Case C‑445/19

Viasat Broadcasting UK Ltd

v

TV2/Danmark A/S
and
Kingdom of Denmark

(Request for a preliminary ruling, made by the Østre Landsret (High Court of Eastern Denmark, Denmark))

Judgment of the Court (Grand Chamber), 24 November 2020

(Reference for a preliminary ruling – State aid – Public-service broadcaster – Article 106(2) TFEU – Services of general economic interest – Aid compatible with the internal market – Article 108(3) TFEU – Notification – Failure to notify – Recipient’s obligation to pay interest in respect of the period during which that aid was unlawful – Calculation of interest – Amounts to be included)

1. State aid – Respective powers of the Commission and the national courts – Role of the national courts – Safeguarding of the rights of individuals in the event of a breach of the prior notification requirement – Obligation of the national courts to ensure that appropriate action is taken to address the consequences of that breach

   (Art. 108(3) TFEU)

   (see paragraphs 16, 17)

2. State aid – Planned aid – Grant of aid in breach of the prohibition laid down by Article 108(3) TFEU – Subsequent Commission decision declaring the aid compatible with the internal market – Effect – No ex post facto regularisation of measures of national law concerning the grant of the aid

   (Art. 108(3) TFEU)

   (see paragraphs 19-21)

3. State aid – Planned aid – Grant of aid in breach of the prohibition laid down by Article 108(3) TFEU – Subsequent Commission decision declaring the aid compatible with the internal market – Duties of national courts adjudicating on a claim for repayment – Payment of illegality interest – Scope – Aid declared compatible with the internal market on the basis of Article 106(2) TFEU – Whether included

   (Art. 106(2) and 108(3) TFEU)

   (see paragraphs 24-28, 35, 36, 40-44, operative part 1)

4. State aid – Planned aid – Grant of aid in breach of the prohibition laid down by Article 108(3) TFEU – Subsequent Commission decision declaring the aid compatible with the internal market – Duties of national courts adjudicating on a claim for repayment – Payment of illegality interest – Scope – Aid granted to the recipient transferred to affiliated undertakings – Whether included – Aid granted to the recipient by a publicly controlled undertaking – Whether included

   (Art. 108(3) TFEU)

   (see paragraphs 49-51, operative part 2)

Résumé

TV2/Danmark A/S (‘TV2’) is a Danish broadcasting company with a public-service mission of producing and broadcasting national and regional television programmes. To accomplish that task, it received financing from licence fee resources as well as advertising revenue paid via the TV2 fund, controlled by the State. That aid was not notified to the European Commission by the Kingdom of Denmark and was implemented before the definitive decision had been made that the aid was compatible with the internal market on the basis of Article 106(2) TFEU, since it was necessary to the performance of the public-service task assigned to TV2.

Relying on the failure to notify that aid and its premature implementation in breach of Article 108(3) TFEU, Viasat Broadcasting UK Ltd (‘Viasat’), a competitor of TV2, brought an action before the referring court, the Østre Landsret (High Court of Eastern Denmark, Denmark), seeking to have TV2 pay illegality interest in respect of the period during which the aid concerned was unlawful, namely the period from its implementation in 1995 until 20 April 2011, the date on which the Commission adopted its final decision finding the grant of unlawful but compatible aid. ( 1 ) According to Viasat, in the absence of the unlawful aid, TV2 would have had to pay that interest if it had borrowed the amount of that aid on the market pending the adoption of the Commission’s final decision.

It was in those circumstances that the referring court decided to ask the Court of Justice whether the obligation for national courts to order a recipient of aid implemented in breach of Article 108(3) TFEU to pay illegality interest applies also where the Commission had found that the unlawful aid is compatible on the basis of Article 106(2) TFEU. The referring court also asked whether that obligation applies to aid that TV2 has transferred to affiliated undertakings and to aid received by it from a publicly controlled undertaking.

The assessment by the Court of Justice

In the first place, as regards the relationship between Article 108(3) TFEU and Article 106(2) TFEU, the Court recalls first of all that where the Commission adopts a final decision finding unlawful aid to be compatible, while the national courts are not bound to order its recovery, they are however, under EU law, bound to order its recipient to pay interest in respect of the period of unlawfulness of that aid. Indeed, implementation of aid in breach of Article 108(3) TFEU gives the aid recipient an undue advantage consisting, first, in the non-payment of the interest which it would have paid on the amount in question of the compatible aid, had it had to borrow that amount on the market pending the Commission’s final decision, and, second, in the improvement of its competitive position as against the other operators in the market while the aid concerned is unlawful.

Next the Court points out that the question whether a measure must be categorised as State aid occurs upstream of the question which consists in examining, where necessary, if incompatible aid as provided for in Article 107 TFEU is nevertheless necessary to the performance of the tasks assigned to the recipient of the measure at issue, under Article 106(2) TFEU. Therefore, the Commission must, before any consideration of a measure under that provision, be in a position to review whether that measure constitutes State aid, which requires prior notification of the intended measure to that EU institution, in accordance with the first sentence of Article 108(3) TFEU.

Furthermore, the Court clarifies that any exception to the general rule that notification is required must be explicitly provided for and that the performance of the tasks of an undertaking entrusted with the operation of a service of general economic interest cannot, in itself, justify an exemption from that requirement.

Therefore, aid for such an undertaking remains, in the absence of an express exemption from that general rule, subject to the prior notification requirement laid down in the first sentence of Article 108(3) TFEU such that Member States are obliged not to implement them until the Commission has taken a final decision in relation to them. Failure to comply with those requirements means the aid concerned is unlawful, so that the recipient of that aid cannot have either a legitimate expectation that the grant of that aid is lawful or a legitimate expectation that the advantage it derives from the non-payment of interest, due in respect of the period during which the aid is unlawful, is itself lawful.

Thus, the Court holds that, in order to ensure the effectiveness of that notification obligation as well as proper and full consideration of State aid by the Commission, national courts are bound to draw all the consequences from a breach of that obligation and to adopt measures to remedy them, which includes the obligation, for the recipient of unlawful aid, to pay illegality interest in respect of that aid, even if the recipient is an undertaking entrusted with the operation of a service of general economic interest in accordance with Article 106(2) TFEU.

In the second place, as regards the amount to take into account for the interest calculation, the Court states that the EU Courts have confirmed that the Commission decision is valid and have made a definitive ruling that the resources obtained from the licence fees paid to TV2, and subsequently transferred to its regional stations, ( 2 ) as well as the advertising revenue transferred to TV2 via the TV2 fund, ( 3 ) constituted State aid in accordance with Article 107(1) TFEU. Therefore, the amounts of those resources and that revenue received by TV2 and which form part of the aid implemented in breach of Article 108(3) TFEU must also give rise to the payment of illegality interest in respect of that aid.

( 1 ) Commission Decision 2011/839/EU on the measures implemented by Denmark (C 2/03) for TV2/Danmark (OJ 2011 L 340, p. 1). The Court dismissed the action seeking annulment of that decision by its judgment of 9 November 2017, Viasat Broadcasting UK v TV2/Danmark (C‑657/15 P, EU:C:2017:837).

( 2 ) By its judgment of 9 November 2017, TV2/Danmark v Commission (C‑649/15 P, EU:C:2017:835), the Court of Justice dismissed TV2’s appeal against the General Court’s judgment of 24 September 2015, TV2/Danmark v Commission (T‑674/11, EU:T:2015:684), and thereby confirmed that the General Court’s review was correct in so far as it held that those resources constituted State aid granted to TV2.

( 3 ) By its judgments of 9 November 2017, Commission v TV2/Danmark (C‑656/15 P, EU:C:2017:836), and of 9 November 2017, Viasat Broadcasting UK v TV2/Danmark (C‑657/15 P, EU:C:2017:837), the Court of Justice annulled the General Court’s judgment of 24 September 2015, TV2/Danmark v Commission (T‑674/11, EU:T:2015:684), in so far as it had annulled Decision 2011/839 to the extent that the Commission had concluded in that decision that the advertising revenues for 1995 and 1996 which were paid to TV2 via the TV2 fund constituted State aid.