Italian Republic v Commission of the European Communities.
Date: 2001-10-09
46 Where the Member State concerned does not suspend the implementation of the measure in order to comply with the duty under the last sentence of Article 88(3) EC and Article 3 of the regulation on procedure in State aid cases not to put new aid or the alteration of existing aid into effect before authorisation is obtained from the Commission or, as the case may be, from the Council, the Commission has the power under Article 11(1) of that regulation, having given the Member State the opportunity to submit its comments, to adopt a decision requiring it to suspend such implementation until the final decision as to the compatibility of the aid. The Commission already had that power before the regulation on procedure in State aid cases came into force (See Case C-301/87 France v Commission [1990] ECR I-307 (known as Boussac), paragraphs 18 to 20).
48 However, the effect of Article 88(1) and (2) EC and Articles 17 to 19 of the regulation on the procedure in State aid cases is that, if the Commission considers that there is existing aid whose compatibility with the common market it wishes to re-examine, it cannot require the Member State concerned to suspend that aid before a negative final decision holding it incompatible with the common market. For its part, the Member State is not under any obligation to suspend existing aid before such a negative final decision (Spain v Commission, paragraph 17; Italy v Commission, paragraph 25).
56 As the Court of Justice held in paragraph 17 of Spain v Commission and paragraph 25 of Italy v Commission, the decision which marks the beginning of the procedure under Article 88(2) EC produces different effects according to whether the aid in question is new or existing aid. Whereas, in the former case, the Member State is prevented from implementing the aid proposal submitted to the Commission, that prohibition does not apply where the aid is existing aid.
57 Regarding aid in the course of implementation the payment of which is continuing and which the Member State regards as existing aid, the contrary classification as new aid, even if provisional, adopted by the Commission in its decision to initiate the procedure under Article 88(2) EC in relation to that aid, has independent legal effects.
58 It is true that the classification of the aid corresponds to an objective situation which does not depend on the assessment made at the stage of the initiation of the procedure under Article 88(2) EC. However, a decision such as that envisaged in paragraph 57 of this judgment implies that the Commission does not intend to examine the aid in the context of the permanent examination of existing aid schemes provided for by Article 88(1) EC and Articles 17 to 19 of the regulation on procedure in State aid cases. That signifies that the Commission is not proposing to the Member State concerned appropriate measures for adapting the aid to the progressive development or functioning of the common market as provided for by those provisions before initiating the procedure, and that, from its point of view, the aid has been and is being unlawfully implemented, in disregard of the suspensory effect, in relation to new aid, which follows from the last sentence of Article 88(3) EC.
59 Such a decision to initiate the procedure under Article 88(2) EC in relation to a measure in the course of implementation and classified as new aid necessarily alters the legal position of the measure under consideration and that of the undertakings which are its beneficiaries, particularly as regards the pursuit of its implementation. Whereas, until the adoption of such a decision, the Member State, the beneficiary undertakings and other economic operators may think that the measure is being lawfully carried out as an existing aid, after its adoption there is at the very least a significant element of doubt as to the legality of that measure which, without prejudice to the possibility of seeking interim relief from the court with the power to grant it, must lead the Member State to suspend payment, since the initiation of the procedure under Article 88(2) EC excludes the possibility of an immediate decision holding the measure compatible with the common market which would enable it to be lawfully pursued. Such a decision might also be invoked before a national court called upon to draw all the consequences arising from the infringement of the last sentence of Article 88(3) EC. Finally, it is capable of leading the undertakings which are beneficiaries of the measure to refuse new payments in any event, or to hold the necessary sums as provision for possible subsequent repayments. Businesses will also take account, in their relations with those beneficiaries, of the fragile legal and financial situation of the latter.
60 It is true that, in such a context, unlike a suspension injunction addressed to a Member State, which is immediately binding in character and non-compliance with which permits the Commission to refer the matter directly to the Court of Justice pursuant to Article 12 of the regulation on procedure in State aid cases for a declaration that such non-compliance constitutes an infringement of the Treaty, the decision to initiate the procedure under Article 88(2) EC, taken in relation to measures in the course of implementation and classified by the Commission as new aid, produces legal effects the consequences of which it is for the Member State concerned and, in appropriate cases, economic operators themselves to draw. However, that procedural difference does not affect the scope of those legal effects.
61 On the other hand, where the Commission decides to deal with the measure concerned in the context of the permanent examination of existing aid schemes, the legal situation does not change until such time as the Member State concerned accepts proposals for appropriate measures or the Commission adopts a final decision.
62 Therefore, where the Commission initiates the procedure under Article 88(2) EC in relation to a measure in the course of implementation which it classifies as new aid, whereas the Member State concerned maintains that it is existing aid, the choice made by the Commission entails independent legal effects, particularly in relation to the suspension of the measure concerned.
63 Moreover, as the Court has also pointed out in paragraphs 21 to 23 of Spain v Commission and paragraphs 27 to 29 of Italy v Commission, Commission decisions such as the contested decision are not simply preparatory steps, in which case an action against the decision closing the procedure under Article 88(2) EC would ensure sufficient protection against any unlawfulness. In particular, the success of an action brought against the Commission's final decision that a measure was incompatible with the common market would do nothing to eradicate the irreversible consequences that would result from the suspension of the aid.
64 In this case, it is undisputed that, by initiating the procedure under Article 88(2) EC, the Commission took the view that the measures examined raised doubts concerning the existence of new unauthorised State aid and invited the Italian authorities to suspend the payment of aid exceeding strict compensation for additional costs arising from public service obligations, reminding them of the suspensory effect of Article 88(3) EC.
65 Therefore, contrary to what the Commission maintains, the contested decision has direct consequences on the suspension of the measures in question, and the action by the Italian Republic seeking the annulment of that decision in so far as it rules on the suspension is not devoid of purpose.
66 Moreover, as the documents before the Court show, the Italian Government is challenging the classification of certain financing measures covered by the contested decision as new aid, arguing that if those measures were to constitute aid - as to which the Italian Government does not express an opinion - they are in any event existing aid. Such measures are those which flow from the performance of the public service contract of 30 July 1991.
67 It should be noted in this respect that, in its action, after referring to the judgments in Spain v Commission and Italy v Commission, which concern the question of the admissibility of an action for the annulment of a decision to initiate the procedure under Article 88(2) EC where a Member State challenges the classification of the measures referred to in that decision as new aid and maintains that they are existing aid, the Italian Government states that, if the payments made pursuant to the public service contract of 30 July 1991 are to be regarded as aid, they cannot be regarded as new unnotified aid. In its observations on the cross application by the Commission, the Italian Government confirms that approach.
68 The action by the Italian Republic must therefore be declared admissible in so far as it seeks the annulment of the part of the contested decision which rules on the suspension of the payments made pursuant to the public service contract of 30 July 1991, concluded between the Italian Ministry of Transport and the Tirrenia group.