Judgment — ECLI:EU:C:2002:143
Date: 2002-03-07
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition
Concepts: Statement of reasons;Commission decision following the formal investigation procedure;Regional aid;Damage to competition and effect on trade;General;Implementation of the Commission decision and recovery
Procedure: Action for annulment - unfounded
Origin: Italy

Summary of the Judgment 
1. State aid — Investigation by the Commission — Commission's discretion — Possi­
bility of adopting guidelines — Judicial review — Scope 
(Art. 87(2) and (3) EC) 
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SUMMARY — CASE C-310/99 
2. State aid — Prohibition — Derogations — Aid which may be considered to be 
compatible with the common market — Aid to promote the development of particular 
areas — Exceptional cases 
(Art. 87(3)(a) EC) 
3. State aid — Affecting trade between Member States — Prejudicial to competition — 
Criteria of assessment 
(Art. 87 EC) 
4. State aid — Commission decision finding a particular aid programme incompatible 
with the common market — Obligation to state reasons — Necessary indications 
(Arts 87 EC and 253 EC) 
5. State aid — Commission decision finding a particular grant of aid incompatible with 
the common market and ordering its abolition — Resulting obligation to recover — 
To restore the previous situation — Commission's discretion — No repayment — 
Grounds — Exceptional circumstances — Mechanism of employment law — Exclu­
sion 
(Art. 88(2), first subpara., EC) 
6. State aid — Planned aid — Implemented before the Commission's final decision — 
Commission decision ordering recovery of the aid — Obligation to state reasons — 
Scope 
(Art. 88(3) EC) 
1. The conditions with which aid granted 
by a State must comply in order to be 
compatible with the common market 
are spelled out in the exceptions laid 
down in Article 87(2) and (3) EC. In 
that connection, the Commission may 
adopt a policy as to how it will exercise 
its discretion in the form of measures 
such as guidelines, in so far as those 
measures contain rules indicating the 
approach which the institution is to 
take and do not depart from the rules 
of the Treaty. It follows that, although 
those rules, setting out the approach 
which the Commission proposes to 
follow, certainly help to ensure that it 
acts in a manner which is transparent, 
foreseeable and consistent with legal 
certainty, they cannot bind the Court. 
However, they may form a useful point 
of reference. 
(see para. 52) 
2. Use of the terms 'abnormally' and 
'serious' in the exception laid down in 
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ITALY v COMMISSION 
Article 87(3)(a) EC shows that it con­
cerns only areas where the economic 
situation is extremely unfavourable in 
relation to the Community as a whole. 
It follows that aid to maintain employ­
ment, which is comparable to oper­
ating aid, is as a general rule prohibited 
and may be authorised only in excep­
tional cases for regions fulfilling certain 
requirements. Such aid must also be 
progressively reduced and limited in 
time. 
(see paras 77-78) 
3. When aid granted by the State 
strengthens the position of an under­
taking vis-à-vis other undertakings 
competing in intra-Community trade 
the latter must be regarded as affected 
by that aid. For that purpose, it is not 
necessary for the recipient undertaking 
itself to export its products. Where a 
Member State grants aid to an under­
taking, domestic production may for 
that reason be maintained or increased 
with the result that undertakings estab­
lished in other Member States have less 
chance of exporting their products to 
the market in that Member State. 
Similarly, where a Member State grants 
aid to undertakings operating in the 
service and distribution industries, it is 
not necessary for the recipient under­
takings themselves to carry on their 
business outside the Member State for 
the aid to have an effect on Community 
trade, especially in the case of under­
takings established close to the frontier 
between two Member States. 
The relatively small amount of aid, or 
the relatively small size of the under­
taking which receives it, does not as 
such exclude the possibility that intra-
Community trade might be affected. 
(see paras 84-86) 
4. When stating the reasons for a decision 
on the compatibility of an aid pro­
gramme with the common market, the 
Commission may confine itself to 
examining the characteristics of the 
programme in question in order to 
determine, in the grounds of its 
decision, whether, by reason of the 
terms of the programme, it gives an 
appreciable advantage to recipients in 
relation to their competitors and is 
likely to benefit in particular undertak-
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SUMMARY — CASE C-310/99 
ings engaged in trade between Member 
States. 
(see para. 89) 
5. The abolition, by means of recovery, of 
State aid which has been unlawfully 
granted is the logical consequence of a 
finding that it is unlawful and the aim 
of obliging the State concerned to 
abolish aid found by the Commission 
to be incompatible with the common 
market is to restore the previous situ­
ation. 
By repaying the aid, the recipient for­
feits the advantage which it had 
enjoyed over its competitors on the 
market, and the situation prior to 
payment of the aid is restored. It also 
follows from that function of repay­
ment of aid that, as a general rule, the 
Commission will not, save in excep­
tional circumstances, exceed the 
bounds of its discretion, recognised by 
the case-law of the Court, if it asks the 
Member State to recover the sums 
granted by way of unlawful aid, since 
it is only restoring the previous situ­
ation. 
In that regard, just as the social char­
acter of State intervention is not suffi­
cient to exclude it outright from being 
categorised as aid, so the argument that 
what is concerned is a 'mechanism of 
employment law' does not amount to 
an exceptional case in which there 
might be grounds for excluding repay­
ment. 
(see paras 98-99, 101) 
6. In the matter of State aid, where, 
con t ra ry to the prov is ions of 
Article 88(3) EC, the proposed aid 
has already been granted, the Commis­
sion, which has the power to require 
the national authorities to order its 
repayment, is not obliged to provide 
specific reasons in order to justify the 
exercise of that power. 
(see para. 106) 
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