ave ed he ommissionto pen the ormal investigationprocedure .

72 Case -92/02 Stadtweke chwUbischall .o Commisson udgment of26 January006 not et eported.he case resentsne of the elativelyreoccasionshere the FI as faced ith ommission decisionoldinghatthe easure t ssueid ot onstituteid.he assessmentf he FI asthus oncerned ith he ropei qualificationf the easure and ot he ues-tion f itsompatibilityith the ommon market. eCF dismissedhe ppli-atin helding that the ommission had correctlyound he easure oto beselective.

73 See aragraph6 of he udgment where the ourt erelytateshat hosepersonsncluden particularompeting ndertakingsnd race ssociatons.See lso he efinitiondopted in Case 23/82 Intemils v Commission[i984]CR 3809 aragiaph i8 nd rticle(h) f Regulationo 659/1999.

74 Case 68/84 Compcgnie fancaisee I azoteCofaz)A and others.Commission ECR i986 page 39i.

75 Case 64/82 I imex oiporation. ouncilnd omms on, CR i985page 49

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their observations. Moreover, the Court held that anadditional condition should be fulfilled in the area ofState aid, i.e. (iv) the undertaking s position on themarket should be significantly affected by the aid inquestion. This last condition was also fulfilled inCofaz, according to the Court. The Court observed thatit is not for the Community Court, when it is considering whether the application is admissible, to make adefinitive finding on the competitive relationshipbetween the applicant and the undertakings in receiptof the aid. In that context, it is for the applicant aloneto adduce pertinent reasons to show that theCommission s decision may adversely affect its legitimate interests by seriously jeopardising its position onthe market in question.

It follows from the judgment in Cofaz that twomain conditions must be fulfilled, i.e.i the applicant must have been substantially involv

ed in the procedure before the Commission (condition of procedural involvement),and

2) the applicant must be substantially affected by theaid in question (condition of substantial affectation).

The ramifications of the Cofaz judgment have onlybeen tested in a limited number of cases before theCFI.It appears from the cases decided by the i in the

period 1995 2005 that the application of the conditions laid down in Cofaz has varied at times.

i The condition of proceduralinvolvementAlready in the first case involving a Phase ii decisionbefore it, the CFI departed from the condition of pro-cedural involvement.76 Cofaz, paragraph 28. In paragraph 27 of te Judgment, the Cout refers to the

data supplied by the applicants according to which the Netherlands eiies of the aid, between 1978 and 1982, had more than tripled their volume ofexports of nitrate fertilizers to France and increased their market shares on thatmarket from 9 to 21.7 .

7 The ECJ,untl its ruliin ARE had not decided any cases involving actionsbrought by competit against Phase 11 ecisions known to this authoi.78 ASPEC aragraphs 6 nd 079 BPChemicals Ltdv. Commission, [1998] ECR11-235, paragraph 7780 BPChemicals Ltdv. Commission, aragiaphs 73-7581 joined Cases 744//93 T448/93 and -449/93- AITEC.o.v. Commission,

[19951 ECP I-i97i82 joined Cases -3/l/94 and j-394/94 British Airvays a.o.v. Commission,

[i998] ECR 1-2 10583 in AITEC he CFIwas s tied that three of the members of AITECad taken

part in the administrative procedure (pLiagraph 59 . The same observation wasmace in relation to three members of the British Cement Association, who hadalso taken part in meetings with representatives of the Commission (paragraphs/6-78 . Similarly, in British Aivways, the Court admitted the actions brought bythe applicants which had mainly submitted comments to the Commiss on duL-cnghe administrative procedure (paragraph 88 of the judgment).

In Case ASPEC decided on 27 April 1995 the applicants challenged a Commission decision approving anaid granted by the Italian authorities to the companyItalgrani. The three applicants were all competitors toItalgrani. In the Commission s submissions, not all ofthe applicants had taken actively part in the procedureas required by the Court in the Cofaz judgment. TheCFI nevertheless admitted the application, holdingthat all of the conditions laid down in Cofaz shouldnot necessarily be satisfied in all circumstances.According to the CFI, the Court [in Cofaz] merely stated that undertakings in aposition to establish the existence of such circumstances are concerned within themeaning of Article [230 EC], which does not precludethe possibility that an undertaking may be in a posi-tion to demonstrate by other means, by reference tospecific circumstances distinguishing it individuallyas in the case of the addressee.

This was later repeated in Case BP Chemicals vCommission (judgment of 15 September 1998), wherethe Court held that where, as in this case, the appli-cant has not exercised its right to submit comments inthe course of the procedure foreseen by Article [88(2)EC], it must prove that it is in a distinct competitiveposition which differentiates it, as regards the Stateaid in question, from any other trader 9. In that case,the claimant was a UK company challenging a Com-mission decision concerning certain individual aidmeasures (three capital injections) granted by an Italian State owned company (ENI) to one of its subsidiaries, a producer of chemical products (ENIChem).The Court noted that the applicant had not com-plained to the Commission and had only beeninvolved in the procedure before the Commission as amember of a working party made up by the UnitedKingdom and had not submitted any observations inits own name. This was not considered sufficient tofulfill the condition of procedural involvement

In other cases following Cofaz, the CFI has high-lighted the procedural involvement of the applicantsas an important feature. However it is not entirelyclear from those cases whether the condition of procedural involvement necessarily implies that all threeelements listed by the E J in Cofaz (i.e. the applicantbeing at the origin of the complaint; the applicantsviews having been heard during the administrativeprocedure, and the conduct of the procedure beinglargely determined by their observations) be present.Accordingly in AITEC31 and British Airways8 2the CTI accepted as sufficient involvement in theprocedure the fact that the applicants had submittedcomments to the Commission without being at theorigin of the complaint. In contrast, in Ducros, theCH seems to attach importance primarily to the factthat the applicant was the instigator of the complaintand the sole undertaking to participate in the proce-dure other than the recipients of the aid, while seem-


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ingly relaxing its assessment of the condition of substantial affectation. Finally it is clear from the rulingin Kahn Scheppvaart that in any event, the mere par-ticipation in the procedure even s complainantdoes not suffice for a competitor to be individuallyconcerned by an aid measure.The above cases have led some commentators toobserve that the situation is unclear.8c

It is submitted that, by its ruling in ARE, the ECJhas signaled an inclination to abandon the conditionof procedural involvement. Indeed, in paragraph 7 ofits judgment, the Court refers to the fact that the'applicant's market position [should be] substantiallyaffected by the aid to which the decision at issuerelates', making no reference to the requirement ofprocedural involvement. These dicta seem to confirmthe approach adopted by the i in AITEC and BPChemicals, namely that an applicant may acquirestanding from the mere fact of its market positionbeing substantially affected by the aid in question.Interestingl, the E J in paragraph 37 makes refer-ence to paragraphs 22 to 5 of its judgment in Cofaz.It is exactly by those paragraphs in Cofaz that the ECJintroduced the condition of procedural involvement.This too would suggest that the test of proceduralinvolvement may be dispensed with in future cases.

Moreover, such an approach would seem in con-formity with the Court's own case law in areas such asanti dumping and competition where the Court hasacknowledged that claimants may satisfy the conditions laid down in the Plauiann judgment even ifthey have not participated in the procedure leading tothe adoption of the contested decision.

On the other hand, if disregarding for a momentthe special circumstances surrounding the ARE case(as discussed above), it should not be overlooked thatthe ARE ruling is concerned with a challenge broughtagainst a decision adopted after Phase I thus withoutthe opening of a formal investigation procedure. Inthe absence of such a procedure, it would appearpointless for the Court to require that the full test ofprocedural involvement set out in Cofaz be satisfied.This might explain wh y the Court in ARE did not referto the procedural involvement test nor explain if the'full-prong' procedural involvement test would remainapplicable in some cases.

In addition, it has been suggested that one of thereasons why a condition of procedural involvementwas originally included in Cofaz may have been thewish to ensure that an operator only brings mattersbefore the Community courts which have alread)been brought to the prior attention of the Commissionduring the administrative procedure . However, thisargument seems to be of little assistance today, whereit follows from the case law of the Court that, in theabsence of any explicit provision to that effect, theapplicant's possibility of relying on a plea before the

Community judge cannot be made dependent on theapplicant having already stated those grounds duringthe administrative procedure.In um, although this question might still be open tosome debate, the ECJ in the ARE ruling seems to sup

port the conclusion that the condition of proceduralinvolvement set out in Cofaz must not necessarily befulfilled in order to challenge a Phase II decision.

It is less clear, however, whether the failure to com-ply with the condition of procedural involvement mayhave an impact on the strictness of the requirement ofsubstantial affectation. Indeed, it has been suggestedby some authors that a more lenient approach tostanding may apply where an applicant shows that itwas involved in the procedure leading to the adoptionof the challenged decision and principally where itparticipated as a complainant.C

2 The condition of substantial affectationAs regards the condition of substantial affectation', itappears from the judgments rendered by the CH inthe aftermath of Cofaz that the CFI has applied thiscondition with varying degrees of firmness.

A remarkably liberal approach was observed inBritish Airways. In that case, seven air transport com-panies from England, France and the Netherlands hadchallenged a Commission decision approving Stateaid granted to the French company Air France in theform of a capital increase. in its ruling, the CFI did notconduct any assessment of the admissibility of theaction brought by seven European airlines, but limiteditself to state -while examining a plea relating to thesubstance of the case that the condition of substantial affectation was satisfied in relation to all seven

84 Case 149/95 Ducros.Commission, L99/] CR II-2031,aragraphs 37-41.At he ame time,owever,the ourt recognseshat he onditionf roceduralnvolvementeed not ecessailye satistedpciagiaph 34).

85 Case 398/94 Kahn cheppvaart. ommission,[1996]CR 1-4/7,aragicph 1

86 SoMsz/Bielesz,Judicialeviewf tateid ecision',uropean CompettionLaw Review 2004 133 14i)

8/ See n aricularase -358/89 Extrametndustrie. ouncil,1991]CR2-01, nd Case -528/93 - Mtropole televisonCommison [i996]CR ii-649.

88 See Mero a,Legal Postionf hirdarties in the iocedureoverningMattersf Stateid n uiopeanompetitionaw: new ole toi he embeiStates',ongressmgansed n 20th nd 1th ovember 2002 bytheEuropeanssociationf Layers, Brussels001, 54 283 et eq.).

89 Case 580/94 AIUFFASSndAKTv. ommission,[L996]CR II2169,ara-graph 4,and 0oine0ases 0298/97512/97,13/97, 315/9/ 600/9/to 07/9Z 1-1/98,-3/98oT-6/98 and -23/98 Alzettaauio and theisv Commission, 2000] ECR I-2319,cicgraph 88.

90 Flynn,Remediesin he uiopean Couits', in: iond t al.eds), he Law ofStateidn the U xford004, 283 (295), with eference to he udgmentsin ofaz nd n ase -313/90 CIRFS nd lhers v. Commission,1993] CR11125 See lsoeppenne,'Guidees ides'etat en roll communautaiie ,Biussels999,pages 13-6i4,itheference to he udgment in SPtC andBP Chemicals


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STANDING OF THIRD PARTIES IN STATE AID CASES EStAL 212006

applicants, including the intervening parties. In thatcase, there could be no doubt that the applicants onlyregrouped some of the many air companies inside andoutside Europe who might be considered as competi-tors to the beneficiary, Air France. In addition, itwould appear that not all of the applicants belonged tothe largest competitors of the beneficiary.

Another example was found in the AITEC judg-ment of 6 July 1995, where the applicants contestedthe validity of a Commission decision approving anaid granted by the Greek Government to a Greekcement company. The CFJ found that all three applications, lodged by respectively two associations ofcement producers (AITEC and British Cement As-sociation) and one cement company ('Titan Cement'),were admissible. As regards AITEC's application, theCourt held without more ado that at least three of itsinembers competitive position had been affected' bythe imports of the Greek cement benefiting from theaid at issue. Similarly as regards one of the otherapplicants, British Cement, the Court was satisfiedthat the competitive position of three of its membercompanies' on the UK market was affected by the decision, 'inasmuch as the aid considerably strengthensthe financial position of their Greek competitorHeracles, thus enabling it to export its products to theUnited Kingdom at more competitive prices thanbefore 9Other examples include the judgments in ASPECand Ducros, both mentioned in the previous section.

91 in ssessingh th rth contestedecsioncont inedufficienteg le soninga plea aisedythe ourtf itswn motion),he ourt bservedhat theapplicantsad ubmittedo ments to the Commission during the dminist ra-tiverocedLe and eld hat its ommon ground hat he pplicantsas ellas] he aersk ompanies,s inteveners..]re artiesoncernedithinhemeaning ofA cle88] 2) f he reatynd hatheontestedecisions fdirectnd ndividual concern o hem withinhe eaning of he ourthdia-giaph f rticie230]f he reaty,iven hat h market ositions igniicantlyffectedythe id easure which tauthorises'paragraph 93).ieudgment contain o furtherevelopmentsn relationo his inding.ileFIannulledhe ecis on, oldinghathe decisn utfeied fom insufficientea-soningn two ponts f crucial mportance.

92 i[id,cicgraphs 58-59.93 bid, aragraphs/5-80.94 Case 435/93 ASPEC, ECR1995 I1281,aragraph0.95 Case T-149/95 Ducros . omms on, CR 1997 H-205i,aragiaphs 37-41.96 Case -36/99 Lenzing Commission, udgment of 21 October004, not et

reported,ialgraphs3-92.mongst otheis,he ourt dismisseds hlirrelevanthe ommission- argumenthat he pplicantad chievedoodresulturinghe ears n uestionparagraph 90 of he udgment).

9 Case 88/01 Sniace. Commission, udgment of 14 pril005,not etreported.y udgment of the ameate n ase -141/01 iace v.Commission, ante actionntroducedy he ame applicantwo eacs ailerwas dismisseds nadmissibley he R. In hat ase,he CR found hatSniace ackedegalnterestn ringingroceedingsgainstCommission decision uthormingoan granted by a Spanish bank o niace.ccordingo heCF , he pplicantad tailedo how thathe ommission'sindings in elationto he egaltatusf the panish ank nd hus he assficatonf the oan said as susceptibleo hange niace'segalosition.ee lso ubbing/vantMervei,TwoStonest one Bir F clarifiesules n Standing in tateidCase niace ommission',StAL 005, 361.

In ASPEC, the CFI admitted the application, referring to (i) the limited number of producers of theproduct in question and (ii) the fact that the aid inquestion would result in a significant increase in theproduction capacity in a market already characterisedby overcapacity.4In Ducros, the I admitted an application challenging a Commission decision authorising aid grant-ed by the Italian authorities to an Italian companyactive in the metalconstruction sector. As regards thequestion of substantial affectation, the i observedthat the applicant was a competitor to the beneficiaryin a sector characterised by a restricted number ofundertakings and difficulties in calculating marketshares.

In other cases the CFI seems to have applied astricter standard to measure whether the condition ofsubstantial affectation was met. One example is BPChemicals, where the Court dismissed the application,referring to the fact that (i) some 20 operators wereactive in the sector affected and that (ii) five other pro-ducers had a arger capacity than the applicant, whichonly occupied seventh position.More recent examples would arguably include thejudgments in cases Lenzing and Sniace.

In Lenzing (judgment of 21 October 2004) , theapplicant challenged a decision finding that a resched-uling of debt arrangement agreed between the SocialSecurity Fund in Spain and a Spanish producer of cellulose, Sniace, did not constitute State aid. The Jdeclared the action admissible, holding that (i) theapplicant had lodged the complaint and had partici-pated actively in the procedure leading the Com-mission to open the procedure (the Commission hadoriginally decided to take no action). Moreover, theCourt held the applicant's position to be substantiallyaffected by the aid, underlining that (ii) he applicantwas a competitor in a market distinguished by a verysmall number of producers, keen competition andserious overcapacity; and iii) although Sniace wasnot one of the largest viscose fibre producers in theCommunity [ ] 'its position on the market was by nomeans insignificant and its disappearance from themarket might have had appreciable effects on thecompetitive position of the remaining producers inthe form of a reduction in their surplus capacity andan improvement in their commercial situation . Inaddition, it could not be precluded that the alleged aidhad allowed Sniace to 'to sell its products at lowerprices than its competitors'.

In the Sniace judgment of 14 April 2005, the roleswere reversed, since in that case, Sniace challenged aCommission decision authorising certain funds granted by an Austrian public body to the Austrian company Lenzing AG to assist its production of a naturalbiodegradable fibre (1yocell). In rejecting the applica-tion as inadmissible, the CFI stressed that the appli-


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cant had only played a limited role in the course of thepre-litigation procedure and had not adduced perti-nent reasons to show that the subsidised productswere in competition with those of the applicant. It didtherefore not satisfy the conditions set out in Cofaz.

It is submitted that the test of substantial affectation applied by the i in cases such as BP Chemicals,Sniace and Lenzing is stricter than the test applied incases such as AITEC and British Airways and, albeit toa lesser extent, Cases ASPEC and Ducros. In fact, theCI in British Airways could even be seen as going sofar as to conflate the notion of interested party withthe test of substantial affectation.The judgment in ARE does not address the defini-tion of substantial affectation in relation to individualapplicants. Nor does the ARE judgment tell us if thetest of substantial affectation may vary according towhether the condition of procedural involvement issatisfied. Indeed, the Court s ruling on the standing ofARE (paragraphs 53-59) is concerned merely withwhether ARE as an association (in ts capacity as nego-tiator) was individually affected y the contested deci-sion and not whether one or more of its memberswere substantially affected by it. These issues therefore still await clarification by the Court.

In any event, it is suggested by this author that thetest of substantial affectation set out in the Cofaz judgment is not as strict as the test of individual concernlaid down in Plaumann. Indeed, in Cofaz the E J heldthat it is not for the Community Court, when it is considering whether the application is admissible, tomake a definitive finding on the competitive relationship between the applicant and the undertakings inreceipt of the aid . Accordingly, the Court in Cofazaccepted that the applicant adduce[s] pertinent rea-sons to show that the Commission s decision mayadversely affect its legitimate interests. 9 It thereforeseems perfectly in line with the Cofaz ruling the Hhas not always engaged in an in-depth scrutiny of theveracity of the reasons adduced y the claimant todemonstrate that its competitive position was serious-ly affected by the contested aid measure.The judgments of the I in Sniace and Lenzinghave been appealed to the E J and may give the E Jan opportunity to further clarify its case-law in thisfield.

9 Cofaz, paragraph2


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STANDING OF THIRD PARTIES N ST TE AID C SES EStAL 212 6 283

Table Decisions dopted wit out opening Phase II Proceedings brought by ompetitors Case ' Admissibility: Admissibility: Plea alleging failure to open Other pleas Individual aid Result

Limited Full standing Article 88(2) procedure examined by or general aidstanding (Cofaz) the Court scheme('Interested Brought by Reinterpretaparty') applicant tion made bythe urt

CIRFS Yes Not examined No Yes No individual AnnulmentCook Yes Not examined Yes No No individual AnnulmentMatra Yes Not examined Yes No Yes individual Dismissed as

unfoundedSIDE Yes Yes Yes No No individual Annulment

(implicitly)Kahn No No No Yes No General Dismissed asScheppvaart scheme inadmissibleSkibsvarfts Yes Yes No No Yes individual Dismissed asforeningen (implicitly) unfoundedVvaterleiding Yes No Yes No No General Dismissed as

inadmissibleBP Chemicals Yes No Yes No No individual Annulmentre. third capital injection)Sytraval and Yes Not examined Yes No Yes Individual AnnulmentBrink s FranceSIC Not examined Not examined Yes No No Individual AnnulmentARAP Yes No No No Yes Both Dismissed a,

unfoundedPrayon-Rupel Yes No No No No Individual AnnulmentHamburger No No Yes No No General Dismissed asHafen inadmissibleThermenhotel Yes No Yes Yes Yes Individual Dismissed a,Stoiser unfoundedDanske Bus Yes Not examined Yes No Yes Individual AnnulmentvognmndKronofrance Yes No Yes No No) Individual AnnulmentARE CFI) Yes Yes No Yes No General AdmittedARE ECJ) Yes No No No No General Dismissed as

inadmissibleStadtwerke Yes Not examined No Yes Yes General Dismissed asSchwabisch unfoundedHall

This table does not include cases where proceedings have been brought y the aid beneficiaries or i ssoci tions100 rhe cases are listed in honi order foowing th ae tof judgment)


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284 EStAL 2 2OO6 STANDING OF THIRD PARTIES IN STATE AID CASES

able Decisions Adopted at the nd of the Phase II Procedure Proceedings brought by CompetitorsCase 2 Admissibility: Procedural involvement Substantial Individual aid or Result

Full standing affectation general aid(Cofaz) Lodged corn Actively partici scheme

plaint to the pated in theCommission administrativepro e ure

Cofaz Yes Yes Yes Yes General AdmittedASPEC Yes No not all No not all Yes Individual Annulnent

applicants) applicants)AITEC Yes No Yes Yes Individual Dismissed as

inadmissibleDucros Yes es Yes es Individual Dismissedo s

unfoundedBP Chemicals No No No No Individual Disnissed as(re. first and sec inadmissibleond capitalinjections)British Airways Not examined No Yes Yes Individual AnnulmentLenzing 103 es es es es Individual AnnulmentSniacelo No No Only limited No Individual Dismissed asinadmissible

101 This table co. not include cases where proceedings have been brought by the aid beneficiaries or their associations102 The cases are ited in chronological order (following the date of judgment)03 Under appeal in Case C-525/04, Spain v Commissn see O 2 5 C 59/4)

i04 Under appeal in Case C-260/05 P Sniace v. Commisson see 2005 C 193/22

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