Keywords

Summary



Keywords

1. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure – Breach of the obligation to comply with the judgment – Financial penalties – Penalty payment – Order for payment – Condition

(Art. 228(2), EC)

2. State aid – Recovery of unlawful aid – Application of national law – Suitability of measure adopted for producing the same effect on the conditions of competition as repayment

(Council Regulation No 659/99, Art. 14(3))

3. State aid – Recovery of unlawful aid – Procedures for recovery

(Art. 88(2), EC)

4. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure – Breach of the obligation to comply with the judgment – Financial penalties – Penalty payment – Determination of the amount

(Art. 228(2), EC)

5. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure – Breach of the obligation to comply with the judgment – Financial penalties – Penalty payment – Lump sum payment – Whether the two penalties should be cumulated

(Art. 228(2), EC)

6. Actions for failure to fulfil obligations – Judgment of the Court establishing the failure – Breach of the obligation to comply with the judgment – Financial penalties – Imposition of a lump sum payment – Discretion of the Court

(Art. 228(2), EC)

Summary

1. Having found that a Member State has failed to comply with a judgment establishing a failure on its part to fulfil obligations, within the period prescribed in the reasoned opinion, the Court may, in accordance with the third subparagraph of Article 228(2) EC, impose a penalty payment and/or a lump sum payment on that Member State. As regards the imposition of a penalty payment, such a penalty is, in principle, justified only in so far as the failure to comply with an earlier judgment of the Court continues up to the time of the Court’s examination of the facts.

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. Where, in such proceedings, the Commission has provided sufficient evidence to suggest that the breach of obligations complained of has persisted, it is for the Member State concerned to challenge, in a detailed manner, the substantive content of that evidence and to prove that the breach has ceased.

(see paras 58-59, 74-75)

2. Recovery of State aid is to be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision.

Since there are no Community provisions on the procedure for recovery of wrongly paid amounts of aid, such financial assistance must, in principle, be recovered in accordance with the relevant procedural provisions of national law.

A Member State which, pursuant to a decision of the Commission, is obliged to recover unlawful aid is thus free to choose the means of fulfilling that obligation, provided that the measures chosen do not adversely affect the scope and effectiveness of Community law. It follows that, in principle, so long as it is provided for under the national legal system as a mechanism for extinguishing debts, a set-off operation can constitute an appropriate means by which State aid may be recovered.

(see paras 65-68)

3. Where a Member State recovers illegal 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 its decision ordering recovery of the aid. Moreover, the Member State must ensure that the measures it chooses, which must have the same effect as that of repayment by way of a transfer of funds, are sufficiently transparent to enable the Commission to satisfy itself that they are suitable for the purpose of eliminating, in full compliance with Community law, the distortion of competition caused by that aid and are capable of being identified as such by interested third parties.

(see paras 79-81)

4. It is for the Court to assess in each case, in the light of the circumstances of the case, the financial penalties to be imposed. Accordingly, the Commission’s suggestions cannot bind the Court and merely constitute a useful point of reference.

In exercising its discretion, it is for the Court to set the penalty payment so that it is both appropriate to the circumstances and proportionate to the infringement established and the ability to pay of the Member State concerned. Accordingly, the basic criteria which must be taken into account in order to ensure that penalty payments have coercive force and Community law is applied uniformly and effectively are, in principle, the duration of the infringement, its degree of seriousness and the ability of the Member State concerned to pay. In applying those criteria, the Court is required to have regard, in particular, to the effects of its failure to comply on public and private interests and to the urgency for the Member State concerned to fulfil its obligations.

(see paras 111-112, 114-115)

5. The procedure laid down in Article 228(2) EC is aimed at inducing a defaulting Member State to comply with a judgment establishing a failure to fulfil obligations, thereby ensuring that Community law is in fact applied. The measures provided for by that provision, namely a lump sum and a penalty payment, are both intended to achieve this objective. The application of each of those measures depends on their respective ability to meet the objective pursued according to the circumstances of the case. That being so, recourse to both types of penalty provided for is not precluded.

It is therefore for the Court, in each case, in the light of the circumstances of the case 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. Therefore, the Court is empowered, in exercising the discretion conferred on it in the field in question, to impose a penalty payment and a lump sum payment cumulatively.

(see paras 140-143)

6. The decision whether to impose a lump sum payment 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. That provision confers a wide discretion upon the Court in deciding whether or not to impose such a sanction.

If the Court decides to impose a lump sum payment, it must do so, in exercising its discretion, in a manner that is appropriate to the circumstances and proportionate both to the breach that has been established and the ability to pay of the Member State concerned. The relevant factors to be taken into account include, in particular, factors such as how long the breach of obligations has persisted since the judgment which initially established it was delivered and the public and private interests involved.

(see paras 144, 146-147)