2000/334/EC: Commission Decision of 25 November 1998 on State aid granted by Italy to Enirisorse SpA (notified under document under C(1998) 3866) (Only the Italian text is authentic) (Text with EEA relevance)
Date: 1998-11-25
Institutions: European Commission
Subjects: Italy, State aid, holding company, industrial enterprise, industrial restructuring

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 25 November 1998

on State aid granted by Italy to Enirisorse SpA

(notified under document number C(1998) 3866)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2000/334/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Background

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
93(2) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1),

By Decision 98/212/EC (2)
the Commission terminated
proceedings concerning the injection of capital into Enirisorse
by ENI between 1992 and 1996. The capital injections, which
were part of a restructuring plan, amounted to a total of
ITL 1 819 billion. The Decision was notified to Italy by letter
of 2 May 1997.

Whereas:

I

In Decision 98/212/EC the Commission found that the capital
injections amounting to ITL 1 819 billion were compatible
with the common market and the EEA Agreement pursuant to
Article 92(3)(c) of the EC Treaty and Article 61(3)(c) of the
EEA Agreement, provided that
Italian Government
complied with certain conditions. The main conditions, for the
purposes of the present Decision, were as follows:

the

By letter dated 13 January 1996 the Commission informed the
Italian Government of its decision to initiate the Article 93(2)
procedure in respect of aid granted in the form of a capital
injection by ENI to the sub-holding Enirisorse SpA (hereinafter
referred to as (cid:145)Enirisorse(cid:146)). Enirisorse was wholly owned by the
Italian State holding company ENI, which in turn at the time
in question was controlled by the Italian
of
Government through the Ministry of the Treasury, the majority
shareholder.

the events

(cid:151) Italy was to honour the commitment
to complete the
companies and
restructuring plan by privatising the
production sites of Enirisorse and liquidating it completely
by 31 December 1998,

(cid:151) the income from privatisation was to be used to cover any

further liquidation costs,

(1) OJ C 70, 6.3.1998, p. 5.

(2) OJ L 80, 18.3.1998, p. 32.

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(cid:151) the Italian Government was to set up a procedure to

monitor the implementation of the Decision.

not seem to qualify for the derogations under Article 92(2)
and (3) of the Treaty. It therefore decided to initiate the Article
93(2) procedure in respect of the new capital injections.

The first half-yearly report reached the Commission on 11
November 1997. It showed that the sale of Pertusola Sud, one
of the remaining companies owned by Enirisorse SpA which
manages a zinc-production plant in Crotone, had not yet taken
place, contrary to the restructuring plan notified by Italy and
approved by the Commission.

The problems surrounding Pertusola Sud had been of major
importance in Decision 98/212/EC. At the time, Italy had said
that
the company would be closed down or sold to an
interested buyer by the end of 1997. In the second scenario,
the buyer was to convert the production complex from zinc to
nickel. These were the terms in which the closure or sale of
Pertusola Sud appeared in the restructuring plan for Enirisorse,
notified to the Commission and restated in Decision
98/212/EC.

Given that
the Enirisorse’s operating losses for 1997 were
apparently attributable to the activities of Pertusola Sud, the
Commission counted on the closure or sale of the company to
a private buyer in order to achieve the ultimate aim of the
restructuring plan, i.e. the final liquidation of Enirisorse.

revealed that

The same report
in 1997 ENI had given
Enirisorse fresh capital injections amounting to ITL 133 billion.
This new capital was used partly to cover the operating costs
of Pertusola Sud and the cost of liquidating Enirisorse. The
in the
new capital
restructuring plan notified to the Commission and therefore
were not taken into consideration in Decision 98/212/EC. The
new capital
injections were not notified to the Commission
and were therefore made illegally.

injections were not provided for

II

Following publication of the notice on the initiation of the
procedure (3) by letter of 6 April 1998 the Government of the
United Kingdom submitted its own comments in support of
the Commission’s arguments. The UK authorities said that,
given the financial situation of Enirisorse,
the new capital
injections made by ENI were inconsistent with the action of a
private investor.

By letter of 4 May 1998 the company Union MiniŁre, a zinc
producer and direct competitor of Pertusola Sud, submitted its
comments, also in support of the Commission’s arguments.
injections given to
Union MiniŁre said that the new capital
Enirisorse concerning the financial years 1997 and 1998
intended to cover the losses of its subsidiary Pertusola Sud
constituted State aid which was not notified and therefore
illegal. The new aid clearly and unduly distorted competition
in zinc, already suffering from structural
in the market
overcapacity.

interested party submitted
No other Member State or
comments to the Commission. The comments of the United
Kingdom and Union MiniŁre were forwarded to the Italian
Government by letter of 28 May 1998.

III

The Commission therefore had to examine these new capital
illegal because granted in
injections as new aid measures,
breach of the prior notification pursuant to Article 93(3) of
the Treaty.

In its reply to the letter initiating the procedure and to the
abovementioned comments by third parties,
Italian
Government challenged both the Commission’s Decision to
initiate the procedure and the comments by the third parties,
in so far as:

the

its

As it had on the basis of the information gathered in the first
the Commission came to the
stage of
investigations,
conclusion that the capital
injections carried out by ENI in
1997 were unlikely to yield a sufficient financial return, given
that Enirisorse would be liquidated very soon. Therefore,
it
could not be claimed that ENI was acting as a private investor.
In any case, Enirisorse had suffered serious losses for over five
years; a private investor would have restructured or liquidated
the company much sooner, in order to avoid prolonged losses.

(cid:151) the

capital

injection

to
ITL 133 billion was notified to the Commission as part of
the monitoring procedure provided for
in Decision
98/212/EC,

amounting

question

in

(cid:151) of the total ITL 134 billion, ITL 34 billion were intended
to cover losses of Pertusola Sud, while the remaining
ITL 99 billion served to cover costs relating to Enirisorse.
The ITL 99 billion was used to help complete the
this
restructuring plan approved by the Commission;

The Commission had serious doubts as to the compatibility of
the capital injections with the common market, since they did

(3) See footnote 1.

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further injection of ITL 99 billion should be considered as
formally
in effect authorised, even though it was not
included in the aid provided for in the plan, given that the
Commission had stipulated,
in Article 3(b) of Decision
98/212/EC,
Italy should communicate any further
that
liquidation costs,

of ITL 1 819 billion for the purpose of implementing the plan.
In its Decision 98/212/EC the Commission found that this aid
was compatible, subject to the terms and conditions set out in
the notified restructuring plan. In the same period, Enirisorse
also expected to receive about ITL 840 billion from the sale of
companies and areas of business.

(cid:151) the amounts (ITL 99 billion) intended to cover the costs of
liquidating and closing down an undertaking cannot
possibly distort
are
undertakings which are permanently ceasing their activities
and leaving the market.

competition since

recipients

the

With regard to the ITL 34 billion paid to Pertusola Sud, the
Italian Government recognises the fact
that Enirisorse gave
capital injections totalling ITL 34 billion to Pertusola Sud in
1997 in order to compensate the company’s losses. However,
it goes on to state that:

(cid:151) when the Commission adopted Decision 98/212/EC,

it
knew that Pertusola Sud was to lose ITL 48 billion that
year. Therefore, by imposing the sale or closure of
Pertusola by the end of 1997, the Commission implicitly
approved continuation of activities up to that date and the
consequent compensation of losses accumulated in 1997,

V

Whether the capital injections constitute State aid

In order to assess whether the capital
injections totalling
ITL 133 billion constitute State aid, the Commission examines
the flow of capital between the Italian State,
the main
shareholder at the time, and Enirisorse in the light of the
market
in the
Commission’s communication to the Member States on public
undertakings in the manufacturing sector (4). According to this
principle, State aid is involved if
transaction
would not have been undertaken by a private investor
operating under normal market economy conditions.

economy investor principle

the financial

set out

as

(cid:151) the Pertusola Sud plant is situated near Crotone in an area
which qualifies for regional aid under Article 92(3)(a) of
the Treaty;
the aid in question should therefore be
considered compatible with the common market in the
light of those Treaty provisions.

As the time of the events in question, i.e. 1997, alongside the
Italian State, which was by far the largest shareholder, other
private investors held shares in ENI. Nevertheless the Ministry
of the Treasury, which held most of the shares in ENI at the
time, played a leading strategic role in determining the Group’s
business decisions.

IV

Enirisorse was set up in 1991 as a non-operating holding
company,
intended to optimise the economic and financial
resources of the ENI Group and with the basic objective of
entrusting the administration of the Group’s holdings, mainly
in mining activities, to a single centre of responsibility. In fact,
ENI and its shareholder at
the
Treasury) decided in 1991 to pull out of the non-core business
so as to make the core business profitable again by separating
it
to
from loss-making activities. The ultimate aim was
privatise the holding company Enirisorse.

the time (the Ministry of

To that end, Enirisorse formulated a plan of one-off aid
measures including, for the purposes of this Decision, closure
of the Pertusola Sud plant by the end of 1997, or sale to an
interested buyer who would turn the
complex into a
production unit for nickel.

injection of ITL 133 billion, the subject of the
The capital
the procedure, was financed by proceeds that
initiation of
in
would otherwise have benefited ENI’s
Italian State.
controlling
particular
its
Consequently,
to
available
the
Enirisorse must be considered State resources within the
meaning of Article 92(1) of the Treaty.

the
shareholder,
funds which ENI made

shareholders,

The Commission has good reason to suppose that the capital
injections made by ENI totalling ITL 133 billion will yield an
insufficient, or rather non-existent financial return, given that
the measures consist basically in covering the losses of a
company, Pertusola Sud, which should already have been
liquidated,
and unspecified liquidation costs which the
Commission does not see why ENI should undertake, unless it
has a specific legal obligation to do so.

If there is no such legal obligation, which it was up to the
Italian State to prove, ENI’s conduct does not conform to that
economy
of a private

investor operating under market

At the end of the five-year period 1992 to 1996, Enirisorse
had received from its sole shareholder, ENI, capital injections

(4) OJ C 307, 13.11.1993, p. 3.

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conditions, since it could not count on a profitable return in
proportion to the amount of the capital injection, and in fact
would have to give up hope of even the smallest return on the
investment, given the decision to liquidate Enirisorse in any
case by 31 December 1998.

It certainly cannot therefore be claimed that ENI acted as a
private investor when it decided to make further, fresh capital
injections of ITL 133 billion. A private operator would have
liquidated Enirisorse, limiting the liquidation costs as much as
possible and taking action only if
it had a specific legal
obligation to do so. From the evidence at its disposal, the
Commission must conclude that ENI did not act in response to
a legal obligation connected with the normal procedures for
liquidating a company.

The measures in question therefore constitute State aid.

The Commission cannot accept this argument in so far as
Article 2 of Decision 98/212/EC expressly stipulated that the
proceeds of privatisation of Enirisorse could not be used by
ENI to invest in other companies owned by ENI, but had to be
used to defray any further liquidation costs of Enirisorse. This
means that, although the Commission might have foreseen
further liquidation costs at the time it adopted its Decision, it
was clear from the wording of this Article that, as far as the
Commission was concerned, any such costs were to be met
using revenue from the privatisation of Enirisorse’s companies,
certainly not using new State aid in the form of fresh capital
injections, as was in fact the case.

There is also no basis to the claim by the Italian authorities
that the Commission, knowing that Pertusola Sud would lose a
further ITL 48 billion in 1997 and having accepted that it
would close by 31 December 1997, implicitly authorised the
compensation of those losses.

VI

The illegality of the State aid

As to the legality of the aid in question, in its reply to the
initiation of the procedure the Italian Government maintains
that
ITL 133 billion was notified to the
Commission as part of the monitoring procedure provided for
in Decision 98/212/EC.

the injection of

such losses.

The fact that the Commission was aware that Pertusola Sud
was to suffer further losses does not in any way imply that it
approved new aid to cover
It was entirely
reasonable, as may be seen from Decision 98/212/EC, that
Enirisorse should have compensated the losses of Pertusola Sud
using revenue from privatisations carried out in the medium
term, or at least using the holding company’s own internal
funds, without having recourse to a new and absolutely
unplanned injection of capital, as was in fact the case.

The measures in question therefore constitute illegal State aid
in so far as they were not notified by Italy to the Commission
before being granted and, a fortiori, were not authorised by the
Commission pursuant to Article 93(3) of the Treaty.

in this regard that

the monitoring procedure,

The Commission must point out
the
information concerning the new capital injection, one among
the many items of information sent to the Commission in the
context of
should have been
notified formally, since this was new aid, not included in the
amounts authorised in Decision 98/212/EC. In any case, the
Italian authorities did not comply with the obligation to give
prior notice before implementing the aid, as stipulated by the
Court of Justice, in particular in its judgment in Case 120/73
Lorenz v Germany (5).

The Italian authorities themselves agree that the new injection
of ITL 133 billion was not included in the ITL 1 819 billion
authorised by the Commission. However, they claim that, of
the ITL 133 billion, ITL 99 billion was used to help complete
the restructuring plan approved by the Commission. The
further injection of ITL 99 billion should be considered as in
effect authorised, even though it was not formally included in
the aid provided for in the plan, given that the Commission
had stipulated, in Article 3(b) of Decision 98/212/EC, that Italy
should communicate any further liquidation costs.

(5) [1973] ECR 1471.

VII

Compatibility of the aid with the common market

As to the compatibility of the aid, the Italian Government
maintains first of all that the amounts intended to cover the
costs of liquidating and closing down an undertaking cannot
possibly distort competition in the common market or affect
trade between Member States,
are
undertakings which are permanently ceasing their activities
and leaving the market.

recipients

since

the

This claim has no basis in the present case.
is directly
contradicted by the comments of Union MiniŁre, a competitor
of Pertusola Sud, which complains that the aid allowed the

It

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company to remain active on the zinc market, thus distorting
competition with other zinc producers.

can lead to no concrete advantage in terms of employment,
since the Italian authorities themselves acknowledge that in
any case Pertusola Sud, already in liquidation, will close by 31
December 1998.

the companies which benefited directly or
In this case,
indirectly from the aid in question are still active on the
market, often still producing, as in the case of Portovesme and
Pertusola Sud which, although put
into liquidation a few
months ago, is still an active zinc producer. Without the aid in
question it would have had to be sold or closed down some
time ago.

Therefore, the argument put forward by the Italian authorities
cannot be accepted, since the liquidation costs in question
have had direct or indirect repercussions on companies still
active on the market.

Italy also claims that, in any case, the Pertusola Sud plant is
situated near Crotone in an area which qualifies for regional
aid under Article 92(3)(a) of the Treaty. The aid in question
should therefore be considered compatible with the common
market in the light of those Treaty provisions.

Nor does the measure in question appear to serve any regional
policy purpose, since aid to liquidate companies cannot be said
to be aimed at (cid:145)promoting the economic development(cid:146) of an
area. It is, in fact, a further measure aimed at keeping Pertusola
Sud active on the market at all costs for another few months,
with no industrial, economic or regional logic behind it.

Therefore, as far as the cited provisions of Article 92(3)(a) are
concerned, the Commission must conclude that the ad hoc aid
measures in question were not taken as part of a government
strategy effectively promoting regional development, such as
would qualify for the derogation in question. The case file does
not even show that the aid was granted to create jobs in an
assisted area. On the contrary, all the evidence suggests that
these are ad hoc measures aimed at the industrial survival at
all costs of companies still controlled by Enirisorse, and in
particular Pertusola Sud.

The Commission would point out in this regard that Article
in derogation
92(3)(a) of the Treaty allows the Commission,
from the ban on State aid which affects trade between Member
States and distorts competition, to declare as compatible with
economic
the
development of
living is
abnormally low or where there is serious underemployment,
where such aid does not adversely affect trading conditions to
an extent contrary to the common interest(cid:146).

the
standard of

common market,

areas where

to promote

(cid:145)aid

the

In this context the Commission has authorised regional aid,
having established the viability of the company involved. In
other words, regional aid is authorised in so far as it can
effectively bring an advantage to the region, almost always in
terms of employment, linked to the viability over time of the
undertaking receiving the aid.
is clear, as
confirmed by successive Court judgments (see, most recently,
the judgment of the Court of First Instance in Joined Cases
T-126/96 and T-127/96 EFIM and BFM v Commission (6) that
the Commission cannot, even in the context of the application
the Community
of Article 92(3)(a), waive consideration of
interest,
to verifying the
it must never confine itself
regional specificity of the measures involved without assessing
their impact at Community level.

In any case it

i.e.

In the case in point, Italy simply invokes a regional derogation
for a company in liquidation, with no prospect of any viability
even in the medium term. This means that the capital injection

As to possible compatibility of
the new aid under Article
92(3)(c) of the Treaty, the Commission would stress that this
provision was not directly cited by the Italian authorities
during the procedure. However, the Commission would repeat
that State aid may qualify for this derogation provided that it
does not adversely affect
trading conditions to an extent
contrary to the common interest. As for restructuring aid, the
only aid which might possibly be cited in the present case, the
Community
and
restructuring firms in difficulty (7) state that this type of aid is
extraordinary and cannot be renewed, unless this is justified by
exceptional circumstances.
In this case the aid in question,
which was new and in addition to the aid already authorised
by Decision 98/212/EC, goes against the (cid:145)one-off(cid:146) condition,
since there are no new, exceptional circumstances which might
justify authorisation by the Commission.

guidelines on State

rescuing

aid for

VIII

the Commission
On the basis of the above considerations,
concludes that the aid in the form of capital
injections of
ITL 133 billion, questioned in the decision to initiate the
procedure, does not qualify for any of the derogations under
Article 92(3)(a), (b) or (c) in so far as it is not intended to
promote the economic development of areas where the
to restructure
living is abnormally low or
standard of

(6) Judgment of 15 September 1998; ECR II-3437, point 101.

(7) OJ C 283, 19.9.1997, p. 2.

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undertakings which are to be closed down soon and in any
case before 31 December 1998.

When it initiated the procedure, the Commission reminded the
Italian authorities that any aid granted illegally is liable to be
followed by a Commission decision requiring the Member
State in question to recover
the
Commission considers it necessary to recover the aid in order
to restore the fair competition which prevailed before it was
granted,

in this case,

it, and,

HAS ADOPTED THIS DECISION:

2.
Recovery shall be effected in accordance with the
procedures of Italian law. The amounts to be recovered shall
include interest from the date on which the aid was paid to
Enirisorse until the date on which it is effectively recovered.
The interest shall be calculated on the basis of the reference
rate used to calculate the net grant equivalent of regional aid.

Article 3

Italy shall
inform the Commission, within two months of
notification of this Decision, of the measures taken to comply
with it.

Article 1

Article 4

The State aid granted by Italy in 1997 to Enirisorse SpA in
the form of capital
injections totalling ITL 133 billion is
incompatible with the common market.

This Decision is addressed to the Italian Republic.

Article 2

Done at Brussels, 25 November 1998.

1.
Italy shall take all necessary measures to recover from
Enirisorse SpA the aid which has already been unlawfully paid.

For the Commission

Karel VAN MIERT

Member of the Commission