Regulatory case law, February 2015: gas emission allowances and exploratory drilling for natural gas

In February the European Court of Justice ruled on gas emission allowances, exploratory drilling for natural gas and petroleum, and the financing of the pensions of civil servants working for France Télécom.

Environment

C-43/14 – ŠKO-ENERGO: acquisition free of charge of greenhouse gas emission allowances

Case C-43/14 – ŠKO-ENERGO – EU law precludes a Czech tax on the acquisition free of charge of greenhouse gas emission allowances by electricity producers to the extent that the tax applies to more than 10% of those allowances

The request for a preliminary ruling concerns the interpretation of Article 10 of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32). It has been made in proceedings between ŠKO–ENERGO and Tax Appeal Board, concerning the payment of a tax on the allocation of greenhouse gas emission allowances for the years 2011 and 2012.

ŠKO–ENERGO acquired free of charge, for 2011 and 2012, greenhouse gas emission allowances for the production of electricity for which the Tax Office is claiming CZK 20 473 152 in gift tax. ŠKO–ENERGO lodged an objection to the assessment with the Finančního úřad but it was unsuccessful. It then brought the matter before the Prague Regional Court, which granted its application claiming that this tax infringed EU law. Hearing an appeal, the Supreme Administrative Court of the Czech Republic expressed doubts as to whether this tax was compatible with EU law, particularly Article 10 of Directive 2003/87, which provides that at least 90% of emission allowances are to be allocated free of charge during the period 2008-2012. The Court of Justice of the European Union held that Article 10 of Directive 2003/87/EC must be interpreted as precluding the imposition of a gift tax if it does not respect the 10% ceiling on the allocation of emission allowances for consideration laid down in that article, which is a matter for the referring court to determine.

C-531/13 Marktgemeinde Straßwalchen and Others on assessment of the effects of certain public and private projects on the environment

The request for a preliminary ruling concerns the interpretation of Annex I, No 14, to Council Directive 85/337/EEC of 27 June 1985 on the assessment of the effects of certain public and private projects on the environment (OJ 1985 L 175, p. 40), as amended by Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 (OJ 2009 L 140, p. 114) (‘Directive 85/337’).

It has been made in proceedings between municipality of Straßwalchen and 59 other applicants and the Austrian Federal Minister for Economy, Family and Youth concerning a decision authorising Rohöl-Aufsuchungs AG to carry out exploratory drilling on the territory of the Marktgemeinde Straßwalchen. The Court ruled that Annex I, No 14, to Council Directive 85/337/EEC must be interpreted as meaning that exploratory drilling in the context of which a trial production of natural gas and petroleum is envisaged in order to determine the commercial feasibility of a deposit, does not come within the scope of that provision.

Article 4(2) of Directive 85/337, read in conjunction with Annex II, No 2(d), to that directive, must be interpreted as meaning that it may give rise to an obligation to conduct an environmental impact assessment of a deep drilling operation, such as the exploratory drilling at issue in the main proceedings. The competent national authorities must accordingly carry out a specific evaluation as to whether, taking account of the criteria set out in Annex III to Directive 85/337, as amended by Directive 2009/31, an environmental impact assessment must be carried out. In so doing, they must examine inter alia whether the environmental impact of the exploratory drillings could, due to the impact of other projects, be greater than what it would be without the presence of those other projects. That assessment must not be confined to municipal boundaries.

C-498/13 Agrooikosystimata: long-term set aside scheme for agricultural land

The Court in case C-498/13 Agrooikosystimata held that only persons who have previously produced agricultural products could benefit under the long-term set aside scheme for agricultural land

The request for a preliminary ruling concerns the interpretation of Council Regulation (EEC) No 2078/92 of 30 June 1992 on agricultural production methods compatible with the requirements of the protection of the environment and the maintenance of the countryside (OJ 1992 L 215, p. 85) and Commission Regulation (EC) No 746/96 of 24 April 1996 laying down detailed rules for the application of Council Regulation (EEC) No 2078/92 (OJ 1996 L 102, p. 19).

It has been made in proceedings between Agrooikosystimata and Minister for Economy and Finances and Minister for Agricultural Development and Food and Region of Thessaly, Prefecture of Magnisias, concerning the exclusion of agricultural land, leased by Agrooikosystimata, from the long-term set-aside scheme for agricultural land (‘the LTSAS’). The Court held that Council Regulation (EEC) No 2078/92 must be interpreted as meaning that only persons who have previously produced agricultural products could benefit under the long-term set aside scheme for agricultural land provided for in Article 2(1)(f) thereof.

 

Competition

C-37/14 Commission v France: aid granted illegally to French fruit and vegetable producers

The Court in Case C-37/14 Commission v France holds that France has not taken all the necessary measures to recover aid granted illegally to French fruit and vegetable producers

The Court notes that no measure was adopted by France in order to recover the aid within the period prescribed by the Commission in its decision ordering the recovery and that it was nearly two years after the expiry of that time-limit, that France initiated the recovery procedure. The Court also notes that the procedure for the recovery of the aid was still ongoing at the time of the hearing before the Court in the present case.

In addition, the Court finds that France has failed to demonstrate that it was absolutely impossible for it to implement the decision ordering the recovery. Furthermore, France failed to provide precise and specific data establishing, for each of the beneficiaries concerned, whether the conditions for applying grounds for non-recovery were met. France has failed to prove that it can no longer identify the members of those POs or extrapolate the amount of the aid paid to the producers involved. The Court points out that the fact that the beneficiary companies are in difficulty or bankrupt or are the object of a buy-out or a merger-take-over does not affect the obligation to recover the aid, as the Member State concerned is obliged to take every measure to facilitate the reimbursement of the aid.

Cases T-135/12 France v Commission and T-385/12 Orange v Commission: reform of the financing of the pensions of civil servants working for France Télécom after its conversion into a public limited company only constitutes compatible State aid

The General court in Cases T-135/12 France v Commission and T-385/12 Orange v Commission held the reform of the financing of the pensions of civil servants working for France Télécom after its conversion into a public limited company only constitutes compatible State aid subject to the conditions imposed by the Commission. The effect of that reform was to reduce the contribution to be paid to the French State by France Télécom up until that conversion and it failed to bring about an equalisation of the social charges payable by competitors

The General Court confirms that France granted State aid compatible with the internal market to France Télécom, in accordance with the conditions laid down by the Commission, and dismisses the actions. The General Court notes that, by reducing the social charges, the 1996 Law improved the legal situation of France Télécom as compared with the previous regime and therefore created an advantage for that undertaking.

The advantage conferred on France Télécom is highly selective, and the 1996 reform distorted, or threatened to distort, competition on the telecommunications services market. The Commission was entitled to conclude that the new system of financing the pensions concerned does not achieve a competitively fair rate. That rate is designed to ensure that France Télécom bears the same level of costs for social security charges as its competitors, including the charges which are not part of its budget due to its special status.

The General Court finds that the Commission correctly took into account the effects of the exceptional flat-rate contribution, holding that that contribution has neutralised the effects of the aid for a period of approximately 15 years, so that France Télécom does not have to pay, in respect of the period from 1997 to 2010, an additional contribution assuring a competitively fair rate. Finally, the General Court declares that, even if the exceptional flat-rate contribution had led to a reduction in the detrimental effects of the aid, it cannot be automatically inferred from this that the contributions paid by France Télécom necessarily ensured fair competition.

Cases T-473/12 Aer Lingus Ltd v Commission and T-500/12 Ryanair Ltd v Commission: partial annulment of the Commission decision ordering Ireland to recover the sum of €8 per passenger from the beneficiary airlines.

In Cases T-473/12 Aer Lingus Ltd v Commission and T-500/12 Ryanair Ltd v Commission the General Court partially annuls the Commission decision ordering Ireland to recover the sum of €8 per passenger from the beneficiary airlines. The Commission could not consider that the advantage enjoyed by the airlines automatically amounted, in all cases, to €8 per passenger.

The General Court finds that the Commission did not err in characterising the higher rate of €10 as the reference rate, and in concluding that the application of the different rates in the present case constituted State aid in favour of airlines whose flights were subject to the lower rate of €2 during the period concerned. However, the General Court finds that the Commission erred in quantifying the amount of aid to be recovered at €8 per passenger.

Inasmuch as the economic advantage resulting from the application of that reduced rate could have been, even only partially, passed on to the passengers, the Commission was not entitled to consider that the advantage enjoyed by the airlines amounted automatically, in all cases, to €8 per passenger. The General Court adds that the Commission has not established how, in those circumstances, the airlines whose flights were subject to the ATT at the reduced rate enjoyed an advantage corresponding to the difference between the two rates of ATT. The General Court notes, moreover, that the Commission could not presume that the economic advantage resulting from the application of the reduced rate of ATT had not been passed on to the passengers at all.

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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