Italian Republic v Commission of the European Communities.
Date: 2005-12-15
26. It is settled case-law that the obligation to state reasons is an essential procedural requirement, as distinct from the question whether the reasons given are correct, which goes to the substantive legality of the contested measure. The statement of reasons required by Article 253 EC must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent Court to exercise its power of review. That requirement must be appraised by reference to the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 253 EC must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see, inter alia, Case C-310/99 Italy  v Commission  [2002] ECR I-2289, paragraph 48).
– The first part of the plea
77. According to settled case-law, the definition of aid is more general than that of a subsidy, because it includes not only positive benefits, such as subsidies themselves, but also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect (see, inter alia, Case C-143/99 Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke  [2001] ECR I-8365, paragraph 38, and Case C‑501/00 Spain  v Commission  [2004] ECR I-6717, paragraph 90 and the case-law cited there).
78. It follows that a measure by which the public authorities grant to certain undertakings a tax exemption which, although not involving a transfer of State resources, places the persons to whom the tax exemption applies in a more favourable financial situation than other taxpayers constitutes State aid within the meaning of Article 87(1) EC (see Case C-387/92 Banco Exterior de España  [1994] ECR I-877, paragraph 14). Similarly, a measure which grants to certain undertakings a tax reduction or a deferral of liability to tax that would otherwise be payable may constitute State aid.
85. It must be pointed out that Article 42(2) of the Rules of Procedure provides that no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.
86. However, it must also be pointed out that a plea which may be regarded as amplifying a plea made previously, whether directly or by implication, in the original application must be considered admissible (Case 306/81 Verros  v Parliament  [1983] ECR 1755, paragraph 9, and Case C-301/97 Netherlands v Council [2001] ECR I-8853, paragraph 169).
91. In the case of an aid scheme, the Commission may confine itself to examining the general characteristics of the scheme in question without being required to examine each particular case in which it applies (see, inter alia, Joined Cases C-15/98 and C-105/99 Italy and Sardegna Lines  v Commission  [2000] ECR I-8855, paragraph 51, and Case C-278/00 Greece v Commission [2004] ECR I-3997, paragraph 24) in order to establish whether the scheme involves elements of aid.
94. Article 87(1) EC prohibits aid which ‘[favours] certain undertakings or the production of certain goods’, that is to say aid which is selective.
95. Aid may be selective for the purposes of that provision even if it concerns a whole economic sector (see, inter alia, Case C-75/97 Belgium v Commission [1999] ECR I-3671, paragraph 33).
98. Without it being necessary also to determine whether, as the Commission maintains in recital 33 in the contested decision, the tax reduction applying to mergers or similar restructuring operations is of greater benefit to large undertakings participating in them, it must therefore be held that the measures at issue are selective in relation to other economic sectors and within the banking sector itself.
99. As they do not apply to all economic operators, they cannot be considered as general measures of fiscal or economic policy.
108. The argument in fact amplifies a plea raised in the original application, so that it cannot be considered as a new plea for the purposes of Article 42 of the Rules of Procedure (see Verros  v Parliament , paragraph 9, and Netherlands v Council , paragraph 169).
111. In assessing those two conditions, the Commission is required, not to establish that such aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (Case C-372/97 Italy v Commission [2004] ECR I-3679, paragraph 44).
113. With respect to the last-mentioned point, it should, moreover, be noted that the withdrawal of unlawful aid by recovery is the logical consequence of the finding that it is unlawful and that such recovery for the purpose of re-establishing the situation which previously existed cannot, in principle, be regarded as disproportionate to the objectives of the Treaty provisions on State aid (see Case C-372/97 Italy v Commission , paragraph 103 and the case‑law cited there).
115. In particular, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, those undertakings must be regarded as affected by that aid (see, inter alia, Case 730/79 Philip Morris  v Commission  [1980] ECR 2671, paragraph 11; Case C-53/00 Ferring [2001] ECR I-9067, paragraph 21; and Case C-372/97 Italy v Commission , paragraph 52).
116. In that regard, the fact that an economic sector has been the subject of liberalisation at Community level will suffice to indicate the real or potential effect of the aid on competition and its effect on trade between Member States (see Case C-409/00 Spain v Commission [2003] ECR I‑1487, paragraph 75).
117. Furthermore, it is not necessary that the beneficiary undertaking should itself participate in the intra-Community trade. Where a Member State grants aid to an undertaking, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are reduced as a result (see, to that effect, inter alia Case C-310/99 Italy v Commission , paragraph 84). Furthermore, the strengthening of an undertaking which has not previously participated in intra-Community trade may place it in a position which enables it to penetrate the market of another Member State.
131. The Italian Republic criticises the Commission for departing very significantly from the position it adopted in its Decision 1999/288/EC of 29 July 1998 giving conditional approval to the aid granted by Italy to Banco di Napoli (OJ 1999 L 116, p. 36) and its Decision 2000/600/EC of 10 November 1999 conditionally approving the aid granted by Italy to the public banks Banco di Sicilia and Sicilcassa (OJ 2000 L 256, p. 21).
135. The first point to note is that, in applying Article 87(3) EC, the Commission enjoys a wide discretion, the exercise of which involves assessments of an economic and social nature which must be made within a Community context. The Court, in reviewing whether that freedom was lawfully exercised, cannot substitute its own assessment for that of the competent authority but must restrict itself to examining whether the authority’s assessment is vitiated by a manifest error or misuse of powers (see Case C-456/00 France v Commission [2002] ECR I-11949, paragraph 41 and the case-law cited there).
151. It is not in dispute that the measures contained in Law No 218/90 were never notified to the Commission. Accordingly, as regards the Italian Republic’s claim that a measure laid down under Article 7(3) of Law No 218/90 was closely connected with the reduction in income tax provided for by Articles 22 and 23 of Decree No 153/99, it is sufficient to hold that the measure referred to was not investigated by the Commission. Furthermore, even if the two successive measures represent a common thread, the fact that the Commission took no steps in relation to the first of them is of no relevance, as the scheme at issue in the present case, viewed independently from its predecessor, favours certain undertakings (see, to that effect, Case 57/86 Greece v Commission [1988] ECR 2855, paragraph 10).