2006/598/EC: Commission Decision of 16 March 2005 concerning State aid that Italy (Regione Lazio) intends to grant for the reduction of greenhouse gas emissions (notified under document number C(2005) 587)   (Text with EEA relevance)
Date: 2005-03-16
Institutions: European Commission
Subjects: Italy, Latium, State aid, control of State aid, heating, investment aid, reduction of gas emissions

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 16 March 2005

concerning State aid that Italy (Regione Lazio) intends to grant for the reduction of greenhouse
gas emissions

(notified under document number C(2005) 587)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2006/598/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

Italy wrote on 23 July 2003.

Having regard of
Community, and in particular Article 88, paragraph 2,
indent,

establishing the European
first

the Treaty

Having regard of the agreement on the European Economic
Area, and in particular Article 62, paragraph 1, point (a),

After having invited the interested parties to present their obser-
vation according to these Articles (1), and having regard of these
observations,

(3)

ACEA S.p.A. (‘ACEA’), beneficiary of the aid, wrote on 8
September 2003. The letter was
to Italy for
comments, together with a number of other demands,
on 15 September 2003. The demands concerned:

sent

— a demand for a copy of the Memorandum of Under-
standing between ACEA and Electrabel for the consti-
tution of AEP;

Whereas:

— the conditions of transfer of ACEA’s activities to AEP,
in particular if the measure under consideration had
been taken into account;

I. THE PROCEDURE

(1) With its decision of 13 May 2003, notified to Italy by
means of letter of the same day, the Commission decided
to open the investigation procedure based on Article
88(2) on the case mentioned in the subject and invited
interested parties to submit comments (2).
Italy and all

— on which of

the activities of ACEA the recovery

would impinge.

(1) OJ C 188, 8.8.2003, p. 8.
(2) See footnote 1.

(4)

Italy responded on 18 March 2004, and again on
29 April 2004.

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II. DESCRIPTION OF THE CASE

(7)

(5)

(6)

The case originally concerned two energy saving projects
supported by the Region Lazio, a district heating project
and a windpower plant. Both projects were declared
compatible, but it was decided to open the proceedings
pursuant
to Article 6 of Council Regulation (EC) No
659/1999 of 22 March 1999, based on the Deggendorf
jurisprudence (3). The present case thus concerns only the
energy saving project. The project consists in a district
heating network in the area of Torrino Mezzocammino,
near Rome. The distribution network will be supplied by
energy produced in a partly repowered and upgraded
(converted) cogeneration plant and will provide heating
to a new neighbourhood. Two other neighbourhoods
near Rome — Torrino Sud and Mostacciano — are
already linked to the combined heat and electricity
power plant by means of district heating pipelines. The
new project represents an extension of the network. The
pipelines will have an extension of 14 km.

for

costs

Investment
to
this
EUR 9 500 000. They are limited to the amount of the
investment related to the heat distribution system, to the
exclusion of the re-powered turbine. The aid amount is
limited to EUR 3 800 000.

amount

project

The legal base of the measure is the Deliberazione of the
Giunta Regionale del Lazio n. 4556 of 6 August 1999,
which selected the projects to fund through the ‘carbon
tax’. The measure is financed through the funds collected
with the ‘carbon tax’
the
budgetary law (‘finanziaria’) approved on 23 December
1998 (legge n. 448/98). On 20 July 2000 the Ministry of
the Environment adopted a decree (decreto n. 337 del
Ministero dell’Ambiente)
lying down the operational
criteria that the Region had to respect in spending the
resources collected through the tax.

introduced by Article 8 of

III. DESCRIPTION OF THE BENEFICIARY

(8)

The undertaking benefiting from the aid was ACEA
S.p.A., former municipalizzata of Rome. After a series
of reorganisations which involved a number of other
undertakings, notably Electrabel, the beneficiary is now
a different one, AceaElectrabel Produzione (AEP). AEP is
controlled at 50 % by Electrabel Italia, and at 50 % by
AceaElectrabel. The first is controlled at 100 % by Elec-
trabel (Belgium). The second is controlled at 40,59 % by
Electrabel Italia, and at 59,41 % by ACEA S.p.A.

Note: Chart of the ACEA Group; the figures between brackets indicate the level of control by the parent company; the rest belongs to

Electrabel Italia, Italian subsidiary of the Belgian group Electrabel.

IV. REASONS FOR OPENING ARTICLE 88(2)
PROCEDURE

(10)

(9)

The Commission considered (4) that the project under
examination does comply with the relevant provisions
of
the
the Environmental Guidelines. Nevertheless,
Commission expressed doubts and decided to open the
investigation procedure, as it considered that the prin-
ciples and criteria endorsed in the Court jurisprudence
(‘Deggendorf’) are applicable.

the former

‘aziende municipalizzate’

It appeared that the intended recipient, ACEA S.p.A., is
one of
(public
utilities owned by local public administrative bodies) in
the energy sector which has benefited of the aid schemes
assessed in the Commission Decision 2003/193/EC of 5
June 2002 on State aid granted by Italy in the form of
tax exemptions and subsidised loans to public utilities
with a majority public capital holding (5)
(State aid
C 27/99, ex NN 69/98). Even though that decision only
concerns the schemes as such and does not deal with the
individual situation of the recipients, at least one of those
to all undertakings
schemes was intended to benefit
meeting certain conditions, and at
time
ACEA met those conditions.

the relevant

(3) Judgement of the Court of 15 May 1997 in the case C-355/95 P
(Textilwerke Deggendorf GmbH v Commission of
the European
Communities and Federal Republic of Germany), Rec. 1997,
p. I-2549.

(4) Point 3.4 of the decision to open the procedure, C(2003) 1468 fin

of 13.5.2003, on case N 90/2002.

(5) OJ L 77, 24.3.2003, p. 21.

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The Commission Decision 2003/193/EC declared such
non-notified schemes unlawful and incompatible and
imposed to the Italian State to recover any possible
amount disbursed under those schemes. ACEA has chal-
lenged that decision before the Court of First Instance (6)
and, in that context it has submitted that it had benefited
from the relevant scheme. Financial reports by ACEA
explicitly refer to the risk of recovery, for instance the
semi-annual report of September 2004 (7).

(17)

the measure constitutes aid, as it
Italy contests that
concerns a local project with no impact on trade;
furthermore since heating is not tradable, and it cannot
be taken as a substitute for other energy sources, there is
no distortion of competition.

(18)

Italy then develops a number of arguments against the
application of the Deggendorf jurisprudence (recitals 19
to 23):

(11)

(12)

those amounts,

from the adoption of

Following two reminders of the Commission addressed
to the Italian authorities concerning their obligation to
the Italian authorities have
recover
informed the Commission that, after more than two
years
the decision in case
2003/193/EC, they are still
in the process of fulfilling
their recovery obligation by adopting and implementing
In particular
the appropriate administrative measures.
they have not clarified whether the sums that have
been received by ACEA have been recovered yet. Based
on the above mentioned information,
should be
inferred that ACEA S.p.A. has received and not yet reim-
bursed certain amounts under
the incompatible aid
schemes assessed in the Decision 2003/193/EC.

it

(13)

Therefore, the Commission concluded, on the one hand,
that it was unable to determine the amount of aid which
ACEA S.p.A. had already received prior to the new aid
granted under the project and which still has to be reim-
bursed.

(14) On the other hand, the Commission concluded that it
could not assess the cumulative effect of both the ‘old’
and ‘new’ aid accruing to ACEA S.p.A. and its likely
distortionary impact on the common market.

V. COMMENTS FROM ITALY AND FROM THIRD
PARTIES

1.1. Comments from Italy

(15)

The arguments of the Italian authorities are the following
(recitals 16 to 27):

(23)

(16)

to that date. However,

Italy raises the issue of the identity of the beneficiary,
which has changed since the decision of the Commission.
In fact, Italy points out that the beneficiary of the aid had
Italy
changed even prior
recognises that the Commission was not made aware
of this fact prior to the decision to open the current
procedure. The change of the beneficiary would have as
a consequence that the Deggendorf jurisprudence should
not apply and that the present case would be without
object.

(19)

Italy claims that the Deggendorf jurisprudence should not
apply in this case, given the different origin of the case.
The present case is a regional case (granting authority
being the Regione Lazio), while the case concerning the
municipalizzate was a national case.

(20)

Italy claims that there is no absolute identity in the bene-
ficiaries. The Deggendorf jurisprudence should apply only
to individual aid and not to schemes.

(21)

Italy claims that the Deggendorf
jurisprudence should
apply only when decisions are incontrovertible, while
the decision of the Commission is not final, as there is
the Commission
an appeal pending.
cannot exercise such a pressure on Members States’
policies before all enforcement means foreseen by the
Treaty have been used.

Italy states that

(22)

Italy claims that the Commission is making a use of the
Deggendorf jurisprudence which is too wide. It notes that
a possible consequence would be that Member States
would stop notifying.

jurisprudence:

Italy points out two other features of the project under
examination which would not favour the application of
the Deggendorf
the energy saving
objectives of the project are in line with Commission
(b) ACEA would be penalised
and EU policies;
compared to other municipalizzate, and the Commission
would be exercising pressure towards a single subject,
through illegitimate means.

(a)

(24)

In reply to the Commission’s questions, Italy points out
that (recitals 25 to 27):

(6) Case T-297/02 (OJ C 289, 23.11.2002, p. 37).
(7) Available on the Internet site of ACEA: www.aceaspa.it

(25)

The Memorandum of Understanding shows that AEP is
subject to double control of AEA and Electrabel.

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(26)

In the Joint Venture Agreement the project under consi-
deration was not
the
recovery decision.

taken into account, nor was

(33)

Secondly, the assessment will look at the identity of the
beneficiary and the application of the Deggendorf juris-
prudence.

(27) ACEA has various activities, and that it is not possible to
determine on which of these the recovery of the aid will
impinge.

1.1. Existence of aid

(34) A number of comments from Italy and from ACEA
concern the finding of the Commission that the project
is an aid (see paragraph 5.3).

1.2. Comments from third parties

(28)

The beneficiary of the aid ACEA, made a number of
comments, which, to a very large extent, are identical
to those submitted by Italy. There are however three
additional comments in particular on the application of
the Deggendorf jurisprudence:

(35)

The project is funded through state resources coming
from the budget of
the Regional Government, and
deriving in particular from the ‘carbon tax’, which was
introduced by the Budget Law for the year 1999. The
first condition for the existence of an aid is respected.

(29)

The first additional argument from ACEA is that, in the
present case, contrary to the Deggendorf case, there are
no urgent and serious reasons for the recovery, nor has a
long period passed since the decision on the unlawful
aid.

(30)

The second argument from ACEA points out that, again
contrary to the Deggendorf case, ACEA bears no respon-
sibility or unwillingness concerning the recovery; to the
contrary, ACEA declares itself as willing to payback, and
makes clear that the delay does not depend on it.

(31)

The third additional argument that ACEA puts forward is
the claim that the Commission is not coherent in its
application of
the jurisprudence Deggendorf. ACEA
mentions the Commission Decision 98/466/EC of 21
January 1998 granting conditional approval
to aid
which France has decided to grant to Société française
de production (8), where a previous negative decision
concerning the same beneficiary is mentioned, but
where Deggendorf was not applied.

VI. ASSESSMENT

(32)

The assessment of the case will look first at whether the
measure under consideration is an aid, and whether it
can be considered compatible according to the Treaty.

(36)

The measure is selective, as it benefits only one producer,
initially ACEA and now AEP. The second condition for
the existence of an aid is respected.

(37)

the 2003 Decision
Concerning the impact on trade,
‘Heat is not traded but is substitutable
(point 3.1) says:
to other primary or secondary energy products, which
are themselves traded.’

(38)

(39)

This is confirmed by other decisions of the Commission,
for instance on the case Italy, Regione Piemonte, Aid for
the reduction of polluting emissions (N 614/02) (9), when
it says that a local district heating project ‘will allow
households
to other primary or
secondary sources of energy such as oil or electricity
which are traded among Member States’.

to substitute heat

The objective of district heating is to replace individual
heating in buildings in an entire neighbourhood. In other
words, the heating provided by the district heating power
generator replaces the heating generated by small boilers,
which in turn use other energy sources such as oil, gas,
or by electricity. Oil, gas and electricity are traded among
Member States. There is a substitution effect and the
project under consideration does then have an impact
on trade. In any event, both the ACEA and the Electrabel
in particular
groups are active in a number of areas,
energy
and electricity production and distribution,
where intra-Community trade takes place. The third
condition for the existence of aid is also respected.

(8) OJ L 205, 22.7.1998, p. 68.

(9) OJ C 6, 10.1.2004, p. 21.

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(40)

Finally, the measure is also distortive, as it favours only a
producer that may have its position strengthened in the
global energy market, which may then possibly lead to a
Impact on trade and
change in market conditions.
thus
distortion stemming
confirmed, and are consistent with the findings of the
Commission in other cases (10).

from the measure

are

(41) All the four conditions for the existence of an aid are
thus respected, and the Commission confirms its finding
that the project under examination should be considered
as such.

1.2. Compatibility of the aid

(46)

(47)

(48)

(42)

(43)

been considered

The Commission then examined if the aid under consi-
deration could have
compatible,
according to article 87(3)c. It first recognised that the
to reach environmental objectives.
project
looked at whether the measure could fall
Second,
within the
Environmental
foreseen by
Guidelines. The Commission looked in particular at
points 30 and 37.

intends
it

rules

the

Point 30 of the Guidelines stipulates that ‘investments in
energy saving as defined in point 6 are deemed
equivalent
to investments to promote environmental
role in
protection. Such investments play a major
achieving economically the Community objectives for
the
for
are,
investment aid at the basic rate of 40 % of eligible costs’.

environment. They

therefore,

eligible

(44) Within the project under consideration, only investment
concerning district heating, consisting in pipelines for the
distribution of heat and its accessories, is eligible to aid.
The regional authorities of Lazio have provided the
Commission with technical and economic
evidence
which proves that
the proposed distribution network
for district heating would actually mark a significant
step forward in energy saving as compared to the
existing — i.e. pre-investment — situation,
ceteris
paribus. Therefore, point 30 of the Guidelines applies.

(45)

Point 37 of the Guidelines stipulates that ‘eligible costs
must be confined strictly to the extra investment costs
necessary to meet the environmental objectives’.

(10) In the case N 707/02 — The Netherlands — MEP — Diffusion of
renewable energy, approved by the Commission on 19.3.2003 it is
written that the scheme will only favour the producers of renewable
electricity and producers of CHP electricity who are feeding that
electricity into the grid. The financial assistance provided to these
selective groups of producers of electricity will strengthen their
position on the global electricity market, which may possibly lead
to a change in market conditions. Such strengthening of
the
position of
the relevant undertakings as compared with other
undertakings competing with them within the Community must
be regarded as affecting trade between Member States.

In view of the fact that the reference investment is nil as
the alternative is individual heating of households, the
Commission accepted that
investment cost is
eligible.
there is no cost saving accruing
In addition,
from the extension of the network. Therefore, the full
the investment can be considered as eligible.
cost of
The aid granted corresponds
to a maximum gross
intensity of 40 %.

the full

Therefore, in terms of eligible investment costs and aid
intensity, the district heating project, taken in isolation,
appears to be in line with points 30 and 37 of the
Guidelines.

balanced

Based on this analysis the Commission would be able to
declare the project, taken in isolation, as compatible to
the rules concerning state aid. In taking this decision, the
Commission
aspects with
competition policy, as it is precisely supposed to do.
As it
the Environmental
Guidelines ‘taking long-term environmental requirements
into account does not mean that all aid must be
authorised’.

is indicated in point 4 of

environmental

(49) Accepting the point of view of

It

Italy,

is established jurisprudence that

that since the
project intended to reach environmental objectives the
Commission should then have approved it, would
ignore the fact that what matters most for competition
rules is the modality through which the objectives are
met.
in providing
guidelines on the ways it will examine State aid notifi-
cations, the Commission indicates to the Member States
the less distortive ways of reaching the environmental
goals. However, the environmental objective of the aid
does not
justify a derogation from general rules and
principles concerning all State aid measures, whatever
their objective.

1.3. Identity of the beneficiary

(50)

The first aspect of the assessment in the present case is to
analyse the identity of the beneficiary.

(51) A number of comments from Italy (11) concern the
change of beneficiary, the conditions of transfer of the
part of the firm that is going to carry out the project and
the Memorandum of Understanding between ACEA and
Electrabel.

(52)

It is useful to underline that, before taking the decision to
open the current procedure, the Commission was not
made aware that the beneficiary of the aid had become
AEP. It’s a fact that was communicated from the Italian
authorities only in the course of the current procedure.

(11) See recitals 16 and 25 to 27.

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It

the Commission,

(53) As mentioned above, in the section describing the bene-
is a distinct
from ACEA.
ficiary, AEP is different
jointly controlled by ACEA and Electrabel.
company,
in its appreciation in the State
But
separation. As
aid area, must go beyond the legal
recently confirmed by the Court of First Instance, with
extensive references to the jurisprudence of the European
Court of
Instance
itself (12).

the Court of First

Justice and of

(54)

‘It should be noted that, according to settled case-law,
where legally distinct natural or legal persons constitute
an economic unit, they should be treated as a single
undertaking for the purposes of Community competition
law (see, to that effect, Case 170/83 Hydrotherm [1984]
ECR 2999, paragraph 11,
and, by analogy, Case
T-234/95 DSG v Commission [2000] ECR II-2603,
paragraph 124). In the field of State aid, the question
whether there is an economic unit arises primarily in
relation to the question whether there is an aid bene-
ficiary (see,
to that effect, Case 323/82 Intermills v
Commission [1984] ECR 3809, paragraphs 11 and
12). It has been held in that regard that the Commission
has a broad discretion in determining whether companies
which form part of a group should be regarded as an
economic unit or rather as legally and financially inde-
pendent for the purpose of applying the rules governing
State aid (see, to that effect, Joined Cases T-371/94 and
T-394/94 British Airways and Others v Commission
[1998] ECR II-2405, paragraphs 313 and 314, and, by
analogy, DSG v Commission, paragraph 124).’

(58)

The Memorandum of Understanding between ACEA and
Electrabel, concerning the transfer of the branch from
ACEA to AEP does not mention the project at all.
However, it is clear that AEP inherited the project and
became the intended beneficiary of the aid as a result of a
restructuring within the ACEA group and that it pursues
some of the activities that were previously performed by
ACEA itself. Furthermore, Article 4 of the agreement to
confer the branch to AEP (named at that time GEN.CO)
says that any dispute concerning that branch would be
left out from the agreement itself, and that the conferred
undertaking would not be subject to any dispute that
may arise, even if they would originate after December
1, 2002 (date of entering into effect of the agreement)
but would be based on facts preceding that date.

the obligation of

(59) An agreement between two parties cannot lead to an
exemption from the obligation to reimburse the illegal
and incompatible aid. If such an agreement would be
accepted, it could lead to the systematic circumvention
the companies to reimburse the
of
illegal and incompatible aid. Furthermore,
it should be
noted that, at the time of the entering into effect of the
agreement, the decision on the aid granted to ACEA had
already been taken by the Commission and that ACEA at
that time had already introduced an action for annulment
of this decision. The obligations imposed on ACEA were
therefore well known, so that a circumvention of the
State aid recovery obligation cannot be excluded.

(55)

The Commission has to assess if ACEA and a company
that is still part of the ACEA group should be regarded as
an economic unit. To this respect, the analysis of the
situation of AEP confirms that this is the case.

(60)

Therefore we conclude that ACEA and AEP are to be
considered as a single entity and that, notwithstanding
the reorganisation that has taken place within the ACEA
including ACEA, must be
group,
considered as beneficiary of
In addition, a
different approach might make it possible to circumvent
State aid rules.

the group itself,

the aid.

(56) ACEA recognises that

it has joint control over AEP,
together with Electrabel. It mentions it explicitly in one
of the submissions (13). This is confirmed by the financial
reporting of ACEA, which lists AEP among the conso-
lidated companies. The fact that ACEA exercises control
on AEP jointly with Electrabel and not alone is not
relevant.

(57) AEP is mentioned in the accounts of ACEA: in page 35
of the report for the first half of 2004, it is written that
‘having regard of the possibility allowed by Article 37 of
the legislative decree 127/91, are also included within the
consolidation boundaries the following undertakings over
which the holding exercise the control jointly with other
partners and on the basis of agreements with them’. The
list includes AEP.

(12) Judgement of the Court of First Instance of 14 October 2004, in
the case T-137/02 (Pollmeier Malchow GmbH & Co. KG v
Commission of European Communities).

(13) Letter from Italy of 29.4.2004.

1.4. The Deggendorf Jurisprudence

(61) After more

from the Decision
than two years
to define the amounts
2003/193/EC,
Italy has yet
which the municipalizzate have to reimburse,
let alone
recover the aid which had been declared illegal and
incompatible. The situation thus has not changed since
the
the opening of
the proceedings in 2003. More,
Commission decided to bring Italy to the Court
for
non-implementation of the Decision 2003/193/EC (14).
The latest development is the inclusion in the so-called
is still
Legge Comunitaria for 2004, whose approval
pending by both Chambers of Parliament, of
a
the main directions for the
provision which sets out
to indicate
recovery,
possible beneficiaries or asking beneficiaries
to self-
declare the amount of aid perceived.

like asking local governments

(14) Decision notified under document number C(2005) 41 of

20.1.2005. See press release IP05/76 of 20.1.2005.

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(62)

of

the

the

exact

Therefore the Commission considers that the situation
that was in place at the moment of the opening is still
present. The Commission confirms that it still cannot
determine
advantages
amount
perceived by ACEA prior to the new aid. Neither the
forward any
Italian government nor ACEA have put
specific elements showing that,
in the case of ACEA,
the advantages arising from the scheme considered as
incompatible must be considering as not constituting
aid, or constituting existing aid, or compatible aid
because of the specific features of its beneficiary. On
the contrary, because of
the
activities it performed at the time of the grant of the
aid in different markets,
including the production and
advantages
and
energy
distribution
granted to ACEA must be considered as affecting intra-
Community
In
distorting
the advantages are considerable since they
addition,
the Italian
correspond to the amounts due under
corporate tax (IRPEG)
the
ACEA group, including AEP, is still in receipt of illegal
and incompatible aid which still has to be reimbursed
and the distortion of competition is still in place.

for three years. Therefore,

its size and because of

competition.

electricity,

trade

and

of

(63) Under such circumstances, and even if the exact amount
of the first aid is not known, the cumulative effect of the
two aids accruing to ACEA and its distortionary impact
on the common market render the grant of the notified
aid incompatible with the common market.

1.5. Application of the Deggendorf jurisprudence to
the case

(64)

Italy and ACEA put forward a number of arguments on
the application of the Deggendorf jurisprudence to this
case.

(65)

that

states

To recall, the Deggendorf jurisprudence established by
the Court (15)
the Commission, when
examining the compatibility of an aid, should take into
account all the relevant elements and in particular the
cumulative effect of the new aid and of aid which has
been declared incompatible and has not yet been reim-
bursed. This
the possibility to
suspend the granting of compatible aid as long as the
previous illegal and incompatible aid has not been reim-
bursed.

jurisprudence gives

(67)

(68)

(69)

(70)

of the ACEA Group, and that to the effect of this case
the beneficiary is basically the same.

that

relevant (16). For

this is a regional case, while the case
The fact
is
concerning the municipalizzate was a national case,
the Commission, all cases are
not
national, as is confirmed by the fact that the national
authorities are the only direct
the
Community institutions. Proof is that the measure was
notified by Italy, and that Italy is the addressee of the
decision, according to Articles 87 and 88 of the EC
are
Treaty.
national, whether they are distributed from the national
government or
this
argument does not hold.

institution. Hence

interlocutors of

Furthermore,

resources

involved

regional

the

a

concerns

The Deggendorf jurisprudence applies whenever a bene-
ficiary of an aid has not paid back what the Commission
decided, irrespective of the fact that the case is individual
scheme (17). The Commission must
or
consider that ACEA was among the beneficiaries of the
aid to the municipalizzate, since at least part of that aid
was given to all undertakings falling into that category,
hence also to ACEA.

a

Furthermore, ACEA presented observations in the course
of that procedure in its quality of third interested party
those schemes. The
arguing for the compatibility of
Commission Decision
non-notified
such
declared
schemes unlawful and incompatible and imposed to the
Italian State to recover any possible amount disbursed
those schemes (18). ACEA has challenged that
under
decision before the Court of First Instance (19) and,
in
that context it has submitted that it had benefited from
the relevant scheme. As explained above, neither Italy
nor ACEA have put forward any specific reasons that
could prevent or limit recovery in its specific case.

Financial reporting by ACEA mentions the decision of
the Commission and the financial risks that may derive
for the group. It even quantifies the likely amounts of the
aid that Italy should recover from ACEA, at least for the
years 1998 and 1999, since in 1997 ACEA reported a
loss (hence no benefits in terms of reduced tax). ACEA
mentions possible figures for 1998 (EUR 28 million) and
for 1999 (EUR 290 million, due to some exceptional
operations of de-merging).

(66)

it is worth repeating what is mentioned in the
First,
paragraphs 51 to 60 concerning the identity of the bene-
ficiary. For the present case, the Commission considers,
for the arguments presented above, that AEP is still part

(15) See footnote 3.

(16) See recital 19.
(17) See recital 20.
(18) Article 3 of the Commission Decision stipulates that all necessary
measure must be taken by Italy in order to recover from the
beneficiaries the unlawful aid thus granted.

(19) See footnote 6.

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(71)

(72)

(73)

(74)

(75)

Contrary to the claim that Deggendorf should apply only
when the decision of
the Commission are incontro-
vertible (e.g. only when they are finally confirmed by a
ruling of the Court) (20), the Commission reminds that its
is
decisions have immediate effect and validity, as
recognised by Italy (21). This is in line with the general
principle that appeals do not have any suspension effects
(Article 242 EC Treaty). Also,
it should be mentioned
that no interim measures have been asked for this case.

Italy claims that the use of the Deggendorf jurisprudence
is an exceptional way to proceed, and should be applied
only as extrema ratio. Contrary to this point of view, an
effective control of State aid policy would push to a
juris-
constant and immediate use of
prudence in order to ensure the effectiveness of
the
system, whose purpose is to take into account all State
aid that
thereby
is still available to the beneficiary,
reducing distortions of competition and to ensure an
effective application of its decisions.

the Deggendorf

Contrary to the claim by Italy that the application of the
jurisprudence by Italy would lead to a
Deggendorf
number
reduced
from Member
States (22),
the Commission notes that notification is
not an option, but an obligation according to Article
88(3) of
the EC Treaty. Non-notified aid becomes
illegal, even if it may be compatible.

notifications

of

Concerning the claim by Italy that the Commission is
exercising a particular pressure (23),
the Commission
notes that
the
existing jurisprudence. ACEA is penalised only to the
extent it is the beneficiary of another aid.

this case is a simple application of

penalised.

The Commission

Furthermore, it should be pointed out that ACEA is not
approved
particularly
(Decision on case N 614/02 mentioned in paragraph
38) a number of projects in the Region Piemonte. Two
of the projects approved were to be carried out by AEM,
the municipalizzata from Torino, and by ASM, the muni-
cipalizzata from Settimo Torinese. In the case of AEM,
the decision considered whether the Deggendorf juris-
prudence would apply. It finally said no, because of the
de minimis rule, the amount in question being limited to
took the
EUR 17 240. The
engagement to verify if there was no cumulation with
other de minimis aid over a three years period, for a total
amount over EUR 100 000, in which case there would
have been aid which would not have been granted
precisely because of Deggendorf.

authority further

local

(76)

In the case of ASM, the same Decision on case N 614/02
(mentioned in paragraphs 38 and 75) said:

therefore

the Deggendorf case law (24),

‘In view of
the Italian
authorities have
committed to check if
Azienda Sviluppo Multiservizi S.p.A. and the other bene-
ficiaries have indeed benefited of such aid and if so not
to grant the present State aid before the unlawful and
incompatible State aid previously granted has been reim-
bursed in line with the above mentioned decision.’

(77)

(78)

(79)

(80)

Finally, the fact that ACEA had various activities, and that
it cannot determine on which of these the recovery of
the aid will impinge (25), does not influence this case. It
would be too easy for a company to escape to a recovery
decision simply by not specifying on which part of its
activities or on which branch the recovery would fall.

To the contrary, it can be argued that, since part of the
aid that was declared illegal and incompatible concerned
a fiscal measure, all branches of ACEA have benefited
is
from it in the past. Fiscal aid, being operating aid,
not as such referable to any activity of
the firm in
particular. The illegal and incompatible aid covered
thus the entire economic activity of ACEA,
including
the branch that was then transferred to AEP. This
implies that part of
that non-recovered aid can be
attributed to AEP too.

1.6. On third parties’ comments

Contrary to what is said by ACEA (26),
indeed a long
period has passed since the decision to recover was
made, without any real step taken by the Italian autho-
rities to recover the aid. At the end of January 2005, Italy
had yet
to approve the procedure for the recovery.
Article 14.3 of the Regulation (EC) No 659/1999 of
22 March 1999 (27) clearly indicates that recovery shall
be effected without delay. Until now, as mentioned
above, no clear procedure has been defined to recover
the aid, and no recovery proceedings have been started
yet.

The goodwill of ACEA (28) does not change the situation
de facto, which is still of a non recovered aid. The issue
under examination — the recovery of an aid that was
declared illegal — is a factual one, and is not influenced
by the disposition of one of the parties in one sense or
another. Furthermore, beyond a simple expression of
goodwill, ACEA could have acted towards speeding up
the recovery, for instance by indicating the amounts that
would be involved, and especially by putting a reserve in
a blocked bank account.

(20) See recital 21.
(21) Letter from Italy, 23.7.2003, p. 6.
(22) See recital 22.
(23) See recital 23.

(24) See footnote 3.
(25) See recital 27.
(26) See recital 29.
(27) OJ L 83, 27.3.1999, p. 1.
(28) See recital 30.

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HAS ADOPTED THE PRESENT DECISION:

Article 1

The aid that Italy intends to grant to the company AEP for
1.
‘Deliberazione della
a district heating project on the base of
Giunta Regionale del Lazio n. 4556’ of 6 August 1999 is
compatible with the common market.

2.
The aid referred to in paragraph 1 may not be granted
before Italy has submitted evidence that ACEA has reimbursed
the previous aid assessed on the case covered by the Decision
2003/193/EC, and the interests.

Article 2

Italy informs the Commission, within a deadline of two months
starting from the date of the notification of this Decision, of the
measures taken to comply with it.

Article 3

This Decision is addressed to Italy.

Done at Brussels, 16 March 2005.

For the Commission

Neelie KROES
Member of the Commission

(81)

it

should be noted that

Finally, concerning a pretended incoherence by the
Commission in the application of the Deggendorf juris-
prudence, of which the decision on SFP would be an
example (29),
the 1998
decision (30) was based on a commitment from France
to reimburse the previous aid which had been the
subject of a negative decision. So, Deggendorf was not
applicable. The Decision 1998/466/EC also says that no
further aid can be given, except in exceptional circum-
stances. In 2002, the Commission has adopted a decision
on a new intervention from France in favour of SFP, but
it concluded that the intervention was not an aid. As a
consequence,
the
Deggendorf jurisprudence.

there was no reason to apply

VII. CONCLUSION

(82) On the

basis of
Commission
finds
EUR 3 800 000 for
Rome to be granted to the company AEP,
isolation, would be compatible with the Treaty.

the
the
that
to
a district heating project near
taken in

considerations
the

above,
amounting

aid

(83)

The payment of the aid to AEP is however suspended
until the moment that Italy submits the proof of the
reimbursement of the aid by ACEA that was declared
illegal and incompatible in the case assessed in the
Decision 2003/193/EC, in application of the Deggendorf
jurisprudence,

(29) See recital 31.
(30) See in particular the third paragraph in the introduction.