62007CC0369_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
I – Introduction
1. The present case concerns an action brought by the Commission against the Hellenic Republic under Article 228 EC. The Commission alleges that the Hellenic Republic has failed to comply with the judgment in Case C-415/03 (2) (‘the 2005 Judgment’), in which the Court held that the Hellenic Republic had failed to fulfil its obligations under Commission Decision 2003/372/EC (‘the 2002 Decision’), (3) concerning the aid granted by Greece to Olympic Airways (‘OA’). The Commission is now asking the Court to declare that the Hellenic Republic has failed to fulfil its obligations, and to order it to make both a penalty payment and a lump sum payment.
II – Background to the case
A – Steps taken by the Commission prior to the 2002 Decision
2. In 1994, the Commission authorised, on the basis of Article 92(3)(c) of the EC Treaty [now Article 87(3)(c) EC], a number of aid measures for the benefit of OA, largely consisting in a plan for the restructuring and recapitalisation of the company. (4) Compatibility of that aid with the common market was made conditional upon the Hellenic Republic honouring a certain number of undertakings.
3. On the view that some of those undertakings had not been honoured, the Commission decided on 30 April 1996 to launch the procedure under Article 93(2) of the EC Treaty (now Article 88(2) EC) in relation to the aid already authorised, as well as to new aid which had not been notified and which had come to its attention. That procedure resulted in Decision 1999/332/EC of 14 August 1998 (‘the 1998 Decision’), (5) by which the Commission again gave the green light to the aid authorised in 1994, as modified in the meantime by the Greek authorities. As in 1994, the grant of that aid was accompanied by a restructuring plan and made subject to specific conditions.
4. By a subsequent decision of 2000, the Commission approved further modification of the authorised financial measures.
B – The 2002 Decision
5. On 6 March 2002, in response to complaints concerning the grant of aid for the benefit of OA, the Commission launched a fresh procedure under Article 88(2) EC and, on 11 December 2002, it adopted the 2002 Decision, which was based, in particular, on the finding that most of the objectives of the company restructuring plan had not been met; that the conditions attached to the 1998 Decision authorising the aid had not been respected in full; and that that decision had been applied in an unlawful manner. Attention was also drawn to the existence of new operating aid, which basically consisted in the Hellenic Republic’s toleration of the persistent non-payment of social security obligations, VAT on fuel and spare parts, rentals owed for various airports, airport charges and a tax called the ‘spatosimo’ tax, paid by passengers departing from any Greek airport.
6. Articles 1 to 3 of the enacting terms of the 2002 Decision read as follows:
‘Article 1
The restructuring aid granted by Greece to Olympic Airways in the form of:
(a) loan guarantees extended to the company until 7 October 1994 pursuant to Article 6 of Greek Law 96/75 of 26 June 1975;
(b) new loans guarantees totalling USD 378 million for loans to be contracted before 31 March 2001 for the purchase of new aircraft and for investment necessary for the relocation of Olympic Airways to the new airport in Spata;
(c) easing of the undertaking’s debt burden by GRD 427 billion;
(d) conversion of GRD 64 billion of the undertaking’s debt to equity;
(e) a capital injection of GRD 54 billion reduced to GRD 40.8 billion in three instalments of respectively GRD 19, 14 and 7.8 billion in 1995, 1998 and 1999 respectively,
is considered to be incompatible with the common market within the meaning of Article 87(1) of the Treaty … .
Article 2
The State aid which Greece has implemented in the form of tolerance of a persistent non-payment of social security obligations, of VAT on fuel and spare parts by Olympic Aviation, of rentals for different airports, of airport charges to Athens International Airport and other airports, of ‘spatosimo’ tax is incompatible with the common market.
Article 3
1. Greece shall take the necessary measures to recover from the beneficiary the aid of GRD 14 billion (EUR 41 million) (6) referred to in Article 1 which is not compatible with the Treaty and the aid referred to in Article 2 and unlawfully made available to the beneficiary.
2. Recovery shall be effected without delay and in accordance with the procedures of national law provided they allow the immediate and effective execution of the decision. The aid to be recovered shall include interest from the date on which it was at the disposal of the beneficiary until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant-equivalent of regional aid.’
7. On 24 February 2003, OA brought an action before the Court of First Instance seeking annulment of the 2002 Decision.
C – Events subsequent to the 2002 Decision
8. In March 2003, the Greek authorities informed the Commission of their intention to privatise OA. In September, the Commission enjoined the Hellenic Republic to provide all of the information needed for the purposes of determining the compatibility with Article 87 EC of the measures for the restructuring and privatisation of OA. In December, a new company – Olympic Airlines (‘NOA’) – entered into service.
9. On 16 March 2004, the Commission notified the Hellenic Republic of its decision to launch the procedure under Article 88(2) EC. On 14 September 2005, on completion of that procedure, the Commission adopted a decision confirming the existence of new aid for the benefit of OA and NOA, which was unlawful and incompatible with the common market (7) (‘the 2005 Decision’). That decision was challenged before the Court of First Instance by the Hellenic Republic, NOA and OA. (8)
10. On 4 October 2006, the Commission brought an action before the Court of Justice, pursuant to Article 88(2) EC, seeking a declaration that the Hellenic Republic had failed to fulfil its obligations under the 2005 Decision. On 14 February 2008, the Court delivered a judgment, in which it ruled that the Hellenic Republic had failed to fulfil its obligations. (9)
D – The 2005 Judgment
11. On 25 September 2003, regarding as insufficient the information obtained during the pre-litigation procedure concerning the progress made in recovering the aid covered by the 2002 Decision, the Commission brought an action for failure to fulfil obligations under Article 88(2) EC. It asked the Court to declare that ‘by failing to take within the prescribed period all the measures necessary for repayment of the aid found to be unlawful and incompatible with the common market – except that relating to the contributions to the national social security institution … – in accordance with Article 3 of [the 2002 decision], or, in any event, by failing to inform it of the measures taken pursuant to Article 4 of that decision, the Hellenic Republic has failed to fulfil its obligations under Articles 3 and 4 of that decision and the EC Treaty’.
12. As regards the obligation to recover the sum of EUR 41 million referred to in Article 1 of the 2002 Decision, the Court stated, first, that ‘the operation in issue transferred all the assets [of OA], free of all debts, to the new company [NOA]’, ‘structured in such a way as to make it impossible, under national law, to recover the debts of the former company [OA] from the new company [NOA]’ ‘created an obstacle to the effective implementation of the [2002] decision and to the recovery of the aid’, with the result that ‘the purpose of that decision, which aims to restore undistorted competition in the civil aviation sector was thus seriously compromised’. (10) The Court added that ‘the action taken by the Greek authorities, that is to say, the adoption of a decision to proceed with recovery of [the] debt of EUR 41 million [of OA], had no real effect with regard to the actual reimbursement of that sum by the company’ (11) and held that the Hellenic Republic had failed to fulfil its obligation to recover that sum.
13. As regards the recovery of the sums referred to in Article 2 of the 2002 Decision, the Court first of all rejected the Hellenic Republic’s argument that the decision could not be implemented in that regard without precise information as to the sums to be recovered. In that connection, the Court pointed out that ‘no provision of Community law requires the Commission, when ordering the recovery of aid declared incompatible with the common market, to fix the exact amount of the aid to be recovered’, it being ‘sufficient for the Commission’s decision to include information enabling the recipient to work out himself, without overmuch difficulty, that amount’. (12) The Court also pointed out that the amounts to be repaid could be established by reading Article 2 of the 2002 Decision in conjunction with [recitals] 206 to 208 … thereof’. (13) Lastly, the Court pointed out that the Greek authorities had ‘restricted themselves to a certain number of procedural and administrative steps, partial arrangements for the settlement of debts and offset operations; those initiatives which, moreover, were late or incomplete or without binding effect and which, in any event, did not result in the actual recovery of the sums owed by [OA], [could not] be regarded as complying with the obligations of the Member States in relation to the recovery of State aid’. (14)
14. On those grounds, the Court declared in the operative part of the judgment that, ‘by failing to take within the prescribed period all the measures necessary for repayment of the aid found to be unlawful and incompatible with the common market – except that relating to the contributions to the national social security institution – in accordance with Article 3 of [the 2002 Decision], the Hellenic Republic has failed to fulfil its obligations under that article’.
E – The pre-litigation procedure
15. By letter of 18 May 2005, the Commission enjoined the Hellenic Republic to inform it of the measures taken to comply with the 2005 Judgment.
16. The Hellenic Republic replied by letter of 2 June 2005, stating that the aid had been recovered, both by using the proceeds from the sale of assets and the transfer of shares in the OA group, and by applying Article 27 of Law No 3185/2003, on the basis of which all of the proceeds from the sale of NOA and sectors of activity other than flight operations were automatically to be credited to the State. The Greek authorities further informed the Commission that if OA’s assets were not sufficient, it was their intention to continue the recovery procedure by winding up the company. If even that measure were to prove inadequate, then, within the limits and subject to the conditions laid down by Community case-law, they would turn to NOA, as the assignee of OA’s flight operations. In that same letter, the Hellenic Republic also informed the Commission of the progress achieved in the recovery procedure. As regards the aid referred to in Article 1 of the 2002 Decision, it reminded the Commission that the recovery order, adopted once the procedures for determining the amount owed and the related interest were complete, had been contested by OA before the Athens administrative court and that, on 26 January 2004, that court had suspended enforcement of the recovery order pending a final decision in the case. As regards the aid referred to in Article 2 of the 2002 Decision, the Hellenic Republic informed the Commission that the procedures for quantifying, verifying and charging the amounts to be recovered were under way. Referring to paragraph 41 of the 2005 Judgment, the Greek authorities indicated that, in accordance with Article 2 and recitals 206 to 208 of the 2002 Decision, the amounts to be recovered related to the non-payment by OA of: (i) the VAT on fuel for the periods from January to May 2001 and from November to December 2001 (recital 206); (ii) the VAT on spare parts for the periods from January to May 2001 and from November to December 2001 (recital 206); (iii) the rentals due to the regional airports (recital 206); (iv) the charges payable to Athens International Airport at Spata (recital 207); and (v) the ‘spatosimo’ tax for the period from December 2000 to February 2002 and for the month of March 1999 (recital 208). The total amount to be recovered from OA was estimated at approximately EUR 111 million, including interest.
17. On 18 October 1995, following a further exchange of correspondence, the Commission sent the Hellenic Republic a letter of formal notice in accordance with Article 228 EC.
18. The Hellenic Republic replied by letter of 19 December 2005. It again stated that the delay in the procedures for recovering the aid referred to in Article 1 of the 2002 Decision was attributable to the action brought by OA contesting the order to pay; it maintained that it had exhausted all of the measures available to it under Greek law and that it was its intention to await the outcome of the court proceedings before embarking on any further action. In relation to the aid referred to in Article 2 of the 2002 Decision, the Hellenic Republic confirmed that it had verified the amounts due and served the related payment orders. More generally, the Greek authorities noted that the adoption of the 2005 Decision had delayed completion of the recovery procedures, as it had thwarted the conclusion of the agreement for the sale of NOA, thereby preventing OA from obtaining the resources needed to make the payments. (15)
19. On 10 April 2006, (16) on the view that it had received no information about the actual recovery of the aid, the Commission sent the Hellenic Republic a reasoned opinion in which it concluded that, by failing to adopt the measures necessary to comply with the 2005 Judgment, the Hellenic Republic had failed to fulfil its obligations under Article 228(1) EC, and asked it to meet those obligations within two months of receipt of the reasoned opinion. The Commission also informed the Greek authorities that, if an action were brought before the Court of Justice under Article 228 EC, it would ask for the Hellenic Republic to be ordered to make a penalty payment and a lump sum payment, but meanwhile it reserved the right to specify the amounts of those payments.
20. The Hellenic Republic replied to the reasoned opinion by letter of 9 June 2006. As regards the aid referred to in Article 1 of the 2002 Decision, it reiterated that the procedures for recovering the aid had been suspended pending a decision by the Athens administrative court on the action brought by OA. In order to avoid further delays, it asked for the Commission’s assistance and suggested accelerating the procedures for transferring OA’s assets. Although it was not in principle opposed to the possibility of winding up the company failing any other solution, the Hellenic Government none the less considered that to take that step solely for the purposes of recovering the aid, as proposed by the Commission in the reasoned opinion, would be in breach of OA’s constitutionally guaranteed right to judicial protection and contrary to the principle of proportionality.
21. As regards the aid referred to in Article 2 of the 2002 Decision, the Hellenic Republic first of all asked the Commission to indicate what period of time would be available to OA, if that aid were to be recovered by applying a provision of national law which makes it possible to discharge debts to public bodies by means of regular payments spread over a maximum period of 10 years. Lastly, the Hellenic Republic provided information about the progress made in the procedure for recovering the aid. With reference to the ‘spatosimo’ tax, the Greek authorities maintained that the amount originally to be recovered – that is to say, EUR 60.9 million – had been reduced as a result of the payment by OA of the sums pertaining to the month of March 1999 and the period between December 2000 and May 2001. They again called upon the Commission to cooperate in determining the procedures for repaying the amounts outstanding. As regards the airport rentals owed to the Directorate for Civil Aviation (‘the DCA’), the Greek authorities claimed that the debts relating to OA’s failure to pay those rentals had been in part offset, in the amount of about EUR 2.3 million, and in part cancelled. The balance of EUR 176 082.17, relating to an invoice disputed by OA, would be paid shortly.
22. The Greek authorities concluded that, given that the recovery procedures were at an advanced stage, and in the light of the request for assistance which they had addressed to the Commission, as well as the fact that the action for annulment of the 2002 Decision was still pending before the Court of First Instance, any decision by the Commission to bring an action under Article 228 EC before the Court of Justice would be contrary to the principle of genuine cooperation laid down in Article 10 EC.
III – Procedure before the Court and forms of order sought
23. By act lodged at the Registry of the Court of Justice on 3 August 2007, the Commission brought the action which forms the subject-matter of the present proceedings, claiming that the Court should:
– declare that, by not taking the necessary measures to comply with the 2005 Judgment, the Hellenic Republic has failed to fulfil its obligations under the 2002 Decision and Article 228 EC;
– order the Hellenic Republic to pay the Commission a penalty payment of EUR 53 611 for each day of delay in complying with the 2005 Judgment, running from the date of delivery of the judgment in the present proceedings until the date on which the 2005 Judgment is complied with;
– order the Hellenic Republic to make a lump sum payment to the Commission, the amount of which is to be calculated by multiplying a daily amount of EUR 10 512 by the number of days over which the failure to fulfil obligations continues, running from the date of delivery of the 2005 Judgment until the date of delivery of the judgment in the present proceedings;
– order the Hellenic Republic to pay the costs.
24. The Hellenic Republic contends that the Court should dismiss the action and order the Commission to pay the costs. The representatives of the parties presented oral argument at the hearing on 11 November 2008.
IV – Analysis
A – The alleged failure to fulfil obligations
1. Preliminary observations
25. In its statement of defence, the Hellenic Republic informs the Court that it has met in full its obligations under the 2002 Decision and that, for those purposes, between August and October 2007, it undertook full recovery of the aid to which Articles 1 and 2 of that decision refer. It is settled case-law that the reference date for assessing an alleged failure to fulfil obligations in the context of an action brought under Article 228 EC is the deadline specified in the reasoned opinion delivered pursuant to that provision, (17) in other words, in the present case, two months after the reasoned opinion was notified to the Hellenic Republic on 10 April 2006.
26. It is necessary to establish that, by failing to adopt in good time all of the measures necessary to comply with the 2005 Judgment, the defendant Member State has failed to fulfil its obligations under Article 228 EC and must therefore be declared to be in breach of its obligations.
27. However, given that the Commission seeks, in parallel with a declaration that the Hellenic Republic has failed to fulfil its obligations, an order directing that Member State to make a penalty payment and a lump sum payment, it is also necessary to determine whether the alleged breach continued up to the Court’s examination of the facts. (18) That entails taking into account measures which were adopted by the defendant Member State after the action had been brought, and in respect of which the Commission has been able to express a view only in the context of the present proceedings.
28. In particular, the observations lodged by the Greek Government during the written procedure and its answers to the written questions put in accordance with Article 54a of the Court’s Rules of Procedure refer to a series of set-off arrangements relating to the debts mutually owed
by OA and the Greek State, on the basis of which most of the sums of aid declared incompatible with the common market by the 2002 Decision had purportedly been recovered.
29. In that connection, I would point out that it is settled case-law that in the absence of Community provisions on the procedure for the recovery of sums paid but not owed, unlawful aid must in principle be recovered in accordance with the relevant procedures laid down by national law. (19) That case-law was consolidated in Article 14(3) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, (20) under which recovery is to be effected ‘without delay and in accordance with the procedures under the national law of the Member State concerned, provided they allow the immediate and effective execution of the Commission’s decision’.
30. A Member State which is obliged to recover unlawful aid pursuant to a decision of the Commission is thus free to choose, from among the methods available in its legal order, the means of fulfilling that obligation, provided that the measures chosen do not compromise the scope and effectiveness of Community law. (21) It follows that, in principle, if it is envisaged under the national legal system as a method of discharging debts, a set-off arrangement may also constitute a method of recovering the aid unlawfully granted. The Commission does not dispute that conclusion; rather, it contests the probative value of the documents produced by the Hellenic Republic and the conditions in accordance with which the purported set-off operations took place.
31. That said, it should be borne in mind that, according to the Court’s case-law, in the context of proceedings under Article 228 EC, it is for the Commission to provide the Court with the information necessary to determine the extent to which a Member State has complied with a judgment declaring it to be in breach of its obligations. (22) If the Commission has provided sufficient evidence to suggest that there is a continuing breach of obligations, it is for the Member State concerned to challenge, in a detailed manner, the substantive content of the evidence produced, as well as the inferences drawn. (23)
32. Under Article 10 EC, the Member States are also under a duty to cooperate with the Commission in order to facilitate the achievement of the Commission’s tasks. (24) As regards, in particular, the execution of a decision requiring the recovery of unlawful aid, the Court has already had occasion to state that where a Member State recovers that aid by means other than a cash payment, it must provide the Commission with all the information enabling it to establish that the means chosen constitute an appropriate means of implementing the decision . In effect, according to the Court, ‘in contrast to recovery by way of a cash payment, which by its nature lends itself to supervision by the Commission, alternative measures proposed by a Member State for the fulfilment of its obligation to ensure recovery of illegal aid may make it necessary to assess complex matters’. Consequently, ‘in order for the Commission to make such an assessment, it requires information which it cannot obtain without close cooperation on the part of the Member State concerned’. (25)
33. It is in the light of those principles that it is necessary to examine the various measures adopted by the Hellenic Republic in order to execute the 2002 Decision.
2. The recovery of the aid referred to in Article 1 of the 2002 Decision
a) Arguments of the parties
34. In its application, the Commission states that it did not receive any communication concerning the actual recovery of the aid totalling EUR 41 million referred to in Article 1 of the 2002 Decision.
35. For its part, the Hellenic Republic contends that the aid in question has been recovered and refers to a declaration by the Greek tax authorities, dated 18 October 2007 and appended to the statement of defence, which confirms, inter alia, that a sum of EUR 73 363 107, inclusive of capital and interest calculated in accordance with the Community rate, (26) was repaid by OA to the Greek State on 31 August 2007. In reply to a written question put in accordance with Article 54a of the Rules of Procedure, the Greek authorities explained that the sum in question was recovered by being set off against the sums awarded to OA as compensation for damages in a number of arbitral awards made in 2006 and 2007. The information provided by the Greek authorities indicates that, on the basis of Article 27 of Legislative Decree 3560/1956, which took over the terms of the ‘air transport agreement’ concluded between the Greek State and Aristotle Onassis, the disputes between OA and the State were referred to courts of arbitration. During 2006 and 2007, OA brought a total of seven actions against the Greek State: four in order to obtain compensation for damage sustained as a result of the early closure of Elliniko airport and the obligation to relocate to Athens International Airport at Spata, and three in respect of damage sustained as a result of having provided services in the general interest, free of consideration, during the period from 1993 to 1999, in 2000 and in 2001. Those actions led the courts of arbitration to order the Greek State to pay OA approximately EUR 846 million by way of compensation for the damage sustained as a result of the relocation to Athens International airport at Spata and approximately EUR 25 million as compensation for the damage resulting from the company being placed under an obligation to provide services in the general interest. More specifically, the sum of EUR 41 million owed by OA pursuant to Articles 2 and 3 of the 2002 Decision was offset by the payment order in the amount of EUR 601 289 003.97, issued as a result of arbitral award No 57/2006 of 6 December 2006. (27)
36. In its reply, the Commission claims that, in a letter dated 16 July 2006, it had suggested to the Hellenic Republic the possibility that the abovementioned arbitral awards could contain elements of aid, and had asked to be formally notified before any payment was made. That notification was not, however, forthcoming. The Commission also notes that, in response to a number of complaints and to information received from Greece, it launched the procedure under Article 88(2) EC (28) in relation, inter alia, to the compensation awarded to OA by the courts of arbitration. As far as the substance of the awards is concerned, the Commission states that it does not have sufficient information to enable it to determine the extent to which OA was under a legal obligation to provide flights at a loss, but that it cannot discount the possibility that the compensation awarded to OA on that basis was overestimated, constituting unlawful aid. As regards compensation for damage sustained as a result of the relocation to Athens International Airport at Spata, the Commission observes that the matter was already covered in its decisions of 1998, 2000 and 2002, but that the information provided by the Greek Government in the context of the ongoing administrative procedure had not enabled it to compare the figures reviewed in those decisions with those awarded by the courts of arbitration. The Commission is concerned that the same damage has been compensated for twice over. More generally, the Commission considers that if the aid declared incompatible by the 2002 Decision has been recovered, its recovery was made possible only through the grant of new aid. The Commission stresses that to accept recovery made in such circumstances is to accept that, where a Member State fails to fulfil its obligation to recover aid which has been declared incompatible by a Commission decision, it can escape the penalties provided for under Article 228 EC by granting new aid to enable the earlier aid to be repaid.
37. In its rejoinder and in its answers to the questions put in accordance with Article 54a of the Rules of Procedure, the Hellenic Republic maintains that the compensation obtained by OA in the form of arbitral awards does not constitute State aid and that the procedure launched by the Commission in December 2007 is without foundation. As regards arbitral award No 57/2006, on the basis of which the payment order taken into account for the purposes of the set-off arrangement was issued, the Hellenic Republic explains that, when determining the compensation owed by the State to OA, the court of arbitration deducted EUR 146 100 000, corresponding to the sums already paid as compensation for that damage before the 2002 Decision was adopted. The Greek Government lastly observes that, even if the Commission were to prove that the damage of which OA complained had been overestimated, this would have no bearing on the validity of the recovery procedures, since, in total, the amount of the aid that had still to be recovered from OA, and which constituted the company’s largest debt to the State, was far lower than the compensation set by the court of arbitration.
b) Assessment
38. As I have already had occasion to point out, it is settled case-law that, in the context of proceedings under Article 228 EC, it is for the Commission to provide the Court with the information necessary to determine the extent to which a Member State has complied with a judgment declaring it to be in breach of its obligations. If the Commission has provided sufficient evidence to suggest that the breach of obligations has persisted, it is for the Member State concerned to challenge, in a detailed manner, the substantive content of the evidence produced, as well as the inferences drawn.
39. In the present case, the Commission maintains that it lacks sufficient information to prove that the arbitral awards at issue entail new elements of aid for the benefit of OA, but it assumes
this to be the case. The procedure under Article 88(2) EC has been launched in that connection, and, according to the information provided to the Court, remains open. (29) For its part, the Hellenic Republic has clarified the circumstances that led to the recovery of the aid referred to in Article 1 of the 2002 Decision and has produced before the Court both the arbitral award that determined the sums taken into account for the purposes of the set-off arrangement – adopted in accordance with an arbitration clause approved by law – and the payment order issued in implementation of that award. Lastly, the Hellenic Republic produced a certificate from the tax authorities confirming that the set-off had taken place.
40. In those circumstances, although I appreciate the reasons for the Commission’s vexation – given that the Commission was not informed of the set-off arrangement and the way in which it was implemented until the present proceedings were already under way – I do not consider it reasonable to place on the Hellenic Republic the burden of proving, in the context of the present proceedings for failure to fulfil obligations, that the award in question did not result in an overestimation of the damage invoked by OA and, accordingly, did not involve the grant of new aid to the company.
41. On the other hand, I do not believe that it is for the Court, in the context of infringement proceedings, to evaluate whether the measures proposed or adopted by a Member State in order to meet the recovery obligation imposed by a Commission decision involve new elements of aid. That is particularly true in the circumstances of the present case in which, on the one hand, the question of recovery purportedly effected through the grant of new aid was raised for the first time before the Court and, accordingly, was not addressed in the course of the pre‑litigation procedure, when the Commission could have obtained and examined the evidence necessary for an assessment, and, on the other hand, the Commission has launched an administrative procedure concerning, inter alia, elements of aid the existence of which is merely an assumption on its part.
42. For those reasons, I suggest that the Court should hold that the Commission has failed to show that the failure of the Hellenic Republic to fulfil its obligation to recover the aid referred to in Article 1 of the 2002 Decision continued until the Court’s examination of the facts.
3. Recovery of the aid referred to in Article 2 of the 2002 Decision
a) Scope of the obligation to recover the aid
43. As we saw above, the Court expressly excluded the obligation to recover the aid referred to in Article 2 of the 2002 Decision, consisting in the non-payment of social security obligations, from the scope of its ruling in the 2005 Judgment that the Hellenic Republic had failed to fulfil its obligations. Furthermore, after the present proceedings had been brought, the Court of First Instance – by judgment of 12 September 2007 (30) in the action brought by OA – annulled Articles 2 and 3 of the 2002 Decision ‘in so far as they concern tolerance of persistent non-payment of airport charges by [OA] to Athens International Airport at Spata and of value added tax owed by Olympic Aviation on fuel and spare parts’, and dismissed the remainder of the application. (31)
44. It follows that, at the time of the Court’s examination of the facts, the recovery obligation that remained incumbent on the Hellenic Republic pursuant to Article 2 of the 2002 Decision, read in conjunction with Article 3 thereof, covered – and this is common ground – the aid elements consisting in failure to pay (i) the airport rents and (ii) the ‘spatosimo’ tax.
45. However, there has been debate before the Court as to whether the recovery obligation also covered the aid element considered by the Commission in recital 209 of the 2002 Decision, that is to say, the ‘tolerance of a persistent non-payment of airport charges’. The Hellenic Republic argues that, in this case, there is no repayment obligation, because that aid element is not referred to in the enacting terms of the 2002 Decision.
46. For its part, the Commission – without expressing a view on the arguments advanced by the Hellenic Republic – clearly stated in its reply that the sum referred to in recital 209 is covered by the recovery order. However, when asked about this at the hearing and in two different written questions put in accordance with Article 54a of the Rules of Procedure, the Commission altered its initial position, stating that the sum at issue does not have to be recovered because it does not in itself constitute State aid and, consequently, was not included in the enacting terms of the 2002 Decision. I must confess that I do not find that last argument at all clear and, above all, it is not, to my mind, borne out by the relevant parts of the 2002 Decision. In fact, one of the forms of aid declared by Article 2 of the 2002 Decision to be incompatible with the common market was the aid ‘implemented in the form of tolerance of a persistent non-payment of ... airport charges payable to Athens International Airport and other airports ’. (32) Now, the reference to charges owed by OA to airports other than Athens International Airport at Spata would appear to be a reference to recitals 151 to 153 and recital 209 of the decision, which analyse the set-off agreement between the Greek State and OA concerning OA’s debts, in the amount of EUR 28.9 million, to various airports and pertaining to the non-payment of airport charges for domestic and international flights during the period between November 1994 and December 1998. (33) Furthermore, those are the only recitals in which the charges in question are addressed. Accordingly, the actual text of the 2002 Decision seems rather to support the Commission’s original argument, according to which the sum of EUR 28.9 million referred to in recital 209 is also covered by the recovery order under Article 3 of that decision.
47. In any event, setting aside any consideration relating to the interpretation of the decision, the Court cannot, in my view, disregard the position most recently adopted by the Commission, which implies, in the final analysis, a withdrawal of its claim that the Hellenic Republic has failed to recover the sum in question, originally categorised as an element of the failure to fulfil obligations alleged in the context of these proceedings.
48. In conclusion, regard being had to the above findings, the recovery obligation incumbent upon the Hellenic Republic, pursuant to Articles 2 and 3 of the 2002 Decision, at the time of the Court’s examination of the facts, covered the elements of aid consisting in the non-payment of (i) the rents owed to various regional airports and (ii) the ‘spatosimo’ tax.
b) Implementation of the recovery obligation
i) The rentals owed to various regional airports
49. Recital 206 of the 2002 Decision refers to the non-payment by OA of airport rentals relating to the period from 1998 to 2001 and totalling EUR 2.46 million. In its response to the reasoned opinion, the Hellenic Republic maintained that OA’s debts to the DCA in relation to the non-payment of those rentals had in part been offset – in the amount of approximately EUR 2.3 million – and in part cancelled, and that in that connection the amounts outstanding were the sum of EUR 176 082.17 (relating to an invoice which OA has contested) and the sum of EUR 478 609.91 (relating to another invoice which OA has contested, issued in the name of Olympic Aviation, a company belonging to the OA group). In its rejoinder, the Greek Government maintains that the DCA had carried out another check of OA’s debts in relation to the non-payment of airport rentals, which revealed that only EUR 1 818 027 – not EUR 2.3 million, as previously stated – had in fact been repaid. It is maintained that that difference was brought about by the dismissal of Olympic Aviation’s action.
– Repayment of the sum of EUR 1 818 027
50. The Hellenic Republic contends that this sum was repaid in June 2006. The Commission maintains, first, that the documentation appended to Greece’s response to the reasoned opinion did not provide any information as to the methods used to recover that sum and, secondly, that the certifying documents produced for the first time before the Court do not prove that it was actually repaid.
51. When questioned by the Court as to the methods of recovery, the Hellenic Republic first referred to the information already provided in response to the reasoned opinion, which allegedly shows that four DCA invoices, totalling EUR 1 087 141.43, had been cancelled by the DCA by decision of 3 December 2003 because of tariff errors, and replaced with an invoice for EUR 605 072.63. The decision in question is appended to the letter replying to the reasoned opinion and refers to 14 invoices, including the four in question, for an amount totalling EUR 2 690 281.91. Not only does that decision concern an amount which is not the same as the amount indicated by the Greek authorities in their reply to the reasoned opinion and their reply to the Court’s written questions, it fails to specify the reasons that led the DCA to cancel and replace the invoices in question. Furthermore, it is stated in recital 5 of that decision that all of the cancelled invoices relate to the rental of space at the old Athens Airport for a period subsequent to (34) the period to which recital 206 of the 2002 Decision refers (1998-2001). Lastly, I note that the evidence produced in order to prove payment of the sum of EUR 605 072.63, corresponding to the new invoice replacing the earlier invoices, consists of three certifying documents, one from the DCA dated 28 September 2007, and two issued by the tax authorities, which do not, however, indicate how that payment was made. In those circumstances, the Commission is entitled to dispute whether those declarations are capable of proving that recovery actually took place.
52. The Hellenic Republic referred, secondly, to the Decree of the Minister for Finance and the Economy of 8 February 2005, appended to the Greek authorities’ reply to the reasoned opinion, which made provision for the debts mutually owed by OA and the DCA to be set off in an amount totalling EUR 1 073 371.93. That set-off arrangement purportedly also covered OA’s debts in relation to the non-payment of three invoices for airport rentals totalling EUR 349 081.73. (35) In addition to the fact that the table set out in paragraph 3.78 of the reply to the reasoned opinion indicates that two of the three invoices in question (No 4082/01 and No 227/02) concern services provided to OA between January and April 2002 – that is to say, during a period subsequent to the period to which recital 206 of the 2002 Decision refers – the Hellenic Republic has provided no information concerning the debts which the DCA owed to OA and which have allegedly been offset; nor is it possible to extract such information from the Ministerial Decree which provided for the set-off arrangement or the declarations of the tax authorities which were produced before the Court.
53. As we saw above, (36) the Court has held that, where a Member State recovers State aid by means other than a cash payment, it must provide the Commission with all the information enabling it to establish that the means chosen constitute an appropriate means of implementing the decision. In the present case, the Commission maintains that the information provided by the Hellenic Republic does not make it possible to identify which of the Greek State’s debts to OA have been offset.
54. As the Commission has suggested, I consider that where a Member State decides to recover aid by means of a set-off arrangement, the documentation produced must at the very least provide a clear indication of (i) the nature of the payments made by the aid beneficiary to the State that have been taken into account for the purposes of the set-off arrangement and (ii) the amount of those payments, and the period to which they refer. That information must be given to the Commission, one way of doing so being to produce the relevant invoices. In my view, however, and as the Commission has rightly argued, the production of an official document, issued by the authorities of the Member State concerned, which merely indicates that the beneficiary undertaking’s debts to the State, resulting from the grant of aid, have been offset, is not sufficient to prove that recovery has been properly effected on the basis of a set-off arrangement.
55. In the present case, as the Commission has argued, the information provided by the Greek Government does not appear sufficient to confirm the actual recovery of the sum of EUR 349 081.73, corresponding to the three invoices referred to in point 52 above.
56. In conclusion, I agree with the Commission that the documentation produced by the Hellenic Republic is insufficient to prove that the sum of EUR 1 818 027 was recovered, having purportedly been repaid by OA in June 2006 as part of the aid element referred to in recital 206 of the 2002 Decision.
– The repayment of EUR 176 082.18, corresponding to DCA invoice No 3307/98
57. According to the Greek Government’s statement of defence, the outstanding amount owed by OA for unpaid airport rentals amounted – after the purported repayment of EUR 1 818 027 considered above – to EUR 654 692 (EUR 176 082.18 + EUR 478 606.91). Of that sum, EUR 176 082.18 plus interest, totalling EUR 352 808.78, had purportedly been repaid on 31 August 2007. In reply to a written question put in accordance with Article 54a of the Rules of Procedure, the Greek Government explained that this sum had been offset by the sums awarded to OA as compensation by arbitral award No 57/2006, mentioned above. Accordingly, as regards the proof that the recovery obligation was fulfilled in relation to that figure, the findings set out in points 40 and 41 above apply.
– The repayment of EUR 478 606.91 corresponding to DCA invoice No 4175/99, issued in relation to Olympic Aviation
58. The amount corresponding to that invoice plus interest, totalling EUR 933 289.41, was purportedly repaid on 2 October 2007 on the basis of an arrangement under which the debts mutually owed by OA and the DCA could be set off against one another. As evidence, the Greek Government appended to its statement of defence the Decree of the Greek Minister for Finance and the Economy making provision for the set-off arrangement, together with a letter from the DCA to OA dated 17 October 2007; also appended to that letter is a detailed statement of the amounts involved in the set-off arrangement. That statement shows that the claims made by OA in relation to the DCA concerned the assistance which OA had provided to DCA aircraft during the period from 1 January 2004 to 31 July 2007. Appended to the statement of defence are two other letters from the DCA, addressed to OA: the first letter, dated 2 October 2007, states that, as regards the airport rentals owed for the period from 1998 to 2001, ‘all of OA’s debts have been paid, cancelled, offset or passed to the appropriate tax authority to be verified and recovered’; the second letter, dated 19 October 2007, confirms that among the debts of OA which had been offset in accordance with the Ministerial Decree of 2 October 2007 was the invoice in question of EUR 478 606.91 plus interest.
59. The information produced by the Greek Government on the recovery of the sum in question, in particular the information contained in the annex to the DCA’s letter of 17 October 2007, is decidedly more detailed and, contrary to the Commission’s claims, makes it possible to identify with a sufficient degree of clarity the nature, the amount and the period of time covered by OA’s claims against the DCA, which were taken into account for the purposes of the set-off arrangement.
– Findings in relation to the fulfilment of the obligation to recover the element of aid referred to in recital 206 of the 2002 Decision
60. On the basis of all the above assessments, it is my belief that, at the time of the Court’s examination of the facts, there was demonstrably a failure to implement the obligation to recover from OA the element of aid referred to in recital 206 of the 2002 Decision, consisting in the persistent non-payment of airport rentals owed during the period from 1998 to 2001 and totalling EUR 2.46 million, with the exception of the sum of EUR 176 082.18, corresponding to DCA invoice No 3307/98, and the sum of EUR 478 606.91, corresponding to DCA invoice No 4175/99, in respect of services provided for the benefit of Olympic Aviation.
ii) Repayment of the ‘spatosimo’ tax
61. Recital 208 of the 2002 Decision refers to the element of aid consisting in the tolerance of OA’s persistent non-payment of the tax for modernising and developing airports, the ‘spatosimo’ tax, for the period between December 2000 and February 2002 and for the month of March 1999, totalling approximately EUR 60 999 156.
62. In its statement of defence, the Hellenic Republic maintains that it informed the Commission, on several occasions, that a portion of the tax owed for the period in question had been paid before the 2002 Decision was adopted. The evidence concerning the payment, in that connection, of a total of EUR 22 806 158.87 was purportedly sent to the Commission, appended to a letter of the then Secretary-General for Transport, dated 26 June 2003; the relevant extracts from that letter and the relevant annexes were produced before the Court. As was pointed out by the Commission, the supporting documents pertaining to the payment in question consist in (i) a series of forms issued by OA, none of which displays in the appropriate box the stamp of the bank that supposedly received the payment (Trapeza tis Ellados) and (ii) a certificate concerning the corresponding movements from OA’s account, which is illegible. In those circumstances, I agree with the Commission that the documents that have been produced are insufficient evidence that the sums in question were actually paid.
63. As regards the DCA’s letter to OA of 2 October 2007, appended to the statement of defence and confirming the payment by OA, on 24 September 1999 and 29 June 2001, of a total of EUR 22 806 158.87 by way of payment of the ‘spatosimo’ tax for March 1999 and for the period from December 2000 to May 2001 respectively, I do not believe that, in the absence of the relevant supporting documents, this constitutes definite proof that payment was made. To my mind, the same is true of the certificate of OA’s tax position, which was appended to the statement of defence and which shows that, as at 29 January 2008, the company had no debt owing to the State.
64. As regards the outstanding amount owed by way of the ‘spatosimo’ tax – after payment of the abovementioned EUR 22 806 158.87 – namely the sum of EUR 38 192 997, the Greek Government stated in reply to the written questions put in accordance with Article 54a of the Rules of Procedure that that amount had been offset, together with the interest that fell due on 31 August 2007, by the sums owed by the State as compensation under arbitral award No 57/2006, referred to above. Accordingly, as regards the proof that the recovery obligation had been fulfilled in relation to that sum, the considerations set out in points 40 and 41 above apply.
c) Conclusions concerning the obligation to recover the aid referred to in Article 2 of the 2002 Decision
65. On the basis of all of the above assessments, I consider it to have been proved that the failure on the part of the Hellenic Republic to fulfil its obligations under Article 2 of the 2002 Decision, read in conjunction with Article 3 thereof, persisted until the Court’s examination of the facts, in relation to (i) the recovery from OA of the element of aid referred to in recital 206 of the 2002 Decision, consisting in the persistent non-payment of airport rentals owed during the period from 1998 to 2001, totalling EUR 2.46 million, with the exception of the sum of EUR 176 082.18, corresponding to DCA invoice No 3307/98, and the sum of EUR 478 606.91, corresponding to DCA invoice No 4175/99, in respect of services provided for the benefit of Olympic Aviation, and (ii) the recovery from OA of the element of aid referred to in recital 208 of the 2002 Decision, consisting in the persistent non-payment of the ‘spatosimo’ tax, in an amount totalling EUR 60 999 156, with the exception of the sum of EUR 38 192 997.
B – The financial penalties
66. In 2005, the Commission adopted a new communication on the application of Article 228 EC (‘the 2005 Communication’). (37) In paragraph 10 of the 2005 Communication, the Commission states that the need to prevent compliance out of time on the part of the Member States from not resulting in any penalty and, accordingly, from not being effectively discouraged, led it to change the practice followed on the basis of the two earlier communications (38) and, henceforth, systematically to seek in actions under Article 228 EC both a penalty payment and a lump sum payment. In the present case, the Commission claims, in line with that approach, that the Court should impose both those financial penalties on the Hellenic Republic.
1. The penalty payment
a) Arguments of the parties
67. The Commission maintains that a penalty payment of EUR 53 611 for every day of delay in implementing the 2005 Judgment, running from the date on which judgment is delivered in the present case, properly reflects the seriousness and duration of the alleged infringement and takes account of the need to ensure that the penalty has a coercive and deterrent effect. In accordance with the method of calculation set out in paragraph 14 of the 2005 Communication, that figure is determined by multiplying a uniform flat-rate reference sum of EUR 600 per day by a coefficient of seriousness and a coefficient of duration, and then multiplying the result obtained by a factor ‘n’ which takes account of the defendant State’s ability to pay, calculated on the basis of its gross domestic product and the number of votes that it has within the Council; in the case of Greece, that coefficient is set at 4.38. As regards the seriousness
of the infringement, the Commission has applied a coefficient of 12, on a scale of 1 to 20, in the light both of the importance of the Community rule which was infringed and of the consequences of that infringement on general and individual interests. As regards the duration
of the infringement, the Commission takes into account the period of 17 months which elapsed between the date of the 2005 Judgment (12 May 2005) and the date of the decision to refer the matter to the Court (18 October 2006), applying a coefficient of 1.7 in accordance with paragraph 17 of the 2005 Communication. However, the Commission leaves to the Court the possibility of fixing a higher coefficient to take account of the period that elapsed between its decision to refer the matter to the Court and the Court’s examination of the facts.
68. The Hellenic Republic contends, principally, that the Commission’s application for it to be ordered to make a penalty payment must be dismissed, as it has become inoperative, given that the 2005 Judgment has been complied with in full. In the alternative, the Hellenic Republic contends that the amount proposed by the Commission is disproportionate and must be reduced, in view of three factors: (i) the 2005 Judgment was complied with quickly, despite the lack of cooperation from the Commission and the lack of clarity of some aspects of the 2002 Decision; (ii) the Court of First Instance partially annulled the 2002 Decision, with the result that there can be no complaint against Greece for breach of obligations as far as the elements of aid covered by the annulment are concerned; (iii) the coefficient of seriousness set by the Commission is disproportionate, both as compared with the coefficients applied in other cases, notwithstanding the more serious nature of the infringements concerned, and in relation to the specific consequences of that infringement on general and individual interests. In that last connection, the Greek Government observes, inter alia, that OA has ceased all flight operations and that, in consequence, the delay in recovering the aid in question has not continued to distort competition in the air transport sector.
b) Assessment
69. According to settled case-law, the imposition pursuant to Article 228 EC of a penalty payment – whose coercive role in relation to the continuing failure to fulfil obligations has been highlighted by the Court on a number of occasions (39) – is justified, in principle, only if the failure to comply with an earlier judgment of the Court persists. (40) Given that, on the basis of the above assessments, I am proposing that the Court should declare that the failure to fulfil obligations in the present case remains in part ongoing, the Commission’s request that a penalty payment be imposed on the defendant Member State must, in my view, be upheld.
70. The amount of the penalty payment proposed by the Commission is calculated in accordance with the method set out in the 2005 Communication. In that connection, the Court has emphasised more than once that guidelines such as those contained in the Commission’s communications do not bind the Court, but help to ensure that the Commission acts in a manner that is transparent, foreseeable and consistent with legal certainty. (41) It follows that, for the Court, the proposals made by the Commission on the basis of those guidelines are merely a useful point of reference. (42)
71. Given that the purpose of a penalty payment, imposed where a Member State fails to fulfil its obligation to comply with a judgment establishing that it is in breach of its obligations, is to place that Member State under economic pressure so as to compel it to put an end to the infringement established, the amount of the penalty must be decided upon according to the degree of coercion needed if the Member State in question is to alter its conduct. (43) It is for the Court, in the exercise of its discretion, to set the penalty payment at a level that it is appropriate to the circumstances and proportionate in relation both to the infringement that has been established and to the ability to pay of the Member State concerned. (44) With that in mind, the basic criteria that must be taken into account in order to ensure that penalty payments have coercive force for the purposes of the uniform and effective application of Community law are, in principle, according to the Court, the degree of seriousness of the infringement, its duration and the ability to pay of the Member State concerned. (45) Ultimately, those criteria are not substantively different from those envisaged by the Commission in its various communications on the application of Article 228 EC. (46)
72. In the present case, as regards, first, the seriousness
of the infringement, I agree with the Commission that the application of a high coefficient is in principle justified, given that the Treaty rules on State aid are vital to the establishment of a system which is designed to ensure that there is no distortion of competition in the internal market; and the obligation to recover aid which is incompatible with the common market is the logical corollary of the prohibition laid down in those rules. It should also be borne in mind that, after the 2002 Decision, the Commission ascertained that new aid had been granted to OA (the 2005 Decision) and that, in 2008, the Court found that Greece had failed to meet its obligation to recover that aid also.
73. However, for the purposes of determining the appropriate coefficient to apply in the present case, it is necessary, in my view, to take account also of the following factors which, taken together, mitigate the degree of seriousness inherent in the nature of the infringement. To begin with, it must be borne in mind that the amount of the aid in relation to which the recovery obligation still exists and does not appear to have been fulfilled is distinctly lower than the amount taken into account by the Commission for the purposes of assessing the seriousness of the infringement. (47) To that end, it is necessary to take into account not only the partial annulment of the 2002 Decision by the Court of First Instance after the action had been brought, but also the fact that the Commission originally claimed that the defendant Member State had also failed to recover the element of aid referred to in recital 209 of that decision and – if the analysis I have proposed is adopted – those aspects of the infringement which the Commission has failed to prove are still ongoing.
74. Furthermore, as regards the implications for general and individual interests of the failure to comply with the 2005 Judgment, it should be noted that it is not clear from the file that, when evaluating those implications for the purposes of assessing the seriousness of the infringement, the Commission specifically examined the impact of the transfer of flight operations from OA to NOA in December 2003. Now, even though that transfer may entail the transfer to the new operating company of the benefits of the aid received by OA – and, in consequence, the continuing distortion of competition on the market in air transport – the Commission has confined itself in the present proceedings to stating the obvious, that is to say, to stating that the transfer took place. (48) In those circumstances, it is difficult to assess the full impact of the persistence of the infringement at issue on operators active on that market. (49) However, it should be recalled that, in the 2005 Judgment, the Court held that the transfer at issue ‘created an obstacle to the effective implementation of [the 2002 Decision] and to the recovery of the aid by means of which the Greek State had supported the commercial activities of [OA]’ and that ‘[t]he purpose of that decision, which aims to restore undistorted competition in the civil aviation sector, was thus seriously compromised’. (50)
75. Lastly, it does not seem appropriate to me to accept the Hellenic Republic’s argument concerning the lack of cooperation from the Commission at the time when the obligation to recover was being implemented. Even if some of the information in the file suggests that there were communication problems between the Hellenic Republic and the Commission, it does not seem to me that, overall, either party can be accused of conduct which is contrary to the obligation under Article 10 EC to provide genuine cooperation and which would be justification for taking into account, as the case may be, an aggravating or a mitigating circumstance.
76. On the basis of the foregoing considerations, it seems to me that a seriousness coefficient of 12 (on a scale between 1 and 20), as proposed by the Commission, is excessive in the present case and that, instead, a coefficient of 3 would more appropriately reflect the seriousness of the infringement at issue.
77. As regards, secondly, the duration
of the infringement, the case-law has already made it clear that the relevant coefficient must be assessed ‘by reference to the time when the Court assesses the facts, not the time at which the case is brought before it by the Commission, and the Court’s discretion is moreover not limited by the scale of 1 to 3 proposed by the Commission.’ (51) In the present case, more than three and a half years have elapsed since the 2005 Judgment was delivered. (52) In similar circumstances, the Court recently held that a coefficient of 2 appropriately reflected the duration of the infringement. (53) I think that it would be fitting to apply the same coefficient in the present case.
78. Lastly, as regards the ability to pay
of the Member State concerned, the Court has acknowledged the appropriateness of the method of calculation proposed by the Commission in its communications, as ‘reflecting that Member State’s ability to pay, while keeping the variation between Member States within a reasonable range.’ (54) The coefficient set for Greece in the 2005 Communication, which I consider the correct coefficient to apply in the present case, is 4.38.
79. Multiplying the basic figure of EUR 600 by the three coefficients proposed – namely 3 based on the seriousness of the infringement, 2 based on its duration and 4.38 based on the ability to pay of the Member State concerned – we arrive at a figure of EUR 15 768 for every day of delay. That amount seems to me to be appropriate, bearing in mind that the penalty payment is intended as a means of coercion.
2. The lump sum payment
a) Arguments of the parties
80. For the purposes of calculating the lump sum payment, the Commission proposes multiplying a daily figure of EUR 200 by the coefficients of 12 (seriousness of the infringement) and 4.38 (ability to pay of the Member State), the coefficients already suggested as a basis for calculating the penalty payment. According to the Commission, the figure of EUR 10 512 per day, which that calculation would produce, must be applied for the period of time between the date on which the 2005 Judgment was delivered and the date on which judgment is delivered in the present case.
81. The Hellenic Republic contends, primarily, that no lump sum payment should be imposed upon it, given that it has ensured that the 2005 Judgment was complied with rapidly and in full. In the alternative, in case the Court decides that the judgment has not been complied with, the Hellenic Republic maintains that the cumulative application of the financial penalties provided for in Article 228 EC is precluded, since both penalties have the same objective. The Hellenic Republic also stresses that the Court has only once applied the penalty payment and the lump sum payment cumulatively, and the circumstances of that case were exceptional, largely because of the duration of the infringement. Lastly, the Greek Government contends that the figure proposed by the Commission is disproportionate. The arguments on which it relies are, in essence, the same as those used to dispute the amount of the penalty payment.
b) Assessment
82. The primary contention put forward by the Hellenic Republic, according to which no penalty under Article 228 can be imposed unless the infringement is ongoing, is contradicted by a recent judgment of the Court, in which the defendant Member State was ordered to make a lump sum payment despite the fact that, on the date on which judgment was delivered, the judgment originally establishing the infringement had been complied with properly and in full. (55) It follows that, even if – contrary to my proposal – the Court were to find that the Hellenic Republic has fully complied with the 2005 Judgment, that would not be sufficient to dispense that Member State from the imposition of a lump sum payment.
83. As regards the argument put forward in the alternative by the Hellenic Republic, it seems to me necessary, first, to reject the argument that the penalties provided for under Article 228 cannot be applied cumulatively because they pursue the same objectives. Even setting aside the fact that the Court has already applied a penalty payment together with a lump sum payment, that argument does not seem to me to be acceptable, especially in the light of the judgment mentioned in point 82 above. In that judgment, in fact, the Court – confirming an approach which was already discernible in earlier case-law – drew a clear distinction between the two penalties in terms of their function and the preconditions for their application. The main function of the penalty payment is to induce ‘a Member State to put an end as soon as possible to a breach of obligations which, in the absence of such a measure, would tend to persist,’ (56) and, consequently, if such a penalty is to be applied, the breach of obligations must be ongoing. The lump sum payment, on the other hand, is intended rather to penalise the infringement because of its effects and its duration, and to prevent the recurrence of similar infringements: consequently, that penalty may also apply to an infringement which has since been brought to an end. Given their different functions, the cumulative application of the two penalties cannot, in principle, be ruled out, even though the final objective pursued by means of their application is the same, namely to ensure the effective application of Community law by the Member States. (57)
84. I would also point out that, when applying the penalty payment and the lump sum payment cumulatively for the first time, the Court stated that it is for the Court itself ‘in each case, in the light of the circumstances before it and the degree of persuasion and deterrence which appears to it to be required, to determine the financial penalties appropriate for making sure that the judgment which previously established the breach is complied with as swiftly as possible and preventing similar infringements of Community law from recurring’. (58) The Court’s decision to apply one or other of the penalties or, possibly, to apply them cumulatively, is thus based exclusively on the circumstances of the specific case and the degree of coercion and deterrence required; the choice made by the Court between the possible measures available is in no way linked to a particular degree of seriousness of the infringement or a particular duration. Cumulative application of the penalty payment and the lump sum payment could, for instance, prove particularly appropriate where the compliance out of time with the judgment establishing the infringement has been less than full, and the penalty payment is thus commensurate with the ongoing aspects of the infringement. In such cases, the imposition on the Member State of a lump sum payment at the same time makes it possible to penalise it also for infringements which have meanwhile come to an end.
85. That said, I would point out that, according to the Court, the imposition of a lump sum payment does not follow automatically, as the Commission suggests in the 2005 Communication; rather, it must in each individual case ‘depend on all the relevant factors pertaining to both the particular nature of the infringement established and the individual conduct of the Member State involved in the procedure instigated pursuant to Article 228 EC’. (59) In that connection, I would point out that, in Case C‑121/07 Commission
v France, the Court attached particular relevance to the fact that a number of judgments had already been delivered against the defendant Member State under Article 226 EC, establishing that it was in breach of its obligations in the same sector as the infringement at issue in Case C‑121/07. (60)
86. In the light of the abovementioned criteria, I consider that the imposition of a lump sum payment is justified in the present case principally on the basis of the considerations set out in point 72 above concerning the seriousness of the infringement at issue, that is to say, the importance of the rules that have been infringed and the fact that it has already been held – on two separate occasions, but concerning this same beneficiary – that, by failing to recover aid incompatible with the common market, the Hellenic Republic had failed to fulfil its obligations.
87. As regards the duration of that infringement starting from the date of delivery of the 2005 Judgment, it should be borne in mind that the implementing measures which, according to the Greek authorities, secured the effective recovery of part of the aid in question, were not adopted until between August and October 2007, and that some aspects of the infringement went on for more than three and a half years from the date on which that judgment was delivered. In my view, examination of the file does not disclose any justification for such a delay, particularly in view of the fact that most of the measures notified to the Commission during the pre-litigation stage were not substantively different from those already adopted by the Hellenic Republic before the 2005 Judgment, which the Court had held to be inadequate for the purposes of ensuring the effective recovery of the aid. As for the difficulties of a domestic nature which the Hellenic Republic purportedly encountered in fulfilling its obligations, it should be recalled, first, that a Member State cannot plead provisions, practices or situations prevailing in its domestic legal order in order to justify failure to fulfil obligations (61) and, secondly, that, according to settled case-law, the application of procedures under national law for the recovery of aid which has been declared incompatible with the common market is conditional, under Article 14(3) of Regulation No 659/1999, on it being possible by means of those procedures to ensure the immediate and effective execution of the Commission’s decision. (62) Furthermore, as the Commission notes, the Court has already had occasion to explain that a national procedure which confers suspensory effect on actions contesting demands for payment issued with a view to recovering aid granted is not such as to ensure the ‘immediate and effective’ execution of the decision requiring recovery of the aid and, in consequence, does not satisfy the requirements laid down in Article 14(3) of Regulation No 659/1999. (63)
88. For the purposes of determining the amount of the lump sum payment, I consider that it is also necessary to take account of the findings set out in points 73 and 74 above, as regards the reduction in the total amount of the aid originally to be recovered and as regards the evaluation of the effects of the persistence of the infringement.
89. In the light of the foregoing, the imposition of a lump sum payment of EUR 2 million seems to me to reflect a fair evaluation of the facts of the present case.
3. Costs
90. 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 applied for the Hellenic Republic to be ordered to pay the costs and the infringement has been established, the latter must be ordered to pay the costs.
V – Conclusions
91. In the light of the above considerations, I propose that the Court should rule as follows in the present case:
(1) The Hellenic Republic has failed to fulfil its obligations under Article 228(1) EC, by failing to adopt and, in any event, by failing to notify to the Commission by the deadline specified in the reasoned opinion, all of the measures necessary in order to comply with the judgment in Case C‑415/03 Commission
v Greece [2005] ECR I‑3875, concerning the failure to recover the aid found to be unlawful and incompatible with the common market, with the exception of the aid relating to the contributions to the national social security institution, pursuant to Article 3 of Commission Decision 2003/372/EC on aid granted by Greece to Olympic Airways.
(2) The Hellenic Republic is ordered to pay to the Commission of the European Communities, into the account entitled ‘Own resources of the European Communities’ a penalty payment of EUR 15 768 for each day of delay in adopting, and/or notifying to the Commission, the measures necessary in order to comply with the judgment in Case C‑415/03 Commission
v Greece, starting from the date of delivery of judgment in the present case and continuing until such time as the judgment in Case C‑415/03 has been complied with.
(3) The Hellenic Republic is ordered to make a lump sum payment of EUR 2 million to the European Commission, into the account entitled ‘Own resources of the European Communities’.
(4) The Hellenic Republic is ordered to pay the costs.
(1) .
(2)  –	Case C-415/03 Commission
v Greece
[2005] ECR I‑3875.
(3)  –	OJ 2003 L 132, p. 1.
(4)  –	Decision 94/696/EEC of 7 October 1994 on the aid granted by Greece to Olympic Airways (OJ 1994 L 273, p. 22).
(5)  –	OJ 1998 L 128, p. 1.
(6)  – Equivalent to the second instalment of the recapitalisation operation, approved in 1998.
(7)  –	C(2005)2706 concerning aid granted by Greece to Olympic Airways and Olympic Airlines.
(8)  –	The relevant cases are Case T-415/05 Greece
v Commission, Case T-416/05 Olympic Airlines
v Commission
and Case T-423/05 Olympic Airways
v Commission, still pending.
(9)  –	Case C-419/06 Commission
v Greece .
(10)  –	Paragraphs 33 and 34.
(11)  –	Paragraph 35.
(12)  –	Paragraph 39.
(13)  –	Paragraph 41.
(14)  –	Paragraph 44.
(15)  –	The Hellenic Republic maintains that (i) the conclusion of the agreement for the sale of NOA, in accordance with the ‘Memorandum of Understanding’ between Greece and Olympic Investors/York Capital of 5 August 2005, which was notified to the Commission, was subject to quantification of the aid declared to be incompatible with the common market in the 2005 deci sion and (ii) the negotiations failed specifically because the Commission failed to cooperate on that matter.
(16)  –	According to the Hellenic Republic, its Permanent Representative received the reasoned opinion on 14 April 2006.
(17)  –	See Case C-304/02 Commission
v France
[2005] ECR I‑6263, paragraph 30, and Case C-177/04 Commission
v France
[2006] ECR I‑2461, paragraph 20.
(18)  –	See Case C-304/02 Commission
v France, paragraph 31, and Case C‑177/04 Commission
v France, paragraph 21.
(19)  –	Case C-209/00 Commission
v Germany
[2002] ECR I‑11695, paragraph 32. See also Case C‑24/95 Alcan Deutschland
[1997] ECR I-1591, paragraph 24; Case C‑142/87 Belgium
v Commission
[1990] ECR I-959, paragraph 61; and Case C‑5/89 Commission
v Germany
[1990] ECR I-3437, paragraph 12.
(20)  –	OJ 1999 L 83, p. 1.
(21)  –	Case C‑209/00 Commission
v Germany, cited in footnote 19, paragraph 34.
(22)  –	Case C 387/97 Commission
v Greece
[2000] ECR I‑5047, paragraph 73.
(23)  –	See, to that effect, Case 272/86 Commission
v Greece
[1988] ECR 4875, paragraph 21; Case C‑365/97 Commission
v Italy
[1999] ECR I‑7773, paragraphs 84 to 87; and Case C‑304/02 Commission
v France, cited in footnote 17, paragraph 56.
(24)  –	Case 96/81 Commission
v Netherlands
[1982] ECR 1791, paragraph 7.
(25)  –	Case C‑209/00 Commission
v Germany, cited in footnote 19, paragraphs 40 to 44.
(26)  –	In particular, EUR 41 085 840 by way of capital and EUR 32 277 267 in interest at 31 August 2007.
(27)  –	It is worth pointing out that the action forming the subject-matter of that award is dated 20 March 2006 and the Hellenic Republic claims to have informed the Commission in good time that it had been brought. It is also maintained that the arbitral awards
were notified to the Commission, for information, on 29 January 2008.
(28)  –	2007/2666/EC.
(29)  –	Moreover, it does not appear that the awards in question were formally notified in the context of those proceedings, resulting in suspension of the payments due in accordance with those awards; nor does it appear that the Commission issued a suspensory order to that effect, in which circumstances it might have been possible to maintain that OA could not collect the sums paid for its benefit and, in consequence, that the conditions for setting off were not met.
(30)  –	Case T-68/03 Olympiaki Aeroporia Ypiresies
v Commission [2007] ECR II‑2911.
(31)  –	Paragraphs 1 and 2 of the operative part of the judgment.
(32)  –	Emphasis added.
(33)  –	Recitals 151, 152 and 153 appear in the part of the decision which describes the new unlawful aid (point 5.2), implemented in the form of ‘Greece[‘s] tolerance with the default or deferred payment or any other advantageous treatment under Greek fiscal and commercial law’ (point 5.2.2). Recital 209 appears in the part of the decision concerning assessment of the aid (point 6), entitled ‘Alleged new aid concerning the tolerance with default payment or any other advantageous treatment under Greek fiscal and commercial law’ (point 6.2.1.2). To that effect, see also Olympiaki Aeroporia Ypiresies
v Commission, cited in footnote 30. I would point out that Athens International Airport at Spata opened on 28 March 2001; accordingly, the charges in question cannot relate to that airport.
(34)  –	Between April 2001 and September 2003.
(35)  –	The invoices in question are Invoice No 3513/01 for EUR 116 833.81; Invoice No 4082/01 for EUR 116 123.96; and Invoice No 227/02 for EUR 116 123.96.
(36)  –	See point 32 above.
(37)  –	Communication from the Commission of 13 December 2005 – application of Article 228 of the EC Treaty, SEC(2005) 1658.
(38)  –	Of 1996 and 1997 respectively.
(39)  –	See, in particular, Commission
v Greece, cited in footnote 22, paragraphs 90 and 92, and, most recently, Case C-121/07 Commission
v France
[2008] ECR I‑0000, paragraph 27.
(40)  –	See, in particular, to that effect, Case C-119/04 Commission
v Italy
[2006] ECR I‑6885, paragraphs 45 and 46, and Commission
v France, cited in footnote 39, paragraph 27.
(41)  –	See, to that effect, Case C-304/02 Commission
v France, cited in footnote 17, paragraph 85, and Case C-177/04 Commission
v France, cited in footnote 17, paragraph 70.
(42)  –	See Commission
v Greece, cited in footnote 22, paragraph 89.
(43)  –	See, to that effect, Case C-304/02 Commission
v France, cited in footnote 17, paragraph 91, and Case C-177/04 Commission
v France, cited in footnote 17, paragraphs 59 and 60.
(44)  –	See Case C-304/02 Commission
v France, cited in footnote 17, paragraph 103, and Case C‑177/04 Commission
v France, cited in footnote 17, paragraph 61.
(45)  –	See Case C-70/06 Commission
v Portugal
[2008] ECR I‑1, paragraph 39.
(46)  –	See Case C-304/02 Commission
v France, cited in footnote 17, paragraph 104, and Case C‑177/04 Commission
v France, cited in footnote 17, paragraph 62.
(47)  –	In that connection, I do not share the Commission’s view that the amount of the aid to be recovered does not have a bearing on the seriousness of the infringement. In fact, it is apparent from the application that the Commission itself took that sum into account in determining the coefficient of seriousness, particularly when assessing the impact of the infringement on general and individual interests, and, in addition, point 16.4 of the 2005 Communication specifically includes ‘the financial sums involved in the infringement’ among the factors that the Commission will take into account by way of illustration for the purposes of assessing, on a case-by-case basis, the impact of the infringement on general and individual interests.
(48)  –	I would point out that in the 2005 decision, the Commission concluded that ‘NOA is the company which succeeded OA, at least for the purposes of recovering the State aids prior to the demerger’ (recital 183). NOA disputes that finding in the action contesting that decision, which is the subject-matter of Case T-416/05 pending before the Court of First Instance.
(49)  –	In that connection, the reference in the reply to the fact that OA continues to provide ground assistance services, which have also been liberalised, is not, to my mind, relevant. By that reference, the Commission appears to suggest, without providing any evidence, that there may be ongoing distortion of competition on a market other than the civil aviation market, which, moreover, would require proof that the benefit of the aid received by OA had not been transferred to NOA in its entirety.
(50)  –	Paragraph 34.
(51)  –	See Case C‑177/04 Commission
v France, cited in footnote 17, paragraph 71, and Commission
v Portugal, cited in footnote 45, paragraph 44. The Court has not specified which date should be taken into consideration for the purposes of determining ‘the time when the Court assesses the facts’; however, the judgment in Commission
v Portugal
indicates that this is not the date of the hearing. For reasons of simplicity and transparency, it seems to me to be preferable to set that date as the date of the judgment rather than of the deliberation, which is not made public.
(52)  –	The case-law clearly indicates that, for the purposes of calculating the duration of the infringement, the starting date is the date of delivery of the judgment which first established the infringement ( Commission
v Portugal, cited in footnote 45, paragraph 46). The argument of the Hellenic Republic that the starting date should be the deadline specified in the reasoned opinion delivered under Article 228 EC should therefore be disregarded.
(53)  –	Commission
v Portugal, cited in footnote 45, paragraph 46.
(54)  –	Commission
v Greece, cited in footnote 22, paragraph 88, and Case C‑304/02 Commission
v France, cited in footnote 17, paragraph 109.
(55)  –	Case C‑121/07 Commission
v France, cited in footnote 39, paragraph 56.
(56)  –	Paragraph 58.
(57)  –	Case C‑121/07 Commission
v France, cited in footnote 39, paragraph 57.
(58)  –	Case C‑ 121/07 Commission
v France, cited in footnote 39, paragraph 59.
(59)  –	Case C‑121/07 Commission
v France, cited in footnote 39, paragraph 62.
(60)  –	Case C‑121/07 Commission
v France, cited in footnote 39, paragraph 66.
(61)  –	See, inter alia, Case C-119/04 Commission
v Italy
[2006] ECR I‑6885, paragraph 25, and Case C-195/02 Commission
v Spain
[2004] ECR I‑7857, paragraph 82.
(62)  –	See Case 94/87 Commission
v Germany
[1989] ECR 175, paragraph 12; Alcan Deutschland, cited in footnote 19, paragraph 24; and Commission
v Germany, cited in footnote 21, paragraphs 32 to 34.
(63)  –	Case C-232/05 Commission
v France
[2006] ECR I‑10071, paragraph 49.