Case C‑572/19P
European Road Transport Telematics Implementation Coordination Organisation– Intelligent Transport Systems & Services Europe (Ertico– ITS Europe)
v
European Commission
Judgment of the Court (Fifth Chamber), 10March 2021
(Appeal– State aid– Seventh Framework Programme for research, technological development and demonstration activities– Recommendation 2003/361/EC– Decision of the Validation Panel of the European Commission on classification as a micro, small or medium-sized enterprise (SME)– Decision 2012/838/EU, Euratom– Annex– Sections 1.2.6 and 1.2.7– Request for review– Regulation (EC) No58/2003– Article22– No administrative proceedings– Link between request for review and administrative proceedings– Refusal of SME status despite formal observance of the Recommendation 2003/361 criteria– Legal certainty– Legitimate expectations– Handicaps usually faced by SMEs– None)
1.EU agencies– Research Executive Agency (REA)– Validation of the micro, small or medium-sized enterprise status of participants in existing research programmes– Request for review of the decision of the REA before the Validation Panel of the Commission– Withdrawal of the decision of the Validation Panel– Adoption of a new decision after expiry of the prescribed period– Consequences– Failure by the Commission to reply within that deadline– Implicit rejection decision
(Council Regulation No58/2003, Art. 22; Commission Decision 2012/838, Annex, sections1.2.6 and 1.2.7)
(see paragraphs49, 50, 52, 54, 55)
2.State aid– Prohibition– Exceptions– Commission Recommendation concerning the definition of micro, small and medium-sized enterprises– Definition of the concept of ‘micro, small and medium-sized enterprises’
(Commission Recommendation 2003/361, recitals9 and 12, Art. 1(1), and Annex, Art. 3(3))
(see paragraphs85-89)
3.EU agencies– Research Executive Agency (REA)– Validation of the micro, small or medium-sized enterprise status of participants in existing research programmes– Determination of the size of an enterprise on the basis of the Recommendation 2003/361 criteria– Application of the independence criterion– Refusal to grant micro, small or medium-sized enterprise status to an entity belonging de facto to a large economic group– Whether permissible– Condition– Enterprise not having to contend with the handicaps usually faced by micro, small, or medium-sized enterprises
(Commission Decision 2012/838, Annex, sections1.1.3.1, 1.2.6 and 1.2.7; Commission Recommendation 2003/361, recitals9 and 12, Art. 1(1), and Annex, Art. 3)
(see paragraphs90-94, 98, 100, 102)
4.EU agencies– Research Executive Agency (REA)– Validation of the micro, small or medium-sized enterprise status of participants in existing research programmes– Determination of the size of an enterprise on the basis of the Recommendation 2003/361 criteria– Application of the independence criterion– Refusal to grant micro, small or medium-sized enterprise status to an entity collecting contributions from its members and having resources broadly sufficient to meet its needs– Whether permissible– Fulfilment by the entity, taken in isolation, of the staff headcount and financial ceilings criteria laid down in the recommendation– Irrelevant
(Commission Recommendation 2003/361, Annex, Arts 1 and 2)
(see paragraph96)
Résumé
European Road Transport Telematics Implementation Coordination Organisation– Intelligent Transport Systems & Services Europe (Ertico– ITS Europe) is a cooperative company providing a multisectoral platform to both private and public stakeholders in the intelligent transport systems and services sector.
Since 31December 2006, Ertico– ITS Europe had been regarded as being a micro, small or medium-sized enterprise (SME) within the meaning of the SME Recommendation.(1) That status enabled it to receive, for several years, additional grants from the European Union, in particular within the context of the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013).
In December 2013, during a review of the SME status of participants in existing research programmes, the Research Executive Agency (‘the REA’), in its capacity as the validation service regarding the SME status of participants, requested that Ertico– ITS Europe provide information proving that it should still be entitled to that status. Following a series of emails, the REA decided, on 27January 2014, that that company could no longer be regarded as an SME.
On 25February 2014, Ertico– ITS Europe requested review of that decision before the Commission’s Validation Panel.(2) Those review proceedings were rejected by decision of 15April 2014 (‘the first negative decision’). That decision was then withdrawn and the Validation Panel adopted, on 18August 2015, a new decision in which it concluded that that enterprise was no longer entitled to SME status (‘the decision at issue’). By its judgment in Ertico– ITS Europe v Commission (T‑604/15),(3) the General Court dismissed Ertico– ITS Europe’s action.
The Court of Justice dismisses the appeal brought against the judgment of the General Court and rules that Ertico– ITS Europe, which belongs de facto to a large economic group and does not have to contend with the handicaps usually faced by SMEs, is not entitled to SME status.
Findings of the Court
In the first place, the Court rejects as ineffective Ertico– ITS Europe’s line of argument seeking to demonstrate that Article22(1) of Regulation No58/2003(4) is applicable to the review proceedings before the Validation Panel. In that regard, the Court notes that the mere fact that the decision at issue was adopted after the expiry of the two-month period for the Commission to reply to proceedings instituted on the basis of that article cannot entail annulment of that decision. Indeed, it follows from that very article that the Commission may, upon expiry of the two-month period, confine itself to an implicit rejection of the administrative proceedings. The Court then considers that, even assuming that that article was applicable to the review proceedings, the result of the withdrawal of the first negative decision was a ‘failure by the Commission to reply’ within the prescribed period. That failure to reply is equivalent to an implicit rejection of the proceedings.
In the second place, the Court finds, first of all, that Ertico– ITS Europe is not an independent enterprise and that its members are enterprises that are not SMEs. The Court then emphasises that Ertico– ITS Europe cannot derive its SME status from the fact that it formally meets the staff headcount and financial ceilings criteria laid down by the SME Recommendation if, in fact, it does not have to contend with the handicaps usually faced by SMEs. In addition, those staff headcount and financial ceilings criteria cannot be determined on the basis of data relating solely to Ertico– ITS Europe. Next, the Court notes that whether the condition that an enterprise has access to funds and assistance not available to competitors of equal size is satisfied is not conditional on a finding that that enterprise intended to circumvent the SME definition. Lastly, the Court recalls that the independence criterion, as defined in the SME Recommendation, cannot be regarded as having been met if the economic reality tends to support the exclusion of the entity concerned from the advantages reserved for SMEs alone.
Consequently, the Court concludes that the Validation Panel did not infringe the SME Recommendation by noting that Ertico– ITS Europe belonged de facto to a large economic group and that, because of the organisational links between Ertico– ITS Europe and its partners or members, it could not be regarded as having to contend with the handicaps usually faced by SMEs.
Regarding the costs, although the General Court had ordered the Commission to pay half the costs incurred by Ertico– ITS Europe, the Court of Justice orders that enterprise to bear its own costs and to pay the costs incurred by the Commission.
1Commission Recommendation 2003/361/EC of 6May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ 2003 L124, p.36) (‘the SME Recommendation’).
2Under sections1.2.6 and 1.2.7 of the Annex to Commission Decision 2012/838/EU, Euratom of 18December 2012 on the adoption of the Rules to ensure consistent verification of the existence and legal status of participants, as well as their operational and financial capacities, in indirect actions supported through the form of a grant under the Seventh Framework Programme of the European Community for research, technological development and demonstration activities and under the Seventh Framework Programme of the European Atomic Energy Community for nuclear research and training activities (OJ 2012 L359, p.45).
3Judgment of 22May 2019, Ertico– ITS Europe v Commission (T‑604/15, EU:T:2019:348).
4Article22(1) of Council Regulation (EC) No58/2003 of 19December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes (OJ 2003 L11, p.1) specifies the procedure applicable to review of the legality of acts of the REA.