Where the Commission, after a preliminary examination, finds that serious doubts are raised as to the compatibility with the internal market of a notified measure, it must decide to initiate formal proceedings pursuant to Article 108(2) TFEU. In its judgment of 2 September 2021, the Court of Justice provides further guidance on the factors that indicate such "serious doubts" (C-57/19 P).
Following pre-notification contacts, the UK authorities notified to the Commission on 23 June 2014 a measure to support capacity providers in the electricity market in Great Britain (the UK Capacity Market scheme). The measure intends to ensure that sufficient electricity supply is available to cover consumption at peak times of stress. In July 2014, the European Commission decided that the UK scheme was compliant with EU State aid rules (SA.35980). However, the decision was challenged by Tempus Energy – a UK energy management technology business – which took the view that the Commission should have opened a formal investigation procedure before granting its approval.
On 15 November 2018, the General Court upheld the action of Tempus and ruled that the Commission should have had doubts about certain aspects of the planned UK Capacity Market scheme, and should therefore have initiated a formal investigation under Article 108(2) TFEU (T-793/14).
On 2 September 2021, the Court of Justice reversed the General Court’s judgement and found that the Commission correctly verified the compliance of the UK scheme with internal market rules.
Firstly, the Court rebuts the findings of the General Court that it could rely on the evidence invoked by Tempus such as the number and sources of third parties’ observations, the length of the pre-notification phase, and the complexity and novelty of the measure, to evidence the existence of serious difficulties for the Commission in determining the compatibility of the notified measure with EU State aid rules.
In that regard, the Court explains that the size of the aid, its complexity or its novelty are not sufficient to justify the opening of a formal investigation. As for the length and the circumstances of the Commission’s analysis, the Court states that this can only constitute an indication that there are doubts when the preliminary examination exceeds the two-month period provided for under Article 4(5) of Regulation 659/1999, which was not the case in this instance.
In addition, the Court clarifies that the number, the multiplicity or the origin of the submissions made to the Commission by interested third parties are not in themselves an indicator of the existence of serious doubts. The Court noted that only if these observations refer to elements that could reveal the existence of serious difficulties in the assessment of the notified scheme (which was not demonstrated in this instance) the Commission must initiate a formal investigation.
Secondly, the Court finds that the General Court erred in law in considering that the assessment of the information and evidence which the Commission had at its disposal should have caused it to have serious doubts as to the compatibility of the scheme with EU State aid rules.
As a preliminary point, the Court states that the Commission is not under the obligation, during the preliminary examination procedure, to seek information from other sources to complement the information brought to its attention by the Member State seeking State aid clearance.
In the same vein, the Court underlines that it is for the party seeking annulment to indicate, based on a “body of consistent evidence”, the specific points or elements from the evidence at the Commission’s disposal which should have given rise to serious doubts as to the compatibility of the scheme. More precisely, it is for the applicant party to demonstrate that the Commission has neither researched nor examined diligently and impartially all of the relevant information. However, the Court points out that the mere fact that the Commission does not have all the information on a certain aspect of the scheme does not in itself necessarily lead to the conclusion that there were doubts which could have justified opening a formal investigation.
Please contact Pierre de Bandt, or Jeroen Dewispelaere for further information about this case and/or for general legal advice relating to State aid law or energy law.