94/662/EC: Commission Decision of 27 July 1994 concerning the subscription by CDC participations to bonds issued by Air France (93/C 334/04) (Text with EEA relevance)

• Articles: 6

Article 1

The subscription by CDC Participations to the ORA and TSIP-BSA issued by Air France in April 1993 constitutes unlawful State aid amounting to FF 1 497 415 290 since it was granted to the undertaking in breach of Article 93 (3) of the EC Treaty. The aid is incompatible with the common market within the meaning of Article 92 of the EC Treaty and Article 61 of the EEA Agreement.

Article 2

France is hereby requested to ensure that the aid of FF 1 497 415 290 is reimbursed within two months of publication of this Decision, deducting, if any, the interest already paid on the bonds, by Air France to CDC-Participations. The recovery of the aid must take place in accordance with the relevant national provisions, including the provisions on the repayment of interest on arrears in the case of liabilities to the State, interest starting to run from the date of the granting of the aid.

Article 3

France shall inform the Commission within two months of the publication of this Decision of the measures it has taken in order to comply with this Decision.

Article 4

This Decision is addressed to the French Republic.

Done at Brussels, 27 July 1994.

For the Commission

Hans VAN DEN BROEK

Member of the Commission

(1) OJ No 334, 9. 12. 1993, p. 7.

(2) Decree following an opinion from the 'Commission d'évaluation des entreprises publiques'.

(3) All the financial figures concerning the Air France group are taken from the Annual Report for 1992. These figures are slightly different from the figures indicated in the decision opening the Article 93 (2) procedure which were provisional figures provided by the French authorities.

(4) Case 290/83, Commission v. France, [1985] ECR 439, paragraph 14, p. 449.

(5) Joined Cases 67, 68 and 70/85, Van der Kooy and Others v. Commission [1988] ECR 219, paragraphs 36 and 37, p. 272.

(6) Information report on the Caisse submitted by Senator Roger Chinaud on behalf of the 'Commission des Finances, du contrôle budgétaire et des comptes économiques de la Nation' to the French Senate. See the Annex to the minutes of the meeting of 9 June 1992, p. 180.

(7) See Case 78/76, Steinike and Weinlig v. Germany, [1977] ECR 595, paragraph 21, p. 611, Case 290/83, cited footnote 4, paragraph 12, p. 448, and Cases 67, 68 and 70/85, cited footnote 5, paragraphs 35, 36 and 37, p. 272.

(8) See 'Communication of the Commission to the Member Sates concerning public authorities holdings in company capital' of 17 September 1984, Bulletin EC No 9-1984 and the Judgment of the Court of Justice in Joined Cases 296 and 318/82, The Netherlands and Leeuwarder Papierwarenfabriek BV v. Commission [1985] ECR 809, paragraph 17, p. 823.

(9) See Commission communication on the application of Articles 92 and 93 to capital injections out of public funds, in Bulletin EC No 9-1984.

(10) Communication to the Member States concerning public authorities' holdings in company capital, in Bulletin EC No 9/1984.

(11) See Case C-305/89, Italy v. Commission, [1991] ECR I-1603, paragraph 24, p. I-1641.

(12) Council Regulations (EEC) No 2407/92, (EEC) No 2408/92 and (EEC) No 2409/92, OJ No L 240, 24. 8. 1992, pp. 1, 8 and 15 respectively.

(13) Eighth report on competition policy, point 176.

(14) See the Judgment of the Court of Justice of 17 September 1980 in Case 730/79, Philip Morris v. Commission, [1980] ECR 2671.

(15) Case 70/72 Commission v. Germany, [1973] ECR 813.

(16) Case 310/85, Derfil v. Commission, [1987] ECR 901.

Article 92

(3) of the Treaty and 61 (3) of the EEA Agreement list aid which may be considered compatible with the common market. Such compatibility must be assessed in the context of the Community and not of a single Member State.

Article 92

(3) (a) and (c) of the Treaty and Article 61 (3) (a) and (c) of the EEA Agreement provide for exceptions in respect of aid to promote or facilitate the development of certain regions. The aid to Air France does not seem to qualify for the exemptions laid down in Article 92 (3) (a) or (c), in so far as it relates to regional aids, nor have the French authorities put forward any such arguments in support of the proposed aid.

As for Article 92 (3) (b) of the Treaty and Article 61 (3) (b) of the EEA Agreement, the evidence shows that the aid in question was not intended to promote the execution of an important project of common European interest nor to remedy a serious disturbance in the French economy. Moreover, the French authorities have not invoked this provision.

With regard to the exception under Article 92 (3) (c) of the Treaty and Article 61 (3) (c) of the EEA Agreement for aid to facilitate the development of certain economic activities, the Commission may consider some restucturing aid as compatible with the common market if it meets a number of conditions (13).

These conditions must be seen in the context of the two principles set out in Article 92 (3) (c) of the Treaty and Article 61 (3) (c) of the EEA Agreement: the aid must be required for developing the activity from the standpoint of the Community and the aid may not adversely affect trading conditions to an extent contrary to the common interest (14). These criteria have been interpreted in a sectoral (aviation) context in memorandum No 2 which stipulates that the Commission may in certain cases decide, in accordance with Article 92, that aid may be granted to individual airlines which have serious financial difficulties, provided certain conditions are met:

(a) the aid must form part of a programme, to be approved by the Commission, to restore the airline's health, so that it can, within a reasonably short period, be expected to operate viably without further aid;

(b) the aid in question must not transfer the difficulties from that Member State to the rest of the Community;

(c) any such aid must be structured so that it is transparent and can be verified.

As observed above, the financial injections under scrutiny were not linked to any of the objectives set out in the PRE1, but were operating aids aimed at ensuring the survival of a company experiencing a serious cricis. Even supposing that the funds under scrunity indirectly formed part of the PRE1, the Commission has demonstrated that this plan was clearly inadequate to restore Air France's health.

X In the case of aid that is incompatible with the common market, the Commission has the power pursuant to Article 93 (2) of the Treaty, as confirmed by the Court of Justice in its judgment of 12 July 1973 (15) and in a further judgment of 24 February 1987 (16), to require Member States to compel recipients to repay the aid granted. The French authorities must therefore, within two months, recover the unlawful aid granted to Air France by CDC-P (i.e. FF 1 497 415 290 minus the interest already paid by Air France to CDC-P). The recovery of the aid must take place in accordance with the relevant national provisions, including the provisions on the repayment of interest on arrears in the case of liabilities to the State, interest starting to run with effect from the date of the granting of the aid.

This measure is necessary to re-establish the status quo by eliminating all financial advantages from which the recipient of aid illegally granted has unduly benefited since the date of the granting of the aid,

HAS ADOPTED THIS DECISION: