Appeal brought on 22 December 2009 by the Federal Republic of Germany against the judgment of the Court of First Instance (Seventh Chamber) delivered on 6 October 2009 in Case T-21/06 Germany v Commission

(Case C-544/09 P)

2010/C 51/41

Language of the case: German

Parties

Appellant: Federal Republic of Germany (represented by: M. Lumma, J. Möller and B. Klein, acting as Agents)

Other party to the proceedings: European Commission

Form of order sought

Pleas in law and main arguments

This appeal relates to the judgment of the Court of First Instance of the European Communities by which the action brought by the Federal Republic of Germany against the Commission’s decision of 9 November 2005 in State aid case C-25/2004 on the introduction of digital terrestrial television (DVB-T) in Berlin-Brandenburg was dismissed as unfounded. The Commission had, in that decision, found the aid to be incompatible with the common market (Article 107(3)(c) TFEU).

The Federal Republic of Germany puts forward five grounds of appeal by which it alleges that the Court failed to recognise a misuse of powers on the part of the Commission and, accordingly, that it erred in dismissing the action.

First, the Court erred in denying the incentive effect of the measure by focusing only on the very limited period of the switch-over from analogue terrestrial transmission to DVB-T, instead of considering the cost of the measure as a whole to those broadcasters in receipt of aid. In addition to the switch-over itself, the measure as a whole includes an obligation to maintain broadcasting output via DVB-T for a period of five years, irrespective of the degree of market acceptance which is difficult to forecast. Accordingly, the ancillary costs in respect of this mandatory transmission period should also be taken into account.

Second, the Court erred in overextending the Commission’s assessment criteria under Article 107(3)(c) TFEU by accepting that the Commission could dismiss the suitability of the aid measure solely on the ground that the same objective would be attained by means of alternative regulatory measures. The comparison with alternative measures is not, according to the purpose of the TFEU’s State aid control provisions, within the parameters of what the Commission may review. In that context, the Federal Government also complains that the Court is passing on to the Member State the burden of proving that the alternative measures suggested by the Commission would have been ineffective from the outset. This is contrary to the principle of legal certainty, the general principles of the allocation of the burden of proof and the purpose of the control of State aid.

Third, the Court misjudged the relevance of the fundamental rights of the European Union when considering Article 107(3)(c) TFEU, rights which, as part of primary law, are binding on all institutions of the European Union in respect of all acts. To accept that the mere reference to alternative regulatory measures allegedly available is sufficient for approval of an aid measure to be refused is to overlook the fact that regulatory measures interfere with the fundamental right of the freedom of undertakings to pursue an economic activity. This, at the very least, should be taken into consideration, but that did not happen in this case.

Fourth, by its reference to alternative regulatory measures, the Court erred in its interpretation of the concepts of the internal market and the effect on trading conditions in Article 107(3) TFEU, in that it failed to recognise that regulatory measures also affect competition. The broad assumption that any regulatory measure would have a lesser effect on such legal interests than aid means that an unlawfully stringent standard is imposed.

Fifth, the Federal Republic of Germany objects to the fact that the Court adopted the principle of technological neutrality developed by the Commission without recognising that its effect is to dismiss the purpose of the measure pursued by the German authorities in this case. Technological neutrality is an appropriate criterion against which to review compatibility only if the switch-over to digital broadcasting is, by itself, the purpose of the support. In the case of support for the switch-over to DVB-T in Berlin-Brandenburg, however, it was that platform specifically which, for various reasons, was intended to be supported, no support being required for cable or satellite. Member States have a degree of discretion in setting the legitimate objective of aid measures.