Regulatory case law, November 2014: treatment of urban water waste and renewable energy sources

This past November the European Court of Justice decided on the obligation of electricity producers to feed into the national grid a certain quantity of electricity produced from renewable energy sources and on the treatment of urban waste water in Belgium.

 

Environment

C‑404/13 ClientEarth - the Court clarifies Member States’ obligations as regards respecting the limit values for nitrogen dioxide

In case C 404/13 ClientEarth, the Court clarifies Member States’ obligations as regards respecting the limit values for nitrogen dioxide. When a Member State finds that the limit values cannot be respected before the deadline fixed by the Air Quality Directive and wishes to postpone that deadline for a maximum of five years, that Member State is required to make an application for the postponement of the deadline by drawing up an air quality plan demonstrating how those limits will be met before the new deadline.

In case C 404/13 ClientEarth, the request for a preliminary ruling concerned the interpretation of Articles 4 TEU and 19 TEU and Articles 13, 22, 23 and 30 of Directive 2008/50/EC of the European Parliament and of the Council of 21 May 2008 on ambient air quality and cleaner air for Europe. The request has been made in proceedings between ClientEarth, a non governmental organisation interested in protection of the environment, and the Secretary of State for the Environment, Food and Rural Affairs, concerning that organisation’s request for revision of the air quality plans drawn up by the United Kingdom of Great Britain and Northern Ireland under Directive 2008/50 for certain of its zones and agglomerations.

The Court explained that article 22(1) of Directive 2008/50/EC must be interpreted as meaning that, in order to be able to postpone by a maximum of five years the deadline specified by the directive for achieving conformity with the limit values for nitrogen dioxide specified in Annex XI thereto, a Member State is required to make an application for postponement and to establish an air quality plan when it is objectively apparent, having regard to existing data, and notwithstanding the implementation by that Member State of appropriate pollution abatement measures, that conformity with those values cannot be achieved in a given zone or agglomeration by the specified deadline. Directive 2008/50 does not contain any exception to the obligation flowing from Article 22(1). Where it is apparent that conformity with the limit values for nitrogen dioxide established in Annex XI to Directive 2008/50 cannot be achieved in a given zone or agglomeration of a Member State by 1 January 2010, the date specified in that annex, and that Member State has not applied for postponement of that deadline under Article 22(1) of Directive 2008/50, the fact that an air quality plan which complies with the second subparagraph of Article 23(1) of the directive has been drawn up, does not, in itself, permit the view to be taken that that Member State has nevertheless met its obligations under Article 13 of the directive.

Where a Member State has failed to comply with the requirements of the second subparagraph of Article 13(1) of Directive 2008/50 and has not applied for a postponement of the deadline as provided for by Article 22 of the directive, it is for the national court having jurisdiction, should a case be brought before it, to take, with regard to the national authority, any necessary measure, such as an order in the appropriate terms, so that the authority establishes the plan required by the directive in accordance with the conditions laid down by the latter.

C‑66/13 Green Network - obligation of electricity producers and importers to feed into the national grid a certain quantity of electricity produced from renewable energy sources

Case C 66/13 Green Network – obligation of electricity producers and importers to feed into the national grid a certain quantity of electricity produced from renewable energy sources or, failing that, to purchase ‘green certificates’ from the competent authority

In case C 66/13, the request for a preliminary ruling concerned the interpretation of Articles 3(2) TFEU and 216 TFEU, read in conjunction with Article 5 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, and the Agreement between the European Economic Community and the Swiss Confederation.

The request has been made in proceedings between Green Network and the Autorità per l’energia elettrica e il gas (‘the AEEG’) concerning an administrative fine imposed by the latter on Green Network for its refusal to purchase green certificates in an amount corresponding to the quantity of electricity which that company imported into Italy from Switzerland. The Court declared that on a proper construction of the EC Treaty, having regard to the provisions of Directive 2001/77/EC, the European Community enjoys exclusive external competence precluding a provision of national law, such as that at issue in the main proceedings, which provides for the grant of exemption from the obligation to purchase green certificates owing to the introduction, onto the national consumer market, of electricity imported from a third State, by means of the prior conclusion, between the Member State and third State concerned, of an agreement under which the electricity thus imported is guaranteed as having been produced from renewable energy sources, according to arrangements identical to those set out in Article 5 of that directive.

When a provision has been disapplied by a national court because it is incompatible with EU law, it is contrary to EU law for that court to apply, by way of substitution, an earlier provision of national law in substance similar to that disapplied, which provides for the grant of exemption from the obligation to purchase green certificates owing to the introduction, onto the national consumer market, of electricity imported from a third State, by means of the prior conclusion, between the national grid manager and an equivalent local authority of that third State, of an agreement determining the verification arrangements necessary for the purpose of certifying that the electricity thus imported is electricity produced from renewable energy sources.

C‑395/13 European Commission v Kingdom of Belgium - concerning urban waste water treatment

In case C 395/13, European Commission v Kingdom of Belgium, the Court held that Kingdom of Belgium has failed to fulfill its obligations under Articles 3 and 4 of Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment.

In case C 395/13, European Commission v Kingdom of Belgium, the European Commission sought a declaration by the Court that, by failing to make provision for the collection and treatment of urban waste water in 57 small agglomerations with a population equivalent (p.e.) of more than 2 000 and less than 10 000, the Kingdom of Belgium has failed to fulfil its obligations under Articles 3 and 4 of Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment. The Court declared that, by not ensuring the collection and treatment of urban waste waters of the agglomerations, the Kingdom of Belgium has failed to fulfill its obligations under Articles 3 and 4 of Council Directive 91/271/EEC of 21 May 1991 concerning urban waste water treatment.

Competition

C‑580/12 P Guardian Industries and Guardian Europe v Commission - the Court set aside the judgment of the General Court of the European Union in case T‑82/08

The Court of Justice in the case C 580/12 P, Guardian Industries and Guardian Europe v Commission, set aside the judgment of the General Court of the European Union in case T 82/08, in so far as it rejected the plea in law alleging infringement of the principle of non-discrimination as regarded the calculation of the amount of the fine imposed jointly and severally on Guardian Industries Corp. and Guardian Europe Sàrl and ordered them to pay the costs. Beside that it reduced the fine imposed on Guardian for its role in the flat-glass cartel from €148 million to €103.6 million.

In 2007, the Commission found that the undertakings Guardian, Asahi Glass, Pilkington and Saint-Gobain had unlawfully fixed prices in the flat-glass sector in the European Economic Area. The Commission imposed a fine of €148 million on Guardian. In 2012, the General Court upheld that decision. Guardian brought an appeal before the Court of Justice seeking to have the judgment of the General Court set aside and the fine reduced. It argued that the General Court failed to have regard to the principle of equal treatment in refusing to accept that, when the fine was calculated, sales between entities belonging to the same undertaking (internal sales) must be taken into account on the same basis as sales to independent third parties (external sales).

The Court of Justice noted that, in order to determine the amount of the fine to be imposed on an undertaking, the proportion of the overall turnover deriving from the sale of products in respect of which the infringement was committed is able to reflect the economic importance of the infringement and the relative weight of that undertaking in it. As regards those sales, a distinction must therefore not be drawn between external and internal sales. Excluding a company’s internal sales would effectively favour vertically integrated companies by reducing their relative weight in the infringement to the detriment of the other companies, on the basis of a criterion which has no connection with the objective pursued (namely that of reflecting the economic importance of the infringement and the relative weight of each of the undertakings that took part in it). The Court noted that the exclusion of the internal sales led to the relative weight of Saint-Gobain (a vertically integrated company) in the infringement in particular being reduced and that of Guardian (a non-vertically integrated company) being increased commensurately. The Court therefore decided to reduce the amount of the fine imposed on Guardian by 30% and to set that fine at €103.6 million.

T-219/10 Autogrill España SA v Commission and T- 399/11 Banco Santander SA and Santusa Holding SL v Commission - annullment of Commission decisions regarding the Spanish tax regime

In cases T-219/10 Autogrill España SA v Commission and T- 399/11 Banco Santander SA and Santusa Holding SL v Commission, the General Court annulled the Commission decisions declaring the Spanish tax regime allowing for the deduction of shareholdings in foreign companies to be incompatible with the internal market. The Commission failed to establish the selective nature of that regime.

Three undertakings established in Spain, Autogrill España, Banco Santander and Santusa Holding, asked the General Court to annul the Commission decisions, which declared the regime established by the Spanish legislation, to be incompatible with the internal market and Spain was directed to recover the aid granted. The General Court annulled the two Commission decisions. According to the General Court, the Commission failed to establish that the Spanish regime was selective, selectivity being one of the cumulative criteria for classifying a measure as State aid.

The General Court observed, first of all, that the existence of a derogation from or an exception to a reference framework (in this case, according to the Commission, the Spanish corporation tax regime in general and, more specifically, the rules relating to the tax treatment of financial goodwill contained in the tax regime), if proved, does not, by itself, establish that a measure favours‘ certain undertakings or the production of certain goods’ for the purposes of EU law, since that measure is available, a priori, to any undertaking. Spanish regime is not aimed at any particular category of undertakings or the production of goods, but a category of economic transactions. That regime applies to all shareholdings of at least 5% in foreign companies held without interruption for at least one year. In that regard, the General Court notes that the Spanish regime does not exclude, a priori, any category of undertaking from taking advantage of it, since its application is independent of the nature of an undertaking’s activity. In addition, the Spanish government does not set any minimum amount in respect of the minimum 5% shareholding threshold. The regime, therefore, does not, in fact, restrict the undertakings which can take advantage of it to those which possess sufficient financial resources to do so.

The General Court rejects the Commission’s argument that the Spanish regime is selective in so far as it only benefits certain groups of undertakings which make certain investments abroad. It points out that such an approach could lead to every tax measure the benefit of which is subject to certain conditions being found to be selective, even though the beneficiary undertakings would not share any specific characteristic distinguishing them from other undertakings, apart from the fact that they would be capable of satisfying the conditions to which the grant of the measure is subject. The General Court recalls that a measure which may confer an advantage on all undertakings without distinction within the State concerned does not constitute State aid as regards the criterion of selectivity, and that a finding of the selectivity of a measure must be based, inter alia, on a difference of treatment between categories of undertakings under the legislation of the same Member State, not a difference in treatment between companies of a Member State and those of other Member States. The General Court concludes from this that the fact that the measure favours undertakings which are taxable in one Member State as compared to undertakings which are taxable in other Member States (in particular, because the measure facilitates undertakings established in that Member State acquiring shareholdings in the capital of undertakings established abroad) does not affect the analysis of the selectivity criterion and supports only the finding that, depending on the circumstances, competition and trade have been affected.

Ines Grah

Ines Grah

Ines Grah, Aphaia’s guest blogger, holds a law degree in state aid and is currently writing a thesis on individuals’ access to the EU Court of Justice as part of the doctoral programme of the Faculty of Law at the University of Ljubljana.
Ines Grah

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