Apple Distribution International v Commission (Competition - Action for annulment - State aid - Aid planned by Germany to fund film production and distribution - Order) [2018] EUECJ T-101/17

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	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Apple Distribution International v Commission (Competition - Action for annulment - State aid - Aid planned by Germany to fund film production and distribution - Order) [2018] EUECJ T-101/17_CO (27 July 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/T10117_CO.html Cite as: EU:T:2018:505, [2018] EUECJ T-101/17_CO, ECLI:EU:T:2018:505

(Action for annulment - State aid - Aid planned by Germany to fund film production and distribution - Decision declaring the aid compatible with the internal market - No individual concern - Inadmissibility)

Apple Distribution International, established in Cork (Ireland), represented by S. Schwiddessen, H. Lutz, N. Niejahr and A. Patsa, lawyers,

European Commission, represented by J. Samnadda, G. Braun and B. Stromsky, acting as Agents,

APPLICATION under Article 263 TFEU seeking annulment of Commission Decision (EU) 2016/2042 of 1 September 2016 on the aid scheme SA.38418 - 2014/C (ex 2014/N) which Germany is planning to implement for the funding of film production and distribution (OJ 2016 L 314, p. 63),

composed of A.M. Collins (Rapporteur), President, R. Barents and J. Passer, Judges,

1 The Gesetz über Maßnahmen zur Förderung des deutschen Films (Filmförderungsgesetz) (Law on the funding of film production) of 25 June 1979 (BGBl. 1979 I, p. 803) codifies an aid scheme for the funding of the production, distribution and exhibition of films, financed by a special levy imposed on undertakings in the cinema and video industry and on the broadcasting sector.

2 On 3 December 2013, by Decision C(2013) 8679 final on State aid scheme SA.36753 (2013/N), the European Commission declared that that aid scheme for providers established in Germany (‘the existing aid scheme’) was compatible with Article 107(3)(d) TFEU up to 31 December 2016.

3 On 4 March 2014, the Federal Republic of Germany informed the Commission of an amendment to the existing aid scheme (‘the amendment’) in accordance with Article 108(3) TFEU.

4 The effect of the amendment was twofold. First, it extended liability for the levy to video on demand service providers established outside Germany and receiving revenue from customers in Germany through an internet presence in the German language. Second, eligibility for aid was also extended to include those non-domestic video on demand service providers. The obligation to pay the levy did not apply, however, if the turnover of the undertakings concerned was subject, at their place of establishment, to a comparable financial contribution for the promotion of cinematographic works by institutions for the promotion of films. As was the case with the existing aid scheme, the proceeds raised through payment of the levy were paid into a fund. That fund, which is administered by the Filmförderungsanstalt (Film Board, Germany; ‘the FFA’), promotes a variety of cultural objectives in the audiovisual sector, including the provision of financial support for the video on demand sector.

5 The amendment was to apply from the date of its approval by the Commission until 31 December 2016. The Nichtanwendungserlass des Beauftragten der Bundesregierung für Kultur und Medien (BKM) (Decree suspending the order of the Federal Commissioner for Culture and the Media (BKM)) of 11 November 2013 stated, however, that, if the Commission approved the amendment, the levy would be recovered retroactively as from the date of entry into force of the amendment, that is to say, 1 January 2014.

7 On 1 September 2016, by Decision C(2016) 5551 final on State aid SA.38418 (2014/C) (ex 2014/N), addressed to the Federal Republic of Germany (‘the contested decision’), the Commission found that the amendment was compatible with the internal market pursuant to Article 107(3)(d) TFEU. Accordingly, it authorised the implementation of the amendment.

8 The applicant, Apple Distribution International, operates iTunes, a digital platform from which consumers can download content, including films and television series. Subscribers to iTunes pay a specific fee per element that they download to watch.

9 Since the applicant offers its services to a German audience on the German market, it comes within the scope of the amendment. By virtue of that amendment, the applicant is required to pay a levy calculated on the basis of the turnover generated by its customers in Germany for content (films, TV shows, documentaries, etc.) with a length of more than 58 minutes, broadcast via the internet in the German language.

10 By application lodged at the Court Registry on 15 February 2017, the applicant brought the present action.

11 By separate document lodged at the Court Registry on 18 May 2017, the Commission raised an objection of inadmissibility under Article 130(1) of the Court’s Rules of Procedure.

12 By document lodged at the Court Registry on 19 July 2017, the applicant submitted observations on the objection of inadmissibility and asked that that objection be joined to the substance of the case.

15 By documents lodged at the Court Registry on 23 and 29 May and on 2 June 2017 respectively, the French Republic, the Federal Republic of Germany and the FFA applied for leave to intervene in the present proceedings in support of the form of order sought by the Commission.

16 On 27 February 2018, by way of a measure of organisation of procedure, the Court requested the Commission, first, to set out its position on the applicant’s argument that its competitive position is substantially affected by the contested decision, and, second, to submit its observations on whether the applicant is directly affected by the contested decision.

17 The Commission complied with that measure of organisation of procedure within the time limit it had been set.

18 Pursuant to Article 130(1) and (7) of the Rules of Procedure, on the application of the defendant, the Court may decide on inadmissibility or lack of competence without going to the substance of the case. In the present case, as the Commission has applied for a decision on inadmissibility, the Court, finding that it has sufficient information from the documents in the case file, has decided to rule on that application without taking further steps in the proceedings.

19 At the outset, it should be recalled that, in accordance with the fourth paragraph of Article 263 TFEU, any natural or legal person may, under the conditions laid down in the first and second paragraphs of that article, institute proceedings against an act addressed to that person or which is of direct and individual concern to that person, and against a regulatory act which is of direct concern to that person and does not entail implementing measures.

20 In the present case, it is common ground that the contested decision is addressed solely to the Federal Republic of Germany. Moreover, the applicant does not rely on the third situation referred to in the fourth paragraph of Article 263 TFEU. In any event, it must be noted that the Court has already ruled, in the context of an action brought against the same decision in Case T‑818/16 and concerning similar subject matter, that the contested decision entailed implementing measures and, accordingly, that that action did not fulfil the conditions governing admissibility laid down in the third situation referred to in the fourth paragraph of Article 263 TFEU (judgment of 16 May 2018, Netflix International and Netflix v Commission, T‑818/16, not published, EU:T:2018:274, paragraphs 33 and 44).

21 In those circumstances, the present action is admissible only in so far as the contested decision is of direct and individual concern to the applicant, by virtue of the second situation referred to in the fourth paragraph of Article 263 TFEU.

22 The applicant’s claim that the contested decision is of individual concern to it is divided into two parts. In the first place, it argues that the amendment substantially affects its competitive position on the market. In the second place, it argues that it belongs to a closed group of undertakings which are required to pay the levy for the period from 2014 to 2016.

24 First of all, it must be noted that the Court of Justice has ruled that the fact that a measure is, by its nature and scope, a provision of general application inasmuch as it applies to the economic operators concerned in general, does not of itself preclude it from being of individual concern to some of them (see, to that effect, judgments of 18 May 1994, Codorniu v Council, C‑309/89, EU:C:1994:197, paragraph 19, and of 22 June 2006, Belgium and Forum 187 v Commission, C‑182/03 and C‑217/03, EU:C:2006:416, paragraph 58 and the case-law cited).

25 Next, it must be recalled in this regard that, according to settled case-law, natural or legal persons satisfy the condition of individual concern only if the contested act affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons, and by virtue of these factors distinguishes them individually just as in the case of the person addressed (judgment of 15 July 1963, Plaumann v Commission, 25/62, EU:C:1963:17, at p. 107; see, also, to that effect, judgment of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council, C‑583/11 P, EU:C:2013:625, paragraph 72 and the case-law cited).

26 An applicant may, inter alia, show that it enjoys a ‘special status’ for the purpose of the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17), if its position on the relevant market is substantially affected by the aid to which the decision at issue relates (judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 35). The onus is therefore on the applicant to adduce pertinent reasons to show that the Commission decision may adversely affect its legitimate interests by seriously jeopardising its position on the market in question (judgment of 22 November 2007, Spain v Lenzing, C‑525/04 P, EU:C:2007:698, paragraph 41).

27 In addition, where a measure affects a group of persons who were identified or identifiable at the time when that measure was adopted by reason of criteria specific to the members of the group, those persons may be individually concerned by that measure inasmuch as they form part of a limited class of economic operators. That may in particular be the case where the measure alters rights acquired by the individual prior to its adoption (see, to that effect, judgment of 13 March 2008, Commission v Infront WM, C‑125/06 P, EU:C:2008:159, paragraphs 71 and 72 and the case-law cited).

28 However, the possibility of determining more or less precisely the number, or even the identity, of the persons to whom a measure applies by no means implies that it must be regarded as being of individual concern to them so long as that measure is applied by virtue of an objective legal or factual situation defined by it (see judgment of 19 December 2013, Telefónica v Commission, C‑274/12 P, EU:C:2013:852, paragraph 47 and the case-law cited).

29 The applicant’s arguments must be assessed in the light of the considerations set out above.

30 In support of the first part of its argument, according to which the contested decision substantially affects its competitive position on the market, the applicant asserts that the aid in question is designed to have an effect on the structure of the market for the provision of home video entertainment services in Germany, by transferring demand to products offered by the German film industry. It argues that, having regard to its business model, it will not benefit significantly from the aid despite its substantial contribution and, in any event, it will benefit less than its competitors which distribute physical copies of home video entertainment, certain non-domestic video on demand distributors, and national video on demand distributors.

31 The applicant’s arguments cannot be accepted. The Court of Justice has, admittedly, upheld the admissibility of an action concerning a measure designed to affect the structure of the market on which the party concerned was active, inter alia, inasmuch as it made express and measured provision for the substantial reduction in the demand for certain goods produced by the party involved (see, to that effect, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 56).

32 However, it is apparent from the judgment of 22 December 2008, British Aggregates v Commission (C‑487/06 P, EU:C:2008:757), that the purpose of the levy in question there was to transfer some of the demand for virgin aggregates to other products, which were exempted in order to encourage their use as aggregates and to reduce the extraction of virgin aggregates. The levy therefore modified generally the allocation of the market between virgin aggregates, which were subject to the levy, and alternative products, which were exempt from the levy (see, to that effect, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 56).

33 In the present case, the amendment is designed to extend the aid available under the existing aid scheme to video on demand distributors established outside Germany, which will, in return for recognition of their eligibility for the aid, also be subject to the levy which funds that aid. Therefore, the amendment is akin to a plan to modernise the existing aid scheme in recognition of the growing importance of the provision of delocalised video on demand services.

34 Thus, in contrast to the circumstances of the case which resulted in the judgment of 22 December 2008, British Aggregates v Commission (C‑487/06 P, EU:C:2008:757), it must be held that the evidence adduced by the applicant in the present case does not serve to demonstrate that the existing aid scheme in general, or the amendment in particular, had the purpose or effect of altering the allocation of the market by transferring demand to the German film industry.

35 The applicant cannot be exempted from the requirement to produce pertinent reasons why the contested decision is liable adversely to affect its legitimate interests by seriously jeopardising its position on the market in question (see, to that effect, judgment of 22 November 2007, Spain v Lenzing, C‑525/04 P, EU:C:2007:698, paragraph 41).

36 In that regard, it must be borne in mind that a substantial effect on the competitive position of an undertaking can be inferred from evidence such as a significant decline in turnover, appreciable financial losses, a significant reduction in market share, the loss of an opportunity to make a profit or a less favourable development than would have been the case had it not been for the contested measure (see, to that effect, judgment of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 53).

37 The mere fact that a measure may have an influence on the competitive relationships existing on the relevant market and that the undertaking concerned is in a competitive relationship with one or more of the addressees of that measure cannot suffice for that undertaking to be regarded as being individually concerned by that measure (see, to that effect, judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraph 99 and the case-law cited).

38 In the present case, the applicant merely claims that it is ineligible for almost all of the contested aid, unlike some of its competitors, without adducing evidence which would enable the significance of the possible effect of that circumstance on its competitive position to be established.

39 The evidence adduced by the applicant, first of all, concerns the low percentage of its catalogue that might potentially qualify for the aid schemes, by reason of the format or origin of the content offered and the nature of their distribution costs. Next, the applicant provides documents recording the differential between the funding allocated to the distribution of films on physical media and that allocated to the distribution of films via video on demand services, in favour of the first means of distribution. Lastly, the remaining evidence concerns the difference between the applicant’s business model and that of some of its competitors which promote the production of German and European content and are therefore likely to derive greater benefit from the aid scheme in question.

40 It must be stated that, in the light of the case-law cited in paragraphs 36 and 37 above, the evidence adduced by the applicant does not make it possible to assess the impact that the aid in question might have on its competitive position.

41 Lastly, with regard to the applicant’s argument that its competitive position is substantially affected by reason of the fact that the benefit which it could receive is largely outweighed by the tax burden that funds the aid in question, this is not such as to alter that finding. In that regard, it must be stated that the applicant does not put forward any evidence from which it could be concluded that the sum payable for the purpose of funding the aid, although not insignificant, is such as substantially to affect its competitive position on the market.

42 It follows that the argument that the applicant’s competitive position is substantially affected must be rejected.

43 In support of its second argument, concerning the existence of a limited class of operators of which the applicant forms part, it must be noted that the Court of Justice has indeed held that, where the contested decision affected a group of persons who were identified or identifiable when that measure was adopted by reason of criteria specific to the members of the group, those persons could be individually concerned by that measure inasmuch as they formed part of a limited class of economic operators (judgment of 27 February 2014, Stichting Woonlinie and Others v Commission, C‑133/12 P, EU:C:2014:105, paragraph 46).

44 In the present case, however, it must be noted that the applicant is affected by the contested decision only in its capacity as a non-domestic video on demand distributor which provides services in the German language on German territory in the same way as other companies in the sector concerned. The national legislation authorised by the contested decision therefore applies to the applicant only by reason of its objective legal and factual situation under a general rule (see, to that effect, order of 26 April 2016, EGBA and RGA v Commission, T‑238/14, not published, EU:T:2016:259, paragraph 67 and the case-law cited).

45 That finding is not called into question by the fact that the amendment authorised by the contested decision, which dates from 1 September 2016, applied only up to 31 December 2016. That circumstance is not such as to establish the existence of a limited class of economic operators conferring a particular status on the applicant. When the levy was devised, adopted and implemented at national level, following the adoption of the contested decision, it was intended to apply to all market participants satisfying objective criteria (see, to that effect, order of 27 August 2008, Adomex v Commission, T‑315/05, not published, EU:T:2008:300, paragraph 27, and judgment of 16 December 2011, Enviro Tech Europe and Enviro Tech International v Commission, T‑291/04, EU:T:2011:760, paragraph 109).

46 Furthermore, since the video on demand distribution market is dynamic and the entry of new participants, or the exit of existing participants, is consequently possible, the operators affected by the contested decision constituted an open group at that time.

47 Moreover, it follows from the case-law that the fact of belonging to a limited class of economic operators may result from the fact that the applicant had specific rights prior to the adoption of the decision (see, to that effect, judgments of 26 June 1990, Sofrimport v Commission, C‑152/88, EU:C:1990:259, paragraph 12; of 22 June 2006, Belgium and Forum 187 v Commission, C‑182/03 and C‑217/03, EU:C:2006:416, paragraphs 61 to 63; and of 27 February 2014, Stichting Woonpunt and Others v Commission, C‑132/12 P, EU:C:2014:100, paragraphs 61 and 62). However, the applicant has not established that it enjoyed any acquired rights within the meaning of the case-law, prior to the adoption of the contested decision or the national legislation, which could have been affected by that decision or legislation.

48 Consequently, since the applicant has failed to prove that it is individually concerned, the Court finds that it does not fulfil the cumulative conditions set out in the second situation envisaged by the fourth paragraph of Article 263 TFEU.

49 In the light of all of the foregoing considerations, it must be concluded that the action is inadmissible.

50 Pursuant to Article 144(3) of the Rules of Procedure, where the defendant lodges a plea of inadmissibility or of lack of competence, as provided for in Article 130(1) of those rules, a decision on the application to intervene is not to be given until after the plea has been rejected or the decision on the plea reserved.

51 In the present case, since the action is dismissed as being inadmissible in its entirety, there is no need to rule on the applications to intervene lodged by the Federal Republic of Germany, the French Republic and the FFA.

52 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those of the Commission, in accordance with the form of order sought by the Commission, with the exception of the costs relating to the applications to intervene.

53 In accordance with Article 144(10) of the Rules of Procedure, the applicant, the Commission, the Federal Republic of Germany, the French Republic and the FFA are each to bear their own costs relating to the applications to intervene.

2. There is no need to rule on the applications to intervene lodged by the Federal Republic of Germany, the French Republic and the Filmförderungsanstalt.

3. Apple Distribution International shall bear its own costs and pay those incurred by the European Commission, with the exception of the costs relating to the applications to intervene;

4. Apple Distribution International, the Commission, the Federal Republic of Germany, the French Republic and the Filmförderungsanstalt shall each bear their own costs relating to the applications to intervene.

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