OPINION OF ADVOCATE GENERAL

ALBER

delivered on 15 May 2003 ( )

Case C-298/00 P

Italian Republic

v

Commission of the European Communities

(State aid – Carriage of goods by road – Existing and new aid – Principle of protection of legitimate expectations – Principle of proportionality – Duty to state reasons – Cross-appeal – Admissibility of the action at first instance – Concern to individuals of a decision regarding an aid scheme)

I – Introduction

1. The present dispute concerns State aid granted by the Friuli-Venezia Giulia Region to road haulage undertakings between 1981 and 1995. In its decision of 30 July 1997 ( ) the Commission declared the aid in question to be partly incompatible with the common market and to that extent ordered that it be recovered. The Court of First Instance, ruling on an action brought by undertakings affected by that decision, declared the decision to be partly void. ( )

2. In the present action the Italian Republic, which at first instance supported certain applicants as intervener, challenges the judgment of the lower court. The Commission has lodged a cross-appeal claiming that the action brought before the Court of First Instance was inadmissible. It considers that the decision addressed to Italy concerning an aid scheme prescribed by law is not of individual concern to the beneficiaries even if recovery of the aid is ordered in the decision. In the Commission’s opinion, the Court of First Instance ought to have examined the issue of admissibility of its own motion.

3. The Italian Republic has likewise brought an action before the Court for the Commission’s decision to be annulled. That action is pending under reference C‑372/97. ( )

4. The main point at issue is the extent to which the aid in question was such as to distort competition in the markets concerned, which at least in the early part of the period in which the aid was paid were not yet fully liberalised. Another point at issue is whether the principle of the protection of legitimate expectations and the principle of proportionality militate against a requirement that the aid be recovered.

II – Legal framework and background to the dispute

A – Community law

5. In the area of transport the general provisions concerning State aid contained in Article 92 of the EC Treaty (now, after amendment, Article 87 EC) and Articles 93 and 94 of the EC Treaty (now Articles 88 and 89 EC) are applicable save where the special provisions of Article 77 of the EC Treaty (now Article 73 EC) apply. Council Regulation (EEC) No 1107/70 of 4 June 1970 on the granting of aids for transport by rail, road and inland waterways ( ) sets out the conditions under which the Member States may grant permissible aid within the meaning of Article 77 of the EC Treaty.

6. During the period in which the aid at issue was granted, road haulage in the Community was still in the process of liberalisation. In this connection a distinction must be made between, on the one hand, the international road haulage market for cross-border transport and, on the other, cabotage, that is to say the carriage of goods within one Member State by a carrier established in another Member State.

7. The international road haulage market was opened up between 1969 and 1992, beginning with Council Regulation (EEC) No 1018/68 of 19 July 1968 concerning the establishment of a Community quota for road haulage between the Member States (hereinafter ‘Regulation No 1018/68’). ( ) The Community quota provided for in the Regulation and subsequently expanded by stages was divided among the Member States. Undertakings were entitled to provide, within the quotas allocated to their respective Member States, cross-border haulage services. This market was fully liberalised as from 1 January 1993. ( )

8. Liberalisation of cabotage did not begin until 1 July 1990. Here again quotas were established in the first instance; these were expanded by stages through to complete opening of the market on 1 July 1998. ( )

B – The contested aid provisions of the Friuli-Venezia Giulia Region

9. Friuli-Venezia Giulia Regional Law No 28 of 18 May 1981, on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter ‘Law No 28/1981’), provided for certain aid measures in favour of road haulage contractors established within that region.

10. The scheme introduced by that law was replaced by Regional Law No 4 of 7 January 1985 on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter ‘Law No 4/1985’), which essentially contained the same provisions on aid.

11. The above laws provided for three measures, which in simplified terms can be described as follows:

– subsidies in respect of interest on loans contracted for the purpose of the development of infrastructures (construction, purchase and modernisation of premises) and for the purchase of equipment, including road transport vehicles (Article 4 of Law No 4/1985);

– financing of the cost of leasing vehicles, trailers and semi-trailers, together with equipment for the maintenance and repair of vehicles and for the handling of goods (Article 5 of Law No 4/1985); and,

– in favour of groups and other forms of association, financing of up to 50% of investment in the construction or purchase of particular installations and equipment (Article 6 of Law No 4/1985).

12. Between 1981 and 1995, 2 202 applications were accepted and aid totalling in excess of EUR 22 million was disbursed.

13. The Friuli-Venezia Giulia Region suspended allocation of the aid concerned with effect from 1 January 1996 and, between September and December 1997, sent letters to the undertakings concerned notifying them of the Commission’s decision and informing them that the aid was to be recovered.

C – The contested decision

14. On 30 July 1997 the Commission adopted the contested decision, ( ) on completion of the administrative procedure. The operative part of that decision is worded as follows:

‘Article 1

Subsidies granted under Laws No 28/1981 and No 4/1985 [...] up to 1 July 1990 to companies exclusively engaged in transport operations at local, regional or national level do not constitute State aid within the meaning of Article 92(1) of the Treaty.

Article 2

The subsidies not covered by Article 1 of this Decision constitute aid within the meaning of Article 92(1) of the Treaty and are illegal since they were introduced in breach of Article 93(3).

Article 3

The subsidies for financing equipment specifically adapted for, and used solely for, combined transport constitute aid within the meaning of Article 92(1) of the Treaty but are compatible with the common market by virtue of Article 3(1)(e) of Regulation (EEC) No 1107/70.

Article 4

The subsidies granted from 1 July 1990 onwards to companies engaged in transport operations at a local, regional or national level and to undertakings engaged in transport operations at an international level are incompatible with the common market since they do not fulfil any of the conditions for derogation provided for in Article 92(2) and (3) of the Treaty, or the conditions provided for in Regulation (EEC) No 1107/70.

Article 5

Italy shall abolish and recover the aid referred to in Article 4. The aid shall be reimbursed in accordance with the provisions of domestic law, together with interest, calculated by applying the reference rates used for assessment of regional aids, as from the date on which the aid was granted and ending on the date on which it is actually repaid.

[...]’

15. In its statement of reasons, the Commission explained inter alia that the subsidies covered by Article 1 did not constitute aid within the meaning of Article 92(1) of the Treaty because the cabotage market had been closed to competition until 1 July 1990. Otherwise, however, competition had already existed in the markets concerned – albeit in the framework of quota arrangements – and the measures at issue were potentially such as to affect that competition.

III – Proceedings before the Court of First Instance and the contested judgment

16. A total of 165 undertakings to which the decisions were of concern brought actions (gathered into group actions in some cases) before the Court of First Instance for the annulment, in whole or in part, of the contested decision.

17. In its judgment of 15 June 2000, ( ) the Court of First Instance allowed the applications in part and found Article 2 of the decision to be null and void in so far as it declared aid granted from 1 July 1990 onwards to undertakings engaged solely in local, regional or national transport to be illegal. The corresponding order, in Article 5 of the contested decision, that such aid be recovered was also set aside. For the rest the applications were rejected.

18. The Court of First Instance considered that aid granted after 1 July 1990 to undertakings engaged solely in transport operations within Italy constituted existing aid and not, as the Commission took to be the case, new aid. The aid scheme had been introduced at a time when the cabotage market had not yet been liberalised and did not therefore at that juncture infringe Article 92 of the Treaty. The liberalisation, for which the Member State concerned was not responsible, could not result in existing and previously permissible aid becoming new aid that had to be notified to the Commission. ( )

19. The Court of First Instance also annulled the order for the recovery of the aid wrongly classed by the Commission as new aid, on the ground that existing aid could only be held incompatible with the common market ex nunc. ( )

20. The other pleas in law were rejected by the Court of First Instance. It held in particular that the small size of the undertakings concerned, the fact that their activities were to a very large extent limited to the region and the existence of quotas did not preclude the possibility of the measures at issue inhibiting intra-Community trade or threatening to distort competition.

21. The Court of First Instance further rejected the complaint that the order for recovery of the aid plus interest was in breach of the principles of the protection of legitimate expectations, legal certainty and proportionality.

IV – The appeals

22. On 3 August 2001 the Italian Republic lodged an appeal against the judgment delivered by the Court of First Instance. It is supported by the company Collorigh Edo and a further 12 undertakings which were applicants in the action brought in the lower court.

23. The Italian Republic bases its appeal on two pleas. It claims, firstly, infringement of Articles 92 and 93(1) and (2) of the Treaty, arguing that the Court of First Instance had characterised the measures in favour of international transport haulage as new aid that threatened to distort competition even though this haulage market was not fully liberalised until 1 January 1993. At all events, the Court of First Instance had not provided sufficient reasoning in support of the contested judgment.

24. It maintains, secondly, that the order for recovery infringes the principles of the protection of legitimate expectations and of reasonableness (principio di ragionevolezza).

25. In its response, the Commission has lodged a cross-appeal in which it questions the admissibility of the action at first instance.

26. The Italian Republic claims that the Court should:

(1) set aside in its entirety the judgment delivered on 15 June 2000 by the Court of First Instance in Joined Cases T-298/97, T‑312/97, T-313/97, T‑315/97, T-600/97 to T-607/97, T-1/98, T‑3/98 to T-6/98 and T-23/98;

alternatively, set aside that judgment in so far as it imposes the obligation to recover the aid granted;

(2) order the Commission to pay the costs in any event.

27. The other parties claim that the Court should:

(1) set aside the judgment delivered on 15 June 2000 by the Court of First Instance in Joined Cases T-298/97, T-312/97, T-313/97, T-315/97, T‑600/97 to T‑607/97, T-1/98, T-3/98 to T-6/98 and T-23/98 in so far as it:

– declares incompatible with the common market aid granted under Regional Laws No 28/81 and 4/85 to undertakings engaged in international transport,

– characterises the aid granted between 1981 and 1995 to undertakings engaged in international transport as new aid, and

– requires the Member States to recover the aid purported to be illegal.

alternatively, set the Commission’s decision aside in so far as it orders recovery of the aid plus interest (Article 5), or, in the second alternative, set the recovery order aside in so far as it exceeds a specified amount and includes interest;

(2) order the Commission to pay the costs.

28. The Commission claims that the Court should:

(1) dismiss the appeal brought by the Italian Republic;

(2) set aside the judgment of the Court of First Instance in its entirety or at least in so far as it partly sets aside the Commission’s decision, and

(3) order the Italian Republic and the applicants at first instance to bear the costs of the proceedings in the lower and higher courts.

29. A more detailed presentation of the pleas in law and arguments of the parties is provided in conjunction with the legal assessment.

V – Legal assessment

30. The cross-appeal must be examined first as it concerns the admissibility of the action brought before the Court of First Instance.

A – The cross-appeal lodged by the Commission (inadmissibility of the action)

1. Arguments of the parties

31. The Commission maintains that the actions brought before the Court of First Instance were inadmissible because the decision was not of individual concern to the applicants within the meaning of the fourth paragraph of Article 173 of the EC Treaty (now, after amendment, Article 230 EC).

32. The contested decision does not declare any individual instance of aid in favour of a particular undertaking, but rather an aid scheme, to be incompatible with the common market. Such a decision is not of individual concern to past, present or future recipients of aid. The Court and the Court of First Instance have, it points out, rejected the actions as inadmissible in a series of comparable cases. ( )

33. The judgment of the Court of First Instance in Case T-55/99 CETM, ( ) which might point to another conclusion, relies, in the Commission’s view, on inadequate reasoning and fails to convince. And while the Court, in its judgment in Sardegna Lines, ( ) found the action brought by an undertaking in a similar situation to be admissible, the case is not, in the Commission’s view, comparable in that the aid scheme affected very few economic agents and the Commission had examined the particular case of the applicant in the formal procedure.

34. Nor, for reasons of effective legal protection, is it advisable to admit such actions. For the undertakings concerned could, in the framework of an application to have the recovery order set aside, invoke flaws in the decision. The national court could then apply to the Court for a preliminary ruling on the validity of the decision. According to the judgment in TWD Textilwerke Deggendorf, ( ) this path is not, however, open to the parties affected by the decision where a direct application for annulment of the decision would be admissible.

35. The Commission accepts that none of the parties raised the issue of admissibility before the Court of First Instance. The latter should however have done so of its own motion, in line with consistent case-law. ( ) The failure by the Court of First Instance to comply with this obligation can therefore be claimed in the appeal proceedings.

36. The Commission goes on to explain in detail why the contested decision, addressed to the Italian Republic, is not of individual concern to the applicants.

37. Firstly, the Commission did not take a position in that decision on specific aid granted to particular undertakings. The recovery of aid already paid was, admittedly, also ordered. The decision was not however addressed to a limited group of undertakings since it concerned not only all aid already granted, whose recovery was ordered, but also the aid scheme itself, which was to cease to operate. The decision thus also affected the interests of an indeterminate number of further potential beneficiaries.

38. Secondly, the decision declares only particular categories of aid granted under the Regional Laws to be incompatible with the common market. Only the Member State and the individual undertaking concerned would be in a position to judge, with regard to the activity in which the undertaking is engaged in the particular case, whether the aid should be reimbursed.

39. Thirdly, as the Court has already held, the general applicability, and thus the legislative nature, of a measure is not called in question by the fact that it is possible to determine more or less exactly the number or even the identity of the persons to whom it applies at any given time, as long as it is established that it applies to them by virtue of an objective legal or factual situation defined by the measure in question in relation to its purpose. ( )

40. Fourthly, it does not suffice for the persons affected to have belonged to a group which, at the time the decision was adopted, was identifiable. The provision must, rather, be of individual concern to them by reason of certain attributes peculiar to them or by reason of factual circumstances which differentiate them from all other persons.

41. The Commission observes that, according to case-law, it is possible for a generally applicable legal instrument simultaneously to affect particular economic agents individually. ( ) That does not however alter the fact that in this respect the criteria developed in Plaumann ( ) would have to be met.

42. In this regard, the applicants have not pointed to anything that would differentiate them in any particular way. Nor does the decision affect their legal position in such a way that it would have been incumbent upon the Commission, in adopting it, to have taken their particular situation into account.

43. At the hearing, the Italian Government questioned the contention that the Court of First Instance ought of its own motion to have assessed the admissibility of the action.

2. Assessment

a) Obligation to assess admissibility

44. The Court has consistently held that the admissibility of an action must, as an essential precondition for a case to be tried, be assessed of the Court’s own motion. ( ) The Court of First Instance is also under an obligation to perform such an assessment, unless, for reasons of proper administration of justice, an assessment of admissibility can be dispensed with because the action is in any case unfounded. ( )

45. The fact that the Court of First Instance did not, in the contested judgment, comment on the admissibility of the action does not necessarily mean, however, that it failed to assess its admissibility and thus infringed a corresponding obligation. Assuming the action was admissible, there would be no reason to state this point explicitly, as long as the defendant had not entered a plea of inadmissibility. The fact that the Court of First Instance assessed the appeal on the merits and allowed it in part points rather to the conclusion that it found the action admissible.

46. The situation in the present case differs to that extent from that on which the Court was called upon to rule in its judgment in Council v Boehringer Ingelheim Vetmedica. ( ) In that case the Court of First Instance rejected the entire action as unfounded and stated expressly that there was consequently no need for it to rule on a plea of inadmissibility entered by the Council. In its judgment on the appeal lodged by the Council, the Court confirmed that the Court of First Instance had not ruled by way of decision on the admissibility of the action and had been under no obligation to do so. ( ) If however, as in the present case, the Court of First Instance grants a case in part, on the merits, there is an implicit acknowledgment of admissibility.

47. The question to be considered is not therefore whether the Court of First Instance erred in law in not assessing the admissibility of the action of its own motion but rather whether its implicit conclusion that the action was admissible was correct.

48. The fact that the Commission claimed the inadmissibility of the action for the first time in its cross-appeal does not stand in the way of examination of that claim. It is true that the parties are in principle barred from introducing new pleas in law in the course of proceedings. ( ) The Court has however, in proceedings on appeal, considered, or even raised of its own motion, such new pleas where these involve a question of public policy (moyens d’ordre public). ( ) The Court has consistently held that the admissibility of an action must likewise, as an essential precondition for a case to be tried, be raised by the Court of its own motion, so that is of no consequence whether a complaint of inadmissibility was in fact put forward (in due time). ( )

49. It should be noted too that the question whether the contested decision affects the applicants individually is primarily a point of law, which can be examined in the appeal procedure.

b) Direct and individual concern

50. According to the fourth paragraph of Article 173 of the EC Treaty (now, after amendment, Article 230 EC) any natural or legal person may institute proceedings against a decision which, although addressed to another person, is of direct and individual concern to the former.

51. As the Commission itself acknowledges, the contested decision is of direct concern to the applicants even though that decision has to be transposed by the national authorities, which are required to recover the aid that is incompatible with the common market from the beneficiaries.

52. The Court’s case-law shows that, for an individual to be directly concerned by a Community measure, the latter must directly affect the legal situation of that individual and leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from Community rules without the application of other intermediate rules. ( )

53. The contested decision firmly establishes the extent to which the Regional Laws provide for aid incompatible with the common market, leaving no discretion to the Italian Republic as regards that assessment. It also orders the aid to be recovered. This order too is in principle mandatory for the Member State.

54. The Court has however consistently held, with regard to recovery of aid, that, within certain limits, account may be taken of the domestic law principle of the protection of legitimate expectations. ( ) If, however, the aid concerned has not been notified, the Member State’s discretion to refrain from recovering the aid is severely restricted. For the Court proceeds on the basis that the recipient may rely on the regularity of the aid only where it was granted in conformity with the procedure laid down in Article 93 of the EC Treaty. ( ) The fact that the Commission’s decision in the matter of recovery calls for an implementing measure by the national authorities does not therefore prevent that decision from being of direct concern to the applicants. ( )

55. Whether the contested decisions are of individual concern to the applicants is less clear-cut.

56. According to the form of words developed in the judgment in Plaumann, ( ) persons ‘other than the addressees of a decision may claim to be individually concerned only if the decision affects them by reason of certain attributes peculiar to them or by reason of factual circumstances differentiating them from all other persons and, as a result, distinguishing them individually in like manner to the person addressed’. The Court continues to uphold this form of words, which has recently been called into question above all in connection with actions brought by private individuals against Regulations. ( )

57. According to the Court’s case-law, a measure has general application and is not, in principle, of individual concern where it applies to objectively defined situations and produces legal effects for categories of economic operators who satisfy a number of conditions defined in a general and abstract manner. ( ) On the other hand, a provision applying to all the economic operators concerned may, in certain circumstances, be of individual concern to some of the economic operators involved. ( )

58. The Commission concludes from the fact that the contested decision concerns an aid scheme prescribed by law that that decision applies to objectively defined situations and produces legal effects for a category of economic operators who satisfy a number of conditions defined in an abstract manner, namely all transport undertakings registered in the Friuli-Venezia Giulia Region that have received or could go on to receive aid pursuant to the contested scheme.

59. There can be no doubt that the decision, in so far as it declares the aid scheme to be incompatible with the common market and orders that the rules in question should cease to be applied, is of concern only to a category of economic operators who satisfy a number of conditions defined in an abstract manner. The decision thus produces legal effects for those undertakings that have already received aid but also for an indeterminate number of potential future beneficiaries. According to the case-law already cited, this does not however mean that the same measure may not also be of individual concern to particular economic operators.

60. The applicants are road haulage undertakings registered in the Friuli-Venezia Giulia Region which have received State aid from that Region under Laws No 28/1981 and 4/1985. In its contested decision, the Commission not only declared the aid granted them to be incompatible with the common market but also ordered that the aid be recovered. In submitting at first instance letters addressed to them by the Region between September and December 1997 advising them that the aid was to be recovered, the applicants have demonstrated that they are indeed among the undertakings affected by a recovery measure.

61. The question arises whether the Commission’s decision can be regarded as of individual concern to the applicants by reason of certain attributes peculiar to them or of factual circumstances which differentiate them from all other persons in that they received unlawful aid whose recovery has been ordered by the Commission.

62. The Commission invokes a series of judgments, from which it concludes that the Court has considered a decision not to be of individual concern to a group of persons where that decision pertained to an aid programme or an aid scheme prescribed by law.

63. In the judgment in DEFI, ( ) a committee established to promote the textile sector (Comité de développement et de promotion du textile et de l’habillement – DEFI) appealed against a Commission decision addressed to the French Republic. The committee’s income was to come from a quasi-fiscal levy. That money was to be used to carry out measures to promote the textile sector. In the contested decision, the Commission stated the duly notified promotional programme to be incompatible with the common market and prohibited implementation thereof. The Court rejected the action as inadmissible. The decision could not, in the Court’s view, be of concern to the applicant because it was not itself the final recipient of the aid. The Court stated further that:

‘In so far as the applicant represents the interests of those economic agents, it must be stated that the aid plan does not determine which undertakings are to receive aid and that consequently any undertaking wishing to bring an action in that connection is no more concerned by the Commission decision than all the other economic agents in the sector in question.’ ( )

64. This judgment does not however provide any guidance as to how the question under consideration should be answered in so far as the contested decision in that case concerned aid that had not yet been implemented and did not therefore include an order for recovery of aid already granted. The judgment does, moreover, rest primarily on the particular status of the DEFI.

65. The Commission refers further to the judgment in Van der Kooy. ( ) This case concerned a Commission decision in which a preferential tariff for the supply of gas to growers was classed as State aid. The Court rejected the action brought by a number of growers to have that decision set aside as inadmissible, stating the following reasons:

‘The contested decision is of concern to the applicants solely by virtue of their objective capacity as growers established in the Netherlands and qualifying for the preferential gas tariff on the same footing as any other grower in the same circumstances. With regard to them, therefore, the decision is a measure of general application covering situations which are determined objectively, and entails legal effects for categories of persons envisaged in a general and abstract manner.’ ( )

66. In the decision which is the subject of the judgment in Van der Kooy, the Commission did, however, only order that the aid scheme be cancelled ex nunc. It did not call for recovery of benefits already granted, any more than it did in the other judgments cited by the Commission. ( ) It does not, therefore, follow from the judgments that a decision comprising not only a declaration that an aid scheme is incompatible with the common market but also an order for the recovery of the aid already granted on the basis of that scheme, is not of individual concern to the recipients of the aid to be reimbursed.

67. The Commission goes on to argue that it was not possible to conclude generally from the judgment in Sardegna Lines ( ) that actions brought by aid recipients for the annulment of a decision concerning an aid scheme in which recovery of the aid is also ordered are admissible. In the decision at issue on that occasion, the Commission had objected to a law of the Region of Sardinia under which shipping and other undertakings were able to obtain loans at concessionary interest rates for the acquisition, conversion and repair of merchant vessels registered in Sardinia.

68. The Court found as follows in its judgment in Sardegna Lines:

‘However, Sardegna Lines is in a different position [than the applicants in Van der Kooy and Federmineraria]. It is concerned by Decision 98/95 not only by virtue of being an undertaking in the shipping sector in Sardinia and a potential beneficiary of the aid scheme for Sardinian shipowners but also by virtue of being an actual beneficiary of individual aid granted under that scheme, the recovery of which has been ordered by the Commission.

It follows that Sardegna Lines is individually concerned by Decision 98/95.’ ( )

69. The Commission regards the case of Sardegna Lines as a special one in that the applicant was, through the exercise of wide discretion, granted aid by means of a measure taken after adoption of the aid scheme. The overall amount of the aid was, moreover, distributed among a small number of recipients, by far the largest share of that aid going to the applicant. The beneficiaries were known to the Commission and account was taken of the individual cases in the formal procedure.

70. A first point to be made here is that the Regional Laws in the present case were also implemented through individual measures, by virtue of which the applicants were granted actual aid. In deciding whether to grant aid and in determining the amount thereof, the authorities of the Friuli-Venezia Giulia Region seem also to have enjoyed discretion. The aid scheme in the present case is in this respect comparable with the corresponding scheme in Sardegna Lines. The situation does, however, differ from that in Van der Kooy and Federmineraria, where the aid was granted in the form of automatically applicable preferential tariffs rather than – as in the present case – through individual administrative measures.

71. A second point is that the contested decision ( ) in the case of Sardegna Lines does not offer any indication that the Commission had, in reaching that decision, examined the applicant’s situation or otherwise taken account thereof. In the above-cited passage from the judgment, the Court likewise relies only on the fact that the applicant, Sardegna Lines, is affected as recipient of aid whose recovery the Commission had ordered. It makes no reference to other circumstances which set the applicant apart as an individual, for example consideration of its case in the administrative procedure.

72. The present case may differ from that of Sardegna Lines to the extent that the economic support legislation of the Friuli-Venezia Giulia Region may perhaps have benefited a larger number of undertakings. ( )

73. The Court has, however, consistently held that it is not essential, in order to establish individual concern, for it to be possible to determine more or less exactly the number or even the identity of the persons to whom the contested legal decision applies at any given time. ( ) Thus, even where the recovery order produces legal effects for a substantial number of undertakings, it may still be of individual concern to the undertakings involved.

74. What would seem essential rather is for the group of persons affected by the measure to be a closed one. This becomes particularly clear if one recalls the Court’s judgments concerning the granting of import licences. ( ) The Court held in these cases that a decision is of individual concern to applicants for import licences where the Commission, in that decision, establishes retroactively how many of the applications submitted in a specified period of time are to be granted. In the Court’s view, such a decision is in reality a ‘bundle of individual decisions’ since at the time the decision is adopted the number of applications that could be affected by it is already known and no new applications can be added.

75. Even if these judgments can be transposed to other situations to only a limited extent, ( ) they nevertheless share the basic notion that the essential factor in establishing individual concern is whether the group of persons affected is a closed one which cannot ─ even theoretically ─ be extended by other persons to whom the contested measure is also applicable. ( )

76. Transposing these considerations to the present case, it is clear that the group of potential future aid recipients which, following adoption of the decision, can no longer receive aid, is theoretically unrestricted. Those undertakings, on the other hand, which have already received aid and are now required to pay it back constitute a closed group. This group could not be further extended by persons to whom the decision was of concern once the Region had discontinued application of the aid scheme on 1 January 1996, before the contested decision was adopted.

77. The Commission objects that the persons to whom the decision would in practice be of concern were not in any way known to it at the time of its adoption and that it had been unable, therefore, to take their situation into account. The national authorities ought rather to have ascertained, in the first instance, the extent to which the undertakings had received aid declared to be either authorised or unauthorised and the volume of the disbursements.

78. The point should be made here that the Commission made statements in the contested decision as to the precise number of applications granted, the budget for the measure and the average financing rate. It went on to differentiate between the aid granted under each of the two laws and to say for which of the various measures provided for in the laws the funds had been used. The Commission could not, however, arrive at any precise conclusion from this information as to the identities of the specific beneficiaries to whom the order for recovery was of concern.

79. The case-law deals variously with the question of whether individuals are to be regarded as individually concerned only where their cases were known to the Commission at the time it adopted its decision. In the cited judgments concerning the granting of import licences, the applications were to be made not to the Commission but to the national authorities, which were then required to inform the Commission only of the total import volumes for which application had been made. The Court stated in this connection that ‘even if the Commission was aware only of the quantities applied for when it adopted [the Regulations at issue], it thereby decided on the treatment to be accorded to each application lodged.’ ( )

80. It follows that the persons to whom a legal measure is of individual concern do not have to be specifically known to the Commission at the time that measure is adopted. It is sufficient rather for the persons concerned to be identifiable, if only by the national authorities called upon to implement the Commission’s decision.

81. In its judgment in Piraiki-Patraiki, ( ) on the other hand, the Court considered that the Commission had indeed been in possession of sufficient information concerning the undertakings affected by the contested legal measure or had been in a position to obtain such information.

82. Apart from the fact that in the present case the Commission would likewise have been in a position to obtain information from the Italian authorities about the undertakings concerned by recovery of the aid, a weighty argument can be advanced against making individual concern dependent on the fact of the persons actually affected having been known to the Commission at the time the decision was adopted.

83. For the persons affected, it would be a source of considerable legal uncertainty for their capacity to sue to depend in the last resort on whether or not their case was known to the Commission. It is not infrequently a matter of chance which specific instances of aid are known to the Commission at the time it examines an aid scheme. The information available to the Commission may for example come from more or less complete accounts in complaints by competitors or from details supplied by the national authorities. As the decision is not addressed to the applicant, he is not involved in the administrative procedure and only finds out what is going on through the announcement in the Official Journal of the opening of the formal procedure. He is thus unable to discern the extent to which the Commission has taken his case into account in examining the national scheme.

84. It should, moreover, be remembered once again that the Court did not specify any such requirement in its judgment in Sardegna Lines, which specifically concerned the recovery of aid.

85. It follows that the recipient of a State aid is individually concerned by a Commission decision regarding the general aid scheme on which the granting of that aid is based in so far as the Commission, in that decision, orders recovery of the aid and the decision affects a closed group of persons that cannot be extended. The fact that a large number of persons are affected and that these were not known to the Commission individually at the time the decision was adopted does not preclude individual concern. It is sufficient rather for the persons concerned to be identifiable by the national authorities responsible for recovery.

86. Finally, a brief assessment is called for of the Commission’s contention that for reasons of effective legal protection, the persons affected might perhaps even find it more advantageous not to be able to contest the decision directly as in doing so they would then, according to the rule in TWD Textilwerke Deggendorf, ( ) be barred from asserting the nullity of the decision in national courts.

87. In its judgment in TWD Textilwerke Deggendorf the Court stated: ( )

‘that the national court is bound by a Commission decision adopted under Article 93(2) of the Treaty [its legal validity can no longer, therefore, be challenged] where, in view of the implementation of that decision by the national authorities, the recipient of the aid to which the implementation measures are addressed brings before it an action in which it pleads the unlawfulness of the Commission’s decision and where that recipient of aid, although informed in writing by the Member State of the Commission’s decision, did not bring an action against that decision under the second paragraph of Article 173 of the Treaty, or did not do so within the period prescribed’.

88. The Court explicitly emphasised in that judgment that the question submitted was to be answered ‘in the light of those circumstances’, meaning the circumstances of the particular case, in which the national authorities had sent a copy of the Commission’s decision to the person to whom it was of concern and had advised him that he could bring an action against that decision before the Court. ( ) The case-law shows, therefore, that the particular circumstances of the case in point determine when an application to a national court to have a decision annulled is in fact ruled out.

89. It is, moreover, as Advocate General Jacobs has argued in his Opinion in Pequeños Agricultores, highly doubtful whether the ability to assert the invalidity of a Community legal measure before national courts offers greater legal protection than an action for annulment. ( ) It is not, for instance, always the case that the national tribunal makes reference to the Court for a preliminary ruling. In any event, considerations turning on the principle of effective legal protection may not give rise to a restrictive interpretation of the capacity to sue of natural or legal persons under the fourth paragraph of Article 173 of the EC Treaty.

90. It can thus be concluded that the applicants are individually concerned and that the action brought before the Court of First Instance was therefore admissible. For they belong to a closed group of concerned persons, who, through individual measures taken on the basis of the rules at issue, were granted aid whose recovery the Commission ordered in the contested decision. This fact differentiates them sufficiently from all other haulage undertakings, which are only affected in a general manner as potential recipients of aid.

91. The cross-appeal lodged by the Commission must therefore be dismissed.

B – The appeal lodged by the Italian Republic

1. Aid granted to undertakings engaged in international transport incorrectly characterised as new aid

a) Arguments of the parties

92. The Italian Government disputes the finding of the Court of First Instance that the aid in favour of undertakings engaged in international transport should be categorised as new aid as it was granted after Regulation No 1018/68 entered into force.

93. Italy contends that as, prior to 1 January 1993, cross-border haulage services could be provided only in the framework of quotas and bilateral agreements between the Member States, (full) competition capable of being distorted by the aid at issue could not be said to have existed at the time that aid was introduced. Only as from complete liberalisation could the measures be characterised as aid and then only as existing aid that could be prohibited ex nunc.

94. The Italian Government, like the other parties, takes the view that the Commission should have shown which specific undertakings had been placed at a disadvantage by the granting of the aid.

95. The Italian Government and the other parties point out, finally, that between 1990 and 1995 the total disbursements to 300 undertakings came to only about ITL 17 000 million and that the beneficiaries had an insignificant market share.

96. The other parties add that the Court of First Instance failed to look into the extent to which the aid at issue was of any benefit at all to international transport within the Community or to international transport between Italy and non-member countries. Ultimately, the aid served only, in their contention, to offset the competitive disadvantage suffered by Italian firms as a result of unbearably high interest rates.

97. In the Italian Government’s view, the contested judgment also exhibits inadequate reasoning in failing to elucidate the extent to which the measures at issue inhibited intra-Community trade or threatened to distort competition.

98. The Commission contends that the Court of First Instance was right in holding, in paragraph 145 of the contested judgment, that intra-Community competition in cross-border transport activity existed in 1981 and 1985, at least in the framework of quota arrangements. It contends further that the aid was such as to inhibit that competition. Article 92 of the EC Treaty does not, on the other hand, require prejudice to particular undertakings to be proved.

99. The fact that the aid was not very large is immaterial, as the Court has consistently held. In a highly fragmented market in particular, even the most limited aid could affect intra-Community trade.

b) Assessment

100. For it to be possible for aid to distort competition, it is a precondition that competition exist in the sector concerned. Cross-border road haulage was only partly opened up in the Community between 1969 and 1 January 1993. In the framework of quota arrangements, transport undertakings received a licence, usable for only one vehicle and valid for a period of one year.

101. As the Court of First Instance correctly ruled in paragraphs 92 and 94 of the contested judgment, an effective competitive situation did exist within the limit of the quotas laid down. The aid recipients operating from the Friuli-Venezia Giulia Region that were in possession of a licence were in competition with undertakings from other parts of Italy and with undertakings from other Member States. The Italian Government’s contention that competition existed in the international road haulage sector only from the date of full liberalisation of the markets must therefore be rejected. As competition already existed at the time the aid in question was introduced (in 1981 and 1985), it was rightly characterised as new aid. ( )

102. The Italian Government complains further that the Court of First Instance failed to take proper account of the fact that the Commission did not bring forward any proof of actual distortion of competition and adverse effect on trade. At all events, the decision failed to state sufficient grounds in that respect.

103. According to case-law, the very circumstances in which aid is granted may be sufficient to show that the aid is capable of affecting trade between Member States and of distorting or threatening to distort competition; in such cases, it is sufficient for the Commission to set out those circumstances in the statement of reasons for its decision. ( ) In the contested decision the Commission explained that the aid strengthened the position of the recipient undertakings in relation to competitors that were not beneficiaries by improving their financial situation and hence their scope for action. The result was also adversely to affect intra-Community trade. It follows that the Commission has complied with the demands of case-law.

104. The Commission was not obliged to demonstrate the actual effect of aid already granted and in particular the disadvantages suffered by competitors that were not beneficiaries of such aid. If it were required to do so, that would favour those Member States which grant aid in breach of the duty to notify laid down in Article 93(3) of the Treaty, to the detriment of those which do notify aid at the planning stage. ( ) It follows that the corresponding findings of the Court of First Instance in paragraphs 76 to 82 of the contested judgment are unobjectionable.

105. The Italian Government complains further, in support of this plea, that the Court of First Instance failed to take sufficient account of the small size of the recipient undertakings and the small amount of aid allocated in assessing the effect on competition.

106. The Court of First Instance argues in paragraphs 84 to 87, with reference to its own case-law ( ) and that of the Court, ( ) that even aid of a small amount is liable to distort competition and affect trade. It observes further that precisely with a market structure such as that characterising the transport sector, relatively modest aid granted to small undertakings is liable to affect competition.

107. The Court has, in a recently delivered judgment, confirmed the case-law cited by the Court of First Instance and has stated further that ‘[o]ther factors may be decisive when assessing the effect of aid on trade, such as [...] whether the undertakings that receive it are operating in a sector that is particularly exposed to competition’. ( )

108. In another ruling, the judgment in Spain v Commission (C‑351/98), the Court did however conclude that ‘a small amount of aid to an undertaking over a given period does not affect trade between Member States in particular economic sectors’. ( )

109. In the case in point, this finding did however relate to undertakings not operating in the transport sector. Elsewhere in the same judgment, the Court took the view that professional road transport is a sector whose particular market structure, characterised by overcapacity and a large number of small undertakings, is such that even aid of a relatively low amount to small undertakings is liable to affect competition. ( )

110. It follows then from the Court’s more recent case-law that the Court of First Instance correctly judged the fact that in the present case also, as the Italian Government points out, only aid of a relatively small amount was granted to small undertakings.

111. The point must however be made that the Commission did not, in setting out the reasons for the contested decision, expressly mention the particular market structure characterising the road transport sector. It did however point out that the de minimis rule (in so far as it had yet been adopted at all at the time the aid was granted) was not applicable in the road transport sector, since separate provisions on competition existed in that area.

112. In view of the unambiguous case-law on this point, there is no need to place particularly severe demands on the statement of reasons for the decision. It was not, therefore, of critical importance that, in the matter of the extent to which competition in the road haulage sector might be affected despite the low amount of the aid and the small size of the recipient undertakings, the Commission did not discuss the special structure of the road transport market.

113. This complaint together with the assertion in this connection that adequate reasons were not stated must therefore be rejected.

114. Concerning the argument put forward by the other parties that the aid served in the final instance only to compensate for disadvantages suffered by the recipient undertakings in relation to undertakings from the neighbouring countries as a result of the poor borrowing terms available in Italy, it has to be concluded that the Court of First Instance correctly rejected this objection with reference to the relevant case-law. ( ) The Court has ruled in this connection that the fact that a Member State seeks unilaterally, by means of a measure, to approximate the competitive conditions prevailing in a particular economic sector in the Member State concerned to those prevailing in other Member States cannot remove from the measure in question the character of an aid. ( ) The other parties have not advanced any arguments to support the contention that the relevant findings of the Court of First Instance are flawed.

115. The first plea must therefore be dismissed.

2. Infringement of the principle of the protection of legitimate expectations, the principle of reasonableness and the duty to state reasons by extending the recovering obligation to aid granted since the entry into force of Laws Nos 28/81 and 4/85 for the support of international road haulage

a) Arguments of the parties

116. According to the Italian Government, Article 4 of the contested decision is to be understood as applying, temporally, to aid granted from 1 July 1990 onwards to undertakings engaged in local, regional and national road haulage activity and, as from that same date, to undertakings engaged in international road transport. To this extent only is there an obligation to recover under Article 5 of the decision.

117. The Court of First Instance wrongly interpreted the decision, with reference to the statement of reasons therein, as meaning that aid in favour of international road transport granted before 1 July 1990 was also to be reimbursed.

118. If the obligation to recover concerns all aid granted since the aid scheme entered into force, then aid granted more than 14 years previously would also have to be reimbursed. This, it contends, is an inordinately long period of time, as can be seen from a comparison with Regulation No 659/1999. ( ) This Regulation, admittedly not yet applicable in the present case, provides for a period of limitation of ten years.

119. The region and the undertakings concerned did, moreover, trust in the lawfulness of the aid. Recovery thereof would have disastrous consequences for what are for the most part very small undertakings.

120. The other parties likewise take the view that recovery of the aid would be in breach of the principles of the protection of legitimate expectations, reasonableness and proportionality recognised in Article F(2) of the EU Treaty (now Article 6(2) EU). According to the case-law, the recipients of unlawful aid are not barred from invoking exceptional circumstances that might warrant a legitimate expectation. In the present case, the aid’s insignificant effect on competition is pertinent in this connection.

121. The Commission maintains, on the other hand, that as the operative part of the decision was not entirely unequivocal, the Court of First Instance was able to take account of the statement of reasons therein and had in this way correctly concluded that the temporal limitation did not concern aid in favour of international transport.

122. Concerning the principle of the protection of legitimate expectations, the Commissions refers to the case-law, according to which limitation periods must be fixed in advance. ( ) As Regulation No 659/1999 is not applicable from the point of view of time, a limitation period fixed by the legislator is lacking in the present case. It maintains, furthermore, that the Italian Government has not put forward any arguments that could call the findings of the Court of First Instance in paragraphs 171 to 174 into question.

b) Assessment

i) Interpretation of the contested decision

123. The ruling in Article 4 of the contested decision ( ) that the subsidies granted from 1 July 1990 onwards to undertakings engaged in transport operations at local, regional or national level and to undertakings engaged in transport operations at an international level are incompatible with the common market must, as the Court of First Instance rightly observes, be interpreted in the overall context of the operative part of that decision.

124. The date specified in Article 4 of the decision ties in with the ruling in Article 1, where the Commission states that subsidies granted up to 1 July 1990 to undertakings engaged in transport operations at local, regional or national level do not constitute State aid. This statement, which relates only to internal transport operations, has to be taken into account for the time-limit specified in Article 4 to have any meaning. Where international road haulage was concerned, there was, on the other hand, no need for such a time restriction since subsidies at this level constituted aid as from the time they were first granted. Moreover, the cabotage market was opened up on the above date. This fact does, however, have implications for the assessment regarding internal transport only.

125. There does not appear to be any meaningful argument in favour of the view that the 1 July 1990 cut-off date relates also to aid in favour of international road haulage. Such a demarcation could not, in particular, be ascribed to a concern on the part of the Commission to take account of the principle of the protection of legitimate expectations, as the Italian Government suggests. To begin with, the date selected in this way would be entirely arbitrary in relation to international transport. Secondly, the protection of legitimate expectations could at best be seen as a reason for dispensing with an order to recover the aid. The fact of taking account of the principle of the protection of legitimate expectations is, however, of no relevance in determining whether an aid is compatible with the common market.

126. It can be seen, then, from a systematic analysis of the operative part of the contested decision that the Court of First Instance correctly interpreted Article 4 thereof. This understanding is confirmed by the reasons given for the contested decision, reasons to which the Court of First Instance refers in paragraph 164 of the contested judgment. The complaint that the Court of First Instance wrongly extended the scope of the decision must therefore be rejected.

ii) The principle of the protection of legitimate expectations

127. The Italian Government does not call into question the Court’s consistently held view that recipients may not entertain a legitimate expectation that aid is lawful unless it has been granted in compliance with the procedure laid down in Article 93 of the EC Treaty, ( ) which was not the case in the present instance. Rather it refers in essence only to the long period of time that elapsed between the granting of the first subsidies and the adoption of the decision on recovery. Effectively, therefore, it favours a time-limit on the right to recover aid.

128. As the Court has held, ( ) however, limitation periods must, in order to fulfil their function, be fixed in advance, the fixing of their duration and the detailed rules for their application coming within the powers of the Community legislature. In the case before the Court no limitation provisions established in advance by the Community legislature are applicable. It is true that Article 15 of Regulation No 659/1999 limits the recovery of aid to ten years after the granting thereof. But that Regulation did not enter into force until 1999 and cannot be applied retrospectively to the instant case.

129. The Court has, however, also found that the fundamental requirement of legal certainty has the effect of preventing the Commission from indefinitely delaying the exercise of its powers. ( ) In the case of aid that has not been notified, the extent to which the Commission is late in taking action can nevertheless be calculated only from the date on which it learnt of the measures concerned. In the present instance, the Commission did not learn of the aid scheme at issue until September 1995. The Italian Government has not raised the matter of the Commission delaying the procedure until the adoption of the contested decision on 30 July 1997.

130. It should be noted further that the supposedly minor impact on competition of the aid in question is not a fact that could cause the recipients to entertain a legitimate expectation as to the lawfulness of that aid.

131. This complaint must, therefore, also be rejected. This does not, however, prevent the national authorities, in recovering the aid, taking account in individual cases of the principle of the protection of legitimate expectations within the limits established by the Court’s decisions. ( )

iii) The principle of reasonableness or proportionality

132. Finally, the Italian Government claims a breach of the principle of reasonableness. It is clear from its arguments that it finds it above all disproportionate that the recovery of aid should be ordered when, on the one hand, its adverse effect on competition was only small and, on the other hand, the obligation to reimburse would have severe consequences for the undertakings concerned.

133. The Court has consistently held that ‘recovery of unlawful aid is the logical consequence of the finding that it is unlawful. Consequently, the recovery of State aid unlawfully granted for the purpose of re-establishing the previously existing situation cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids’. ( )

134. This does not prevent the Commission refraining from recovery where the circumstances are exceptional. What in fact the Court has done in the case-law cited has simply been to provide the Commission with a guideline for the exercise of its discretion in the normal case.

135. The Italian Government has not, however, put forward any persuasive arguments in favour of refraining from recovery of the aid. It has simply referred, without giving details, to serious consequences for the recipients of the aid and to the implications for the employment market. The Commission cannot therefore be regarded as having failed to exercise proper discretion in ordering recovery of the aid and thereby giving precedence to the restoration of competitive conditions over the interests of the recipients of the aid.

136. As the complaint of infringement of the principle of proportionality is also unsuccessful, the appeal must be dismissed in its entirety.

VI – Costs

137. The first paragraph of Article 122 of the Rules of Procedure of the Court of Justice provides that where the appeal is unfounded the Court shall make a decision as to costs. Article 69(3) of those Rules provides that where each party succeeds on some and fails on other heads, the Court may order that the costs be shared or that the parties bear their own costs. As both the appeal and the cross-appeal are dismissed, it seems appropriate to order the parties to bear their own costs.

VII – Conclusion

138. In the light of the foregoing I propose that the Court:

(1) dismiss the appeal by the Italian Republic;

(2) dismiss the cross-appeal by the Commission;

(3) order the parties to bear their own costs.