Case C-127/16 P, European Commission v French Republic, ECJ Judgment on 7 March 2018, has concerned unlawful State Aid by SNCF in the context of restructuring and recapitalisation and the application of the private investor test to an assignment of debts en bloc. The Court stated as follows:-
(1) In interpreting a provision of EU law it is necessary to consider not only its wording but also the context in which it occurs and the objects of the rules of which it is part;
(2) The operative part of a Union act is indissociably linked to the statement of reasons for it, so that, when it has to be interpreted, account must be taken of the reasons which led to its adoption;
(3) State aid law is not concerned with the legal forms that transactions may take, but rather focuses on their economic reality;
(4) The main purpose of the repayment of unlawfully paid State aid is to eliminate the distortion of competition caused by the competitive advantage afforded;
(5) Restoring the situation prior to the payment of aid which was unlawful or incompatible with the internal market is a necessary requirement for preserving the effectiveness of the provisions of the Treaties concerning State aid;
(6) According to Article 107(1) TFEU, save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the internal market;
(7) The illegal aid must be recovered from the company which carries on the economic activity of the undertaking which initially benefited from the advantage associated with the grant of State aid and which, therefore, retains the actual benefit thereof;
(8) It is incorrect to maintain that the obligation to sell at market price following an open and transparent tendering procedure corresponds to the application of the informed private investor test;
(9) The question of the applicability of that test must be distinguished from the question of its application;
(10) The applicability of the private investor test ultimately depends on the Member State concerned having conferred, in its capacity as shareholder and not in its capacity as public authority, an economic advantage on an undertaking belonging to it;
(11) When the intervention of the public entity in its capacity as shareholder has been established, and therefore the applicability of the private investor as well, the private investor test is applied, next, in order to determine whether, because of its effects, the economic advantage granted, in whatever form, through State resources to a public undertaking distorts or threatens to distort competition and affects trade between Member States;
(12) As regards the application of the private investor test, the market price is the highest price which a private investor acting under normal competitive conditions is ready to pay for a company in the situation it is in and, where a public authority proceeds to sell an undertaking belonging to it by way of an open, transparent and unconditional tender procedure, it can be presumed that the market price corresponds to the highest offer;
(13) However, the applicability of the informed private investor test cannot be inferred from a condition that usually forms part of its application: therefore, a transfer at market price and through an open and transparent tendering procedure does not necessarily lead to the conclusion that that test has been applied;
(14) To require that compensatory measures be implemented in circumstances that seek to re-establish healthy competition therefore forms part of the very essence of the compensatory mechanism, but makes no presumption whatsoever regarding the role of the State at the time of their implementation;
(15) As regards the application of the private investor test, first of all, the applicability of that test depends on the Member State concerned acting in its capacity as shareholder and not in its capacity as a public authority;
(16) Next, for the purpose of determining whether there is State aid, the private investor test can be used to determine whether the measures adopted by the Member State concerned satisfied an economic rationality test, so that a private investor might also accept them;
(17) Thus, under that test, the conditions which a measure must meet in order to be treated as “aid” for the purposes of Article 107 TFEU are not met if the recipient public undertaking could, in circumstances which correspond to normal market conditions, obtain the same advantage as that which has been made available to it through State resources;
(18) The private investor test presupposes that the public entity’s conduct may be compared with that of an investor acting in normal market conditions;
(19) Although that test does not disregard the obligations by which economic operators are bound, the obligations which are normal market conditions must not be confused with those aimed at preventing distortions of competition in that market.