In Case C-272/12P Commission v Ireland and others, judgment of 10 December 2013, the Grand Chamber overturned the latest judgment of the General Court (“GC”) in the mineral oils saga, and in doing so established the central role of the Commission in the State aid regime as a feature of the EU constitutional order.
The background to this litigation is that, under EU legislation governing excise duties, the Council is given power to authorise Member States to grant exemption from mineral oil duties. In the early 1990s it gave such authorisations to Ireland, Italy and France in relation to mineral oil used for the production of alumina in certain regions of those countries.
However, when those Member States notified these exemptions to the Commission under the State aid rules, the Commission decided that they were incompatible State aids.
The GC originally annulled the Commission’s decisions on the basis of failure to state reasons, but that judgment was set aside by the ECJ and remitted back to the GC. On its second attempt, the GC annulled the decisions on two bases, one of which was that the decisions were inconsistent with the Council’s assessment that the exemptions should be approved under the excise duty regime.
Having first dealt with the other basis of annulment (on the short ground that it had not been pleaded and the GC had had no basis for raising it of its own motion), the ECJ then dealt with the relationship between the Council’s powers under the excise duty regime and the Commission’s role under the State aid rules. The ECJ first referred to its case-law on the use by the Council of its exceptional power under Article 108(2) TFEU to approve State aid as compatible, stating that this case-law shows that:
the intention of the [TFEU], in providing through Article [108 TFEU] for aid to be kept under constant review and monitored by the Commission, is that the finding that aid may be incompatible with the common market is to be arrived at, subject to review by the General Court and the Court of Justice, by means of an appropriate procedure which it is the Commission’s responsibility to set in motion. Articles [107 and 108 TFEU] EC thus reserve a central role for the Commission in determining whether aid is incompatible. The power conferred upon the Council in the area of State aid by the third subparagraph of Article [108(2) TFEU] is exceptional in character, which means that it must necessarily be interpreted strictly.
It then held that the principle that the Commission plays the “central role … in determining whether aid is incompatible” ruled out any argument that the Council’s decision under the excise duty regime prevented the Commission from exercising that “central role“.
It was also irrelevant that the Council had acted on a proposal by the Commission, that the Commission had taken the view at that time that the exemptions did not distort competition, and that it had subsequently not exercised powers available to it under the excise duty regime to review those decisions: since the “concept of State aid corresponds to an objective situation and cannot depend on the conduct or statements of the institutions” the Commission’s position under the excise control regime could not bind its decision-making under the State aid rules.
The ECJ therefore sent the case back to the GC for a third attempt to get it right.
The ECJ’s judgment makes it clear that the Commission’s central role in the State aid regime is a feature of constitutional importance under the TFEU, and that that Commission’s application of the State aid rules is not in principle affected by the acts of EU institutions – including the Commission itself – in other areas of EU competence. The message is clear: whatever else the EU may get up to, the Commission can and must continue to apply the State aid rules, at least unless expressly excluded.