2008/854/EC: Commission Decision of 2 July 2008 on a State aid scheme (C 1/04 (ex NN 158/03 and CP 15/2003)): Misuse of aid measure N 272/98, Regional Act No 9 of 1998 (notified under document number C(2008) 2997) (Text with EEA relevance)
Date: 2008-11-12
Institutions: European Commission
Subjects: Italy, State aid, aid system, control of State aid, data transmission, disclosure of information

13.11.2008

EN

Official Journal of the European Union

L 302/9

COMMISSION

COMMISSION DECISION

of 2 July 2008

on a State aid scheme (C 1/04 (ex NN 158/03 and CP 15/2003)): Misuse of aid measure N 272/98,
Regional Act No 9 of 1998

(notified under document number C(2008) 2997)

(Only the Italian version is authentic)

(Text with EEA relevance)

(2008/854/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,
and in particular
Article 88(2) thereof,

establishing the European
subparagraph of
the

first

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
to those provisions (1), and having regard to their
pursuant
comments,

Whereas:

(1)

(2)

(3)

1. PROCEDURE

On 21 February 2003 the Commission received a
complaint, which it registered under the number CP
15/03, alleging misuse of a regional scheme of assistance
to the hotel industry in the Region of Sardinia that the
Commission had approved in 1998, in case N 272/98.

By letter dated 26 February 2003 (ref. D/51355) the
Commission asked the Italian authorities for clarification.
By letter dated 28 March 2003 the Commission agreed
to a request
to
extend the deadline for providing the information; the
information was subsequently submitted by letter dated
22 April 2003 (ref. A/33012).

from the Italian authorities asking it

On 3 February 2004, the Commission decided under
Article 88(2) of the EC Treaty to open a formal investi­
gation into the possible misuse of aid measure No
N 272/98. The decision to initiate the procedure was

published in the Official Journal of the European Union (2).
The Commission there called on interested parties to
submit their comments.

By letter dated 10 March 2004 (ref. D/5172),
the
Commission agreed to a request from the Italian auth­
orities asking it to extend the deadline for submitting
their
Italian authorities
comments;
comments by letter dated 19 April 2004, registered at
the Commission on 26 April 2004 (ref. A/32956).

submitted

the

the
registered at
By letter dated 30 April 2004,
the Commission
same
Commission on the
day,
received comments
a
from one
recipient of aid under the scheme. The Commission did
not receive any further comment from the complainant.

interested party,

ref. D/53359 dated 13 May 2004,

By letter
the
Commission forwarded these observations to the Italian
authorities to allow them to reply.

The Italian authorities did not react to the comments
submitted.

On 7 December 2004, a meeting with the Italian auth­
orities took place in Brussels.

By letter of 28 June 2005, registered at the Commission
on 30 June 2005 (ref. A/35257), the Italian authorities
submitted further information.

(4)

(5)

(6)

(7)

(8)

(9)

(10) On 22 November 2006 the Commission decided to
correct and extend the scope of the investigation; the
decision was published in the Official
the
European Union (3). The Commission there called on
interested parties to submit their comments.

Journal of

(1) OJ C 79, 30.3.2004, p. 4, and OJ C 32, 14.2.2007, p. 2.

(2) OJ C 79, 30.3.2004, p. 4.
(3) OJ C 32, 14.2.2007, p. 2.

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(11) Neither the Italian authorities nor any other interested
party reacted to the correction and extension of
the
scope of the investigation.

2. DESCRIPTION OF THE MEASURE

(12) Aid scheme No N 272/98 provides for grants towards
initial investment in the hotel industry in Sardinia. The
scheme is a regional one, which was approved in 1998,
when the Commission considered it compatible with the
common market under the exemption in Article 87(3)(a)
of the EC Treaty (1).

(13)

The aid contemplated in the scheme is of two kinds:

(a)

there is provision for aid towards initial investment
in the form of grants and subsidised loans;

(b) Article 9 of Regional Act No 9 of 11 March 1998
in the form of interest

provides for operating aid,
relief, falling under the de minimis rule.

This Decision is not concerned with the second part of
the scheme, which is mentioned here only in order to
explain the context.

(14) When they notified the scheme the Italian authorities
supplied the text of Regional Act No 9 of 1998, but
did not at that time send any implementing legislation.

(15)

In its decision to approve the scheme, the Commission
described the measures as follows:

(a)

the purpose of the scheme was to grant aid for initial
investment in the tourism sector;

(b) the aid was in the form of grants with an aid
intensity up to 40 % of the eligible costs, plus a
subsidised loan covering up to 35 % of the eligible
costs (the interest relief could reduce the reference
rate of interest by up to 60 %);

(c)

the decision expressly noted a commitment given by
the Italian authorities that they would adjust the aid
intensity once the Italian regional aid map for the
period 2000-2006 had been approved;

(d) the duration of the scheme was unlimited; the budget
was to be EUR 2,6 million for the first year of im­
plementation;

(e) applications for aid had to be submitted before work

started on the project;

(f) aid in the form of

interest relief could in certain
circumstances be granted for investment carried out
before the implementation of the earlier Regional Act
No 40 of 1993. According to a commitment given
by the Italian authorities, aid of this kind would be de
minimis only.

(16) After the Commission approved the scheme the Regional
Government adopted an order (decreto) and a number of
resolutions (deliberazioni) to implement the scheme. Order
No 285 was adopted in April 1999 (2), and was followed
by several administrative measures, most notably Reso­
lutions Nos 33/4 and 33/6 of 27 July 2000. Resolution
No 33/6 co-exists with Resolution No 33/4, and states
that in certain exceptional cases aid may be granted even
though work
application was
submitted.

started before

the

(17)

Following the adoption of the Italian regional aid map
for the period 2000-2006 (3), the aid intensities provided
in the scheme were adjusted. By letter dated
for
2 November 2000 (ref. A/39177), the Italian authorities
informed the Commission of the implementing measures
that had been adopted as part of
the appropriate
measures exercise; they confirmed:

(a)

the

that
aid intensities had been adjusted in
conformity with the ceilings applicable under the
Italian regional aid map for 2000-2006 (see in
particular Resolution No 34/73 of 8 August 2000);
and

(b) that the principle of the necessity of the aid had been
respected (see in particular Article 6 of Resolution No
33/4 of 27 July 2000, which expressly states that
costs are eligible if sustained after the application
for financing) (4).

(18) On the basis of the information submitted by the Italian
in a letter dated 17 May
authorities, the Commission,
2001, took note that Italy had accepted the proposal
for
the
appropriate measures,
scheme had now been brought
into line with the
guidelines on national regional aid of 1998 (the 1998
Guidelines) (5).

and confirmed that

(2) Decreto dell'assessore del

turismo, artigianato e commercio del
29.4.1999, No 285 ‘Esecutività della Deliberazione della Giunta
Regionale No 58/60 del 22.12.1998 come modificata dalla Deliber­
azione No 16/20 del 16.3.1999 che approva la direttiva di
Attuazione prevista dall'Art. 2 della L.R. 11 marzo 1998 No 9
incentivi per la riqualificazione delle strutture alber­
disciplinante:
e norme modificative della L.R. 14.9.1993 No 40’.
ghiere
Published in BURAS, No 14, 8.5.1999.

(3) OJ C 175, 24.6.2000, p. 11.
(4) Annex to Resolution No 33/4 of 27 July 2000, Guidelines for the
application of Regional Act No 9 of 11 March 1998, Article 6,
‘The expenditure indicated above shall be
Eligible expenditure:
eligible provided it is incurred after the application for the benefits
sought’.

(1) Commission letter dated 12.11.1998, ref. SG(98) D/9547.

(5) OJ C 74, 10.3.1998, p. 9.

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The scheme operated in practice on the basis of
published calls for applications asking interested parties
to submit applications for aid in line with the resolutions
just described.

(24)

The Commission also pointed out that that obligation
was repeated in the decision of 1998 in which the
Commission had decided to raise no objection to the
regional scheme of assistance to the hotel
industry in
the Region of Sardinia (aid measure No N 272/1998).

(19)

(20)

The Italian authorities state that
the first call asking
interested parties to submit a formal application for
financing under the scheme (known as the 2000 call)
was published in 2001.

(21) According to the information available, the first call for
the

followed by the adoption of

applications was
following resolutions:

— on 31 January 2002 the Regional Government
adopted Resolution No 3/24, proposing an initial
list of
recipients of aid in certain sectors. The
selection criteria applied were those listed in Reso­
lution No 33/4, further detailed in a circular dated
21 November 2000,

— on 16 April 2002 the Regional Government adopted
Resolution No 12/17, amending the abovementioned
list of recipients and proposing a further list,

— on 18 July 2002 the Regional Government adopted
Resolution No 23/40 approving the list of projects
eligible under the first call for applications,

— on 7 February 2003 the Regional Government
adopted Resolution No 5/38,
errors
concerning some aid recipients referred to in Reso­
lution No 23/40.

rectifying

(25) Despite the fact

the

that

Italian authorities nevertheless

the Commission Decision had
indicated that recipients must have filed an application
for the aid before work started on the project, and
despite the fact that in the course of the appropriate
measures exercise that followed the entry into force of
the 1998 Guidelines the Italian authorities had expressly
that obligation had been complied
confirmed that
with (1),
adopted
implementing measures, never submitted to the
several
Commission
of
22 December 1998 and Resolution No 33/6 of 27 July
2000), which did allow aid to be granted to projects
started before the date of submission of the application,
though by way of exception and only in the first year of
operation of the scheme on the basis of the first call for
applications. The Commission therefore took the view
that the Italian authorities had not complied with the
obligations
the Commission decision
authorising the scheme or with the requirements of the
guidelines on national regional aid.

imposed by

Resolution

particular

the

(in

(26) As a consequence, the Commission considered that the
incentive effect of the aid might be undermined if there
was no application for aid before work on the project
actually started. This might constitute a case of misuse of
aid measure No N 272/98 that would be caught by
Article 16 of Regulation (EC) No 659/99 (the ‘Procedural
Regulation’) (2), and the Commission doubted whether
aid granted to investments started before the date of
the application for the aid would be compatible with
the common market.

(22)

In the information they submitted on 22 April 2003 (ref.
the Commission on 28 April
A/33012, registered at
2003), on p. 13, the Italian authorities stated that ‘in
the interests of the Region’ they had decided ‘to include
in the ranking certain so-called “critical” projects (i.e.
projects on which work had begun before the date of
the application for aid but after the entry into force of
the Act on 5 April 1998)’. As a result, they said, aid had
been given in 2002 to at least 28 investment projects
that had been started before the date of the application
for aid, the total amount of aid involved being around
EUR 24 million.

3. GROUNDS FOR INITIATING THE PROCEDURE

4. GROUNDS FOR CORRECTING AND EXTENDING THE
SCOPE OF THE PROCEDURE

(27)

In its first decision to open the investigation procedure,
the Commission concentrated its analysis on the fact that
measures
implementing the scheme had never been
brought to its attention. The decision did not mention
Resolution No 33/6.

(28)

But the aid referred to in recital 22 arose out of Reso­
lution No 33/6, rather than Resolution No 33/4, which
was erroneously cited in the initiating decision of
3 February 2004.

(23) When it initiated the formal investigation procedure the
Commission drew attention to the fact that point 4.2 of
the 1998 Guidelines stated that an application for aid
must be submitted before work is started on the project.

(1) By letter dated 25.4.2001, ref. 5368 (registered at the Commission

as A/33473). See recital 17.

(2) Council Regulation No 659/99 laying down detailed rules for the
application of Article 93 of the EC Treaty [now Article 88], OJ L 83,
27.3.1999, p. 1.

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(29)

(30)

The decision originally opening the formal investigation
procedure also spoke of misuse of an approved aid
scheme within the terms of Article 16. Article 16 is
generally understood to refer to situations where the
recipient of approved aid applies the aid contrary to
the individual granting decision or
the conditions of
aid contract, and not
to situations where a Member
State amends an existing aid scheme so as to introduce
new unlawful aid (Articles 1(c) and (f) of the Procedural
Regulation).

— the application for aid submitted on the basis of the
aid scheme now under investigation concerned only a
part of a wider investment project (the eligible costs
of the original investment project amounted to EUR
the eligible costs considered in the
10 500 000;
application made under
the scheme being inves­
tigated amounted to EUR 9 039 028),

For these reasons, and in order to avoid any possible
it
misunderstanding,
necessary to correct and extend the scope of the investi­
gation, and to invite further comments from Italy and
interested parties.

Commission

considered

the

— it was irrelevant that the application for aid on the
basis of the aid scheme under investigation had been
submitted after work had begun, as that application
was merely a re-submission of the same application
that had been submitted previously under a different
regional
same
investment project.

and related to the

aid scheme

5. COMMENTS FROM INTERESTED PARTIES

(31)

In response to the publication in the Official Journal of
investigation
the 2004 decision to open the formal
procedure, the Commission received observations from
the following interested party:

— Grand Hotel Abi d’Oru SpA.

(33)

The interested party also submitted that
the aid was
necessary, arguing that it would not have undertaken
such an investment project
in the absence of public
In order to launch the investment, pending
financing.
the granting of the aid,
it had had recourse to short-
term bank funding.

The interested party argued that there was indeed an
incentive effect, and that the principle of the necessity
of aid had been complied with.

(34)

The Commission did not receive any further comments
following the publication of the decision correcting and
extending the scope of the procedure (2).

(32)

The interested party contended that the incentive effect
and the principle of necessity had been fully respected,
for the following reasons:

— first of all, before work started the interested party
had applied for aid under another
regional aid
scheme, No N 715/99 (Act No 488 of 1992) (1).
That application had been accepted twice, but no
aid was granted, owing to budgetary constraints,

6. COMMENTS FROM ITALY

(35)

In response to the assessments made by the Commission
in the letter initiating the investigation, the Italian auth­
orities put forward three main arguments, regarding the
existence of legitimate expectations, the incentive effect
of
the de minimis
threshold.

the aid, and the determination of

that

the fact

— having failed to receive aid under that scheme, and in
the measures implementing
view of
Regional Act No 9 of 1998 were published at the
same time (May 1999),
the interested party had
decided to apply for aid under the scheme under
investigation here.
It had relied on the acceptance
of its application, despite the fact that the projects
had already started, on the basis of the provisions of
the first implementing measure, Order No 285/99,
which allowed aid to be granted for projects
already started provided they were started after
Regional Act No 9 of 1998 entered into force on
5 April 1998,

(36)

Legitimate expectations and incentive effect

legal certainty. First,

In their observations
the Italian authorities claimed
legitimate expectations, and also invoked the principle
of
they explained that Regional
Act No 9 of 1998 was in some sense considered by
recipients to be a continuation of a previous scheme,
Regional Act No 40 of 1993, which was still in force
at the relevant time, and which operated on a continuous
basis (scheme No N 611/93 as amended by N 250/01).
This earlier system had helped to give recipients a
legitimate expectation that
they would be able to
obtain subsidies when they submitted their application,
irrespective of whether or not work had begun.

(1) Letter

to the Member State dated 2.8.2000,

ref. SG(2000)

D/105754.

(2) OJ C 32, 14.2.2007, p. 2.

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The Italian authorities pointed out, furthermore, that the
measures implementing the scheme were taken after the
scheme had been approved by the Commission. The first
such measure, Order No 285 of 1999, was adopted on
29 April 1999. Article 17 of that Order (transitional
provisions) stated that expenditure incurred after the
Act entered into force on 5 April 1998 was eligible.
The Order was published in the official gazette of the
Region of Sardinia on 8 May 1999 (1).

The Italian authorities added that Order No 285 of 1999
had been annulled by Resolution No 33/3 on 27 July
2000 on the ground that it was defective. At the same
time, the Regional Government adopted new implemen­
ting measures, which were notified to the Commission
on 20 September 2000.

The Italian authorities emphasised that when adopting
these resolutions on 27 July 2000,
the Region of
Sardinia had had to bear in mind that the publication
of Order No 285/99 in the official gazette generated
legitimate expectations among the recipients. This was
for applications it was decided
why for the first call
that applications
investment projects
already started would be accepted under Article 9 of
Regional Act No 9 of 1998. Resolution No 33/6, ‘Tran­
for applications’,
sitional provision for
accordingly stated that by way of exception, in the case
of applications submitted in response to the first call,
costs would be eligible for aid if they were incurred
after 5 April 1998, the date on which Regional Act
No 9 of 1998 entered into force.

in respect of

the first call

bank loans covering the period between the point when
the costs were incurred and the payment of the aid.

(43)

(44)

Finally, the Italian authorities stated that recipients were
required to choose the regional aid scheme of reference,
because they were not allowed to submit applications
under different aid schemes for the same project. They
stressed that the Sardinian regional aid scheme estab­
lished by Regional Act No 9 of 1998 (N 272/98) and
the countrywide regional aid scheme established by the
national Act No 488 of 1992 (N 715/99) were exclusive
of each other.

Determination of the de minimis threshold

The Italian authorities contended that the principle of
incentive effect was complied with even where the
work had begun before the application was submitted
under Article 9 of Regional Act No 9 of 1998. They
argued that the part of the aid granted before the appli­
cations were submitted was covered by the de minimis
rules. The part of the aid below the threshold of EUR
100 000 that was granted before the application had to
be considered separately, taking account only of the costs
incurred before that date and not of the entire cost of the
project. These considerations applied to 12 projects out
of 28.

(45) No further comments were received following the notice

correcting and extending the scope of the procedure.

The Italian authorities pointed out that in its letter of
17 May 2001 (ref. D/52027), as part of the appropriate
measures exercise, the Commission had concluded that
the scheme was compatible with the common market,
after asking the Italian authorities to implement Article 9
of Act No 9 of 1998 in accordance with the de minimis
rules in Regulation (EC) No 69/2001.

7. ASSESSMENT OF THE MEASURE

State aid within the meaning of Article 87(1) of the EC Treaty

(46)

The assessment of scheme No N 272/98 concluded that
the measure constituted State aid within the meaning of
Article 87(1) of the EC Treaty because it met all the
criteria set out there.

(37)

(38)

(39)

(40)

(41)

They also explained that after the Resolution of 27 July
2000 had entered into force the practical implementation
aid
of
for
submitted before the publication of
applications be submitted afresh using the new forms.

for
the first call

required that

applications

scheme

the

(47)

threatens

The measure provides an economic advantage to a
specific category of recipients, reducing their normal
costs. The advantage is granted through state resources,
and it
to distort competition, because it
strengthens the financial position of some undertakings
by comparison with their competitors. Since hoteliers in
different Member States compete to attract
tourists,
support given to the tourism sector is likely to affect
intra-Community trade (2).

(42)

The Italian authorities repeated that there was indeed an
incentive effect, since the grants were needed to clear

(1) Bollettino Ufficiale della Regione Sardegna (Suppl. Straordinario No

3 al Bollettino Ufficiale No 14 dell'8 maggio 1999).

(2) For example, the Commission has ascertained from web searches
that Grand Hotel Abi d'Oru is a five-star hotel with 177 rooms
catering to a mixed Italian and international clientele.

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(48)

(49)

(50)

(51)

Legality of the measure

The
aid scheme notified to the Commission and
approved by it under Article 4(3) of the Procedural Regu­
lation constitutes State aid within the meaning of
Article 87(1) of the EC Treaty.

the appropriate measures exercise,
In the context of
Resolution No 34/73 adjusted the aid intensity to the
new regional aid map ceilings, thus ensuring compati­
bility with the 1998 Guidelines, while Resolution No
of
33/4 ensured
therefore,
incentive effect;
that these resolutions did not add any new element to
the
scheme No
N 272/98.

compliance with
the Commission concluded,

aid scheme previously

approved,

principle

the

The Commission takes the view that
the transitional
provisions introduced by Order No 285 of 1999 might
have changed the scheme the Commission had originally
approved. The Commission never took any position on
that
it never
entered into force, as it was annulled by Resolution
No 33/3.

implementing measure, but accepts that

contravention of the Commission’s original authorising
decision.

(55)

The aid projects on which work started before any appli­
cation for aid was made must be therefore be considered
unlawful.

Compatibility

(56)

the Commission
The doubts as to compatibility that
letters of 3 February 2004 and
expressed in its
22 November 2006, which opened the formal
investi­
gation procedure, have not been challenged either by the
Italian authorities or by the
interested party. The
Commission therefore confirms its assessment, which
can be summarised as follows.

(57) As has been explained, at least 28 investment projects
were started at a time when they could not qualify for
aid under the scheme.

(58)

The 1998 Guidelines require that an application for aid
be submitted before work starts on the project.

Scheme No N 272/98 was changed again on 27 July
2000, with the adoption of Resolutions Nos 33/4 and
33/6. As explained above (recitals 16-21), Resolution No
33/6 made amendments to the notified measure which
were not compatible with the terms of the Commission’s
Decision to approve the aid.

(59)

requirement was

This
repeated in the Commission
Decision of 1998 raising no objection to the regional
scheme to assist
industry in Sardinia (N
272/1998); that decision expressly states that the reci­
pients must have applied for aid before work on the
project begins.

the hotel

(52) As explained in recital 38, the Italian authorities contend
that they did notify the Commission of these implemen­
ting measures as part of
the appropriate measures
exercise.

(53)

The Commission takes the view that the Italian auth­
orities did not notify the resolutions referred to above,
and that as part of the appropriate measures exercise they
informed the Commission that Resolution No 33/4
ensured compliance with the principle of
incentive
they never
course of
effect.
informed the Commission of Resolution No 33/6, and
thus breached Article 88(3) of the EC Treaty and their
duty of cooperation under Article 10 of the Treaty (1).

exercise

In the

that

(54)

The aid scheme thereafter applied by the abovemen­
consequently in
tioned implementing provisions

is

(1) ‘Member States shall take all appropriate measures, whether general
or particular, to ensure fulfilment of the obligations arising out of
this Treaty or resulting from action taken by the institutions of the
Community. They shall facilitate the achievement of the Commu­
nity's tasks. They shall abstain from any measure which could
jeopardise the attainment of the objectives of this Treaty’.

(60) Moreover,

in the context of the appropriate measures
exercise that followed the entry into force of the 1998
Guidelines, the Italian authorities supplied Resolution No
33/4 of 27 July 2000, Article 6 of which expressly states
that costs are eligible if incurred after the submission of
the application for aid.

(61)

The principle of the necessity of aid is a general principle
recognised by the Court in its judgment in the Philip
Morris case (2), and is clearly an essential consideration
when it has to be determined whether
investments
carried out by undertakings are eligible for aid under
the 1998 Guidelines. The abovementioned Commission
Decision and the Guidelines themselves both state that
the application for aid must be submitted before work
starts on the projects.

(2) Case 730/79 Philip Morris Holland BV v Commission [1980] ECR
‘it would result
2671, paragraph 17:
in Member States' being
permitted to make payments which would improve the financial
the recipient undertaking although they were not
situation of
necessary for
specified in
Article 92(3)’.

the objectives

attainment of

the

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(62)

The Italian authorities argue that the system operating in
Italy has created a legitimate expectation that a grant will
be available merely on the basis of the submission of the
application, no matter whether the projects have already
started or not.

regional aid scheme established by the national Act
No 488 of 1992 (N 715/99) are exclusive of each other.

(63)

The Commission cannot accept this argument, as the
decision approving the regional aid scheme under inves­
tigation explicitly requires that an application for aid be
submitted before work on the project begins.

(64)

Resolution No 33/6 was not sent to the Commission
until after the complaint had been lodged. It was trans­
mitted to the Commission only with memo No 5245
dated 22 April 2003,
in the course of the procedure
following the complaint (CP 15/2003). The argument
of legitimate expectations invoked by the Italian auth­
orities cannot be accepted, because the Commission did
not give any specific assurances to the Italian authorities
or to any other interested party, and they could not
this
therefore harbour any legitimate expectation that
‘It is settled case-law that
condition would not apply.
the right to protection of legitimate expectations may
be claimed by any individual who finds himself in a
position in which it is shown that the Community ad­
ministration gave rise to justified hopes on his part …
However, no one may plead infringement of the principle
of
in the
absence of specific assurances given to him by the ad­
ministration’ (1).

legitimate expectations

the protection of

(65) Nor can the Commission accept the arguments proposed
by the Italian authorities according to which there was an
incentive effect where the recipient applied for aid before
the work started on the basis of a different regional aid
scheme.

(66)

The Commission takes the view that the incentive effect
cannot be transferred from one scheme to another, and
that the fact that an undertaking has chosen to apply
under one scheme or another cannot be accepted as
showing that the principle of the incentive effect has
been complied with. The Italian authorities have them­
selves emphasised (see recital 43) that the recipient may
not submit more than one application under different aid
schemes in respect of the same project, and that the
Sardinian regional aid scheme established by Regional
Act No 9 of 1998 (N 272/98) and the countrywide

(1) Joined Cases T-132/96 and T-143/96 Freistaat Sachsen and Others v

Commission [1999] ECR II-3663, paragraph 300.

the grants

effect because

(67) Nor can the Commission accept the arguments advanced
by the Italian authorities according to which there is
indeed an incentive
are
necessary to clear bank loans covering the period
between the time when the costs were incurred and
the payment of
that an economic
the aid. The fact
operator
is prepared to start work, and to borrow
money to finance the costs, does not in any way show
that aid is needed for the project to go ahead, or that the
aid provides an incentive to undertake a project which
would not take place otherwise. Quite the reverse, the
fact that an economic operator is prepared to start work,
and to incur the financial risks inherent in the project,
even without submitting an application for aid under the
relevant scheme, suggests that the aid is not needed in
order to provide an incentive.

(68)

(69)

Lastly, the Commission cannot accept the Italian auth­
orities’ arguments with regard to the de minimis rule,
because the de minimis
rule cannot be invoked to
circumvent the obligation contained in the Guidelines
that in order to comply with the principle of incentive
effect the application must be submitted before work is
started on the project. The sum to be considered must
relate to the project in its entirety, and not just the
section granted before the application for aid. The
Commission cannot accept the suggestion that it ought
to consider the initial work eligible under the de minimis
rule, thus taking it outside the scope of the Guidelines.
Furthermore, not only have the Italian authorities failed
to consider the projects in their entirety when calculating
the de minimis threshold, but the same recipient may have
received de minimis aid from other sources, and the
Commission understands that the Italian authorities did
not take this aspect into account.

In conclusion, the Commission takes the view that the
Italian authorities have failed to demonstrate that the aid
the
was granted in accordance with the terms of
Commission’s approval decision. Even if this aid were
to be considered operating aid, it could not be considered
compatible. Under the 1998 Guidelines operating aid
may be granted on an exceptional basis in regions
eligible under the exemption in Article 87(3)(a) of the
Treaty. Sardinia was eligible for aid under Article 87(3)(a)
during the period 1998-2006. With the exception of de
minimis aid, however, no operating aid was approved
under the scheme in question. Furthermore, the Italian
authorities have not produced any evidence in the
context of
this investigation that might demonstrate
that the aid was justified by its contribution to regional
development, or its nature, nor have they shown that it is
proportionate to the handicaps it seeks to alleviate.

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(70)

Italian authorities have not put

forward any
The
arguments
the aid concerned might be
compatible with other Treaty provisions, state aid rules,
frameworks or guidelines.

to suggest

for

not

does

qualify

exemption

(71) Nor has the Commission been able to identify any other
basis for the approval of the aid. As explained above, the
measure
under
Article 87(3)(c), which provides for authorisation to be
granted for aid to facilitate the development of certain
economic activities or of certain economic areas, where
such aid does not adversely affect trading conditions to
an extent that is contrary to the common interest. The
exemptions in Article 87(2), which concern aid that has a
social character and is granted to individual consumers,
aid to make good the damage caused by natural disasters
or exceptional occurrences, and aid granted to certain
areas of the Federal Republic of Germany, do not apply
in this case. The measure cannot be considered to be an
important project of common European interest, or to
remedy a serious disturbance in the Italian economy as
provided for in Article 87(3)(b). The measure does not
have as its objective the promotion of culture and
heritage conservation provided for in Article 87(3)(d).

(72) Accordingly,

incompatible
the Commission considers
with the common market the aid presumably granted
to projects on which work had started before the
submission of an application for aid under the regional
scheme of assistance to the hotel industry in the Region
of Sardinia, approved by the Commission in 1998
(N 272/98), as implemented by Resolution No 33/6 in
connection with the first call for applications.

(73)

This finding of incompatibility applies to the entirety of
aid granted towards projects whose eligible costs were
incurred before the submission of an application for
aid, on the basis of
the implementing measures in
force at the time the application was submitted, which
exceeds the amount of de minimis aid for which the
recipient may have been eligible at the relevant time,
calculated in accordance with Article 2 of Regulation
(EC) No 69/2001.

8. CONCLUSIONS

(74)

The Commission finds that
plemented
in
the
Article 88(3) of the Treaty.

aid

Italy has unlawfully im­
of

breach

question

in

(75)

(76)

From its assessment the Commission concludes that the
aid granted towards the projects referred to above under
the scheme designated ‘Regional Act No 9 of 1998 —
Misuse of aid N 272/98’, on the basis of the first call for
applications and of Resolution No 33/6, does not satisfy
the tests of the 1998 Guidelines. It finds that the aid was
granted unlawfully and was
incompatible with the
common market under Article 87(3)(a) and (c) of the
EC Treaty.

is the Commission’s

long established practice,

It
in
accordance with Article 87 of the EC Treaty, to require
recovery from the recipient of incompatible aid which
has been granted unlawfully in breach of Article 88 of
the EC Treaty. This practice has been confirmed by
Article 14 of the Procedural Regulation.

(77)

therefore take all necessary measures

to
Italy must
recover the aid from the recipients. To that end, Italy
must require the recipients to repay the aid within four
months from the date of notification of this Decision.

(78) Article 14(2) of the Procedural Regulation states that the
aid to be recovered pursuant to a recovery decision shall
include interest at an appropriate rate fixed by the
Commission. Interest shall be payable from the date on
which the unlawful aid was at
the
recipient until the date of its recovery.

the disposal of

(79)

(80)

The interest
is to be calculated in conformity with
(EC) No
Chapter V of Commission Regulation
794/2004 of 21 April 2004 implementing Council
Regulation (EC) No 659/1999 laying down detailed
the EC
rules
the application of Article 93 of
Treaty (1). The Commission asks
to require
potential recipients of aid under the scheme to repay
the aid including interest within four months of this
Decision as specified below.

Italy

for

The Commission asks Italy to provide the information
requested using the questionnaire attached in Annex to
this Decision, compiling a list of the recipients concerned
and indicating clearly the measures planned and the
measures
and
effective recovery of the illegal State aid. Within two
months of the Decision the Commission asks Italy to
submit all documents giving evidence that
recovery
proceedings have been initiated against the recipients of
the illegal aid, circulars, recovery orders, etc.,

taken to obtain immediate

already

(1) OJ L 140, 30.4.2004, p. 1.

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HAS ADOPTED THIS DECISION:

Article 4

Article 1

The State aid granted in accordance with Regional Act No 9 of
1998, unlawfully put into effect by Italy in Resolution (deliber­
azione) No 33/6 and in the first call for applications, is incom­
patible with the common market unless the recipient of the aid
submitted an application for aid under the scheme before
starting work on an initial investment project.

1. Within two months
this
Decision, the Italian Republic shall submit the following infor­
mation:

following notification of

(a) a list of recipients of aid under the scheme referred to in
Article 1 showing the total amount of aid received by each
of them under the scheme. The information required shall
be provided using the questionnaire attached in Annex to
this Decision;

Article 2

(b) the total amount

to be recovered from each recipient

(principal and interest);

1.
The Italian Republic shall recover the incompatible aid
granted under the scheme referred to in Article 1 from the
recipients.

2.
The sums to be recovered shall bear interest from the date
on which they were put at the disposal of the recipients until
their actual recovery.

3.
The interest shall be calculated on a compound basis in
accordance with Chapter V of Regulation (EC) No 794/2004
and Regulation (EC) No 271/2008 amending Regulation (EC)
No 794/2004.

4.
The Italian Republic shall cancel all outstanding payments
of aid under the scheme referred to in Article 1 with effect from
the date of adoption of this Decision.

Article 3

(c) a detailed description of

the measures already taken or

planned to comply with this Decision;

(d) documents demonstrating that

the recipients have been

ordered to repay the aid.

2.
The Italian Republic shall keep the Commission informed
of the progress of the national measures taken to implement
this Decision until recovery of the aid granted under the scheme
referred to in Article 1 has been completed. It shall immediately
submit, upon request by the Commission, information on the
measures already taken and planned to comply with this
Decision. It shall also provide detailed information concerning
the amounts of aid and interest already recovered from the
recipients.

Article 5

This Decision is addressed to the Italian Republic.

Recovery of the aid granted under the scheme referred to

1.
in Article 1 shall be immediate and effective.

Done at Brussels on 2 July 2008.

2.
The Italian Republic shall ensure that this Decision is im­
plemented within four months following the date of notification
of this Decision.

For the Commission

Neelie KROES
Member of the Commission

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ANNEX

Information regarding the implementation of the Commission Decision in case C 1/2004

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:

— the principal,
— the interest.

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

equivalent; prices of …)?

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

2. Measures already taken and planned to recover the aid

2.1. Please describe in detail what measures have already been taken and what measures are planned to effect an
immediate and effective recovery of the aid. Please also indicate where relevant the legal basis for the measures
taken or planned.

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

3.

Information regarding individual recipients

Please provide details of each recipient from whom unlawful aid granted under the scheme is to be recovered in the
table below.

Identity of the recipient

Total amount of aid
received under the
scheme (°)

Total amount of aid to
be recovered (°)
(principal)

Total amount already reimbursed (°)

Principal

Interest

(°) In million units of national currency.