The decision relates to measures implemented by Spain in the agricultural sector following the increase in fuel prices, and comes the same week as rules on state aid to agriculture were simplified.
One of those measures authorised agricultural cooperatives to distribute a certain type of fuel to non-member third parties, without being subject to the limit of 50 per cent of the total amount of the transactions with members and without having to set up a legal entity.
The Commission took the view that those measures did not constitute State aid incompatible with the common market.
The action for annulment was brought before the Court of First Instance by proprietors of service stations situated in Madrid and Catalonia. They claimed that the tax arrangements applicable to the cooperatives was clearly advantageous as compared with the tax arrangements for other types of companies, and that the measures concerned were selective.
"The Court holds that the Commission decision fails to state clearly and unequivocally the reasons why the tax arrangements applicable to agricultural cooperatives do not constitute an advantage for the purposes of State aid," said the court in a statement.
"First, the decision explicitly states that the cooperatives enjoy fiscal advantages not only as regards company tax, but also as regards economic activities tax and immovable property tax. Second, it states that the contested measures do not constitute an advantage and, therefore, are not State aid incompatible with the common market."
Finally, the Court observed that the Commission decision did not mention any factors explaining the reasoning followed in order to reach the conclusion that the contested measures are not selective because they are justified by the nature and structure of the system.
"Accordingly, the Court finds that the Commission decision does not give sufficient reasons concerning the assessment that the measures concerned are not State aid incompatible with the common market.
"The Court has decided, therefore, to annul the Commission's decision."
Rules on state aid to agriculture were recently simplified by the EC.
The rules are in two parts: an exemption regulation which allows Member States not to notify State aid given to small and medium-sized undertakings involved in agricultural production provided that certain requirements are met, and guidelines which complement the regulation and lay down rules applicable to notified aid.
The two documents cover the period from 2007 to 2013.
"This new regulatory framework is consistent with the framework for rural development, and will provide the agricultural sector with an efficient, stable instrument to help its development over the period covered," said EC agriculture minister Mariann Fischer Boel.
"Moreover, the ability to exempt certain types of state aid will be a genuine relief to the sector, especially when farmers are in genuine and urgent need."