Opinion of the Advocate General — ECLI:EU:C:2005:655
Date: 2005-10-27
Language of the case: Italian
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: State aids;Competition;Right of establishment;Free movement of capital
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - inadmissible
Origin: Italy

summary of the comments submitted by interested third parties. 117. Against that background, the Commission proceeds to develop the legal reasoning on which its conclusions are based, including not only reference to but a brief discussion of the case-law supporting it. (40) In my view, the reasoning is expressed in a ‘clear and unequivocal fashion’ and thus meets the standards set by the Court. 118. With respect to the obligation to accurately state the facts, it must be noted that the order for reference does not question factual statements made by the Commission, but rather their legal assessement in the light of the competition rules of the Treaty. In any event, as stated above, it is apparent that the factual background is properly described and therefore the Commission Decision does not fail in that regard either. 119. There are in my opinion also no grounds to conclude that the Commission has erred in its economic assessment of the national measures under scrutiny. In essence the national court criticises the Commission for failing to take properly into consideration the effects that banking foundations’ management, and eventual disposal, of their controlling shareholdings in assignee banks could have in the banking market, in particular in the light of their task of ‘economic development of the system’. The national court also criticises the Commission for not properly examining the relationship between the banking foundations and their ‘instrumental undertakings’. 120. Paragraphs 36 to 39, 43 to 45 and 48 to 50 of the Commission Decision are devoted to the examination of those issues. 121. On the basis of that examination the Commission concluded that the obligation to relinquish any controlling shareholdings within a specified time-limit, together with the obligations and restrictions imposed by the new legislative regime on the members of the internal bodies and executives of the banking foundations as regards their relationships with assignee banks — in particular the prohibition on performing administrative, managerial or supervisory duties in assignee banks or any other financial or banking undertaking — and the limitations as regards the management of their assets, reinforced the separation between banking foundations and financial institutions, thereby helping ‘to allay the corresponding concerns expressed in the decision to initiate the procedure’. (41) It concluded that the management of their assets was not an economic activity and therefore did not make banking foundations undertakings within the meaning of Article 87(1) EC. (42) 122. The Commission also noted that banking foundations were not entitled to own any controlling shareholding in undertakings other than instrumental undertakings. In the latter case, the Commission held that where the activities of instrumental undertakings consisted in providing services in a market where competition exists, the ability of banking foundations ‘to control undertakings is liable to distort competition and their activities cannot be entirely immune to competition control’. (43) The Commission concluded that ‘the possibility of acquiring control of instrumental undertakings, … would not make [banking] foundations undertakings in so far as it did not imply direct involvement in the activity of the controlled undertaking’. (44) 123. On that basis, the Commission decided that banking foundations did not qualify as undertakings for the purposes of Article 87(1) EC unless they carried out an economic activity in the meaning of the case-law, that is, by offering goods or services on a market where competition exists, even in one of the ‘relevant sectors’. 124. Despite the national court’s misgivings, and as my reasoning above indicates, (45) I agree in essence with the Commission’s assessment and its conclusion as regards the nature of banking foundations under the new legislative regime. The order for reference does not in my view offer additional legal or economic elements or an alternative analysis which could cast doubt on the appraisal carrried out by the Commission. 125. As regards the national court’s concern that the Commission’s analysis gives insufficient weight to the banking foundations’ task of ‘economic development of the system’, it is settled case-law that State measures qualify as State aid not because of their aims but because of their effects. The fact that banking foundations have as one of their tasks the ‘economic development of the system’ does not by itself turn them into undertakings for the purposes of the EC Treaty rules on competition. 126. I therefore conclude that the Commission Decision is not flawed by any error of assessment. 127. In view of the foregoing, the answer to the fourth question is that there are no grounds for declaring invalid Commission Decision 2003/146. The fifth question 128. The wording of the fifth question is not completely clear. However, read in the context of the order for reference it appears that the national court seeks in essence to ascertain whether the tax advantages at stake in the national proceedings could amount to discrimination prohibited under Article 12 or infringe the right of establishment under Article 43 et seq. and the free movement of capital under Article 56 et seq. EC, both of which constitute specific expressions of the principle of non-discrimination. 129. According to the case-law, even if, in the current state of Community law, direct taxation does not as such fall within the scope of the Community’s jurisdiction, Member States must nevertheless exercise their retained powers in compliance with Community law, which includes respect for the provisions on right of establishment and free movement of capital. (46) 130. Even though it is ultimately for the national court to decide on the scope of the national provisions, it appears from the case-file that the tax advantages at issue are not specifically designed for banking foundations. Article 10 bis of Law No 1745/62 does not only cover dividends arising from banking activities but applies generally to dividends obtained in Italy by non-commercial entities pursuing social or public interest aims. That provision applies to any dividend obtained in Italy by any entity that fulfils the criteria specified therein without distinction by reason of their place of establishment. 131. The same is true for the 50% reduction in corporation tax in favour of non-commercial entities seeking aims of social and public interest, which Article 12 of Decree No 153/99 extends to banking foundations which have adapted their statutes to its general provisions and are operating in the ‘relevant sectors’. Banking foundations become eligible because they become exclusively devoted to the pursuance of public interest and social assistance aims. Such tax advantages appear to be granted to any entity subject to corporation tax in Italy that fulfils the conditions, irrespective of nationality or place of establishment. 132. In conclusion, nothing in the order for reference indicates that the national legislative provisions at issue are, on their own, directly or indirectly discriminatory in a manner contrary to Article 12 EC, or constitute obstacles to the right of establishment or the free movement of capital under Articles 43 et seq. EC and 56 et seq. EC, respectively. 133. In view of the foregoing, the fifth question should be answered to the effect that a tax regime providing for tax advantages on their income raised in Italy for banking foundations because of their public interest and social assistance aims without distinguishing by reason of nationality or place of establishment does not infringe Articles 12, 43 et seq. and 56 et seq. EC. Conclusion 134. In view of the foregoing, the questions of the Corte Suprema di Cassazione should be answered as follows: (1) (Questions 1 and 2) Banking foundations as regulated by Law No 218 of 30 July 1990 and the related Legislative Decree No 356 of 20 November 1990, as subsequently amended, and by Law No 461 of 23 December 1998 and Legislative Decree No 153 of 17 May 1999, as subsequently amended, would qualify as undertakings for the purposes of the competition rules of the EC Treaty and, in particular, Article 87(1) EC on State aid if they carried out an economic activity within the meaning of the case-law of the Court of Justice. That would be the case if: – when managing their controlling shareholding in assignee banks of any other undertaking, there is a relevant market where private undertakings may carry out that same activity in order to make profits; or – when carrying out their statutory public interest and social assistance aims they offer goods or services in a market where competition exists; or – when, by virtue of the rights arising from their controlling shareholdings or otherwise, they directly or indirectly involve themselves in the management of undertakings which themselves perform an economic activity within the meaning of the case-law. (2) (Question 3) Provided that the other elements of the notion of State aid — namely, a distortion of competition and an effect on trade between Member States — are present and that the tax advantages are not justified by the nature or general scheme of the system, which it is for the national court to assess, the tax regime in question in the main proceedings would fulfil the conditions for qualification as State aid under Article 87(1) EC if granted to ‘undertakings’ within the meaning of the competition rules of the Treaty as discussed in the context of the first and second questions. (3) (Question 4) There are no grounds for declaring Commission Decision 2003/146/EC invalid. (4) (Question 5) A tax regime providing for tax advantages on the income raised in Italy granted, inter alia, to banking foundations because of their public interest and social assistance aims that applies without distinguishing by reason of nationality or place of establishment does not infringe Articles 12, 43 et seq. and 56 et seq. EC. 1 — Original language: English. 2– Istituzione di una ritenuta d’acconto o di imposta sugli utili distribuiti dalle società e modificazioni della disciplina della nominatività obbligatoria dei titoli azionari (GURI No 5, of 7 January 1963, p. 61), as supplemented by Article 6 of Decree-Law No 22/1967 of 21 February 1967, nuove disposizioni in materia di ritenuta d’acconto o di imposta sugli utili distribuiti dalle società (GURI No 47, of 22 February 1967, p. 1012), converted into a law, with amendments, by Law No 209 of 21 April 1967 (GURI No 101 of 22 April 1967, p. 2099). 3– Disciplina delle agevolazioni tributarie (GURI No 268, of 16 October 1973, p. 3). 4– In its order for reference the national court describes Article 10 bis as an exemption from withholding tax rather than from a retention of an advanced payment on account of tax due. See points 51 and 101 below. 5– By which the Italian Parliament delegated to the government the task of reorganising civil and tax law provisions applicable to the allocating entities referred to in Article 11(1) of Legislative Decree No 356, as well as the tax regime of banking restructuring operations. GURI No 4, of 7 January 1999, p. 4. 6– Article 11 of Law No 448 of 28 December 2001, concerning the 2002 State budget added the following to the relevant sectors: family and related values; growth and development of young people; education, teaching and training, including the acquisition of publications for schools; voluntary and charity work, philanthropy; religion and spiritual development; assistance to the elderly; civil rights, crime prevention and public safety; food safety and high-quality agriculture; social development and building of social housing at local level; consumer protection; civil protection; public health, preventive and rehabilitative medicine; sport, prevention and rehabilitation of drug addiction; mental and psychological conditions; scientific and technological research, environmental protection; art, cultural activities and cultural heritage. 7– Law No 350 of 24 December 2003 concerning the 2004 State budget. 8– Article 11 of Law No 448/01 of 28 December 2001 and Article 4 of Decree-Law No 143 of 24 June 2003, transformed into law, with modifications, by Law No 212 of 1 August 2003. 9– See point 13 above. 10– The description of the national proceedings given in the order for reference by the national court differs on some points from that given by the parties who have submitted observations. Thus, in its order for reference, the national court does not mention the fact that the dispute at national level concerns a request for tax exemption lodged for 1998 and therefore precedes the adoption of Decree No 153/99. Only the parties submitting observations have made that qualification. The account of the role played by the various parties to the national proceedings does not always coincide. The order for reference mentions, for instance, Cassa di Risparmio di San Miniato SpA rather than its holding Fondazione as the original applicant. It appears from the observations submitted by the other parties that it was in fact the Fondazione which was at the origin of the initial request for the exemption. Those differences do not however affect the substance of the case to a significant degree. See also points 51 and 101 below. 11– There seems to be a link between those two provisions under national law. See point 67 below. 12– OJ 2003 L 55, p. 56. 13– See, inter alia, Case C-45/94 Ayuntamiento de Ceuta [1995] ECR I-4385, at paragraph 26. 14– See, inter alia, Case C-145/03 Keller [2005] ECR I-0000, at paragraph 33. 15– See, inter alia, Case C-380/01 Gustav Schneider [2004] ECR I-1389, at paragraph 22 and the case-law cited therein. 16– Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR I-833. 17– See points 57 and 58 above and the case-law cited there. 18– See Case C-18/01 Korhonen [2003] ECR I-5321, paragraph 20 and the case-law cited therein. 19– Case C-41/90 Höfner [1991] ECR I-1979, at paragraph 21. More recently, see Joined Cases C-189/02 P, C-202/02 P, C-205/02 P, C-208/02 P and C-213/02 P Dansk Rørindustri [2005] ECR I-0000, at paragraph 112 and the case-law cited therein. See also my Opinion in Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01 AOK [2004] ECR I-2493, at point 25. 20– See, inter alia, Case C-244/94 FFSA [1995] ECR I-4013, at paragraph 21, and Joined Cases C-180/98 to C-184/98 Pavlov [2000] ECR I-6451, at paragraph 117 and the case-law cited therein. 21– See my Opinion in AOK, cited in footnote 19 above, at point 27 and the case-law referred to therein. 22– See Case 66/86 Ahmed Saeed [1989] ECR 803, at paragraph 48 and the case-law cited therein; Case C-153/93 Delta [1994] ECR I-2517 at paragraph 14 and the case-law cited therein. 23– At paragraph 9, third indent. 24– Case 170/83 Hydrotherm [1984] ECR 2999, at paragraph 11. See also Dansk Rørindustri, cited in footnote 19 above, at paragraph 112 and the case-law cited therein. Similarly, the Court of First Instance has held that ‘Article 85(1) of the EEC Treaty is aimed at economic units which consist of a unitary organisation of personal, tangible and intangible elements which pursues a specific economic aim on a long-term basis and can contribute to the commission of an infringement of the kind referred to in that provision’. Case T-11/89 Shell v Commission [1992] ECR II-757, at paragraph 311. 25– Case T-102/92 Viho [1995] ECR II-17, at paragraph 51. See also Case C-73/95P Viho [1996] ECR I-5457, at paragraph 16 and the case-law cited therein, and Case 15/74 Centrafarm [1974] ECR 1147, at paragraph 41. It is also worth mentioning that under Article 3 of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1990 L 257, p. 13) (Merger Regulation), a subsidiary is not considered to be independent if there is the possibility for the parent company ‘of exercising decisive influence on an undertaking’. See also the criteria for the consolidation of accounts between parent and subsidiary undertakings contained in the 7th Company Law Directive (Council Directive 83/349/EEC of 13 June 1983, OJ 1983 L 193, p. 1) and the Opinion of Advocate General Warner in Commercial Solvents where he suggested as a rule of thumb that whenever a parent company has a majority shareholding the subsidiary is, in principle, not independent (Joined Cases 6/73 and 7/73 [1974] ECR 223, at pp. 262 to 265). 26– Case C-142/99 Floridienne and Berginvest [2000] ECR I-9567, at paragraphs 17 to 19 and the case-law cited therein. I agree that, for the sake of coherence and uniformity, the same concepts in different areas of Community law should, as a general rule, be given identical meaning, unless otherwise justified by the nature or specific features of the area in which that concept is being inserted and which may warrant an ad hoc reading. In this particular case, it seems reasonable to accept the Commission’s proposition that the case-law on the Sixth VAT Directive can apply by analogy for the purposes of the competition rules. 27– Floridienne and Berginvest, cited above, ibid. 28– See footnotes 24, 25 and 26 above. 29– See points 73 to 93 above. 30– See, inter alia, Case C-6/97 Italy v Commission [1999] ECR I-2981, at paragraph 15 and the case-law cited therein. 31– Case C-387/92 Banco Exterior de España [1994] ECR I-877, at paragraph 14. See also Case C-156/98 Germany v Commission [2000] ECR I-6857, at paragraphs 25 and 26 and the case-law cited therein. 32– See, inter alia, Case C-308/01 GIL Insurance Ltd [2004] ECR I-4777, at paragraph 72 and the case-law cited therein. 33– See footnote 20 above. 34– See, inter alia, Case C-56/93 Belgium v Commission [1996] ECR I-723, at paragraph 11 and the case-law cited therein; Case C-169/95 Spain v Commission [1997] ECR I-135, at paragraph 34; Case T-380/94 AIUFFASS [1996] ECR II-2169, at paragraph 56; Case T-395/94 Atlantic Container [2002] ECR II-875, at paragraph 257; Joined Cases T-371/94 and T-394/94 British Airways [1998] ECR II-2405, at paragraph 79. 35– As regards the Court of First Instance, see Case T-296/97 Alitalia [2000] ECR II-3871, at paragraph 105; Joined Cases T-126/96 and T-127/96 BFM [1998] ECR II-3437, at paragraph 81; Case T-36/99 Lenzing [2004] ECR II-0000, at paragraph 150; Case T-358/94 Air France [1996] ECR II- 2109, at paragraphs 71 and 72. The Court has also reasoned in the same vein in Joined Cases C-328/99 and C-399/00 Italy and SIM v Commission [2003] ECR I-4035, at paragraph 39. All those cases concerned the application by the Commission of the ‘private investor test’, which involves a complex economic appraisal, in order to determine whether the State measures in question constituted State aid under Article 87(1) EC. See also Belgium v Commission, cited in footnote 34 above. 36– Case C-83/98 P France v Ladbroke Racing and Commission [2000] ECR I-3271, paragraph 25 (emphasis added). See also Case T-98/00 Linde [2002] ECR II-3961, at paragraph 40. The Court of First Instance has summed up its interpretation of the case-law in its judgment in Valmont, where it held that the exception to the principle of a comprehensive review by the Court as to whether a measure falls within the scope of Article 87(1) EC is where a complex economic appraisal is involved, in which case review by the Court is restricted (Case T-274/01 [2004] ECR II-0000, at paragraph 37). 37– Case C-39/94 SFEI [1996] ECR I-3547, at paragraph 62. 38– At paragraph 9. 39– Case, inter alia, C-310/99 Italy v Commission [2002] ECR I-2289, at paragraph 48 and the case-law cited therein. 40– At paragraphs 44 and 49. 41– At paragraph 43. 42– At paragraph 59. 43– At paragraph 49. 44– At paragraph 52. 45– See points 81 and 82 and 91 to 93 above. 46– Case C-9/02 de Lasteyrie du Saillant [2004] ECR I-2409, at paragraph 44 and the case-law cited therein.