Case C‑558/07, S.P.C.M. and others

Court upholds validity of Article 6(3) of REACH Directive

This reference for a preliminary ruling concerned the interpretation and validity of Art. 6(3) of Regulation 1907/2006 of the European Parliament and of the Council of December 18, 2006 concerning the Registration, Evaluation, Authorization and restriction of Chemicals (‘the REACH Regulation").

The applicant companies in the main proceedings were an undertaking established in France which manufactures water-soluble polymers used in the wastewater treatment industries, an undertaking established in Germany which was a distributor and wholesaler of specialty and industrial chemicals, including preparations and polymers, a company incorporated under English law which imported chemicals, including polymers and preparations, and a holding corporation established in the United States which supplied water- and organo-soluble polymer-based products.

These companies challenged the interpretation and also the validity of Art. 6(3) of the REACH Regulation. Relying on two expert opinions compiled by the Netherlands Organisation for Applied Scientific Research, they submitted that reacted monomers ceased to exhibite their own individual chemical characteristics and that polymers were generally stable and safe. In their view, it followed that, if the words “monomer substances” in Art. 6(3) of the REACH Regulation were to mean or include reacted monomers, it would make no sense to exempt polymers from registration while requiring the registration of monomer substances. Moreover, such an interpretation would, they argued, be inconsistent with the objectives of that regulation and would be discriminatory and disproportionate.

REACH Regulation not applying to monomers
The Court of Justice held that it was clear from the wording of Art. 3(5) of the REACH Regulation that polymers were composed of monomer units, which were defined as monomer substances in a reacted form. Second, under Art. 3(6) of the regulation, a monomer, by contrast, was a “substance” within the meaning of Art. 3(1) when it was in an unreacted form. Third, it followed from Art. 6(3) of the REACH Regulation that registration concerned monomer substances or any other substances which were constituents of polymers.

The fact that the words “monomeric units” were used in Art. 6(3) of the REACH Regulation rather than the words “monomer units’, which appeared in Art. 3(5) of the English and French versions of the REACH Regulation, could not affect that founding. The Court argued that it followed from the preparatory works that those words were added at the request of the Sweden. The Swedish-language version of the REACH Regulation used the same words “monomer units” in Arts 3(5) and 6(3) of the regulation. It followed that the concept of “monomer substances” in Art. 6(3) of the REACH Regulation related only to reacted monomers which were incorporated in polymers.

The principle of proportionality
The Court reiterated that the principle of proportionality, which was one of the general principles of Community law, required that measures implemented through Community provisions should be appropriate for attaining the objective pursued and must not go beyond what was necessary to achieve it. According to the Court, the Community legislature must be allowed a broad discretion in an area such as that involved in the present case, which entailed political, economic and social choices on its part, and in which it was called upon to undertake complex assessments. The legality of a measure adopted in that sphere could be affected only if the measure was manifestly inappropriate having regard to the objective which the competent institution was seeking to pursue (Case C-491/01 British American Tobacco (Investments) and Imperial Tobacco [2002]).

The Court found that the obligation to register reacted monomers in polymers was an appropriate means by which to realise the objectives of the REACH Regulation. Nor did such an obligation go beyond that which was necessary to meet the objectives of the REACH Regulation. It followed that Article 6(3) of the REACH Regulation was not invalid on the ground that it infringed the principle of proportionality.

The principle of equal treatment
The applicants in the main proceedings also claimed that, although the obligation to register monomer substances was identical, Community manufacturers of polymers were in a position to register those substances more easily than were importers inasmuch as they knew the composition of their products, whereas importers were, for their part, subject to the good would of their suppliers outside Community territory.

The Court reiterated that the principle of equal treatment or non-discrimination required that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment was objectively justified (Case C-344/04 IATA and ELFAA [2006])

The Court held that that the obligation to register was identical for Community manufacturers and for importers. Second, reacted monomer substances in polymers manufactured or imported into the Community were in a comparable situation since they were interchangeable or identical. Third, Community manufacturers and importers were in a different situation as the former had knowledge of their products, whereas the latter were dependent on the provision of information by suppliers outside Community territory.

The Court held that, nevertheless, the identical treatment required in those different situations was objectively justified by compliance with the competition rules applicable in the internal market. If importers of reacted monomer substances were to be treated differently to manufacturers of those same substances within the Community, the former would be treated more favourably than the latter.

It followed Article 6(3) of the REACH Regulation was neither invalid on the ground that that principle had been infringed.

Case C‑504/07, Antrop and Others

Court further clarifies Altmark criteria

Carris was a public undertaking which, by administrative contract, obtained a public service concession for passenger transport by bus , electric vehicles and mechanical lifts within the administrative limits of the city of Lisbon.

The STCP was a public undertaking which held a public service concession for passenger transport within the administrative limits of the city of Oporto, pursuant to a law converting a municipal service into a limited company.

In accordance with its public service obligations, Carris was, inter alia, required to ensure that the conceded service operated smoothly and continuously under the price conditions specified by the awarding authority.

The STCP, for its part, was a public undertaking which held a public service concession for passenger transport within the administrative limits of the city of Oporto, pursuant to a law converting a municipal service into a limited company.

In return for the provision of the urban passenger transport services, Carris and the STCP had, for many years, enjoyed various advantages awarded by the State. These consisted of, inter alia, compensation payments, capital injections and State credit guarantees.

Outside the geographical limits of the areas covered by their respective concessions, Carris and the STCP, without being subject to a public service obligation, also operated bus routes on which other undertakings were active, inter alia Antrop and Others.

Those latter undertakings provided transport services under the public service delegation regime and were subject to rules concerning routes, times and fares. The activity of Carris and SCTP on those routes led Antrop and Others to claim a distortion of competition and challenge Resolution 52/2003.

Antrop and Others submitted that their only resource was operating revenue from the fares charged, so that operating losses from their activity were covered exclusively by their own capital, whereas any losses, the investment costs and the capital costs of Carris and the STCP were covered by public subsidy. The award of that subsidy was consequently a factor distorting competition.

Therefore, the appellants in the main proceedings claimed that the part of Resolution 52/2003 under challenge infringed the national legislation relating to competition and the provisions of Community law on State aid, in particular Arts 86 EC, 87(1) EC, 88 EC and 89 EC, Regulations 1191/69 and Regulation 1107/70.

In those circumstances, the issue was raised before the national court of the need for an order for reference to the Court of Justice. The referring Court inter alia asked whether the grant by a Member State of compensation payments, such as those at issue in the main proceedings, to transport undertakings holding a public service concession and which were entitled, within specific urban districts, to carry on their activity on an exclusive basis because of the public service obligations to which they were subject, constituted State aid prohibited by Art. 87(1) EC where, in addition, those undertakings also carried on their activity in competition with private operators outside those specified districts and where it was not possible to calculate the additional cost deriving from the performance of the public service obligations.

The Court reiterated that Article 87 EC was one of the general provisions of the Treaty on State aid, whereas Art. 73 EC created an exception in the field of transport to the general rules applicable to State aid, by providing that aids which met the needs of coordination of transport or represented reimbursement for the discharge of certain obligations inherent in the concept of a public service were compatible with the Treaty. The Court also reiterated that Regulation 1191/69 established a system which the Member States must comply with when they consider imposing public service obligations on undertakings in the land transport sector (see Case C-280/00, Altmark Trans and Regierungspräsidium Magdeburg (2003)).

Art. 10 of Regulation 1191/69 provided, inter alia, that the amount of the compensation must, in the case of an obligation to operate or to carry, be equal to the difference between the reduction in financial burden and the reduction in revenue of the undertaking if the whole or the relevant part of the obligation in question were terminated for the period of time under consideration. However, where the calculation of economic disadvantage was made by allocating among the various parts of its transport activities the total costs borne by the undertaking in respect of those transport activities, the amount of the compensation was to be equal to the difference between the costs allotable to that part of the undertaking’s activities affected by the public service obligation and the corresponding revenue.

Since the activities of Carris and the STPC outside their respective areas of exclusivity were not subject to a public service obligation, it was not possible to ascertain on the basis of reliable data from the accounts of those two undertakings the difference between the costs imputable to the parts of their activities in the areas covered by the respective concessions and the corresponding income. Consequently, it was not possible to calculate the additional cost deriving from the performance of public service obligations by those undertakings.

The Court held that, accordingly, the requirement set out in Art. 10 of Regulation 1191/69 was not fulfilled, since the costs imputable to the part of the activity of Carris and the STPC carried out in the areas in which each was granted an exclusive concession could not be clearly established.

The Court reiterated that in such a case, since the compensation payments paid to those undertakings were not granted in accordance with Regulation 1191/69, they were consequently not compatible with Community law and it was therefore unnecessary to examine them in the light of the Treaty provisions relating to State aid, in particular Art. 87(1) EC (see Altmark, paragraph 65).

The Court concluded that Regulation 1191/69 precluded the grant of compensation payments, such as those at issue in the main proceedings, where it was not possible to determine the amount of the costs imputable to the activity of the undertakings concerned carried out in the performance of their public service obligations. The Court held that where a national court found certain aid measures to be incompatible with Regulation 1191/69, it was a matter for that court to establish all the consequences, under national law, as regards the validity of the acts giving effect to those measures.

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Case C‑241/07, JK Otsa Talu OÜ v PRIA

Court confirms principles of equal treatment, protection of legitimate expectations, and others, applying to implementing measures

This case concerned the interpretation of Regulation 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF).

On 26 May 2005, Agrofarm submitted an application to the PRIA for area payments and support for environmentally-favourable production. Having already made the necessary preparations in 2004, Agrofarm was ready to give a commitment to implement that type of production in order to obtain rural development support. However, the application was rejected and Agrofarm appealed.

The referring court asked whether the provisions of Art. 24(1) of Regulation 1257/1999, read in conjunction with Arts 37(4) and 39 thereof, precluded a Member State from changing, on the ground of insufficient budgetary resources, the conditions for the grant of rural development support in order to restrict the class of eligible applicants to farmers already concerned by a decision to grant such support in the previous budgetary year.

The Court first of held that, in order to guarantee the transparency of the measures contemplated, the Member States were to establish, in accordance with Art. 41 of Regulation 1257/1999, rural development plans, including, inter alia, the description of the support measures for rural development such as agri-environmental measures and an indicative overall financial table summarizing the national and Community financial resources.

Those programs were to be submitted to the Commission which must appraise the plans to determine whether they were consistent with the regulation, although that approval did not confer on them the nature of an act of Community law (see, to that effect, Case C-336/00 Huber [2002]). The Member States must try to manage their financial resources adequately so as to enable each eligible applicant, within the meaning of that regulation, to benefit from rural development support.

However, the Court held that Member States might lay down further or more restrictive conditions for granting Community support for rural development provided that such conditions were consistent with the objectives and requirements laid down in the regulation and that support measures might, where necessary, be subsequently revised by the Member States in order to ensure compatibility and consistency.

The Court furthermore reiterated that, subject to the compatibility and consistency with the objectives and provisions of Regulation 1257/1999, and compliance with the general principles of Community law, with which the Member States must comply when they implement Community rules (see, to that effect, Joined Cases C-181/04 to C-183/04 Elmeka (2006)), such as the principles of equal treatment, the protection of legitimate expectations, and proportionality, the national authorities had the option of using a measure other than the one provided for in the Development Plan.

The Court reiterated that the principle of equal treatment required that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment was objectively justified (Joined Cases C-453/03, C-11/04, C-12/04 and C-194/04 ABNA and Others [2005]).

The Court held that a farmer who submitted an application for rural development support for the first time was not in the same situation as a farmer who, in accordance with a decision already made, was bound to comply with a certain number of obligations with respect to his commitment to engage in environmentally-favourable farming.

As regards the principle of the protection of legitimate expectations, the Court held that, in the field of the common agricultural policy, economic operators were not justified in having a legitimate expectation that an existing situation which was capable of being altered by the competent authorities in the exercise of their discretionary power would be maintained (see Case C-310/04 Spain v Council [2006]).

The Court concluded that Article 24(1) of Regulation 1257/1999, read in conjunction with Arts 37(4) and 39 thereof, did not preclude a Member State from restricting, on account of insufficient budgetary resources, the class of recipients of rural development support to farmers already concerned by a decision to grant such support in the previous budgetary year.

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