1 By application lodged at the Court Registry on 17 August 1989, the Italian Republic brought an action under the first paragraph of Article 173 of the EEC Treaty for a declaration that Commission Decision 90/224/EEC on aid granted by the Italian Government to Aluminia and Comsal, two State-owned undertakings in the aluminium industry, was void. That decision, of which the Italian Government was notified by letter of 7 June 1989, was published in the Official Journal of the European Communities on 9 May 1990 (Official Journal 1990 L 118, p. 42).
2 By that decision the Commission found that: "The two aids in the form of interest-free loans to be converted into equity capital amounting to LIT 70 000 million and LIT 30 000 million, granted by the Italian Government to the undertakings Aluminia and Comsal, are incompatible with the common market within the meaning of Article 92(1) of the EEC Treaty given that these aids have been granted in breach of the provisions of Article 93(3) of that Treaty and of the conditions laid down in the Commission' s decision of 17 December 1986."
3 It appears from the documents before the Court that the Italian authorities submitted to the Commission a reorganization and improvement plan for the State-owned aluminium industry for the period 1983-88 (the "aluminium plan"). The Commission initiated the procedure under Article 93(2) with regard to the financial aspects of the plan. By decision dated 17 December 1986, it terminated the procedure and authorized the aids envisaged, after learning that the amount of new capital had been reduced to LIT 989 000 million. In addition, it requested the Italian Government to provide no further aid in whatever form to the State-owned group in the aluminium industry until the end of 1988.
4 On 18 September 1987 the Italian authorities decided to authorize EFIM (Ente Partecipazione e Finanziamenti Industrie Manifatturiere) to issue, at the expense of the State, a debenture loan, LIT 100 000 million of which would be devoted to financing investments in the undertakings Aluminia (LIT 70 000 million) and Compagnia Sarda Alluminio (hereinafter referred to as "Comsal") (LIT 30 000 million). The Commission, having learned of this, requested the Italian Government to notify it of the financial measures it had adopted, and the government provided information on this matter by letter of 29 March 1988. On the basis of that information the Commission decided to initiate the procedure which led to the contested decision.
5 Reference is made to the Report for the Hearing for a more detailed account of the facts, the course of the procedure and the pleas in law and arguments of the parties, which are hereinafter mentioned or discussed only in so far as is necessary for the reasoning of the Court.
6 The Italian Government puts forward three arguments in support of its action. The first claims that the financial contributions at issue respected the ceiling of LIT 989 000 million authorized by the Commission decision of 17 December 1986. The second argument is to the effect that there was no State aid within the meaning of Article 92(1) of the EEC Treaty. Finally, the third argument is that the Commission failed to make an assessment of the compatibility of the financial contributions with the common market in the light of the derogations laid down in Article 92(3)(c) of the Treaty. During the hearing the Italian Government withdrew the first argument, which does not therefore need to be considered. The argument that there was no State aid within the meaning of Article 92 of the Treaty
7 The Italian Government takes the view that the Commission did not apply correctly the criterion of the comparison of the attitude of the State with that of a private investor to assess whether or not there is an aid within the meaning of Article 92 of the Treaty. It points out that the Commission took into account only the losses and the total indebtedness of Aluminia and Comsal during the period 1985 to 1987, without attaching any importance to the fact that in 1988 Aluminia' s final balance-sheet showed a net profit and that Comsal progressively reduced its losses which, it claims, was foreseeable at the time when these undertakings received the amounts at issue. Nor, according to the Italian Government, did the Commission take into account the fact that these sums were intended for specific productive investment projects. Finally, the Italian Government emphasizes that, by not taking account of the fact that a private undertaking belonging to a large group may rely on the financing capacity of the group, the Commission did not ensure a correct application of the principle of equality between private and public undertakings.
8 In view of these arguments it should be pointed out first, that, according to the Court' s established case-law, a contribution by the public authorities to the capital of an undertaking, in whatever form, may constitute State aid when the conditions referred to in Article 92 of the Treaty are fulfilled, and that, in order to determine whether such contributions amount to State aids, it must be considered whether, in similar circumstances, a private investor of a stature comparable to that of the bodies administering the public sector might have been induced to provide contributions of capital to a like extent (Case C-305/89 Italy v Commission [1991] ECR 1603, paragraphs 18 and 19 of the judgment).
9 Contrary to the Italian Government' s claim, the fact that a financial contribution is intended for productive investment does not by itself preclude such a contribution from constituting an aid when, regard being had to the situation of the undertaking, it appears improbable that a private shareholder would have subscribed the capital in question.
10 It is apparent from the contested decision, which has not been challenged on this point, that the undertakings in whose favour the measures in dispute operated had suffered, from 1985 to 1987, that is, during the period immediately preceding the measures in question, sustained and considerable losses, namely LIT 77 800, 57 500 and 98 300 million for Aluminia and LIT 14 200, 10 200 and 9 400 million for Comsal. In addition, their financial situation was characterized by a considerable amount of indebtedness, which in 1987 amounted to 133% of turnover for Aluminia and 142% for Comsal.
11 However, the Italian Government claims that during 1988 Aluminia' s final balance sheet showed a net profit of LIT 7 000 million and that Comsal reduced its losses by half. It also claims that these results were already foreseeable in September 1987, when the financial contributions were made.
12 Even on the supposition that, as the Italian Government maintains, these results were already foreseeable at the time of the financing operations in question, it must be pointed out that such forecasts were not of such a nature as to induce a private investor to tie up such considerable sums. Moreover, such forecasts must be regarded in the context of the whole of the steps taken by the Italian Government during the years 1983 to 1988.
13 As regards Comsal in particular, it is sufficient to point out that the fact that its losses were reduced during 1988 does not alter the finding that that undertaking suffered sustained and considerable losses without interruption from 1982 onwards.
14 With regard to Aluminia, it must be emphasized that the favourable result of LIT 7 000 million, assuming it to have been foreseeable, would not have been enough to induce a hypothetical private investor to contribute the capital at issue, since such a result is still insufficient to outweigh the crushing volume of indebtedness, equal to almost one and a half times its turnover, and the overwhelming losses, the total of which, since 1982, amounted to LIT 929 800 million and which still amounted to LIT 98 300 million for 1987 alone, that is, for the year immediately preceding that in which the favourable results appeared.
15 As regards the argument relating to the principle of equality between private and public undertakings, it should be recalled that, as the Court pointed out in the judgment in Case C-303/88 (Italy v Commission [1991] ECR I-1433, at paragraph 20), it follows from that principle of equal treatment that capital placed by the State, directly or indirectly, at the disposal of an undertaking, in circumstances which correspond to normal market conditions cannot be regarded as State aid. However, regard being had to the facts recorded above, it is impossible to maintain that the undertakings in question received the capital placed at their disposal in circumstances which corresponded to normal market conditions.
16 It follows from the foregoing that the financial contributions in question are State aid within the meaning of Article 92 of the EEC Treaty. The first argument must therefore be rejected. The failure to consider the compatibility of the financial contributions in question with the common market in the context of the derogations laid down in Article 92(3)(c)
17 The Italian Government submits that the Commission should have considered, as it did for the aluminium plan, since the aid at issue falls within that plan, whether the aid was compatible with the common market on the basis of subparagraph (c) of Article 92(3) of the EEC Treaty. In support of this submission the Italian Government claims, first, that the Commission cannot, under the first subparagraph of Article 93(2) of the Treaty, take a decision merely finding a failure to comply with obligations imposed by a prior decision. With a view to such a finding it can only refer the matter to the Court under the second subparagraph of that paragraph. The Italian Government next expresses the view that the decision of 17 December 1986 contained only a request, and not a mandatory obligation, to provide no further aid. It adds, finally, that that decision could not involve an absolute prohibition of future aid which must, on the contrary, be assessed in relation to the purpose of that aid and the economic situation of the common market at the time it is provided.
18 In the first place it must be pointed out that this submission is inadmissible in so far as it aims to call in question the decision of 17 December 1986 which, not having been challenged within the prescribed period, has become definitive.
19 Next, it must be stated that it is impossible to entertain the Italian Government' s argument to the effect that the condition imposed by the decision of 17 December 1986 to provide no further aid until the end of 1988 is not mandatory. In fact, it must be emphasized that the decision of 17 December 1986 was in response to a prior commitment of the Italian Government to reduce the capital it intended to contribute, and thus terminated the procedure. In these circumstances such a condition can only be mandatory notwithstanding the fact that the Commission used the expression "requests".
20 As regards the argument that in order to make a finding that the previous decision had been infringed the Commission should have referred the matter to the Court, it must be pointed out first of all that when the Commission considers the compatibility of a State aid with the common market it must take all the relevant factors into account, including, where relevant, the circumstances already considered in a prior decision and the obligations which that decision may have imposed on a Member State. In this case the Commission cannot be criticized for considering the new aid in the framework of the whole of the aids to the aluminium industry as, moreover, the Italian Government itself did in its comments at the pre-litigation stage.
21 Moreover, the procedure for assessing aid under Article 93(2) makes it possible to appraise any new fact capable of altering the Commission' s assessment, regard being had to the purpose of any new aid and all relevant economic circumstances at the time when the aid is granted.
22 It must be stated that in this case the Italian Government did not provide, at any time during the procedure, any new features capable of altering the assessment which the Commission had already made in its decision of 17 December 1986. It confined itself, without producing any argument, to asking for the new aid to be assessed in the light of Article 92(3)(c) of the EEC Treaty.
23 It follows that, since the Commission had not been informed, when it took the contested decision, of any new fact allowing it to assess whether the aid in question might have the benefit of the derogation laid down in Article 92(3)(c) of the Treaty, it was justified in basing its decision on the assessments it had already made in its previous decision and the failure to comply with the condition it had imposed thereby.
24 It follows from the foregoing that the second argument must also be rejected.
25 The application must consequently be dismissed in its entirety.