Judgment — ECLI:EU:C:2011:740
Date: 2011-11-17
Language of the case: Italian
Court formation: Third Chamber
Subject matter: State aids;Competition;Provisions governing the Institutions
Procedure: Action for failure to fulfil obligations - successful
Origin: Italy

summary tables also annexed to the rejoinder, bear out the Italian Republic’s claims as to the amount of aid so far recovered, namely EUR 63 062 555. In those circumstances, the production of such payment slips by the Italian Republic may be regarded as the provision of direct and reliable evidence of compliance with its obligations in the present case. 52 That being so, the Italian Republic should be ordered to pay a periodic payment calculated by multiplying a basic amount by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, compared to the total amount not yet recovered on the date of delivery of the present judgment (see, by analogy, Commission v Spain, paragraph 50). 53 For calculating the penalty payment in the present case, recovery of the aid may be taken into account only on condition that the Commission has been informed of it and has been able to assess the adequacy of the evidence communicated to it in this respect (see, to that effect, Case C‑369/07 Commission v Greece, paragraph 75). 54 The periodicity of the penalty payment should therefore be fixed by determining it on a half-yearly basis, so as to allow the Commission to assess the state of progress of the recovery operations by reference to the situation prevailing at the end of that period, while allowing the defendant Member State the time needed to compile and transmit to the Commission the evidence capable of establishing, for the period in question, the recovery of the sums wrongly paid. 55 Consequently, the penalty payment will be quantified on a half-yearly basis and its amount calculated by multiplying a basic amount by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned, compared to the total amount not yet recovered on the date of delivery of the present judgment. ii) The basic amount of the penalty payment 56 It should be recalled that, in exercising its discretion, it is for the Court to set the penalty payment so that it is both appropriate to the circumstances and proportionate to the infringement established and the ability to pay of the Member State concerned (see Case C‑369/07 Commission v Greece, paragraph 114 and the case-law cited). 57 In the assessment carried out by the Court, the basic criteria which must be taken into account in order to ensure that a penalty payment has coercive force with a view to the uniform and effective application of European Union law are, in principle, the duration of the infringement, its degree of seriousness and the ability of the Member State concerned to pay. In applying those criteria, the Court is required to have regard in particular to the effects of non-compliance on public and private interests and to the urgency of compliance by the Member State concerned with its obligations (Case C‑369/07 Commission v Greece, paragraph 115 and the case-law cited). 58 As to the duration of the infringement, it is settled case-law that it is for the Court to assess the duration by reference to the time at which it assesses the facts, not the time at which the case is brought before it by the Commission (see, to that effect, Case C‑369/07 Commission v Greece, paragraph 116 and the case-law cited). 59 Since the Italian Republic has been unable to show that it has put an end to its failure to comply fully with the judgment in Case C‑99/02 Commission v Italy, as found in paragraph 44 above, that failure must be regarded as having continued for more than seven years, which is a very considerable period of time. 60 As to the seriousness of the infringement, the vital nature of the Treaty rules on competition must be recalled, in particular those on State aid, which are the expression of one of the essential tasks with which the European Union is entrusted. At the time of the Court’s assessment of the appropriateness and the amount of the present penalty payment, that vital nature is apparent from Article 3(3) TEU, namely the establishment of an internal market, and from Protocol No 27 on the internal market and competition, which forms an integral part of the Treaties in accordance with Article 51 TEU, and states that the internal market includes a system ensuring that competition is not distorted. 61 The recovery of aid that is incompatible with the common market aims to remove the distortion of competition caused by the competitive advantage the recipient of the aid has enjoyed in the market compared with its competitors, thereby restoring the situation prior to the payment of the aid (see, to that effect, Case C‑348/93 Commission v Italy [1995] ECR I‑673, paragraph 27). 62 Moreover, recovery penalises not only the incompatibility of the aid but also the Member State’s failure to fulfil the twofold obligation set out in Article 108(3) TFEU, under which that State must, first, inform the Commission of its plans to grant or alter aid and, secondly, must not put the proposed measures into effect until the procedure has resulted in a final decision. 63 Finally, it should be added that in the present case, apart from the fact that the unlawful aid in question is particularly harmful to competition because of its large amount, the unusually large number of recipients and its being paid regardless of the economic sector of the recipients, as the Commission rightly points out, it is common ground that a substantial part of the aid has not yet been recovered, or that proof of recovery has not been provided to the Commission. 64 For all that, as became apparent at the hearing, the Italian Republic and the Commission agree on the total amount of aid distributed, EUR 251 271 032.37. The Commission also accepts that aid of a total amount of EUR 63 062 555 must be regarded as having been recovered. 65 As to the ability to pay of the Italian Republic, the Court has repeatedly held that the method of calculation proposed by the Commission, in which the basic amount is multiplied by a specific coefficient applicable to the Member State concerned, is an appropriate means of reflecting that State’s ability to pay while keeping the variation between the Member States within a reasonable range (Case C‑369/07 Commission v Greece, paragraph 123 and the case-law cited). The recent development of inflation and the gross domestic product in the Member State in question must therefore be taken into account, as the Commission did pursuant to the 2010 communication. 66 To determine the basic amount of the penalty payment in the present case, the Court must also, however, have regard to the particular features of the recovery of aid granted under the aid scheme that has been declared incompatible with the common market, as mentioned in paragraph 32 above. 67 Applying the above considerations, the Court considers that in the present case it is appropriate to impose a penalty payment of a basic amount of EUR 30 million per half-year. 68 Consequently, the Italian Republic must be ordered to pay to the Commission, into the ‘European Union own resources’ account, a penalty payment of an amount calculated by multiplying the basic amount of EUR 30 million by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned, compared to the total amount not yet recovered on the date of delivery of the present judgment, for every six months of delay in implementing the necessary measures to comply with the judgment of 1 April 2004 in Case C‑99/02 Commission v Italy, from the present judgment until compliance with the judgment of 1 April 2004. iii) Termination of the penalty payment 69 As stated in paragraph 51 above, it is for the Member State concerned to provide the Commission with direct and reliable evidence that Decision 2000/128 has been implemented and the unlawful aid actually recovered. 70 If the unlawful aid is repaid by the recipient undertaking, the Italian Republic is required to produce payment slips attesting to all movements of funds claimed to represent the repayment of part of the unlawful aid to be recovered. 71 In other cases, the nature of the evidence required should be adjusted to the particular features of the factual situations encountered by the Member State in question in the course of its recovery operations. 72 In cases in which the aid has to be recovered from undertakings which are bankrupt or subject to bankruptcy proceedings whose purpose is to realise the assets and clear the liabilities, it is settled case-law that the fact that undertakings are in difficulties or bankrupt does not affect the obligation of recovery (see, inter alia, Case C‑280/05 Commission v Italy, paragraph 28 and the case-law cited). 73 It is also settled case-law that the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may in principle be achieved by registration of the liability relating to the repayment of the aid in question in the schedule of liabilities (Case C‑331/09 Commission v Poland [2011] ECR I‑0000, paragraph 60 and the case-law cited). 74 For the purpose of calculating the penalty payment in the present case, the Italian Republic is therefore required to provide the Commission with evidence of the registration of the liabilities in question in the bankruptcy proceedings. If it is not possible to do this, the Italian Republic must report everything capable of showing that it has made every effort to that end. In particular, should the application to register a liability be refused, it must provide proof that it has initiated all procedures under national law capable of challenging that refusal. 75 Consequently, contrary to the Commission’s claims, the Italian Republic cannot be required, for the purpose of calculating the penalty payment in the present case and where bankrupt undertakings or undertakings involved in bankruptcy proceedings are concerned, to prove not only the registration of the liabilities against them but also the sale of their assets under market conditions. As the Italian Republic rightly submits, the sums which have not yet been recovered from undertakings in bankruptcy, but which that State has made its best efforts to recover, should not be taken into account for the purpose of allowing the Commission’s application relating to the payment of the penalty payments due in accordance with the present judgment. Otherwise that penalty payment would no longer be appropriate and proportionate to the infringement that has been found, in accordance with paragraph 49 above, in that it would impose on the Italian Republic a financial burden deriving from the very nature of bankruptcy proceedings and from their irreducible length, over which that State has no direct influence. 76 In cases in which the unlawful aid in question has to be recovered from undertakings against which individual protective or enforcement measures have been adopted without success, it is for the Member State concerned to take and then communicate to the Commission all measures enabling repayment of the unlawful aid to be obtained and, if need be, measures aimed at the judicial liquidation of those undertakings, so that that State can enforce its claims against their assets (see, to that effect, C‑280/05 Commission v Italy, paragraph 28 and the case-law cited). Consequently, it is for the Member State to demonstrate, first, that bankruptcy proceedings have been taken against the undertakings concerned and, secondly, that the claims against them have been registered in accordance with the principles set out in paragraphs 72 to 74 above. 77 In cases in which the unlawful aid in question has to be recovered from undertakings which have ceased to exist, proof that they have been removed from the registers suffices to show that they do not exist and consequently that it is impossible to recover the aid. 78 Finally, in cases in which orders for recovery of the unlawful aid in question are challenged in the national courts, it is for the Member State concerned, in accordance with the requirement actually to recover aid that is incompatible with the common market, to contest any national decision depriving the Commission’s decision of effect, in particular on grounds relating, as in the present case, to the application of limitation rules (see, by analogy, Case C‑24/95 Alcan Deutschland [1997] ECR I‑1591, paragraphs 34 and 38) or rules of evidence. Consequently, for similar reasons to those stated in paragraph 74 above, proof that such efforts have been made suffices to exclude the aid concerned from the volume of as yet unrecovered aid to be taken into account for calculating the penalty payment. B – Lump sum 1. Arguments of the parties 79 The Commission, referring to the calculation method set out in its communication of 13 December 2005 as updated by the 2010 communication, considers that a lump sum of a daily amount originally fixed at EUR 31 744 and reduced pursuant to the 2010 communication to EUR 27 200, calculated on the basis of a basic flat-rate amount of EUR 200 multiplied by a coefficient for seriousness of 8, a coefficient for duration of 3 and an n factor of 17, multiplied by the number of days for which the infringement has lasted from 1 April 2004 to the date of delivery of the present judgment, is appropriate to the seriousness of the infringement and has the necessary deterrent force. 80 As regards its method of calculation, the Commission submits that this must depend in each individual case on all the relevant factors, in particular the duration of the infringement after the judgment establishing it, the public and private interests involved and the conduct of the Italian Republic. In view of the fact that the Italian Republic has not complied with its obligations 10 years after the adoption of Decision 2000/128 and 6 years after the judgment in Case C‑99/02 Commission v Italy, and of the fact that the aid in question was paid regardless of the economic sector of the recipients and essentially benefited Italian undertakings, the Commission considers that the proposal submitted to the Court is appropriate. 81 The Italian Republic submits that the amount of the lump sum is disproportionate to its conduct and the possible harm caused by the alleged infringement, having regard in particular to Case C‑304/02 Commission v France. The Italian Republic emphasises the special circumstances of the case in connection with the intrinsic complexity of Decision 2000/128 and the impossibility of implementing it swiftly, and also its positive conduct during the procedure. 2. Findings of the Court a) The principle of the imposition of a lump sum payment 82 Having regard to the objectives of the procedure provided for in Article 228(2) EC, the Court is empowered, in the exercise of the discretion conferred on it in connection with that article, to impose a penalty payment and a lump sum payment cumulatively (see, to that effect, Case C‑304/02 Commission v France, paragraph 83). 83 The imposition of a lump sum payment must depend in each individual case on all the relevant factors relating both to the characteristics of the infringement established and to the conduct of the Member State involved in the procedure initiated under Article 228 EC. That provision confers a wide discretion on the Court in deciding whether or not to impose such a penalty (Case C‑369/07 Commission v Greece, paragraph 144 and the case-law cited). 84 In the present case, besides the seriousness of the infringement as established in paragraphs 60 to 63 above, it should be noted that on the date of the closure of the oral procedure, more than 7 years after the date of delivery of the judgment in Case C‑99/02 Commission v Italy and more than 12 years after the adoption of Decision 2000/128 on 11 May 1999, the Italian Republic was still unable to establish precisely the definitive total amount of the aid to be recovered, as may be seen from its rejoinder. 85 Furthermore, it was not until at best two years after the delivery of the judgment in Case C‑99/02 Commission v Italy that the first coherent measures were adopted by the Italian Republic to remedy the difficulties of identifying and recovering the aid that had been declared unlawful and incompatible by Decision 2000/128, as is apparent from paragraphs 10 to 19 above and was admitted by the Italian Republic at the hearing. In particular, Decree-Law No 59 of 8 April 2008, intended to solve the procedural problem caused by the Italian courts’ suspension of the orders for recovery of the unlawful aid in question, was not enacted until after the period prescribed in the reasoned opinion of 1 February 2008 had expired, and provided only an imperfect solution to the delay in recovering the aid covered by that decision (see, by analogy, Case C‑304/09 Commission v Italy [2010] ECR I‑0000, paragraphs 40 to 42, and Case C‑305/09 Commission v Italy [2010] ECR I‑0000, paragraphs 38 to 40). 86 It is settled case-law that the Member State must actually recover the sums owed, belated recovery after the prescribed time-limits have expired not satisfying the requirements of the Treaty (see, to that effect, Case C‑305/09 Commission v Italy, paragraph 27 and the case-law cited). 87 The justifications put forward by the Italian Republic in this regard, namely that the delay in complying with the judgment was attributable to internal difficulties connected with the complexity of the measures to be taken to identify the recipients of the unlawful aid in question and recover the aid from them, cannot be accepted. As the Court has repeatedly held, a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order to justify failure to observe obligations arising under European Union law (see, inter alia, Case C‑568/07 Commission v Greece [2009] ECR I‑4505, paragraph 50), and the elimination of unlawful aid by means of recovery is the logical consequence of the finding that it is unlawful and that consequence cannot depend on the form in which the aid was granted (see, to that effect, Commission v Poland, paragraph 54 and the case-law cited). 88 It is thus clear that the infringement of which the Italian Republic is accused lasted for a quite considerable period which in any event had no relation to the difficulties in recovering the aid paid under a scheme that had been declared unlawful and incompatible with the common market. 89 Moreover, the Court considers that the legal and factual context of the infringement established may be an indication that effective prevention of future repetition of similar infringements of European Union law may require the adoption of a deterrent measure (see, to that effect, Case C‑121/07 Commission v France [2008] ECR I‑9159, paragraph 69). 90 In particular, the Italian Republic has already been the subject of a number of judgments on the basis of Article 88(2) EC holding that it has failed to fulfil its obligations by not immediately and actually recovering aid paid under schemes declared unlawful and incompatible with the common market. 91 In addition to the finding of failure immediately and actually to implement Decision 2000/128 made in the judgment in Case C‑99/02 Commission v Italy, the failure to comply with which gave rise to the present proceedings, several other findings of failure to fulfil obligations have been made by the Court, in particular in Case C‑207/05 Commission v Italy, Case C‑280/05 Commission v Italy, Case C‑304/09 Commission v Italy and Case C‑305/09 Commission v Italy. 92 Having regard to the foregoing, the Court considers that it is justifiable in the present case to order the Italian Republic to pay a lump sum. b) The amount of the lump sum payment 93 If the Court decides to order a lump sum payment, it must, in the exercise of its discretion, set the payment in such a way that it is, first, appropriate to the circumstances and, secondly, proportionate both to the infringement that has been established and to the ability to pay of the Member State concerned (see Case C‑407/09 Commission v Greece, paragraph 31). 94 The relevant factors in this respect include matters such as the length of time for which the breach of obligations has persisted since the judgment establishing it was delivered and the seriousness of the infringement (see, to that effect, Case C‑369/07 Commission v Greece, paragraphs 147 and 148 and the case-law cited). 95 To offset the considerations set out in paragraphs 58 to 63, 84 and 85 above relating to the duration and seriousness of the infringement, account should be taken of the points raised by the Italian Republic to show that the recovery of the unlawful aid in question was made more difficult by the fact that it had been paid under an aid scheme, that Decision 2000/128 had made the compatibility of the aid subject to conditions, and that implementation of the decision therefore meant that the Italian Republic first had to identify the recipients of the aid and the amounts received by each of them. 96 On the basis of all those factors, the Court considers that the circumstances of the case are fairly assessed by setting the amount of the lump sum which the Italian Republic will have to pay, under the third subparagraph of Article 228(2) EC, at EUR 30 million. 97 The Italian Republic must therefore be ordered to pay to the Commission, into the ‘European Union own resources’ account, a lump sum of EUR 30 million. VI – Costs 98 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has applied for costs and the Italian Republic’s failure to fulfil its obligations has been established, the Italian Republic must be ordered to pay the costs. On those grounds, the Court (Third Chamber) hereby: 1. Declares that, by failing, by the date of expiry of the period prescribed in the reasoned opinion issued by the Commission of the European Communities on 1 February 2008 pursuant to Article 228 EC, to take all the measures needed to comply with the judgment of 1 April 2004 in Case C‑99/02 Commission v Italy concerning the recovery from the recipients of the aid which was found to be unlawful and incompatible with the common market by Commission Decision 2000/128/EC of 11 May 1999 concerning aid granted by Italy to promote employment, the Italian Republic has failed to fulfil its obligations under that decision and Article 228(1) EC; 2. Orders the Italian Republic to pay to the European Commission, into the ‘European Union own resources’ account, a penalty payment of an amount calculated by multiplying the basic amount of EUR 30 million by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned, compared to the total amount not yet recovered on the date of delivery of the present judgment, for every six months of delay in implementing the necessary measures to comply with the judgment of 1 April 2004 in Case C‑99/02 Commission v Italy, from the present judgment until compliance with the judgment of 1 April 2004; 3. Orders the Italian Republic to pay to the European Commission, into the ‘European Union own resources’ account, a lump sum of EUR 30 million; 4. Orders the Italian Republic to pay the costs. [Signatures] * Language of the case: Italian.