2004/800/EC:Commission Decision of 30 March 2004 on the State aid scheme put into effect by Italy providing for urgent measures to assist employment (notified under document number C(2004) 930)  (Text with EEA relevance)
Date: 2004-03-30
Institutions: European Commission
Subjects: Italy, State aid, aid for restructuring, company in difficulties, control of State aid, employment aid

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 30 March 2004

on the State aid scheme put into effect by Italy providing for urgent measures to assist employment

(notified under document number C(2004) 930)

(Only the Italian version is authentic)

(Text with EEA relevance)

(2004/800/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

of the deadline had been accepted by the Commission,
Italy submitted additional information by letter dated 20
May 2003.

Having regard to the Treaty
establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

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

Whereas:

1. PROCEDURE

(1)

By letter dated 12 February 2003 (recorded as incoming
mail under number A/31217 on 14 February 2003), the
Italian authorities notified, pursuant to Article 88(3) of
the EC Treaty, an aid scheme providing for urgent
measures to assist employment. The measure was put
into effect before
the Commission had given its
approval, and it was therefore registered as an unlawful
aid measure under the number NN 7/03.

(2)

By letter dated 12 March 2003 the Commission asked
for further information. After a request for an extension

(3)

(4)

(5)

(6)

the Commission
By letter dated 16 October 2003,
informed Italy that
it had decided to initiate the
procedure laid down in Article 88(2) of the Treaty in
respect of
the scheme. The Commission decision to
initiate the procedure was published in the Official
the European Union (2). The Commission
Journal
invited
their
comments on the measure. No such comments were
received.

of
other

interested

submit

parties

to

Italy submitted comments by letter dated 22 December
2003. The Commission asked for further information by
letter dated 19 January 2004, to which Italy replied by
letter of 11 February 2004.

2. DESCRIPTION OF THE AID

The aim of the scheme is to safeguard jobs in firms in
financial difficulty which are in a form of insolvency
proceeding known as ‘special administration’
(amminis-
trazione straordinaria) and which have more than 1 000
employees.

The legal basis of the scheme is Decree-law No 23 of 14
February 2003, which was converted into statute by Act
No 81 of 17 April 2003.

(1) OJ C 308, 18.12.2003, p. 5.

(2) See footnote 1.

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(7)

(8)

The aid is granted to purchasers of firms that have the
required characteristics (firms in financial difficulty,
in
special
least 1 000
employees).

and having at

administration,

could be considered compatible with the common
market only if it qualified for one of the exemptions
laid down in the Treaty.

The purchaser of such a firm qualifies for aid in respect
of the staff of the firm whom the purchaser agrees to
employ, up to a ceiling of 550 employees. For each
transferred employee the purchaser receives:

— a monthly grant equal

the special
indemnity to which the worker would be entitled if
laid off under the laid-off workers’ mobility scheme
(collocamento in mobilità),

to 50 % of

and

firms

in difficulty,

(11) Given that the measure aimed to safeguard jobs, and
involved the purchase of
the
Commission considered whether the aid might be held
compatible under the Community guidelines on State aid
for rescuing and restructuring firms in difficulty (the
under
rescue
Commission Regulation (EC) No 2204/2002 of 12
December 2002 on the application of Articles 87 and
88 of the EC Treaty to State aid for employment (2) (the
Employment Aid Regulation), or,
the
guidelines on national regional aid (3). The Commission
expressed doubts as to the compatibility of the measure
with the common market under any of these rules.

finally, under

guidelines) (1),

restructuring

or

— a reduction in employer’s social security contributions
the rate of contribution

for the first 18 months,
charged being that for trainees.

(12)

These are the benefits granted under another Act, Act No
223/1991, to employers who take on workers registered
under the laid-off workers’ mobility scheme, i.e. workers
whose employment has ended by reason of a structural
crisis and who satisfy stated requirements.

Under the aid scheme notified, the same benefits are
granted, up to a ceiling of 550 employees, to purchasers
who agree to employ staff of the existing firm; these
would not qualify for the laid off workers’ mobility
scheme.

The benefits are granted in respect of a maximum of 550
employees transferred provided two conditions are met:
(i) the transfer of employees must be provided for in a
collective agreement concluded with the Ministry of
Labour by 30 April 2003, and (ii) the purchaser and
the firm purchased cannot have the same ownership,
and there must be no relationship of control or asso-
ciation between them.

(9)

The scheme is applicable to transactions involving a
transfer of employees approved by means of a collective
agreement concluded with the Ministry of Labour by 30
April 2003. The budget for the year 2003 amounted to
EUR 9,5 million.

3. GROUNDS FOR INITIATING THE PROCEDURE

(10)

investigation
In the decision to initiate the formal
to Article 88(2),
the Commission
procedure pursuant
took the view that
the measure constituted State aid
within the scope of Article 87(1). The measure was
therefore caught by the general ban on State aid, and

doubted whether

The Commission
the measure
constituted a scheme of assistance to a general class of
recipients; in view of its short duration it appeared rather
to be aimed at very specific recipients (the legislation was
adopted on 14 February 2003, and the deadline for the
purchase of
the
transfer of employees was 30 April 2003).

the firm and ministerial approval of

(13)

(14)

The Commission said that if Italy considered that the
notification of the scheme was in fact an individual noti-
fication of restructuring aid to a single firm in difficulty,
then the measure would have to be notified as such. It
would then be necessary to clarify whether the firm in
financial difficulty was the effective recipient of the aid.
Such a notification would have to be accompanied by a
restructuring plan intended to restore the firm to
viability, and would have to satisfy all the conditions
laid down in the rescue and restructuring guidelines.

4. COMMENTS SUBMITTED BY ITALY

Italy submitted comments by letter dated 22 December
2003. The Italian authorities stated that during the
lifetime of the scheme only one firm had been sold in
accordance with the mechanisms it laid down: this was
Ocean SpA, located in Verolanuova, Brescia, which was
bought by Brandt Italia SpA. According to the Italian
Italia acquired Ocean at a market
authorities Brandt
price
economic
any direct
and did not
advantage under the scheme.

receive

(15)

The Italian authorities also stated:

— that the measure under examination was not one that
applied in specific areas or to specific recipients,

(1) OJ C 288, 9.10.1999.
(2) OJ L 337, 13.12.2002, p. 3.
(3) OJ C 74, 10.3.1998.

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— that if the Commission did not consider it a general
it should conclude that it did not affect
restoring the
aimed at
firms in difficulty and safe-

measure,
competition,
productive activity of
guarding the jobs involved,

it was

as

— that

the scheme complied with the rescue and
restructuring guidelines,
increase
production capacity but aimed to restore viability
and safeguard jobs.

it did not

as

(16)

By letter dated 11 February 2004, Italy indicated that the
amount of aid awarded to Brandt Italia under the scheme
the
was, at
granting of aid had begun in March 2003.

that date, EUR 3 197 982,20 and that

(17)

(18)

5. ASSESSMENT OF THE AID

5.1. Existence of aid

In order to assess whether the measure constitutes aid
within the scope of Article 87(1) of the Treaty,
it is
necessary to determine whether it favours certain under-
takings, whether it is granted through State resources,
whether it distorts competition, and whether it may
affect trade between Member States.

The first condition for the application of Article 87(1) is
that the measure must favour certain undertakings. It is
therefore necessary to verify whether the measure confers
an economic advantage on recipients that they would not
enjoy in normal market conditions, or whether it relieves
them of charges that are normally borne from their
budgets, and whether such an advantage is granted to
specific undertakings.

(19)

(20)

to purchasers of

security reductions

The scheme under examination provides for grants and
social
in
financial difficulty that are in special administration and
have at least 1 000 employees. It therefore confers an
economic advantage on the purchaser, who receives a
non-repayable grant for every employee transferred, and
is relieved of part of the social security contributions
ordinarily payable by the employer for 18 months.

firms

firm in financial difficulty is a going concern, whether the
sale is an asset or a share deal, whether the purchaser is
clearly separate from the firm in financial difficulty, how
the selling price is determined, etc.

The Commission considers that the scheme confers an
economic advantage on a specific category of recipients,
namely:

— the purchaser of a firm, where the firm is in financial
difficulty, is in special administration, and has at least
1 000 employees, and the purchaser concluded a
collective
transfer of
employees with the Ministry of Labour by 30 April
2003, and/or

agreement

approving

the

— the firm sold, where the firm is in financial difficulty,
is in special administration, and has at least 1 000
employees.

economic

advantage

the view that

the
The Commission therefore takes
measure is not a general measure, but instead confers
an
undertakings,
reducing the costs they would otherwise have to bear
and strengthening their financial position as compared
with competitors who do not benefit under the same
measures. This finding is confirmed by the fact that the
measure has been applied in only one case.

certain

on

The second condition for the application of Article 87(1)
is that the aid must be granted through State resources.
the use of State
In the scheme under examination,
the measure is
resources is shown by the fact
financed by non-repayable public funding and by the
State’s foregoing a portion of the social contributions
ordinarily due.

that

The third and fourth conditions for the application of
the measure must distort or
Article 87(1) are that
threaten to distort competition and must affect
trade
between Member States. The scheme under examination
threatens to distort competition because it reinforces the
financial position of some undertakings compared to
those of their competitors. In particular, it threatens to
distort competition and affect trade in cases where the
recipients compete with products coming from other
Member States, even if they do not export their own
their own products
products.
there
domestic
an
is
production, because undertakings established in other
Member States have less chance of exporting their
products to the market in question (1).

If
nevertheless

they do not export

advantage

to

The Commission takes the view that the measure may
comprise an economic advantage to the firm in special
administration as well. Who is the effective recipient of
the aid will depend on a number of factors which have
not been clarified by the Italian authorities: whether the

(1) Judgment of the Court of Justice in Case 102/87 France v Commission

[1988] ECR 4067.

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(21)

The measure under examination is consequently caught
by the general prohibition in Article 87(1) of the Treaty,
and can be considered compatible with the common
market only if it qualifies for one of the exemptions
laid down in the Treaty.

5.2. Lawfulness of the aid

(22) As the measure constitutes State aid, the Commission
regrets that
fulfilled
their obligation under Article 88(3) of the Treaty and
the measure into effect before approval by
have put
the Commission.

the Italian authorities have not

5.3. Assessment of compatibility of the aid

(23) Having determined that the measure constitutes State aid
within the scope of Article 87(1) of
the
Commission considered whether it could be held to be
compatible with the common market under Article 87(2)
and (3).

the Treaty,

whether the aid scheme could be assessed under those
guidelines. The rescue and restructuring guidelines allow:

— rescue and restructuring aid notified individually to
the Commission, for all firms irrespective of size,

— rescue and restructuring aid schemes confined to

small and medium-sized enterprises.

The Italian authorities notified an aid scheme that applies
to all firms irrespective of size. Indeed, as the scheme
concerns the sale of
firms having more than 1 000
employees, the firms concerned will for the most part
be large (1).
In its current form, therefore, the scheme
cannot be considered compatible with the common
market on the basis of
the rescue and restructuring
guidelines.

The Commission takes the view that the aid does not
qualify for exemption under Article 87(2), because it is
not aid having a social character of the kind referred to
in Article 87(2)(a), nor aid to make good the damage
caused by natural disasters or exceptional occurrences
of the kind referred to in Article 87(2)(b), nor does it
fall under Article 87(2)(c). The exemptions in Article
87(3)(b) and (d) are obviously inapplicable too.

(27)

(28)

(24)

(25)

Turning to Article 87(3)(a) and (c), the Commission has
laid down its policy on certain categories of aid in
exemption regulations and guidelines. The aid under
examination aims to safeguard jobs and involves the
sale of firms in difficulty, which means that it may fall
within the scope of any of three acts of secondary legis-
lation. The Commission has accordingly examined the
compatibility of the aid under the rescue and restruc-
turing guidelines, under the Employment Aid Regulation,
and finally under the guidelines on national regional aid.
But
the
the doubts
Commission as to the compatibility of the aid scheme
with the common market have been confirmed.

in each case

expressed by

5.4. Assessment under the rescue and restructuring
guidelines

(26) Given that the notified scheme applied to the sale of
firms
Italian authorities
argued that it should be assessed under the rescue and
restructuring guidelines. The Commission considered

in financial difficulty,

the

its

the

decision

initiating

investigation,

In
the
Commission said that if Italy considered that the notifi-
cation of the scheme was in fact an individual notifi-
cation of restructuring aid to a single firm in difficulty,
then the measure would have to be notified as such. It
would then be necessary to clarify whether the firm in
financial difficulty was the effective recipient of the aid.
Such a notification would have to be accompanied by a
restructuring plan intended to restore the firm to
viability, and would have to satisfy all the conditions
laid down in the rescue and restructuring guidelines.

The Italian authorities indicated that in reality only one
firm had been sold under the scheme during its lifetime.
But they continued to describe the measure as a scheme,
and did not provide any information that might have
enabled the Commission to assess it as an individual
restructuring aid to a single firm in
notification of
difficulty. The Commission cannot, therefore, assess the
individual case of the sale of Ocean SpA to Brandt Italia
SpA on its own merits.

5.5. Assessment under the Employment Aid Regu-
lation

(29)

The notified aid scheme aims to safeguard jobs.
In
addition to the rescue and restructuring guidelines, the
Italian authorities also referred to the Employment Aid
Regulation. In this respect, according to the Italian autho-
rities:

(1) As far as the sale of Ocean SpA to Brandt Italia is concerned, the
Italian authorities did not supply any information regarding the size
of the acquiring company, Brandt Italia. The company acquired,
Ocean SpA, had more than 1 000 employees.

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— the notified measure should be considered as a
‘general measure to promote employment which
does not distort or threaten to distort competition
by favouring certain undertakings or the production
of certain goods’
(recital 6 to the abovementioned
it
Regulation),
and
applies
than 1 000
firms with more
employees which are in special administration and
which are sold,

as
to all

and abstract,

is general

(33)

The notified measure consequently cannot be considered
compatible with the common market on the basis of the
Employment Aid Regulation.

5.6. Assessment under the guidelines on national
regional aid

(34)

(35)

— the benefits granted are the same as those available
under the laid-off workers’ mobility scheme, which
has never been considered State aid,

— if the measure is considered to constitute State aid, it
should be regarded as a scheme for the creation of
employment: Article 4(4)(c) of the Employment Aid
Regulation explicitly provides that ‘the new workers
employed as a result of the creation of employment
must have never had a job or have lost or be losing
their previous job’. The measure under examination
concerns the last of these cases.

The Commission also considered whether the scheme
could be assessed under
the guidelines on national
regional aid (1). Provided certain stated requirements are
met, these guidelines allow aid to maintain jobs to be
falls within the definition of
authorised even if
operating aid.
is also possible to approve aid to
investments in fixed capital undertaken in the form of
the purchase of an establishment which has closed or
which would have closed had it not been purchased.

It

it

fall within the scope of

The scheme does not
the
guidelines on national regional aid, however, because
since it is applicable countrywide. Moreover, the only
case in which the scheme is known to have been
applied is that of a company located in Verolanuova,
Brescia, which is not
the
(c). The notified
exemptions
measure consequently cannot be considered compatible
with the common market on the basis of the guidelines
on national regional aid.

in an area falling under

in Article 87(3)(a) or

(30) On the first point, the Commission considers that the
measure is not a general measure,
the reasons
already mentioned in this Decision in the section on
the existence of aid.

for

(36)

Lastly,
the notified measure is incompatible with the
common market in that it contains no provision on
overlapping aid from different sources.

(31) On the second point, the measure does not modify lay-
off schemes such as the special lay-off fund (Cassa inte-
grazione straordinaria) or the laid-off workers’ mobility
It
scheme.
is a temporary measure designed for a
specific
situation and applies only to transactions
carried out in the course of one three-month period.
Thus it cannot be considered equivalent to general lay-
off schemes such as the special lay-off fund or the laid-
off workers’ mobility scheme, which have never been
assessed by the Commission under the State aid rules.

(32) On the third point, the Commission would point out
that under the Employment Aid Regulation aid towards
the creation of new jobs in non-assisted areas is allowed
only where it is given to small and medium-sized enter-
prises. The notified aid scheme applies throughout the
country and to all undertakings irrespective of size.
Indeed, as
firms
having more than 1 000 employees, there are grounds
for supposing that the firms concerned will for the most
part be large.

the measure concerns

the sale of

(37)

(38)

6. CONCLUSION

The Commission finds that the measure under exami-
nation constitutes State aid within the scope of Article
87(1) of the Treaty. Italy has put the measure into effect
unlawfully, in breach of Article 88(3) of the Treaty. On
the basis of the analysis set out above, the Commission
the aid is incompatible with the common
finds that
market
the rescue and restructuring
guidelines,
the Employment Aid Regulation and the
guidelines on national regional aid.

in the light of

This Decision concerns the aid scheme and the individual
cases in which it is applied, and must be complied with
immediately, with special reference to the recovery of all
incompatible aid granted. This Decision is without
prejudice to the possibility that individual aid measures
taken under the scheme may subsequently be considered
compatible on their own merits, in whole or in part, by
Commission decision,

(1) OJ C 74, 10.3.1998.

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HAS ADOPTED THIS DECISION:

Article 1

The State aid measure providing for urgent measures to assist
employment which Italy has put into effect under Decree-law
No 23 of 14 February 2003, converted into statute by Act No
81 of 17 April 2003, is incompatible with the common market.

Article 2

The aid to be recovered shall

include interest from the
4.
date on which it was made available to the recipient until the
date of its recovery.

Interest shall be calculated on the basis of the reference
5.
rate used for calculating the grant equivalent of regional aid on
the date on which the aid was made available to the recipient.

The interest rate referred to in paragraph 5 shall apply on
the entire period referred to in

6.
a compound basis over
paragraph 4.

Italy shall withdraw the scheme referred to in Article 1 in so far
as it continues to have effect.

Article 4

Article 3

Italy shall inform the Commission, within two months of noti-
fication of this Decision, of the measures taken to comply with
it, using the questionnaire attached to the Decision.

1.
Italy shall take all necessary measures to recover from the
recipients the aid granted under the scheme referred to in
Article 1 which has been unlawfully made available to the
recipients.

Article 5

This Decision is addressed to the Italian Republic.

Italy shall cancel all outstanding payments of aid with

2.
effect from the date of this Decision.

Done at Brussels, 30 March 2004.

3.
Recovery shall be effectuated without delay in accordance
with the procedures of national law provided that they allow
the immediate and effective execution of the Decision.

For the Commission

Mario MONTI
Member of the Commission

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ANNEX

Information regarding the implementation of the Commission Decision 2004/800/EC

1.

Total number of recipients and total amount of aid to be recovered

1.1. Please explain in detail how the amount of aid to be recovered from individual recipients will be calculated:

— principal,

— interest.

1.2. What is the total amount of aid granted unlawfully under this scheme that is to be recovered (gross grant

equivalents; prices of …)?

1.3. What is the total number of recipients from whom aid granted unlawfully under this scheme is to be recovered?

2. Measures planned or taken to recover the aid

2.1. Please describe in detail what measures are planned and what measures have already been taken into effect an

immediate and effective recovery of the aid. Please indicate the legal basis of the measures.

2.2. By what date will the recovery of the aid be completed?

3.

Information concerning individual recipients

On the table overleaf, please provide details of each of the recipients from whom aid granted unlawfully under the
scheme is to be recovered.

Name of recipient

Address of recipient

Date (*)

Amount of aid
granted unlawfully (**)
Currency: …

Recovery effected
Yes/No

(*) Date or dates on which the aid or part thereof was made available to the recipient.
(**) Amount of aid made available to the recipient (in gross grant equivalent; at prices of …).