Opinion of Mr advocate-general Roemer

Mr President,

Members of the Court,

This case, in which the oral procedure took place on 10 March 1970, concerns the interpretation of the provisions of the EEC Treaty relating to aid. The following are the facts which gave rise to the case:

In its effort to help the textile industry established in France to overcome the difficulties which face the industry in many countries and in other Member States as well, the French Government introduced a system of aid which came into force on 1 January 1966. This system serves to promote research in the textiles sector and is supposed to facilitate the renewal of its industrial and commercial structure. The resources for this aid are supplied by a charge which is levied on the sale of certain textile products in France and which applies equally to home-produced and imported products. The resources are shared in accordance with a certain scale. The Institut Textile de France (French Textile Institute) receives some of the proceeds to help finance its research and some of the proceeds go to the budget of the trade association Union des Industries Textiles (Union of Textile Undertakings). There they are used in the programme for renewing the industrial and commercial structures of the textile undertakings or, more precisely, to refund part of their non-productive expenditure and, exceptionally, for modernization or collective trade promotion in certain sectors. This scheme was in the first place governed by the Decree of 24 December 1965 which introduced the charge referred to. At first the rate of the charge was fixed at 0.20 % by an order (arrêté) of 24 December 1965. The first detailed rules governing the use of the revenue from the charge were made by orders of 29 March and 21 April 1966. They provided in particular that 40 % should go to the Institut Textile de France and 60 % to the Union des Industries Textiles.

In reply to a request of the Commission of the European Economic Community dated 10 January 1966, the French Government informed them of the details of this scheme in a letter of 4 May 1966. The system of aid was first reviewed at a multilateral meeting of representatives of all the Member States. This prompted the Commission to initiate the investigatory procedure under Article 93 (2) of the EEC Treaty, and it notified the French Government of this in a letter of 30 May 1967. This letter pointed out that the aid was justified as regarded its aim, but that the Commission had reservations as to the method whereby it was financed, that is, to the fact that the charge was also levied on products which were imported from other Member States. In the Commission's view this is not indispensable. Therefore it said that there was a presumption of incompatibility with the Treaty and asked that the application of the scheme be suspended until it had taken a definitive decision. As further prescribed in the Commission's letter the French Government responded to the initiation of the said procedure with a note dated 12 July 1967.

It took the view that the Commission could not examine the method of financing since the aid was compatible with the Treaty as regards its aim, and that this was so chiefly because the provisions of Articles 12 and 95 of the EEC Treaty relating to taxation did not apply to it. Accordingly, the French Government upheld the system of aid which had been criticized in a Decree of 27 April 1968. The rate of tax was increased to as much as 0.35 % by an order (arrêté) of the same day and in addition the ratio of distribution of the revenue was altered so that 2/7 of the receipts went to research and 5/7 was given to the French association of textile undertakings. Finally, as the multilateral meeting held on 18 June 1969 did not lead to agreement being reached between the French Government and the Commission, the Commission took a decision on 18 July 1969 in accordance with the first paragraph of Article 93 (2) and with Article 93 (3) of the EEC Treaty, in which it repeated its view that the aid was compatible with Article 92 (3) (c) as regards its aim. However, as it had done before, it maintained that, to the extent that products imported from other Member States were caught by the charge, the method of financing was not indispensable. In the Commission's view, the result was that foreign undertakings were put at a competitive disadvantage, that is, trading conditions were adversely affected, which is prohibited by Article 92. Finally, therefore, the decision ordered that the French Republic should not give any more aid under the scheme contained in the Decrees of 24 December 1965 and 27 April 1968 unless it previously modified the system so that products imported from other Member States would no longer be caught by the charge.

The French Government was notified of this decision in a letter of the same date which it received on 22 July 1969. As the French Government was unwilling to accept its contents, it brought an action before the Court of Justice in accordance with Article 173 of the EEC Treaty and instituted these proceedings on 26 September 1969.

Thus we shall have to deal with the question whether the French Government's application for the annulment of the decision, in support of which it puts forward several arguments, is well founded or whether the application must be dismissed as unfounded, as the Commission thinks is correct.

Legal consideration

1. The manner in which the French Government contests the decision of the Commission is clearly indicated in the statement of facts. It is of the opinion that the Treaty makes a clear distinction between schemes of aid to which certain provisions (Articles 92 to 94) apply, and national taxes relating to trade which are subject to other Treaty provisions, namely Articles 12 and 95. It claims that Articles 92 and 93, the application of which is now at issue, only deal with aids, that is, with favouring specific undertakings by giving them certain advantages. Article 93 only provides that the Community has jurisdiction to abolish or alter aids. Since however no objection was made in this case to the aim of the French aids, which even the Commission admits, this logically precludes the Community from taking any action in respect of the granting of the aid. On the other hand there can be no question of the Commission's proceeding on the basis of the Treaty provisions relating to taxation because in view of the fact that home-manufactured and imported products are affected alike, it cannot be said that the requirements of these provisions are satisfied. But if that is so, if the components of the French system of aid, the grant of financial benefits on the one hand and the levying of national taxation on the other, appear to be valid as regards the Treaty provisions when they are considered separately, it is not possible to declare that one of these components is contrary to the Treaty when they are examined together and, as the Commission proposes, to demand on the basis of Article 93 that it be altered or, to be more exact, that the levying of the charge be altered.

2. In its principal submissions the French Government further objects to the form taken by the contested decision, or more exactly, to the fact that it made the modification of the system of levying taxes a condition of the continued existence of the aid which is per se compatible with the Treaty, and thus to the fact that it ordered that the aid be abolished if this condition were not satisfied. The French Government claims that the decision is thereby made ambiguous because it does not directly demand the modification of the method of financing but only tries to obtain this by an indirect method. The French Government regards this procedure as a détournement de procédure (misuse of procedure). It says that if it were carried to the limit, it could lead to the ridiculous result that the aid was abolished in spite of its being compatible with the Treaty and the common interest leaving the charge to which there can be no objection under the Treaty, that is, precisely the component which according to the Commission leads in the context of the system of aid to a change for the worse in trading conditions.

3. The French Government's alternative arguments concern the economic repercussions of the system of aid, in particular the alleged oppression of foreign producers. It attempts to show by these arguments that the method of financing which it chose does not adversely affect trading conditions to an extent contrary to the common interest, that is, that an essential requirement laid down in Article 92 (3) (c) for taking the contested decision was not fulfilled.

4. Finally, the summary of my deliberations on this situation can be quite short. My opinion is that although the application which has been lodged is admissible, all the arguments which have been put forward in its favour fail. Therefore is must be dismissed, with the further consequence that the applicant must further be ordered to bear the costs of the action.

1 Translated from the German.

2 Cf. for instance Case 24/68 [1969] ECR 200 and Joined Cases 2 and 3/69 [1969] ECR 221.