Naturgy Secures Court of Justice Victory in Challenge of Spanish Environmental Incentive Formal Investigation

January 4, 2024

Cleary Gottlieb successfully represented Naturgy before the Court of Justice in winning its appeal against the General Court judgment of September 8, 2021.

In this judgement, the General Court dismissed an application for annulment brought by Naturgy seeking the annulment of a Commission decision to initiate the formal investigation procedure with respect to the Spanish environmental incentive for coal-fired power plants.

In a judgment of December 14, 2023, the Court of Justice set aside the General Court’s judgment and annulled the 2017 Commission decision at issue, ordering the Commission to pay Naturgy’s costs in relation to both the first instance and the appeal proceedings.

The Court of Justice upheld Naturgy’s first ground of appeal and found that, if the Commission considers that a measure is selective, it must state the reasons why it considers that the measure had the effect of conferring an advantage on certain undertakings over others that are in a comparable factual and legal situation, even if it does so in a succinct manner. The Court of Justice found that it was in no way apparent from the judgment under appeal that the Commission set out the reasons why the coal-fired power plants that benefitted from the measure at issue were in a factual and legal situation comparable to that of other power plants that did not benefit from the same measure, in light of the objectives pursued by the measure.