Ireland v Commission (State aid - Excise duties on mineral oils for alumina production - Judgment) [2019] EUECJ T-129/07 (17 September 2019)

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(State aid — Directive 2003/96/EC — Excise duties on mineral oils — Mineral oils used as fuel for alumina production — Exemption from excise duty — Selective nature of the measure — Community guidelines on State aid for environmental protection of 2001)

Ireland, represented initially by D. O’Hagan and E. Alkin, subsequently by E. Alkin, E. Creedon and A. Joyce, and finally by E. Alkin, A. Joyce, M. Browne and G. Hodge, acting as Agents, and by P. McGarry, Senior Counsel,

Aughinish Alumina Ltd, established in Askeaton (Ireland), represented initially by J. Handoll and C. Waterson, and subsequently by C. Waterson and C. Little, Solicitors,

European Commission, represented initially by V. Di Bucci, N. Khan, G. Conte and K. Walkerová, and subsequently by N. Khan and V. Bottka, acting as Agents,

APPLICATIONS pursuant to Article 263 TFEU for annulment, in whole or in part, of Commission Decision 2007/375/EC of 7 February 2007 concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia implemented by France, Ireland and Italy respectively (C 78/2001 (ex NN 22/01), C 79/2001 (ex NN 23/01), C 80/2001 (ex NN 26/01)) (OJ 2007 L 147, p. 29), in so far as it finds that State aid was granted by Ireland, from 1 January 2004, on the basis of the exemption from excise duty on mineral oils used as fuel for alumina production in the Shannon region (Ireland), and in so far as it orders Ireland to recover the aid or to cancel or suspend its payment,

composed of I. Pelikánová (Rapporteur), President, P. Nihoul and J. Svenningsen, Judges,

having regard to the written part of the procedure and further to the hearing on 2 April 2019,

1 Alumina (or aluminium oxide) is a white powder principally used in smelters to produce aluminium. It is extracted from bauxite by a refining process, the final stage of which is calcination. More than 90% of the calcinated alumina is used in the smelting of aluminium metal. The remainder is further processed and used in chemical applications. Mineral oils can be used as fuel for alumina production.

2 There is only one producer of alumina in Ireland, one in Italy and one in France. In Ireland, it is Aughinish Alumina Ltd (‘Aughinish’), established in the Shannon region. There are also alumina producers in Germany, Greece, Spain, Hungary and the United Kingdom.

3 Like the French Republic and the Italian Republic, Ireland has exempted from excise duty undertakings using mineral oils for alumina production on its territory.

4 The taxation of mineral oils has been subject to harmonisation at EU level since the entry into force of Council Directive 92/81/EEC of 19 October 1992 on the harmonisation of the structures of excise duties on mineral oils (OJ 1992 L 316, p. 12). The use of mineral oils for alumina production was not excluded from the scope of Directive 92/81 nor was it the object of a compulsory or optional exemption under Article 8 of that directive.

5 Article 6 of Council Directive 92/82/EEC of 19 October 1992 on the approximation of the rates of excise duties on mineral oils (OJ 1992 L 316, p.19) established a minimum rate of excise duty on heavy fuel oil which Member States were required to apply from 1 January 1993.

6 However, by various decisions, the Council of the European Union authorised the French Republic, Ireland and the Italian Republic to exempt from excise duty mineral oils used for alumina production in Gardanne, in the Shannon region and in Sardinia. The most recent Council decision in this regard was Decision 2001/224/EC of 12 March 2001 concerning reduced rates of excise duty and exemptions from such duty on certain mineral oils when used for specific purposes (OJ 2001 L 84, p. 23), which authorised the exemptions until 31 December 2006.

7 By Decisions C(2001) 3296, C(2001) 3300 and C(2001) 3295 of 30 October 2001 (OJ 2002 C 30, pp. 17, 21 and 25), the Commission of the European Communities initiated the procedure laid down in Article 88(2) EC with respect to the exemptions from excise duty on mineral oils for alumina production in Gardanne, in the Shannon region and in Sardinia.

8 In the context of the formal investigation procedure initiated by Decision C(2001) 3300, there were exchanges of correspondence between the Commission, the Member States concerned, the European Aluminium Association and the beneficiaries of the aid, including Aughinish.

9 Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ 2003 L 283, p. 51) repealed Directives 92/81 and 92/82 with effect from 31 December 2003. Article 2(4)(b) of Directive 2003/96 states that that directive does not apply to certain uses of energy products, including dual use of energy products. According to the second indent of Article 2(4)(b) of that directive, the use of energy products for chemical reduction and in electrolytic and metallurgical processes is to be regarded as dual use. The use of heavy fuel oil for alumina production falls into that category. Therefore, as from 1 January 2004, the minimum rate of excise duty for heavy fuel oil no longer applied to fuel oil used for alumina production. Moreover, Article 18(1) of Directive 2003/96 provides that, by way of derogation from the provisions of that directive, Member States are authorised to continue to apply the reductions in the levels of taxation or exemptions set out in Annex II and, subject to prior review by the Council, on the basis of a proposal from the Commission, that authorisation expires on 31 December 2006 or on the date specified in Annex II. That annex provides for an exemption from excise duty for heavy fuel oil used as fuel for alumina production for France, in the region of Gardanne, for Ireland, in the Shannon region and, for Italy, in Sardinia.

10 By Decision 2006/323/EC of 7 December 2005 concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia respectively implemented by France, Ireland and Italy (OJ 2006 L 119, p. 12), the Commission closed the investigation procedure initiated by Decision C(2001) 3300 regarding the aid granted for the period up to 31 December 2003, that is to say up to the entry into force of Directive 2003/96, by declaring part of the aid to be incompatible with the common market (‘the Alumina I decision’). In recital 92 of the Alumina I decision, the Commission decided to extend the procedure in respect of the period commencing on 1 January 2004, that is to say, the period subsequent to the entry into force of Directive 2003/96. As with the previous period, the Commission, in its decision extending the procedure, expressed its doubts as to the compatibility of the aid with the Guidelines on national regional aid (OJ 1998 C 74, p. 9) and the Community guidelines on State aid for environmental protection (OJ 2001 C 37, p. 3) (‘the 2001 Environmental aid guidelines’).

11 The Alumina I decision was sent to the French Republic, Ireland and the Italian Republic by letters of 8 December 2005 (D/206670, D/206671 and D/206673). It was notified to the beneficiaries concerned and to the European Aluminium Association by letters of 23 January 2006 (D/50525, D/50526, D/50527 and D/50528).

12 The three Member States and two beneficiaries each appealed against the Alumina I decision. Those appeals were registered, respectively, as Cases T‑50/06 (Ireland), T‑56/06 (France), T‑60/06 (Italy), T‑62/06 (Eurallumina) and T‑69/06 (Aughinish) (collectively, ‘the Alumina I cases’). Aughinish also requested a suspension of operation of the decision through an application for interim measures. That application was registered as Case T‑69/06 R. By order of 2 August 2006, Aughinish Alumina v Commission (T‑69/06 R, not published, EU:T:2006:225), the Court dismissed the application for interim measures.

13 The Alumina I decision was published in the Official Journal of the European Communities on 4 May 2006 and interested third parties were invited to submit their comments on the decision extending the procedure by a notice published in the Official Journal on 9 May 2006. The Commission received comments from Aughinish, by letter of 9 June 2006 (registered on the same day under A/34490), and from Eurallumina SpA, the Italian beneficiary, by letter of 24 July 2006 (registered on 25 July 2006 under A/35967). That letter was sent and received only after expiry of the deadline of 1 month set out in the invitation to submit comments published in the Official Journal. The Commission therefore informed Eurallumina, by letter of 2 August 2006 (D/56648), that it was not, in principle, obliged to take those comments into account, and Eurallumina replied by letter of 3 August 2006 (registered on 4 August 2006 under A/36269).

14 The comments from Aughinish were forwarded to the French Republic, Ireland and the Italian Republic by letters of 20 June 2006 (D/55106, D/55107 and D/55109).

15 The French Republic and Ireland requested an extension of the time limit for submitting comments on the decision extending the procedure, which the Commission granted. The French Republic submitted its comments by letter of 14 February 2006 (registered on 15 February 2006 under A/31248). The Commission reminded Ireland and the Italian Republic of its invitation to submit comments by letters of 9 March 2006 (D/52054 and D/52055). Ireland and the Italian Republic submitted their comments by letters of 12 April 2006 (registered on 18 April 2006 under A/32940) and 17 May 2006 (registered on 18 May 2006 under A/33852) respectively.

16 By email of 24 July 2006, the Italian Republic informed the Commission that it had no further comments to make in the light of the comments from Aughinish.

17 The French Republic commented on the comments from Aughinish by letter of 27 July 2006 (registered on 28 July 2006 under A/35952).

18 On 7 February 2007, the Commission adopted Decision 2007/375/EC concerning the exemption from excise duty on mineral oils used as fuel for alumina production in Gardanne, in the Shannon region and in Sardinia implemented by France, Ireland and Italy respectively (C 78/2001 (ex NN 22/01), C 79/2001 (ex NN 23/01), C 80/2001 (ex NN 26/01)) (OJ 2007 L 147, p. 29) (‘the Alumina II decision’).

The exemptions from excise duty granted by [the French Republic], Ireland and [the Italian Republic] in respect of heavy fuel oils used in the production of alumina as from 1 January 2004 constitute State aid within the meaning of Article 87(1) [EC].

The aid referred to in Article 1 is compatible with the common market in so far as the beneficiaries pay at least a rate of 20% of the excise tax which would otherwise have been payable or the minimum level of taxation as determined by Directive 2003/96 (EUR 15.00 per 1 000 kg), whichever is the lowest, subject to the condition that the aid is limited to a maximum duration of 10 years.

The aid referred to in Article 1 is incompatible with the common market in so far as the beneficiaries do not pay at least a rate of 20% of the excise tax otherwise payable or the Community minimum (EUR 15.00 per 1 000 kg), whichever is the lowest.

1. [The French Republic], Ireland and [the Italian Republic] shall take all necessary measures to recover from the beneficiaries the aid referred to in Article 3 and unlawfully made available to the beneficiaries.

2. Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of the decision.

3. The sums to be recovered shall include interest from the date on which it was at the disposal of the beneficiaries until the date of its recovery. The interest shall be calculated in compound basis in conformity with the provisions laid down in Chapter V of Commission Regulation (EC) No 794/2004 ...

4. [The French Republic], Ireland and [the Italian Republic] shall cancel all payment of outstanding aid referred to in Article 3 with effect from the date of notification of this decision.

5. [The French Republic], Ireland and [the Italian Republic] shall ensure that this decision is implemented within 4 months of the date of its notification.

[The French Republic], Ireland and [the Italian Republic] shall suspend the payment of the aid referred to in Article 2, to beneficiaries who have not yet repaid the aid held to be incompatible with the common market by [the Alumina I decision] and the aid referred to in Article 3 of this decision in so far as it was unlawfully made available to the beneficiaries, with interest.

1. [The French Republic], Ireland and [the Italian Republic] shall keep the Commission informed of the progress of the national proceedings to implement this decision until these proceedings have been completed.

2. Within 2 months of notification of this decision, [the French Republic], Ireland and [the Italian Republic] shall inform the Commission of the total amount to be recovered from the beneficiaries, indicating both principal amount and interest using the table in the Annex and submit a detailed description of the measures already taken and planned to comply with this decision. Within the same time limit, they shall send to the Commission all the documents demonstrating that the beneficiaries have been ordered to repay the aid.

3. Within 2 months of notification of this decision, [the French Republic], Ireland and [the Italian Republic] shall submit evidence to the Commission showing that they have complied with Article 6.

4. After the expiry of the periods referred to in paragraphs 2 and 3, [the French Republic], Ireland and [the Italian Republic] shall submit, on simple request by the Commission a report on the measures already taken and planned to comply with this decision. The report shall also provide detailed information on the amounts of aid and recovery interest already recovered from the beneficiaries.

This decision is addressed to the French Republic, Ireland and the Italian Republic.’

20 By judgment of 12 December 2007, Ireland and Others v Commission (T‑50/06, T‑56/06, T‑60/06, T‑62/06 and T‑69/06, not published, EU:T:2007:383), the Court joined the Alumina I cases for the purposes of the judgment, annulled the Alumina I decision, on the ground that, in that decision, the Commission had failed to fulfil its obligation to state reasons with regard to the non-application in that case of Article 1(b)(v) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1), and, in Case T‑62/06, dismissed the remainder of the action.

21 By application of 26 February 2008, the Commission lodged an appeal against that judgment of the Court.

22 By judgment of 2 December 2009, Commission v Ireland and Others (C‑89/08 P, EU:C:2009:742), the Court of Justice set aside the judgment of 12 December 2007, Ireland and Others v Commission (T‑50/06, T‑56/06, T‑60/06, T‑62/06 and T‑69/06, not published, EU:T:2007:383), in so far as the General Court had annulled the Alumina I decision, referred the Alumina I cases back to the General Court and reserved the costs.

23 By judgment of 21 March 2012, Ireland v Commission (T‑50/06 RENV, T‑56/06 RENV, T‑60/06 RENV, T‑62/06 RENV and T‑69/06 RENV, EU:T:2012:134), the General Court annulled the Alumina I decision, in so far as it had found, or was based on the finding, that the exemptions from excise duty on mineral oils used as fuel for alumina production granted by the French Republic, Ireland and the Italian Republic until 31 December 2003 constituted State aid within the meaning of Article 87(1) EC, and in so far as it ordered the French Republic, Ireland and the Italian Republic to take all measures necessary to recover those exemptions from the beneficiaries to the extent that the latter had not paid excise duty at the rate of at least EUR 13.01 per 1 000 kg of heavy fuel oil.

24 By application of 1 June 2012, the Commission lodged an appeal against that judgment of the General Court.

25 By judgment of 10 December 2013, Commission v Ireland and Others (C‑272/12 P, EU:C:2013:812), the Court of Justice set aside the judgment of 21 March 2012, Ireland v Commission (T‑50/06 RENV, T‑56/06 RENV, T‑60/06 RENV, T‑62/06 RENV and T‑69/06 RENV, EU:T:2012:134), referred the Alumina I cases back to the General Court and reserved the costs.

26 By judgments of 22 April 2016, Ireland and Aughinish Alumina v Commission (T‑50/06 RENV II and T‑69/06 RENV II, EU:T:2016:227), France v Commission (T‑56/06 RENV II, EU:T:2016:228) and Italy and Eurallumina v Commission (T‑60/06 RENV II and T‑62/06 RENV II, EU:T:2016:233), the General Court dismissed the actions in the Alumina I cases.

27 By application of 8 June 2016, Eurallumina lodged an appeal against the judgment of 22 April 2016, Italy and Eurallumina v Commission (T‑60/06 RENV II and T‑62/06 RENV II, EU:T:2016:233). The Italian Republic then lodged a cross-appeal against that judgment.

28 By application of 4 July 2016, Aughinish lodged an appeal against the judgment of 22 April 2016, Ireland and Aughinish Alumina v Commission (T‑50/06 RENV II and T‑69/06 RENV II, EU:T:2016:227). Ireland applied for and was granted leave to intervene in support of the form of order sought by Aughinish, after having itself lodged an appeal, by application of 5 July 2016, against the judgment of 22 April 2016, Ireland and AughinishAlumina v Commission (T‑50/06 RENV II and T‑69/06 RENV II, EU:T:2016:227).

29 By orders of 7 December 2017, Eurallumina v Commission (C‑323/16 P, not published, EU:C:2017:952), Aughinish Alumina v Commission (C‑373/16 P, not published, EU:C:2017:953) and Ireland v Commission (C‑369/16 P, not published, EU:C:2017:955), all those appeals were dismissed.

30 By applications lodged at the Court Registry on 17 and 19 April 2007, Ireland and Aughinish each brought an action for annulment of the Alumina II decision, pursuant to Article 230 EC. Those applications were registered as Cases T‑129/07 and T‑130/07 respectively.

31 On 21 August 2007 the Commission lodged its respective defences in Cases T‑129/07 and T‑130/07.

32 By orders of 13 September 2007, the parties having been heard, the procedure in Case T‑129/07 was suspended pending the final decision of the Court in Case T‑50/06, and the procedure in Case T‑130/07 was suspended pending the final decision of the Court in Case T‑69/06.

33 By orders of 24 April 2008, the parties having been heard, the respective procedures in Cases T‑129/07 and T‑130/07 were once again suspended pending the final decision of the Court of Justice in Case C‑89/08 P.

34 By orders of 24 March 2010, the parties having been heard, the respective procedures in Cases T‑129/07 and T‑130/07 were once again suspended pending delivery of the final decisions in Cases T‑50/06 RENV, T‑56/06 RENV, T‑60/06 RENV, T‑62/06 RENV and T‑69/06 RENV and pending any decisions of the Court of Justice in the event of appeals against those decisions.

35 Further to the decision taken at the plenary session of 26 September 2016 on the attachment of Judges to the Chambers, Cases T‑129/07 and T‑130/07 were assigned to the First Chamber.

36 On 8 January 2018, acting on a proposal from the Judge-Rapporteur, the Court adopted a measure of organisation of procedure in Cases T‑129/07 and T‑130/07 to hear the parties regarding the consequences to be drawn for those cases from the orders of 7 December 2017, Eurallumina v Commission (C‑323/16 P, not published, EU:C:2017:952), Aughinish Alumina v Commission (C‑373/16 P, not published, EU:C:2017:953), and Ireland v Commission (C‑369/16 P, not published, EU:C:2017:955). The parties complied with that measure within the prescribed period. In their respective responses, Ireland indicated, in essence, that it would proceed on the basis of only the first plea set out in paragraphs 37 to 52 of the application in Case T‑129/07, whilst Aughinish indicated that it would proceed on the basis of only the first and sixth pleas set out in paragraphs 5.11 to 5.19 and in paragraphs 5.64 to 5.72, respectively, of the application in Case T‑130/07. Furthermore, in its response, Ireland indicated its intention to rely on an additional plea to the effect that, in accordance with the Alumina II decision, the aid from which Aughinish benefited was not attributable to it.

37 On 29 March 2018, Aughinish lodged its reply in Case T‑130/07, which was limited to the first and sixth pleas set out in the application.

38 By letter lodged at the Court Registry on 16 May 2018, Ireland requested a hearing in Case T‑129/07, in accordance with Article 106(1) of the Rules of Procedure of the General Court, and applied for the joinder of that case and Case T‑130/07.

39 On 4 June 2018, the Commission submitted its observations on the application for joinder lodged in Case T‑129/07.

40 On 6 June 2018, the Commission lodged its rejoinder in Case T‑130/07, which was limited to the first and sixth pleas set out in the application.

41 On 18 June 2018, Aughinish submitted its observations on the application for joinder lodged in Case T‑129/07.

42 No request for a hearing was made within the prescribed period in Case T‑130/07.

43 Acting on a proposal from the Judge-Rapporteur, the Court decided to open the oral part of the procedure in Cases T‑129/07 and T‑130/07, and to join those cases for the purposes of the possible hearing and the final decision, in accordance with Article 68 of the Rules of Procedure, read in conjunction with Article 19(2) thereof.

44 The parties presented oral argument and replied to the oral questions put by the Court at the hearing on 2 April 2019. In its answer to one of those questions, Ireland confirmed that it did not wish to raise an additional plea alleging, in essence, infringement of Article 87(1) EC resulting from an incorrect application of the criterion for classifying a measure as State aid, based on the imputability to the State of the measure concerned, as had been announced in its observations in reply of 24 January 2018. That was officially noted in the minutes of the hearing.

– annul the Alumina II decision, in whole or in part, in so far as it relates to the exemption from excise duty on mineral oils used as fuel for alumina production in the Shannon region;

47 In Joined Cases T‑129/07 and T‑130/07, the Commission contends that the Court should:

48 The actions in Joined Cases T‑129/07 and T‑130/07 seek, in essence, annulment, in whole or in part, of the Alumina II decision, in so far as it finds that State aid was granted by Ireland, from 1 January 2004, on the basis of the exemption from excise duty on mineral oils used as fuel for alumina production in the Shannon region, and in so far as it orders Ireland to recover the aid or to cancel or suspend its payment (‘the contested decision’).

Single plea in law raised by Ireland in support of its action in Case T‑129/07

49 In support of its claims, Ireland relies on a single plea corresponding to the first plea put forward in the application, alleging, in essence, that the Commission, in the contested decision, infringed Article 87(1) EC by incorrectly applying the criterion for classifying a measure as State aid, based on the selectivity of that measure. Principally, Ireland submits that the Commission failed to provide sufficient reasoning for the contested decision and, in any event, made a manifest error of assessment by considering, in recitals 36 and 41 of that decision, that the exemption from excise duty from which Aughinish had, as from 1 January 2004, already benefited or had yet to benefit (‘the exemption at issue’) constituted State aid, notably because it was highly selective in so far as it favoured the production of a specific product, namely alumina, and, de facto, a single undertaking located in a specific region, namely Aughinish in the Shannon region, without showing that that exemption was justified by the nature and general scheme of the Irish energy tax system. In the context of that complaint, Ireland criticises the Commission for not having itself determined whether the exemption at issue was justified by the nature and general scheme of the Irish energy tax system and for failing to take account of the fact that the exemption was applicable, without distinction, to any undertaking wishing to produce alumina in Ireland. Alternatively, it submits that the Commission, in recital 40 of the contested decision, misunderstood the nature of the exercise required to be carried out by it, by concluding that the Irish authorities had failed to identify the overall logic underpinning the Irish energy tax system as a whole. It refers, first, to recital 22 of Directive 2003/96 and to the text of the Joint Declaration of the Council and of the Commission at the time of its adoption (point A.10 of the Addendum to Draft Minutes 14140/03 ADD 1 of 24 November 2003 concerning the 2536th meeting of the Council of the European Union (Environment), held in Luxembourg on 27 October 2003), according to which it was considered to be in the nature and the logic of the tax system to exclude mineralogical processes from the scope of that directive and, secondly, to the text of that same joint declaration, according to which the Commission would go to the greatest possible lengths to ensure that measures taken by Member States in accordance with the exemptions and tax reductions laid down in Directive 2003/96 might be considered to be compatible with State aid rules.

50 The Commission disputes the arguments put forward by Ireland and contends that the single plea should be rejected.

51 As a preliminary point, it must be noted that that plea as well as all the substantive issues raised in the context of the present cases must be examined in the light of the rules of the EC Treaty in force from the time Aughinish started to benefit from the exemption at issue, which is the subject matter of the contested decision, until the adoption of that decision — which ordered that the exemption be recovered, in part, or cancelled or suspended — that is to say during the entire period from 1 January 2004 to 7 February 2007.

52 Accordingly, it is appropriate, in the present case, to apply the rules of the EC Treaty when dealing with all substantive issues, both in Case T‑129/07 and in Case T‑130/07.

53 The single plea put forward by Ireland concerns the application of the selectivity criterion in the case of the exemption at issue.

54 In that regard, it is important to recall that, in order to constitute State aid within the meaning of Article 87(1) EC, a measure must, in particular, be capable of conferring a selective advantage, to the exclusive benefit of certain undertakings or certain sectors of activity. That article applies to aid which distorts or threatens to distort competition ‘by favouring certain undertakings or the production of certain goods’.

55 It is apparent from settled case-law that the definition of State aid, within the meaning of that article, does not include national measures introducing a differentiation between undertakings when that differentiation arises from the nature and the structure of a system of charges or taxes in the general interest, of which they form part and evidence of the existence of which must be produced by the party benefiting from it. Where that is the case, the measure in question cannot, as a rule, be considered to be selective, even though it gives an advantage to the undertakings that are able to benefit from it (see, to that effect, judgments of 13 February 2003, Spain v Commission, C‑409/00, EU:C:2003:92, paragraphs 53 and 54 and the case-law cited, and of 6 March 2002, Diputación Foral de Álava and Others v Commission, T‑127/99, T‑129/99 and T‑148/99, EU:T:2002:59, paragraphs 163 and 164).

56 The case-law on the ‘justification of a derogation by “the nature or general scheme of the system”’ has been explained by the Commission in its Notice of 10 December 1998 on the application of the State aid rules to measures relating to direct business taxation (OJ 1998 C 384, p. 3), as follows:

‘23. The differential nature of some measures does not necessarily mean that they must be considered to be State aid. This is the case with measures whose economic rationale makes them necessary to the functioning and effectiveness of the tax system … However, it is up to the Member State to provide such justification.

26. A distinction must be made between, on the one hand, the external objectives assigned to a particular tax scheme (in particular, social or regional objectives) and, on the other, the objectives which are inherent in the tax system itself. The whole purpose of the tax system is to collect revenue to finance State expenditure …’

57 In the present case, the complaint alleging incorrect application of the criterion for classifying a measure as State aid, based on the selectivity of that measure, clearly relates to recitals 32 to 40 of the contested decision, in which the Commission examined, inter alia, whether the exemption at issue could be considered to be justified by the nature and general scheme of the Irish energy tax system. Those recitals read as follows:

‘(32) The measures favour certain undertakings as they only apply to companies that use heavy fuel in the production of alumina and in practice, in each Member State there is only one company benefiting from the exemption: Aughinish in the Shannon region, Eurallumina in Sardinia and Alcan in Gardanne. For the reasons set out in recitals 33 to 40, they cannot be considered as being justified by the nature and general scheme of the respective energy tax systems.

(33) Dual uses, non-fuel uses of energy and mineralogical processes fall outside the scope of Directive 2003/96 … and, since 1 January 2004, Member States have had discretion as to whether or not to tax such uses. Indeed, an exemption of such energy uses may constitute a general measure that does not involve State aid if it falls within the nature and the logic of the domestic tax system. Recital 22 in the preamble to Directive 2003/96 … states that “energy products should essentially be subject to a Community framework when used as heating fuel or motor fuel. To that extent, it is in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy products as well as mineralogical processes”.

(34) In addition, when Directive 2003/96 … was adopted, the Council and the Commission jointly declared … “Energy products should essentially be subject to a Community framework when used as heating fuel or motor fuel. It can be considered that it is in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy products as well as mineralogical processes. Member States may then take measures to tax or not to tax or to apply total or partial taxation to each use. Electricity used in similar ways should be treated on an equal footing. Such exceptions to the general system or differentiations within that system, which are justified by the nature or general scheme of the tax system, do not involve State [aid]”.

(35) The Council also stated that “… it understands the legal situation arising with the adoption of this Directive in relation to the Treaty rules on State Aid, the same way as it was set out by the Commission at the meeting of the Working Party on Tax Questions on 14 November 2002”. In the Staff Working Paper, which was discussed in that meeting …, the Commission explained the notion of general measures, that the situation in each individual Member State has to be analysed to define the general excise duty system applicable at national level, and also stated that “the draft directive on energy taxation contains numerous options, making it impossible to determine in advance whether or not the way they will be implemented by Member States will give rise to State aid within the meaning of Article 87 [EC]”. Recital (32) of the preamble and Article 26(2) of Directive 2003/96 …, accordingly, remind Member States of the obligation laid down in Article 88(3) of the [EC] Treaty to notify State aid.

(36) In this specific case, neither [the French Republic], Ireland and [the Italian Republic], nor any of the beneficiaries have demonstrated that the exemptions fall within the nature and logic of the domestic systems. None of them has, for example, explained whether dual use of energy products in other production processes has been exempt, and if not, the underlying reasons. Nor have they explained how the exemptions compare to the national taxes on electricity used principally for the purposes of chemical reduction and in electrolytic and metallurgical processes and energy use for mineralogical processes, which are other uses of energy falling outside the scope of Directive 2003/96 … pursuant to Article 2(4)(b) thereof.

(38) As regards the Irish exemption, Article 100 of the Finance Act 1999 contains some other specific exemptions, but this does not bring the exemption for alumina production within the logic of an overall system. It rather demonstrates that the exemption for alumina is a particular exemption alongside other specific exemptions, as is also confirmed in the preamble to the Law (see recital 10). In addition, the Irish law also excludes potential new entrants from the tax exemption when dual use of energy concerns other production processes. With respect to the Irish situation, Aughinish accepts that it “does not believe that there are any other such industries (benefiting from an excise reduction like the alumina industry)” and “is also unaware of any allegations of discrimination”. This rather tends to confirm the selective nature of the measure.

(40) In fact, the Member States and beneficiaries failed to identify any overall logic of their respective tax systems. On the basis of the information available to the Commission, it is clear that the reasons for granting the aid derive rather from the circumstances of alumina production in the specific regions concerned. These arguments do not derive from the nature and logic of the respective domestic tax systems. Therefore, the Commission concludes that the exemptions remain highly selective, favouring the production of a specific product and, de facto, specific undertakings and they cannot be justified within the logic of the domestic tax systems [the fourth sentence of recital 40, reproduced above, appears in the English and the French versions of the contested decision but not in the Italian version, manifestly as a result of an error].’

‘The Irish exemption is contained in Section 100(1)(e) of the Irish Finance Act 1999, which grants relief from mineral oil tax on “fuel oil intended for use in, or in connection with, the manufacture of alumina, or for the maintenance of the manufactory in which the said manufacture is carried on”. The explanatory memorandum of the Finance Act explains that “Section 100 provides for relief from mineral oil tax in respect of oil used for particular purposes or in other particular situations. These include use for purposes other than motor or heating fuel, exports, fuel oil used in alumina production, oil used for sea-navigation, heavy oil used in commercial aviation and recycled oil” …’

59 In so far as, primarily, Ireland criticises, in essence, the Commission for not having itself determined whether the exemption at issue was justified by the nature and general scheme of the Irish energy tax system and was applicable, without distinction, to any undertaking wishing to produce alumina in Ireland, it must be noted that, in the form of an allegation of failure to state reasons, Ireland disputes, in fact, the assessment of the grounds of the contested decision, which is a matter to be reviewed by the Court when it examines the substance of that decision (see, to that effect, judgments of 2 April 1998, Commission v Sytraval and Brink’s France, C‑367/95 P, EU:C:1998:154, paragraph 67, and of 15 December 2005, Italy v Commission, C‑66/02, EU:C:2005:768, paragraph 26). That complaint is unfounded.

60 Indeed, it relies on an incorrect interpretation of the case-law cited in paragraph 55. As the Commission rightly notes, once it has established the a priori selective nature of a measure, it is then for the Member State or the beneficiary of the State aid contesting the selective nature of the measure to demonstrate that it is not selective in so far as it is justified by the nature and general scheme of the domestic tax system (see, to that effect, judgment of 29 April 2004, Netherlands v Commission, C‑159/01, EU:C:2004:246, paragraph 43).

61 In the present case, the Commission had clearly established in recital 10 of the contested decision that the Irish Finance Act 1999 granted a relief from mineral oil tax on ‘fuel oil intended for use in, or in connection with, the manufacture of alumina, or for the maintenance of the manufactory in which the said manufacture is carried on’ and, in recital 38 of that decision, that that exemption was one of other specific exemptions. The Commission was therefore right to state, in recitals 32 and 38 of the contested decision, that ‘the measures favour[ed] certain undertakings as they only appl[ied] to companies that use[d] heavy fuel in the production of alumina and in practice, in each Member State there [wa]s only one company benefiting from the exemption: Aughinish in the Shannon region’, and that ‘the exemption for alumina [wa]s a particular exemption’ that was not intended to apply ‘when dual use of energy concern[ed] other production processes’. The Commission had thus established that the exemption at issue introduced a differentiation between undertakings, depending on whether or not they produced alumina.

62 In that context, the Commission rightly found in recital 36 of the contested decision that it was for the Member State concerned, namely, in the present case, Ireland, to demonstrate that the exemption at issue fell within the nature and logic of the domestic system of taxes in the general interest excluding the taxation of dual use of energy products or of some of them, such as the energy products used in metallurgical processes.

63 For those reasons, Ireland’s main complaint must therefore be rejected as unfounded.

64 In so far as, in the alternative, Ireland complains, in essence, that the Commission incorrectly applied the criterion for classifying a measure as State aid, based on the selectivity of the measure in question, in finding that the Irish authorities had failed to establish that the exemption at issue fell within the nature and the logic of the domestic tax system, suffice it to note that, in the context of the procedure in Case T‑129/07, Ireland has produced no evidence that, as alleged, the exemption at issue was within the nature and general scheme of an Irish system of taxes in the general interest excluding the domestic taxation of dual use of energy products or of some of them, such as the energy products used in metallurgical processes. Admittedly, the Irish legislation provided for other exemptions from energy tax but, as the Commission rightly indicated in recital 38 of the contested decision, Ireland has neither attempted to show nor, a fortiori, established that, taking those other exemptions into account, the exemption at issue could be regarded as being justified by the nature and general scheme of the Irish energy tax system.

65 Moreover, in so far as Ireland relies on recital 22 of Directive 2003/96 and on the joint declaration relating thereto, it is important to note that they seek to set out the principles underpinning the rules of Community law for taxation, by the Member States, of energy products and electricity.

66 It is apparent from Article 2(4)(b) of Directive 2003/96 that the latter ‘shall not apply to … the following uses of energy products and electricity’, including ‘dual use of energy products’, adding that ‘an energy product has a dual use when it is used both as heating fuel and for purposes other than as motor fuel and heating fuel’ and that ‘the use of energy products for chemical reduction and in electrolytic and metallurgical processes shall be regarded as dual use’. It follows that, from the entry into force of Directive 2003/96, namely as from 1 January 2004, taxation of mineral oils intended for use as fuel for the production of alumina fell outside the scope of the rules of Community law for taxation, by the Member States, of energy products and electricity.

67 Since then, Member States have been free to take measures to tax or not to tax those uses or to apply total or partial taxation to those uses. In order for State aid not to be involved for the purposes of Article 87 EC, the exemptions to the system must be justified by the nature and general scheme of the domestic tax system and, as the Commission rightly stated in recital 35 of the contested decision, ‘the situation in each individual Member State has to be analysed to define the general excise duty system applicable at national level’.

68 However, Ireland has failed to demonstrate that the exemption at issue fell within the nature and the logic of an Irish domestic system of taxes in the general interest excluding the taxation of dual use of energy products or of some of them, such as the energy products used in metallurgical processes.

69 The fact that, as is apparent from recital 22 of the contested decision, ‘Ireland refer[red] to the possibility to widen the scope of the relief to cover heavy fuel oil for dual use, or more widely to energy products generally for dual use’ shows, rather, that the dual use of energy products was not generally exempt from the excise duty under the Irish tax system, even though that possibility could be envisaged for the future.

70 The arguments put forward by Ireland based on the text of the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96 — according to which the Commission would go to the greatest possible lengths to ensure that the measures taken by Member States in accordance with the exemptions and tax reductions laid down in Directive 2003/96 might be considered to be compatible with State aid rules — must be rejected as unfounded on the ground that that declaration could only concern exemptions and tax reductions falling within the scope of that directive. However, regardless of the fact that Article 18(1) of Directive 2003/96, in conjunction with Annex II thereto, seemed to authorise Ireland to apply the exemption at issue until 31 December 2016, the fact remains that such an authorisation fell outside the scope of the rules of Community law for taxation, by the Member States, of energy products and electricity (see paragraph 66). Even if, in the light of Article 18(1) of Directive 2003/96, in conjunction with Annex II thereto, it were to be found that Directive 2003/96 applies to the exemption at issue, since the joint declaration is not referred to in the wording of that directive itself, it cannot, in accordance with the case-law, be used for the purpose of interpreting that wording, as the Commission rightly pointed out (see, to that effect, judgment of 19 April 2007, Farrell, C‑356/05, EU:C:2007:229, paragraph 31). That directive stated expressly, by contrast, in recital 32 thereof that it ‘d[id] not prejudice the outcome of any future State aid procedure that may be undertaken in accordance with Articles 87 and 88 of the [EC] Treaty’ and, in Article 26(2) thereof, that ‘measures such as tax exemptions, tax reductions, tax differentiation and tax refunds within the meaning of this directive might constitute State aid and in those cases have to be notified to the Commission pursuant to Article 88(3) of the [EC] Treaty’.

71 In the light of the foregoing, the Commission was right, inter alia, to state in recitals 32 and 36 of the contested decision that the exemption at issue was selective in that it favoured certain undertakings in Ireland as it only applied to undertakings that used heavy fuel oil in the production of alumina, without having demonstrated that that exemption fell within the nature and the logic of the Irish tax system.

72 In those circumstances, the submission alleging, in essence, incorrect application of the criterion for classifying a measure as State aid within the meaning of Article 87 EC, based on the selectivity of the measure in question, must be rejected as unfounded.

73 Since Ireland’s complaints have thus all been rejected as unfounded, its single plea in law must be rejected and, therefore, the action in Case T‑129/07 must be dismissed.

Pleas in law raised by Aughinish in support of its action in Case T‑130/07

74 In support of its claims, Aughinish puts forward two pleas, the first corresponding to the first plea raised in the application and the second corresponding to the sixth plea relied on in the application.

75 By its first plea, Aughinish alleges, in essence, that the Commission, in the contested decision, infringed Article 87(1) EC by incorrectly applying the criterion for classifying a measure as State aid, based on the selectivity of that measure. More specifically, according to Aughinish, the Commission wrongly refused to find that the exemption at issue, relating to a dual use product, fell within the nature and the logic of the Irish energy tax system. It claims that the selective nature of the exemption at issue cannot be inferred from the fact that it applied only to heavy fuel oil used in a specific economic activity, namely alumina production and, in practice, to a single undertaking located in a particular region, namely Aughinish in the Shannon region. Aughinish argues that the Commission should not have classified the exemption at issue as ‘highly selective’ before establishing that other industries using heavy fuel oil in their production processes had not benefited from a similar exemption. According to Aughinish, there are no other such industries and no one has ever claimed to have been discriminated against because of the existence of the exemption at issue. Furthermore, there was nothing in the Irish legislation to prevent an undertaking wishing to produce alumina from establishing itself in Ireland in order to benefit from the exemption at issue. Moreover, Aughinish refers, first, to recital 22 of Directive 2003/96 and to the text of the Joint Declaration of the Council and of the Commission at the time of its adoption, according to which it was in the nature and the logic of the tax system to exclude mineralogical processes from the scope of that directive and, secondly, to the text of that joint declaration, according to which the Commission would go to the greatest possible lengths to ensure that measures taken by Member States in accordance with the exemptions and the tax reductions laid down in Directive 2003/96 might be considered to be compatible with State aid rules. As regards recital 32 and Article 26 of Directive 2003/96, recalling the obligation on Member States to notify State aid, those were not relevant to measures which, like the exemption at issue, could not be classified as State aid within the meaning of Article 87 EC and could not, in so far as they concerned dual use of energy products, fall within the scope of Directive 2003/96, in accordance with Article 2(4) thereof. In response to the Commission’s arguments, Aughinish argues that the solution adopted in the order of 7 December 2017, Eurallumina v Commission (C‑323/16 P, not published, EU:C:2017:952), is not relevant in the present case because it is based on the Italian tax system, not the Irish tax system.

76 The Commission disputes the arguments put forward by Aughinish and contends that the first plea should be rejected as partly inadmissible and as otherwise unfounded.

77 The first plea put forward by Aughinish, like the single plea raised by Ireland, concerns the application of the selectivity criterion in the case of the exemption at issue.

78 In so far as the Commission raises a plea of inadmissibility in respect of the first plea in law, since Aughinish refers to the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96, that plea of inadmissibility must be examined in the light of the requirements for clarity and precision derived from the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union, which is applicable to the procedure before the General Court in accordance with the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union, and from Article 44(1)(c) of the Rules of Procedure of the General Court of 2 May 1991.

79 According to settled case-law, under the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union, which is applicable to the procedure before the General Court in accordance with the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union, and Article 44(1)(c) of the Rules of Procedure of 2 May 1991, the application must, inter alia, contain a summary of the pleas in law on which it is based. It must, accordingly, specify the nature of the grounds on which it is based, so that a mere abstract statement of the grounds does not satisfy the requirements of the Statute of the Court of Justice of the European Union and the Rules of Procedure (see judgment of 1 July 2009, ThyssenKrupp Stainless v Commission, T‑24/07, EU:T:2009:236, paragraph 156 and the case-law cited). Similar requirements apply where a submission is made in support of a plea in law (see judgment of 14 December 2005, Honeywell v Commission, T‑209/01, EU:T:2005:455, paragraph 55 and the case-law cited). The applicant must indicate the specific complaints on which the Court is asked to rule and, at the very least in summary form, the legal and factual particulars on which those complaints are based (see judgment of 31 March 1992, Commission v Denmark, C‑52/90, EU:C:1992:151, paragraph 17 and the case-law cited).

80 In the present case, the Commission criticises Aughinish for making, in paragraph 5.16 of the application in Case T‑130/07, a ‘passing reference’ or a simple ‘unparticularised allusion’ to the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96.

81 In that paragraph of the application Aughinish complains that the Commission, in establishing the selective nature of the exemption at issue, had ‘read the relevant documents somewhat selectively’, namely Directive 2003/96, since the Commission itself had ‘appreciated the importance of references to the “nature and the logic of the tax system” in recital 22 of the preamble to th[at] directive and the Joint Council/Commission Declaration [at the time of the adoption of that directive]’.

82 In a footnote in paragraph 5.15 of the application in Case T‑130/07, Aughinish referred specifically to the ‘Council and Commission Declaration in the Addendum au projet de procès-verbal of the Council
Meeting of 27 October 2003 (Council Doc. 14140/03 ADD 1), attached at Annex A40’.

83 In recital 34 of the contested decision, the Commission itself had noted that ‘when Directive 2003/96 … was adopted, the Council and the Commission jointly declared [footnote: Addendum au projet de [procès-]verbal, 14140/03, of 24.11.2003, http://register.consilium.eu.int/pdf/en/ 03/st14/st14140-ad01.en03.pdf] “Energy products should essentially be subject to a Community framework when used as heating fuel or motor fuel”’ and that ‘it c[ould] be considered that it [wa]s in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy as well as mineralogical processes’.

84 The third indent in paragraph A.10.2 of the draft minutes of 24 November 2003, relating to the Council meeting of 24 November 2003, attached as Annex A.40 to the application in Case T‑130/07, reproduces the exact wording of recital 34 of the contested decision, as set out in paragraph 83 above.

85 In the light of the foregoing, it must be found that the complaint put forward by Aughinish in paragraph 5.16 of the application in Case T‑130/07, which is based on the text of the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96, is sufficiently clear and precise, in the context of the present case, to have enabled the Commission and the General Court to understand that Aughinish criticised the Commission for failing to adopt, in the contested decision, a position consistent with its joint declaration with the Council at the time of the adoption of Directive 2003/96, according to which ‘it [wa]s in the nature and the logic of the tax system to exclude from the scope of the framework dual uses and non-fuel uses of energy as well as mineralogical processes’.

86 On those grounds, the plea of inadmissibility raised by the Commission with regard to the first plea in law must be rejected in so far as Aughinish refers to the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96.

87 As to the substance of the first plea in law, alleging the incorrect application of the criterion for classifying a measure as State aid, based on the selectivity of that measure, it clearly relates to recitals 32 to 40 of the contested decision, the content of which is set out in paragraph 57 above.

88 In the light of the legal framework set out in paragraphs 52 to 56 above, it must be stated that, like Ireland in Case T‑129/07 (see, in that regard, paragraph 68 above), Aughinish in Case T‑130/07 produced no evidence establishing that, as alleged, the exemption at issue fell within the nature and general scheme of an Irish system of taxes in the general interest excluding the taxation of dual use of energy products or of some of them, such as the energy products used in metallurgical processes.

89 In so far as Aughinish complains that the Commission, in order to establish the a priori selective nature of the exemption at issue, failed to ascertain whether other industries used heavy fuel oil in their production processes and whether or not they had benefited from a similar exemption and had thus been discriminated, suffice it to note that the dual use of energy products, within the meaning of Article 2(4)(b) of Directive 2003/96, that is to say energy products used both as heating fuel and for purposes other than as motor fuel and heating fuel or for chemical reduction and in electrolytic and metallurgical processes, are not limited to heavy fuel oil. As is apparent from Article 2(1) of Directive 2003/96, the latter applies, on the one hand, to energy products that, besides heavy fuel oil, also include gas oil, kerosene, liquefied petroleum gas (LPG), natural gas, coal and coke, and, on the other hand, to electricity. Aughinish does not pretend that no other industry uses one of those energy products — other than heavy fuel oil — or electricity in their production processes, in the same manner or in a manner comparable to its own use of heavy fuel oil for alumina production.

90 In that regard, as already noted in paragraph 69, the fact that, as is apparent from recital 22 of the contested decision, ‘Ireland refer[red] to the possibility to widen the scope of the relief to cover heavy fuel oil for dual use, or more widely to energy products generally for dual use’ shows, rather, that the dual use of energy products was not generally exempt from the excise duty under the Irish tax system, even though that possibility could be envisaged for the future.

91 Therefore, the interpretation suggested by Aughinish is not such as to invalidate the finding of the Commission in recital 32 of the contested decision that the exemption at issue favoured certain undertakings as it only applied to those, such as Aughinish in its plant in the Shannon region, that used heavy fuel oil for alumina production.

92 Moreover, in so far as Aughinish refers to recital 22 of Directive 2003/96 and to the text of the Joint Declaration of the Council and of the Commission at the time of the adoption of that directive, suffice it to note that they both merely set out that it was in the nature and the logic of the tax system to exclude from the scope of the Community framework for the taxation of energy products and electricity dual uses and non-fuel uses of energy products as well as mineralogical processes, without prejudice to the decision to be taken by each Member State whether or not to tax such uses. Indeed, an exemption of such energy uses could have constituted a general measure that did not involve State aid only if it fell within the nature and the logic of the domestic tax system at issue. However, neither Ireland in Case T‑129/07 nor Aughinish in Case T‑130/07 demonstrated that the exemption at issue fell within the nature and the logic of the Irish tax system, although they bore the burden of proof (see paragraph 55).

93 Lastly, to the extent that Aughinish relies on the text of the Joint Declaration of the Council and of the Commission at the time of the adoption of Directive 2003/96, according to which the Commission would go to the greatest possible lengths to ensure that the measures taken by Member States in accordance with the exemptions and tax reductions laid down in Directive 2003/96 might be considered to be compatible with State aid rules, its arguments can be rejected as unfounded on the same grounds as those already set out in paragraph 70.

94 Since the complaints put forward by Aughinish have all thus been rejected as unfounded, the first plea in law must be rejected.

95 By its second plea, Aughinish criticises the Commission for failing to find, in the contested decision, that the State aid granted by Ireland as from 1 January 2004, on the basis of the exemption at issue, was aid which was compatible with the common market, in accordance with point 51 of the 2001 Environmental aid guidelines. It claims that the Commission applied that paragraph too strictly and literally in the contested decision by finding that, in so far as Aughinish had not paid at least a rate of 20% of the national excise tax which would otherwise have been payable, the exemption constituted State aid which had to be repaid. According to Aughinish, the Commission should have taken an approach based on the effects of the exemption at issue and should, in that context, have taken into account that the exemption was entirely justified having regard to the onerous environmental obligations to which it was subject, such as the ongoing requirement to invest heavily in environmental protection measures at its plant as well as the strictly imposed requirement to burn low-sulphur fuel oil and its involvement in the EU emissions trading scheme. Furthermore, the Commission should have taken account of the investment of approximately EUR 100 million which it had made in constructing a combined heat and power plant which, as from 2006, had enabled it to reduce its carbon emissions and to improve the environmental performance of its plant. The strict approach adopted by the Commission in the contested decision would eventually have put it in a less favourable situation than that of its competitors who were subject to far less onerous environmental obligations in other Member States. Moreover, in the context of the review of the Guidelines on State aid for environmental protection, after 2007, the Commission noted that it was desirable to refine the economic approach of the analysis of State aid and to balance the positive impact of the aid measure in reaching an objective of common interest against its potentially negative side effects, such as the distortion of trade and competition. In response to the Commission’s arguments, Aughinish claims that the judgment of 22 April 2016, Italy and Eurallumina v Commission (T‑60/06 RENV II and T‑62/06 RENV II, EU:T:2016:233), is not relevant in the present case in so far as it relates to the specific factual situation in Italy.

96 The Commission disputes the arguments put forward by Aughinish and claims that the second plea should be rejected as unfounded.

97 The second plea put forward by Aughinish concerns the application point 51 of the 2001 Environmental aid guidelines in the case of the exemption at issue.

98 The arguments put forward by Aughinish clearly refer to recitals 45 to 50 of the contested decision, in which the Commission states the following:

‘(45) The Commission has examined whether the aid granted by [the French Republic], Ireland and [the Italian Republic] as from 1 January 2004 qualifies for an exemption from the prohibition of State aid contained in Article 87(1) of the [EC] Treaty. The aid consists in an exemption from energy tax, and such taxes are not only meant to raise financing for the authorities, but also to reduce the consumption of energy and thereby protect the environment. The 2001 Environmental aid guidelines contain rules for exemptions from environmental taxes. For reasons of equal treatment, transparency and legal certainty, these rules are binding upon the Commission.

(46) As regards the period from 1 January 2004, section E.3.2, recitals (47)-(52), of the 2001 Environmental aid guidelines lay down rules applicable to all operating aid in the form of tax reductions or exemptions. As explained in recitals (73) and (74) of [the Alumina I decision], the excise duties on mineral oils can be considered as environmental taxes, they must be considered as existing taxes within the meaning of point 51.2 of the guidelines, they have an appreciable positive impact in terms of environmental protection within the meaning of point 51.2(a) and they may be considered as if they had been decided at the time the excise tax was adopted. Consequently, in accordance with point 51.2 of the guidelines, the provisions in point 51.1 can be applied.

(49) As explained in recital (75) of [the Alumina I decision], the conditions for applying point 51.1(a) of the [2001] Environmental aid guidelines are not fulfilled and therefore only the provisions of point 51.1(b) can be applied in this case.

(50) As from 1 January 2004, taxation of mineral oils intended for dual uses, non-fuel uses and mineralogical processes falls outside the scope of harmonised Community measures and therefore, since that date, the exemptions concern domestic taxes imposed in the absence of a Community tax within the meaning of point 51.1(b), second indent, of the [2001] Environmental aid guidelines. That provision requires companies benefiting from the exemptions to pay a “significant proportion” of the national tax. The reason for that is to leave them with an incentive to improve their environmental performance. This follows from the wording of point 51.1(b), first indent, of the guidelines, which allows for tax reductions from a harmonised tax if the beneficiaries pay more than the Community minimum rates “in order to provide firms with an incentive to improve environmental protection”. This also applies where the national tax is significantly higher than comparable taxes in (some) other Member States, as was the case in Italy. In the practice of the Commission …, it has become clear that in general 20% of the domestic tax or the Community minimum that applies to other energy uses … (EUR 15 per tonne) can be regarded as a significant proportion, even though the Community minimum does not apply to the energy use at hand. Therefore, the Commission considers that only the exemption above 20% of the domestic tax or above EUR 15 per tonne, whichever is the lowest of the two, can be considered [to be] compatible with the common market; the exemption up to the level of 20%, or up to EUR 15 per tonne, constitutes incompatible aid.’

99 In the present case, as is apparent from paragraph 5.66 of the application, Aughinish does not dispute that, in accordance with point 51.2 of the 2001 Environmental aid guidelines, the provisions in point 51.1 thereof could be applied in the case of the exemption at issue, as noted by the Commission in recital 46 of the contested decision.

100 With regard to the application of point 51.1(a) and (b) of the 2001 Environmental aid guidelines, Aughinish itself stated, in paragraph 5.67 of the application ‘that it [wa]s true that following the Commission’s literal approach [concerning the application of point 51 of the 2001 Environmental aid guidelines] … mean[t] that the concerns [set out in that paragraph] [had to] be addressed in a way that would have to be recognised by the Commission’. Therefore, the second plea put forward by Aughinish, in essence, alleges that the Commission failed to examine whether the objective referred to in point 51 of the 2001 Environmental aid guidelines could not be achieved by other methods than those envisaged in that point, namely by way of the obligations incumbent upon Aughinish.

101 In that respect, it is important to recall that the compatibility with the common market of planned aid aimed at environmental protection is assessed in accordance with Article 6 EC in conjunction with Article 87 EC and by reference to the Community guidelines which the Commission has previously adopted for the purposes of such an examination. The Commission is indeed bound by the guidelines and notices that it issues in the area of supervision of State aid where they do not depart from the rules in the Treaty and are accepted by the Member States. The parties concerned are therefore entitled to rely on those guidelines and the Court will ascertain whether the Commission complied with the rules it has itself laid down when it adopted the contested decision (see judgment of 18 November 2004, Ferriere Nord v Commission, T‑176/01, EU:T:2004:336, paragraph 134 and the case-law cited).

102 Moreover, the Commission cannot be accused of incorrectly applying point 51.1(a) and (b) of the 2001 Environmental aid guidelines.

‘[The] exemptions [to tax measures that make a significant contribution to protecting the environment] can constitute operating aid which may be authorised on the following conditions:

1. When, for environmental reasons, a Member State introduces a new tax in a sector of activity or on products in respect of which no Community tax harmonisation has been carried out or when the tax envisaged by the Member State exceeds that laid down by Community legislation, the Commission takes the view that exemption decisions covering a 10-year period with no degressivity may be justified in two cases:

(a) these exemptions are conditional on the conclusion of agreements between the Member State concerned and the recipient firms whereby the firms or associations of firms undertake to achieve environmental protection objectives during the period for which the exemptions apply or when firms conclude voluntary agreements which have the same effect. Such agreements or undertakings may relate, among other things, to a reduction in energy consumption, a reduction in emissions or any other environmental measure. The substance of the agreements must be negotiated by each Member State and will be assessed by the Commission when the aid projects are notified to it. Member States must ensure strict monitoring of the commitments entered into by the firms or associations of firms. The agreements concluded between a Member State and the firms concerned must stipulate the penalty arrangements applicable if the commitments are not met.

These provisions also apply where a Member State makes a tax reduction subject to conditions that have the same effect as the agreements or commitments referred to above;

(b) these exemptions need not be conditional on the conclusion of agreements between the Member State concerned and the recipient firms if the following alternative conditions are satisfied:

– where the reduction concerns a domestic tax imposed in the absence of a Community tax, the firms eligible for the reduction must nevertheless pay a significant proportion of the national tax.’

104 First, with regard to the application of point 51.1(a) of the 2001 Environmental aid guidelines in the contested decision, the Commission referred, in recital 49 thereof, to recital 75 of the Alumina I decision, in which it had stated the following:

‘In their comments, the beneficiaries submitted that they had undertaken significant environmental investments in return for the exemptions. However, there is no evidence that the beneficiaries concluded any agreements with the Member States concerned whereby they committed to achieve environmental protection objectives during the period for which the exemptions applied. Nor were the tax exemptions subject to conditions that would ensure the same effect as such agreements and commitments. Furthermore it appears that the environmental investments did not go beyond what was necessary to comply with relevant legislation or beyond what was feasible and economical from a commercial point of view. As a consequence, the conditions for applying point 51.1(a) of the 2001 [Environmental aid guidelines] are not fulfilled and only the provisions of point 51.1(b) are applicable in this case.’

105 It is common ground that, in the procedure in Case T‑130/07, although it claims that it had ‘accepted’ environmental obligations, Aughinish neither alleged nor, a fortiori, demonstrated that it had provided the Commission with evidence of agreements concluded with the Irish authorities whereby it undertook to achieve environmental protection objectives during the period for which the exemption at issue applied, or evidence that the latter was subject to conditions that would ensure the same effect as such agreements and undertakings, or even evidence that the environmental investments made by its plant in the Shannon region went beyond what was necessary to comply with Irish legislation or beyond what was feasible and economical from a commercial point of view.

106 Therefore, the Commission was right to conclude, in recital 49 of the contested decision, that the conditions for applying point 51.1(a) of the 2001 Environmental aid guidelines were not fulfilled.

107 Secondly, with regard to the application of point 51.1(b) of the 2001 Environmental aid guidelines in the contested decision, Aughinish simply criticises the Commission for putting it in a less favourable situation than that of its competitors who were subject to far less onerous environmental obligations in other Member States, by requiring it to repay at least a rate of 20% of the national excise tax.

108 In that respect, it is important to recall that point 51 of the 2001 Environmental aid guidelines forms part of the objective set out in point 50 of those guidelines that ‘in general, the tax measures [for environmental protection] should make a significant contribution to protecting the environment’, specifying that the exemptions do not, by their very nature, undermine the general objectives pursued. It is in that context that under the second indent of point 51.1(b) of the 2001 Environmental aid guidelines the Commission must ensure that the undertakings eligible for exemption pay a ‘significant proportion’ of the national tax, without ruling out that that ‘significant proportion’ may be expressed, as in the contested decision, as a percentage of the applicable national tax. Moreover, that same point of the 2001 Environmental aid guidelines does not imply that the Commission must, in the context of the review that it is required to carry out, also seek to rectify all the discriminatory effects resulting from the differences between the various national taxes applicable.

109 Lastly, in so far as Aughinish refers to the Guidelines on State aid for environmental protection (OJ 2008 C 82, p. 1), suffice it to note that, in accordance with paragraph 202 thereof, the 2001 Environmental aid guidelines remained in force until 1 April 2008, with the result that the exemption at issue could not be examined, as suggested by Aughinish, in the light of principles and rules introduced in the latter guidelines.

110 Consequently, the Commission was right to find in recital 50 of the contested decision that, in accordance with the second indent of point 51.1(b) of the 2001 Environmental aid guidelines, the requirement to pay a ‘significant proportion’ of the national tax meant that Aughinish must pay at least 20% of the normal Irish rate of excise tax, without taking account of the alleged anticompetitive effect that application would have had in practice, given the differences between the various national taxes applicable.

111 Since the complaints put forward by Aughinish have all thus been rejected as unfounded, the second plea in law must be rejected and, therefore, the action in Case T‑130/07 must be dismissed.

112 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.

113 Since Ireland has been unsuccessful in Case T‑129/07, it must be ordered to pay the costs in that case, in accordance with the form of order sought by the Commission.

114 Since Aughinish has been unsuccessful in Case T‑130/07, it must be ordered to pay the costs in that case, in accordance with the form of order sought by the Commission.

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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) >> Ireland v Commission (State aid - Excise duties on mineral oils for alumina production - Judgment) [2019] EUECJ T-129/07 (17 September 2019) URL: http://www.bailii.org/eu/cases/EUECJ/2019/T12907.html Cite as: EU:T:2019:610, ECLI:EU:T:2019:610, [2019] EUECJ T-129/07, [2019] EUECJ T-129/7

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