Italian International Film v EACEA (Judgment) [2016] EUECJ T-676/13 (04 February 2016)

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(Support programme for the European audiovisual sector (MEDIA 2007) — Measures of support for the transnational distribution of European films — Call for proposals in connection with the ‘selective’ scheme 2013 — EACEA act informing the applicant of the rejection of its application for the film ‘Only God Forgives’ — EACEA act confirming the rejection but stating new reasons — Powers — Distribution of tasks between the Commission and the EACEA — Circumscribed powers — Actions for annulment — Challengeable act — Admissibility — Obligation to state reasons — Permanent Guidelines 2012-2013 — Material or physical distribution agreement — Not communicated in advance to the EACEA — Application not eligible)

Italian International Film Srl, established in Rome (Italy), represented by A. Fratini, B. Bettelli and M. Bottino, lawyers,

Education, Audiovisual and Culture Executive Agency (EACEA), represented by H. Monet and D. Homann, acting as Agents, and D. Fosselard and A. Duron, lawyers,

ACTION for annulment of the decision rejecting the applicant’s application for a grant for the film ‘Only God Forgives’ following call for proposals EACEA/21/12 MEDIA 2007 — Support for the transnational distribution of European films — the ‘Selective’ scheme 2013 (OJ 2012 C 300, p. 5), published pursuant to Decision No 1718/2006/EC of the European Parliament and of the Council of 15 November 2006 concerning the implementation of a programme of support for the European audiovisual sector (MEDIA 2007) (OJ 2006 L 327, p. 12) for the period from 1 January 2007 to 31 December 2013,

composed of D. Gratsias, President, M. Kancheva and C. Wetter (Rapporteur), Judges,

having regard to the written procedure and further to the hearing on 10 September 2015,

1 Call for proposals EACEA/21/12 MEDIA 2007 — Support for the transnational distribution of European films — the ‘Selective’ scheme 2013 (OJ 2012 C 300, p. 5) was published on 5 October 2012, as part of the ‘selective’ scheme intended to choose a number of projects to be subsidised, so as to encourage and support the wider transnational distribution of recent non-national European films.

2 It was published in the context of Decision No 1718/2006/EC of the European Parliament and of the Council of 15 November 2006 concerning the implementation of a programme of support for the European audiovisual sector (MEDIA 2007) (OJ 2006 L 327, p. 12), for the period from 1 January 2007 to 31 December 2013, which was supplemented by the Permanent Guidelines for the MEDIA 2007 programme, which were annexed to the call for proposals (‘the Guidelines’).

3 Section 5 of the Guidelines, ‘Eligibility criteria’, includes point 5.1, ‘Eligible companies’, which reads as follows:

1. be the holder of the theatrical distribution rights for the film in the territory concerned;

2. carry out the theatrical distribution of the film in the territory (determines the release date; plans, controls and executes the distribution and promotion campaign), and

In the event that distribution activities are shared between several companies, the contracts/agreements between these companies must be disclosed to the Agency. The Agency will normally consider as eligible the company which actually executes the distribution of the film in the territory. The decision of the Agency will be final.

The use of “physical distributors” for specific services such as the booking of cinemas, circulation of prints and collection of receipts is allowed. Such physical distributors shall not be eligible for support.

The application form must be accompanied by an official letter from the applicant organisation, and all the other documents referred to in the application form.

The Agency reserves the right to request additional information from the applicant.

5 In accordance with section 13 of the Guidelines, ‘Procedure for the submission of proposals’:

No changes to the dossier can be made after the application has been submitted. However, if there is a need to clarify certain aspects, the Agency may contact the applicant for this purpose.

The applicant has to submit all distribution agreements relevant to the application, including agreements already submitted when applying for support under any previous call of the MEDIA programme. Incomplete applications will be considered non-eligible.

6 The applicant, Italian International Film Srl, submitted an application on 22 March 2013 for a grant for the distribution in Italy of the film ‘Only God Forgives’ (‘the film’).

7 On 4 June 2013 a member of the staff of the Education, Audiovisual and Culture Executive Agency (EACEA) who was responsible for examining applications for grants informed the applicant that he wished to obtain some additional documents. On 6 June 2013 the applicant produced certain documents, which were annexed to its application by the EACEA, in order for the application to be assessed.

8 The committee responsible for evaluating applications for support (‘the Evaluation Committee’) found, at its meetings of 20 and 21 June 2013, that the film was distributed in Italy by 01 Distribution, not by the applicant, so that its application could not be selected. A proposal to reject the application was therefore forwarded to the European Commission by the Evaluation Committee.

9 At its meeting of 26 July 2013, the MEDIA 2007 committee of Commission Directorate-General (DG) Education and Culture delivered an opinion accepting the Evaluation Committee’s proposal, apart from two changes not affecting the applicant.

10 By Implementing Decision C(2013) 5212 final of 2 August 2013 concerning an individual decision to award grants in the MEDIA 2007 programme — Selective support for distribution (‘the decision of 2 August 2013’), the Commission followed the opinion of the MEDIA 2007 Committee (recital 3 of that decision), the applicant not being among those awarded grants for the distribution of the film whose names were annexed to the decision.

11 On 7 August 2013 the EACEA notified the applicant of the substance of the decision of 2 August 2013, under the EACEA letterhead, using a standard form, indicating that ‘the applicant will not carry out himself the theatrical distribution of the film’.

12 By letter of 4 September 2013, the applicant challenged that ground of refusal and submitted various observations to the EACEA. In particular, the applicant stated that it was indeed the theatrical distributor of the film, as could be seen from the documents annexed to the letter. It explained that for commercial reasons the logo of 01 Distribution appeared as principal logo, and said that it regretted that that could have led the Commission to consider that it was not the distributor of the film. It therefore asked for the decision of 2 August 2013, the substance of which had been communicated to it on 7 August 2013, to be reconsidered.

13 By letter of 8 October 2013, the EACEA replied to the applicant’s observations, rejecting them on the ground that while, pursuant to point 5.1 of the Guidelines, the subcontracting to a physical distributor of billing and collection of receipts could be authorised, authorisation was however subject to disclosure of the relevant agreements to the EACEA. The EACEA stated that, when the applicant was contacted by the EACEA on 4 June 2013 to obtain additional information (see paragraph 7 above), it had omitted to disclose the agreement with 01 Distribution for the distribution of the film signed on 26 April 2013, which was necessary to enable the Evaluation Committee to make a proper assessment of whether the applicant could be awarded a grant. In conclusion, the EACEA observed that it ‘regret[ted] to confirm the ineligibility of the above project, following the initial recommendation of the Evaluation Committee’.

14 The EACEA also informed the applicant in that letter of the remedies and time limits for appealing against ‘this decision’ (‘the letter of 8 October 2013’).

15 By application lodged at the Registry of the Court on 18 December 2013, the applicant brought the present action.

16 By a pleading lodged at the Registry on 14 March 2014, the EACEA raised a plea of inadmissibility in accordance with Article 114(1) of the Rules of Procedure of the General Court of 2 May 1991.

17 In its written observations lodged at the Registry on 24 April 2014, the applicant contested the plea of inadmissibility raised by the EACEA.

18 By order of 15 September 2014, pursuant to Article 114(4) of the Rules of Procedure of 2 May 1991, the Court joined the EACEA’s plea of inadmissibility to the substance.

19 On 27 October 2014 the EACEA lodged its defence. A reply was lodged on 12 December 2014 and a rejoinder on 26 January 2015.

– dismiss the action as manifestly inadmissible, or in any event as unfounded;

22 The action is directed against the decision which the applicant claims is contained in the letter of 8 October 2013, not against the decision of 2 August 2013. That is apparent from the express words of the application. Furthermore, while it is correct that on 4 September 2013 the applicant asked for the latter decision to be reconsidered, it was only the import of the decision and the reasons for it that had been brought to its knowledge by means of the standard form notified on 7 August 2013, not the decision of 2 August 2013 as such, which was not mentioned on the form and was not identified to it until the objection of inadmissibility raised by the EACEA.

23 The EACEA raises three pleas of inadmissibility, arguing, first, that the action is out of time, if it is to be regarded as directed against the decision of 2 August 2013; secondly, that the letter of 8 October 2013 is not an act having adverse effect, as only the decision of 2 August 2013, notified on 7 August 2013, is such an act; and, thirdly, that the letter of 8 October 2013 is purely confirmatory as regards the decision of 2 August 2013.

24 The applicant contests the pleas of inadmissibility and considers that its action is admissible.

25 It is apparent from paragraph 22 above that the action is directed against the decision which the applicant submits was contained in the letter of 8 October 2013, to the exclusion of any other decision. Consequently, the plea of inadmissibility on the ground that the action is time-barred in so far as it is directed against the decision of 2 August 2013, which, it must be pointed out, was not identified, either as regards its date or as regards the document embodying it, to the applicant before the present judicial proceedings, can only be rejected.

26 The mere fact that a letter has been sent to its addressee by an institution, body, office or agency of the European Union in response to a request by the addressee does not suffice for it to be regarded as a decision within the meaning of the fourth paragraph of Article 263 TFEU, thereby opening the door to an action for annulment (see, to that effect, order of 27 January 1993 in Miethke v Parliament, C‑25/92, ECR, EU:C:1993:32, paragraph 10; judgment of 22 May 1996 in AITEC v Commission, T‑277/94, ECR, EU:T:1996:66, paragraph 50; and order of 5 November 2003 in Kronoply v Commission, T‑130/02, ECR, EU:T:2003:293, paragraph 42).

27 While an action for annulment is available against all measures taken by the institutions of the European Union, whatever their nature or form, and in certain cases, subject to the specific conditions and arrangements authorised by the fifth paragraph of Article 263 TFEU, against measures taken by bodies, offices and agencies of the European Union, that is conditional, where the action is brought by a natural or legal person, on those measures being intended to produce binding legal effects which are capable of affecting the interests of the applicant by bringing about a distinct change in his legal position (see, to that effect, judgments of 11 November 1981 in IBM v Commission, 60/81, ECR, EU:C:1981:264, paragraphs 9 and 10; 13 October 2011 in Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, ECR, EU:C:2011:656, paragraph 37 and the case-law cited; and order of 13 March 2015 in European Coalition to End Animal Experiments v ECHA, T‑673/13, ECR, EU:T:2015:167, paragraph 22).

28 The EACEA is an agency of the European Union with legal personality (judgment of 21 October 2010 in Agapiou Joséphidès v Commission and EACEA, T‑439/08, EU:T:2010:442, paragraph 35), set up by Commission Decision 2005/56/EC of 14 January 2005 setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the fields of education, audiovisual and culture in application of Council Regulation (EC) No 58/2003 (OJ 2005 L 24, p. 35), repealed and replaced by Commission Decision 2009/336/EC of 20 April 2009 setting up the Education, Audiovisual and Culture Executive Agency for the management of Community action in the fields of education, audiovisual and culture in application of Council Regulation (EC) No 58/2003 (OJ 2009 L 101, p. 26). Decision 2009/336, as amended by Commission Implementing Decision 2012/797/EU of 18 December 2012 (OJ 2012 L 349, p. 68) and now itself repealed but applicable in the present case, does not contain any provision adopted pursuant to the fifth paragraph of Article 263 TFEU.

29 Only, therefore, if it were shown that the letter of 8 October 2013 produced binding legal effects for the applicant capable of affecting its interests by bringing about a distinct change in its legal position would an action by the applicant for the annulment of that letter be admissible (see, to that effect, judgments in IBM v Commission, cited in paragraph 27 above, EU:C:1981:264, paragraph 9; of 5 April 2006 in Deutsche Bahn v Commission, T‑351/02, ECR, EU:T:2006:104, paragraph 35; and order of 19 November 2013 in 1. garantovaná v Commission, T‑42/13, EU:T:2013:621, paragraph 20).

30 To determine whether an act produces such effects, it is necessary to look to its substance (judgment in IBM v Commission, cited in paragraph 27 above, EU:C:1981:264, paragraph 9; orders of 29 April 2004 in SGL Carbon v Commission, T‑308/02, ECR, EU:T:2004:119, paragraph 39; and 9 October 2012 in Région Poitou-Charentes v Commission, T‑31/12, EU:T:2012:528, paragraph 32).

31 First, that has the consequence that the fact that the EACEA used the word ‘decision’ in its letter of 8 October 2013 is merely one indication among others which may be taken into consideration by the EU judicature for defining the substance of the act at issue, but cannot in itself enable that court to classify it as a decision within the meaning of the fourth paragraph of Article 263 TFEU. Secondly, the EACEA cannot argue to any purpose, in the context of a plea of inadmissibility, that it lacks competence to adopt such a decision, since, if an analysis of the circumstances of the case leads to the conclusion that the letter of 8 October 2013 is a decision, the question of the competence of the author of the letter will have to be examined with respect to the external lawfulness of the decision contained in it, which is a question of substance, not of admissibility.

32 In the present case, it must be observed that by the letter of 8 October 2013 the EACEA went beyond what would have been implied by a mere explanation of the decision of 2 August 2013, the content and reason for which it had notified. It did not confine itself to drawing attention to that decision, but itself took a position rejecting the applicant’s application for a grant.

33 While the letter of 8 October 2013 does indeed contain an interpretation of point 5.1 of the Guidelines, that interpretation is not intended to inform the applicant of the reasons for the adoption of the decision of 2 August 2013, which is, moreover, not cited as such in the letter (see paragraph 22 above), but provides support for the refusal by the EACEA itself, ‘following the initial recommendation of the Evaluation Committee’.

34 It thus follows from an examination of that letter that the EACEA intended to confer binding legal effects on it by maintaining the previous rejection of the applicant’s application for a grant, which was such as to affect the applicant’s interests, thus depriving it of the possibility of having the distribution of the film in Italian territory subsidised. In view of the case-law referred to in paragraphs 26 to 30 above, it must therefore be concluded that the letter of 8 October 2013 does indeed constitute a decision within the meaning of the fourth paragraph of Article 263 TFEU (‘the decision of 8 October 2013’), and the second plea of inadmissibility raised by the EACEA must consequently be rejected.

35 According to settled case-law, a decision is a mere confirmation of an earlier decision where it contains no new factors as compared with the earlier measure and is not preceded by any reexamination of the situation of the addressee of the earlier measure (judgments of 14 April 1970 in Nebe v Commission, 24/69, ECR, EU:C:1970:22, paragraph 8; 10 December 1980 in Grasselli v Commission, 23/80, ECR, EU:C:1980:284, paragraph 18; and 11 June 2002 in AICS v Parliament, T‑365/00, ECR, EU:T:2002:151, paragraph 30).

36 It is clear, however, that before adopting the decision of 8 October 2013 the EACEA carried out an examination of the matters raised by the applicant in its letter of 4 September 2013, before indicating that those matters should, in accordance with point 5.1 of the Guidelines, have been forwarded to it when it contacted the applicant on 4 June 2013 ‘for further explanation on the operational capacity of [the] company to release the film’, since that information could have allowed the Evaluation Committee to make a ‘proper assessment of the project’. It must therefore be deduced that, while the decision of 2 August 2013, the content of which was notified on 7 August 2013 by means of the standard form, was based on the ground that the applicant would not itself carry out the theatrical distribution of the film, the decision of 8 October 2013 was based on the ground that the applicant had not brought to the knowledge of the EACEA the necessary factors for a proper assessment of the project. In this respect, the EACEA explained that the limited use of subcontracting, for example for ticketing and billing, could be authorised on condition that it was brought to the knowledge of the EACEA. The decision of 8 October 2013, containing a different ground from that in the decision of 2 August 2013, attesting to the taking into account of the new factors mentioned by the applicant in its letter of 4 September 2013, is therefore not confirmatory.

37 Consequently, the third plea of inadmissibility raised by the EACEA must be rejected, and the action must be declared admissible.

38 The applicant puts forward two pleas in law in support of its action, the first alleging a breach of the obligation to state reasons, the second alleging a manifest error of assessment rendering the decision of 8 October 2013 unlawful.

40 Before examining, if necessary, the two pleas of the action, the Court must examine of its own motion whether the EACEA had power to adopt the decision of 8 October 2013 (see, as to lack of competence of the maker of a decision whose lawfulness is under review by the EU judicature being a ground of public policy, judgments of 10 May 1960 in Germany v High Authority, 19/58, ECR, EU:C:1960:19, p. 233; 28 January 2003 in Laboratoires Servier v Commission, T‑147/00, ECR, EU:T:2003:17, paragraph 45; and 13 December 2013 in Hungary v Commission, T‑240/10, ECR, EU:T:2013:645, paragraph 70), the parties having had an opportunity to argue that question inter partes, since the EACEA itself submitted in its plea of inadmissibility that it lacked competence to adopt a decision such as the decision of 8 October 2013 and several questions were put to the EACEA at the hearing, in particular on whether it had power to review decisions such as the decision of 2 August 2013 and whether there were cases of circumscribed powers in connection with the rejection of applications for grants. The applicant was requested, at the hearing, to state its view on those questions and the answers given to them by the EACEA. It follows that, both in the written stage and in the oral stage of the procedure, the audi alteram partem principle was complied with as regards the plea of lack of competence of the maker of the contested decision, in accordance with the case-law, that being a plea of law raised of the Court’s own motion (see, to that effect, judgment of 2 December 2009 in Commission v Ireland and Others, C‑89/08 P, ECR, EU:C:2009:742, paragraphs 57 and 60).

41 It must be recalled, to begin with, that, according to recital 7 of Decision 2009/336 as amended, ‘the delegation, to an executive agency, of tasks related to implementation of the programme is possible with a clear separation between, on the one hand, the project programming stages and the adoption of funding decision … and, on the other hand, the project implementation, which can be entrusted to an executive agency’. Moreover, recital 8 of that decision states that ‘the setting up of an executive agency [does not affect] the delegation by the Council to the Commission of the management of certain phases of action under the various programmes’.

42 Article 4(1) of Decision 2009/336 as amended provides that the EACEA is ‘entrusted with the management of certain strands of the following Community programmes: …

28. the support programme for the European audiovisual sector (MEDIA 2007) (2007-2013), approved by Decision No 1718/2006 …’.

43 Article 4(2) of Decision 2009/336 as amended provides that, for the management of the Community programme strands referred to in Article 4(1), the EACEA is to ‘be responsible for the following tasks:

(a) managing, throughout their duration, the projects implementing the Community programmes entrusted to it …

(b) adopting the instruments of budget implementation for revenue and expenditure and carrying out, where the Commission has empowered it to do so, some or all of the operations necessary for the management of the Community programmes and, in particular, those linked to the award of grants and contracts’.

44 Next, Commission Decision C(2009) 3355 final of 6 May 2009 delegating powers to the Education, Audiovisual and Culture Executive Agency with a view to the performance of tasks linked to implementation of the Community programmes in the fields of education, audiovisual and culture, comprising in particular implementation of appropriations entered in the Community budget, as amended by Decision C(2010) 7095 final, implemented Decision 2009/336. The MEDIA 2007 programme was thus mentioned in point 28 of the citations of Decision C(2009) 3355 final. Article 5 of that decision, ‘Budget implementation tasks’, states in paragraph 1(a) that the EACEA is to ‘award grants and manage the relating agreements and decisions’ and ‘to this end, the [EACEA] shall be tasked by the Commission to carry out some or all of the operations required to launch and conclude grant procedures, details of which are indicated in Annex III’.

45 Annex I, paragraph 26, third indent, to Decision C(2009) 3355 final as amended notes that the EACEA is involved in the implementation and management of most strands of the MEDIA 2007 programme, including those concerning distribution.

46 Annex III to that decision lays down the tasks delegated to the EACEA, which include, as stated in point A.5, ‘selection of projects or, where the legal basis of the programme provides for the Commission to select the projects, preparation of a proposal for selection to be made by the Commission in conformity with comitology procedures’; as stated in point A.6, ‘notification to beneficiaries of individual decisions on the award of grants’; and, as stated in point A.7, ‘consideration of requests to review grant award decisions’.

47 Finally, Decision No 1718/2006 (see paragraph 2 above) provides in Article 10(2)(e) that any proposal for the allocation of Community funds in excess of EUR 300 000 in the case of distribution is to follow the procedure referred to in Article 11(2) of that decision, while Article 10(3) of the decision provides that ‘the measures necessary for the implementation of [the decision] relating to any other matters shall be adopted in accordance with the procedure referred to in Article 11(3)’ of the decision, including in particular proposals for the allocation of Community funds of less than EUR 300 000 in the case of distribution. Article 11(1) of Decision No 1718/2006 states that the Commission is to be assisted by a committee, while Article 11(2) refers to Articles 4 and 7 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (OJ 1999 L 184, p. 23) and Article 11(4) refers to Articles 3 and 7 of Decision 1999/468. Article 3 of Decision 1999/468 defined the advisory procedure, while Article 4 defined the management procedure. However, Decision 1999/468 was repealed by the first paragraph of Article 12 of Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ 2011 L 55, p. 13), Article 13 of which provides that references to Article 3 of Decision 1999/468 are now to be understood as references to the advisory procedure referred to in Article 4 of Regulation No 182/2011 and that references to Article 4 of Decision 1999/468 are to be understood as references to the examination procedure referred to in Article 5 of Regulation No 182/2011, with the exception of the second and third subparagraphs of Article 5(4) of that regulation.

48 It should be added that the penultimate paragraph of section 4 of the Guidelines specifies that the maximum grant will be EUR 150 000 per distributor and per film, and the final paragraph of section 4 states that the EACEA reserves the right not to distribute all the funds available. That threshold and that reservation were repeated in call for proposals EACEA/21/12, in the third and fourth paragraphs of point 5.

49 It follows from all the above provisions that the EACEA’s competence concerning grants awarded in connection with call for proposals ECEA/21/12, issued in implementation of the MEDIA 2007 programme, was limited, first, to the examination of each applicant’s dossier in order to prepare ‘a proposal for selection to be made by the Commission in conformity with comitology procedures’, in accordance with the second alternative in point A.5 of Annex III to Decision C(2009) 3355 final as amended; secondly, ‘notification to beneficiaries of individual decisions on the award of grants’ in accordance with point A.6 of that annex; and, thirdly, in accordance with point A.7 of that annex, ‘consideration of requests to review grant award decisions’.

50 In the present case, the EACEA examined the applicant’s dossier on the basis of the material it had produced, and on 4 June 2013 asked it by email for additional documents. In reply to that email, the applicant confirmed by email of the same date that it was ‘the Italian distributor of the film’, although without providing documentary evidence, and on 6 June 2013 sent the EACEA additional information on its experience as a distributor, especially during the previous five years. After an analysis of the entire dossier, the EACEA made a proposal to the Commission that a grant should be refused, and the Commission adopted the decision of 2 August 2013, after following the advisory procedure provided for by Article 4 of Regulation No 182/2011 for a proposal for the allocation of EU funds of less than EUR 300 000 in the field of distribution, in accordance with the provisions of Article 10(2) and (3) of Decision No 1718/2006. Recital 3 of the decision of 2 August 2013 took over the reasons stated by the MEDIA 2007 Committee in its opinion of 26 July 2013, which in turn had taken up the Evaluation Committee’s proposal concerning the applicant (see paragraphs 8 to 10 above), namely that the film was distributed in Italy by 01 Distribution, not by the applicant, so that its application could not be selected. On 7 June 2013 the EACEA adopted that ground of refusal by ticking the box in the standard notification form corresponding to the wording ‘the applicant will not carry out himself the theatrical distribution of the film’. On 4 September 2013 the applicant sent the EACEA a letter which must clearly be regarded as a request to review an award decision, within the meaning of point A.7 of Annex III to Decision C(2009) 3355 final as amended.

51 Consequently, in circumstances such as those of the present case, the EACEA, to deal with that request, could choose between restricting itself to clarifying the decision of 2 August 2013 and referring the matter to the Commission for the Commission to amend it, either by awarding a grant or by refusing a grant for reasons other than those originally adopted. The EACEA could not in any way be competent to amend a decision which it had not been competent to adopt.

52 While point 5.1 of the Guidelines admittedly provides that, in the event that distribution activities are shared between several companies, the contracts/agreements between these companies must be disclosed to the EACEA, which will normally consider as eligible the company which actually executes the distribution of the film in the territory, and will adopt a ‘final’ decision on the point, that wording must be interpreted as referring to the fact that, when examining applications, the EACEA must adopt a definitive position in order to submit a selection proposal to the Commission, without prejudice to the applicant’s possibility of subsequently challenging the Commission’s decision by means of an administrative complaint. Any other interpretation would be contrary to the express wording of point A.7 of Annex III to Decision C(2009) 3355 final as amended, which lays down the right to that remedy.

53 It follows that, by itself making a refusal on a ground not adopted by the Commission, the EACEA vitiated the decision of 8 October 2013 by acting outside its powers.

54 However, it follows from settled case-law developed in cases whose circumstances were comparable to that of the present case that, in the case of circumscribed powers, lack of competence cannot entail the annulment of the contested decision, since an annulment on the ground of lack of competence of the maker of the contested decision can give rise, once that defect is remedied on that date on which it occurred, only to the adoption of a decision of identical substance (see, to that effect, judgments of 6 July 1983 in Geist v Commission, 117/81, ECR, EU:C:1983:191, paragraphs 6 and 7; 9 October 1992 in De Persio v Commission, T‑50/91, ECR, EU:T:1992:104, paragraphs 18, 22 and 24; and 19 January 2010 in De Fays v Commission, T‑355/08 P, ECR-SC, EU:T:2010:16, paragraphs 57 and 58).

55 The Court must therefore determine whether in the present case the Commission was in a situation of circumscribed powers, so that the EACEA, by substituting a ground for refusing the applicant’s application for that adopted by the Commission in the decision of 2 August 2013, took a decision identical in substance to that which the Commission would have taken, within its powers, on the same material as that communicated by the letter of 4 September 2013.

56 As may be seen from point 5.1 of the Guidelines, cited in paragraph 3 above, the award of a grant for distribution presupposes that the applicant himself does the theatrical distribution of the film in the territory concerned. That provision nonetheless provides for the possibility of the distributor making limited use of subcontracting, provided that it ‘has been disclosed to the [EACEA]’. The continuation of point 5.1 repeats the disclosure obligation, this time in the case of activities being shared, by stating that, ‘in the event that distribution activities are shared between several companies, the contracts/agreements between these companies must be disclosed to the [EACEA]’. Point 5.1 states that the use of physical distributors for specific services such as the booking of cinemas and collection of receipts is allowed.

57 The applicant submits that it is indeed the distributor of the film and that its contract with 01 Distribution for the booking of cinemas, circulation of prints, collection of receipts and presentation of the film under the principal logo 01 Distribution did not have to be disclosed to the EACEA, since the contract should probably be categorised as the delegation to a third party of the activity of ‘material distribution’ and was in any event not in the nature of subcontracting.

59 It must be observed that point 5.1 of the Guidelines in fact, as is apparent from paragraph 56 above, divides distribution agreements into three categories, corresponding respectively to subcontracting agreements, agreements for sharing distribution activities between several operators, and agreements for the use for specific services of ‘physical distributors’, who are not eligible for grants. However, the fact that those physical distributors are not eligible for grants does not mean that agreements for the use of those distributors for specific services do not have to be disclosed to the EACEA. Moreover, even if only to ascertain whether such a physical distribution agreement does actually exist and does not exceed those precise bounds, every applicant is required to provide the EACEA with as much information as possible on the necessary elements for examining the grant application, including the elements that may, because of a misunderstanding of their scope, block a favourable outcome of the application for a grant.

60 That interpretation is all the more compelling in that, for a distributor, having recourse under contract to third-party companies to carry out some of the tasks of distribution is an exception to the principle that he must distribute the film himself, which means that it must be interpreted strictly (see, to that effect, judgments of 17 September 2014 in Baltic Agro, C‑3/13, ECR, EU:C:2014:2227, paragraph 24 and the case-law cited, and 22 May 2012 in Internationaler Hilfsfonds v Commission, T‑300/10, ECR, EU:T:2012:247, paragraph 90 and the case-law cited). Moreover, point 13.3 of the Guidelines, in mentioning the obligation to ‘submit all distribution agreements relevant’, recalls the importance of giving the EACEA proper information.

61 It should be added that in the present case the applicant had a further opportunity to make its dossier complete, as it was contacted by the EACEA to produce a number of documents. That should have drawn its attention to the possible incompleteness of the dossier and induce it to be as exhaustive as possible.

62 In other words, even if the contract between the applicant and 01 Distribution were only a physical distribution agreement within the meaning of point 5.1 of the Guidelines, which cannot be established from the case-file, the applicant was under an obligation to inform the EACA about it as soon as it made its application for a grant, so that the EACEA and the Commission would be in a position to make a fully informed decision on the reasons for the presence of the 01 Distribution logo on the trailer and posters for the film. It was only by a document annexed to the applicant’s letter of 4 September 2013, more than a month after the decision of 2 August 2013, that the EACEA was informed of the existence of a contract signed on 26 April 2013 by the applicant and 01 Distribution.

63 The interpretation giving priority to providing the EACEA with information that is as complete and appropriate as possible is, moreover, the only interpretation compatible with the principle of sound administration and, more particularly, of sound financial management and monitoring of the use of the Community budget resources for their intended purpose (see, to that effect, judgments of 17 June 2010 in CEVA v Commission, T‑428/07 and T‑455/07, ECR, EU:T:2010:240, paragraph 126 and the case-law cited, and 19 April 2013 in Aecops v Commission, T‑53/11, EU:T:2013:205, paragraph 45 and the case-law cited). Incomplete or incorrect information supplied by the applicant cannot lead the EACEA to recommend the Commission to finance the distribution of a film where there is doubt as to whether the distributor meets the conditions laid done by the applicable legislation. That is, moreover, made clear in point 13.3 of the Guidelines, which states that incomplete applications will be considered non-eligible. So, by rejecting the application for a grant because of the non-disclosure of the agreement between the applicant and 01 Distribution, a reason whose factual basis is not contested by the applicant, the EACEA acted in a situation in which the Commission, the institution competent to adopt such a decision, would have done so in the exercise of circumscribed powers.

64 Consequently, applying the case-law cited in paragraph 54 above, the lack of competence cannot entail the annulment of the contested decision, since an annulment on the ground of lack of competence of the maker of the contested decision could only lead, once that defect were remedied on that date on which it occurred, to the adoption of a decision of identical substance.

65 It follows from the case-law cited in paragraph 54 above that, where it is shown that the authorities acted in the exercise of circumscribed powers, all the pleas directed against their decision have to be rejected as ineffective. That applies in particular to pleas alleging absent or inadequately stated reasons (judgments of 29 September 1976 in Morello v Commission, 9/76, ECR, EU:C:1976:129, paragraph 11, and Geist v Commission, cited in paragraph 54 above, EU:C:1983:191, paragraphs 6 and 7) and, by definition, to those alleging error of fact, error of law or manifest error of assessment (see, to that effect, judgment in Morello v Commission, EU:C:1976:129, paragraph 11), since the authorities were under an obligation to reach the conclusion they adopted.

66 For the sake of completeness, it should be pointed out that the contradictory statement of reasons alleged by the applicant derives precisely from the presence of a ground for refusal that differed from that in the decision of 2 August 2013 and was adopted by the EACEA (see paragraph 36 above), from which the Court has concluded that the decision of 8 October 2013 was not a confirmatory act. As held in paragraph 63 above, the applicant cannot contest such reasoning to any purpose, since it corresponds to that which the Commission would have been required to adopt if it had had to make the decision.

67 Finally, with reference to the head of claim asking the Court to order the EACEA to take ‘all resulting measures’, it must be recalled that, when reviewing lawfulness on the basis of Article 263 TFEU, the Court has no jurisdiction to issue directions to the institutions, bodies, offices and agencies of the European Union (judgment of 15 September 1998 in European Night Services and Others v Commission, T‑374/94, T‑375/94, T‑384/94 and T‑388/94, ECR, EU:T:1998:198, paragraph 53, and order of 27 January 1994 in Stolz v Parliament and Commission, T‑582/13, EU:T:2014:69, paragraph 10).

68 It follows from all the foregoing that the action is unfounded and must be dismissed in its entirety.

69 Under Article 135(2) of the Court’s Rules of Procedure, the Court may order a party, even if successful, to pay some or all of the costs, if this appears justified by the conduct of that party, including before the proceedings were brought, especially if he has made the opposite party incur costs which the Court holds to be unreasonable or vexatious.

70 In the present case, on the one hand, it is apparent from the documents in the file that the notification of 7 August 2013, correctly sent as from the EACEA, did not inform the applicant either of the fact that the maker of the decision to refuse it a grant was the Commission or of the date of that decision, which was 2 August 2013. It was only by bringing the present action that the applicant became aware of those elements. Moreover, by adopting on 8 October 2003 a decision in its name for a different reason from that adopted by the Commission, while subsequently denying that its act was in the nature of a decision and not referring the matter to the Commission for it to correct its decision, the EACEA created a situation of uncertainty in the mind of the applicant, which it could dispel only by bringing an action before the Court.

71 On the other hand, that situation was exacerbated by the conduct of the applicant, which, by not producing when it made the application for a grant the material which the Guidelines required it to disclose, which would have enabled the EACEA to make a proposal to the Commission which would have been appropriate and in any event based on the entire content of the dossier, itself deprived the EACEA and the Commission of the possibility of determining whether the agreement with 01 Distribution was merely a material distribution agreement and, consequently, whether the applicant was the sole distributor of the film.

72 In view of those factors, on a fair assessment of the circumstances of the case, each party should be ordered to bear its own costs.

2. Orders Italian International Film Srl and the Education, Audiovisual and Culture Executive Agency (EACEA) to bear their own costs.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Italian International Film v EACEA (Judgment) [2016] EUECJ T-676/13 (04 February 2016) URL: http://www.bailii.org/eu/cases/EUECJ/2016/T67613.html Cite as: ECLI:EU:T:2016:62, EU:T:2016:62, [2016] EUECJ T-676/13

Court of Justice of the European Communities (including Court of First Instance Decisions)