1 By its appeal, the European Commission seeks to have set aside the judgment of the General Court of the European Union of 24 June 2015, Italy v Commission (T‑527/13, ‘the judgment under appeal’, EU:T:2015:429), by which the General Court partially annulled Commission Decision 2013/665/EU of 17 July 2013 on State aid SA.33726 (11/C) [ex SA.33726 (11/NN)] granted by Italy (deferral of payment of the milk levy) (OJ 2013 L 309, p. 40, ‘the decision at issue’), and dismissed the action as to the remainder.
2 Article 1(b)(ii) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1), defines ‘existing aid’ as ‘authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council’.
3 Article 1(c) of that regulation provides that ‘new aid’ means ‘all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid’.
4 Article 4(1) of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation No 659/1999 (OJ 2004 L 140, p. 1, and corrigendum OJ 2004 L 286, p. 3), provides: ‘For the purposes of Article 1(c) of Regulation [No 659/1999], an alteration to existing aid shall mean any change, other than modifications of a purely formal or administrative nature which cannot affect the evaluation of the compatibility of the aid measure with the common market. However an increase in the original budget of an existing aid scheme by up to 20% shall not be considered an alteration to existing aid.’
5 The General Court summarised the background to the case in paragraphs 1 to 8 of the judgment under appeal as follows: ‘1 In order to enable Italian milk producers to pay the additional levy of EUR 1386475000 owed to the European Union for exceeding the milk quota allocated to the Italian Republic during the period 1995/1996 to 2001/2002, the Italian Republic sought authorisation from the Council of the European Union to establish a State aid scheme pursuant to the third subparagraph of Article 88(2) EC. 2 By Decision 2003/530/EC of 16 July 2003 on the compatibility with the common market of an aid that the Italian Republic intends to grant to its milk producers (OJ 2003 L 184, p. 15, “the Council decision”), the Council authorised that Member State to “itself mak[e] payment to the [European Union] of the amount due from them to the [European Union] by virtue of the additional levy on milk and milk products for the period 1995/1996 to 2001/2002” (Article 1 of the Council decision). The Council also authorised it to “[allow the interested parties] to repay their debt [in relation to the Italian Republic] by way of deferred payment over a number of years without interest” (Article 1 of the Council decision). 3 That statement of compatibility was subject to two sets of conditions. In the first place, the Council required the Italian authorities, first, to declare the amount corresponding to the additional levy owed by the milk producers to the European Agricultural Guidance and Guarantee Fund (EAGGF) and, secondly, to deduct their outstanding debt to the European Union and the interest thereon from the expenditure financed by the EAGGF (Article 2 of the Council decision). In the second place, it required the milk producers to repay in full their debt to the Italian Republic in yearly instalments of equal size and to do so over a period not exceeding 14 years starting from 1 January 2004 (Article 1 of the Council decision). 4 In that context, the Italian authorities adopted decreto-legge n. 49, riforma della normativa in tema di applicazione del prelievo supplementare nel settore del latte e dei prodotti lattiero-caseari (Decree-law No 49 reforming the rules on the application of the additional levy in the milk and dairy products sector) of 28 March 2003 (GURI No 75 of 31 March 2003, p. 4), and decreto ministeriale del 30 luglio 2003, disposizioni per il versamento del prelievo supplementare, dovuto e non versato per i periodi dal 1995/1996 al 2001/2002 di cui all’art. 10, comma 34, della legge n. 119/2003 (Ministerial Decree of 30 July 2003 on payment of the additional levy which is payable but unpaid for the period 1995/1996 to 2001/2002 and referred to in Article 10(34) of Law No 119/2003) (GURI No 183 of 8 August 2003, p. 33). The combined provisions of those two measures provided, in essence, that the amount of the additional levy borne by the Italian Republic would be fully repaid to it by the milk producers, without interest, in the form of annual payment instalments of the same amount deferred over a period not exceeding 14 years (“the system of staggered payments”). 5 Having amended those provisions on several occasions …, the Italian authorities adopted legge n. 10, Conversione in legge, con modificazioni, del decreto-legge 29 dicembre 2010, n. 225, recante proroga di termini previsti da disposizioni legislative e di interventi urgenti in materia tributaria e di sostegno alle imprese e alle famiglie (Law No 10, converting into law, with amendments, Decree-Law No 225 of 29 December 2010, extending time-limits laid down by legislative provisions and urgent interventions in tax matters and to support undertakings and families) of 26 February 2011 (GURI No 47 of 26 February 2011, Ordinary Supplement No 53), which entered into force the following day. The latter, in particular, inserted Article 1(12)k into Decree-Law No 225, which provided that, “[i]n order to address the serious crisis affecting the dairy sector, the time-limits for payment of the amounts due on 31 December 2010 referred to in the instalment plans laid down by Decree-Law No 49 [and the subsequent legislation] have been extended until 30 June 2011” (“the deferral of payment”). 6 The Italian authorities informed the … Commission that the “grant equivalent” of that measure had been offset against the de minimis aid provided for that Member State by the annex to Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles [107 TFEU] and [108 TFEU] to de minimis aid in the sector of agricultural production (OJ 2007 L 337, p. 35). … 7 By Decision C(2011) 10055 final of 11 January 2012 on State aid SA.33726 (11/C) (ex SA.33726 (11/NN)) - Deferral of payment of the milk levy in Italy, a summary of which was published in the Official Journal of the European Union on 10 February 2012 (OJ 2012 C 37, p. 30), the Commission initiated the procedure laid down in Article 108(2) TFEU. In the first place, it indicated, in essence, that it had doubts relating to the classification of the deferral of payment in the light of Article 107 TFEU, and to the compatibility of that measure with the internal market. In the second place, the Commission stated that that deferral of payment gave rise to an infringement of one of the conditions laid down in the Council decision, that that infringement transformed the whole system of staggered payments established by the Italian authorities into new aid, in so far as it related to milk producers who had benefited from the deferral of payment, and that the compatibility of that new aid with the internal market had also not been established. 8 By [the decision at issue], the Commission considered, following the exchange with the Italian authorities during the administrative procedure, that each of the two measures at issue, namely, the deferral of payment, on the one hand, and the system of staggered payments, on the other hand, constituted new and unlawful aid which was incompatible with the internal market (Article 1 of the [decision at issue]). It therefore ordered the Italian Republic to ensure the immediate and effective recovery of the sums granted to milk producers who had benefited from the deferral of payment, together with interest (Articles 2 and 3 of the [decision at issue]).’
6 By application lodged at the Registry of the General Court on 30 September 2013, the Italian Republic brought an action, principally, for the total annulment of the decision at issue. In the alternative, it sought the partial annulment of that decision in so far as the Commission, by that decision, requires the Italian Republic to recover the individual aid granted, in accordance with the aid scheme previously authorised by the Council decision, to the Italian milk producers who benefited from a deferral of payment.
7 In support of its application, the Italian Republic raised two pleas in law, the first alleging infringement of Article 3(7) of Regulation No 1535/2007, and the second alleging infringement of Article 3(2) of that regulation, Article 1(c) of Regulation No 659/1999 and Article 4(1) of Regulation No 794/2004, and a failure to state adequate reasons.
8 The General Court upheld the second plea of the Italian Republic and annulled Article 1(2) of the decision at issue, and Articles 2 to 4 of that decision in so far as those articles concern, first, the aid scheme referred to in Article 1(2) of the decision at issue and, secondly, the individual aid granted under that aid scheme; it dismissed the action as to the remainder.
9 The Commission claims that the Court should: - set aside the judgment under appeal; - dismiss the action brought at first instance, and - order the Italian Republic to pay the costs of both sets of proceedings.
10 The Italian Republic contends that the Court should: - dismiss the appeal, and - order the Commission to pay the costs.
11 The Commission raises three grounds of appeal. The first ground of appeal alleges infringement of the rule prohibiting the General Court from raising of its own motion a plea relating to the substantive legality of the decision at issue. The second ground of appeal alleges infringement of Article 108 TFEU and Article 1 of Regulation No 659/1999 concerning the definitions of ‘new aid’ and ‘existing aid’. By its third ground of appeal, the Commission alleges an infringement of Article 108 TFEU and Articles 4, 6, 7, 14 and 16 of Regulation No 659/1999 concerning the procedures applicable to new aid and misused aid.
12 By its first ground of appeal, the Commission claims that the General Court ruled ultra petita, and infringed the principle that a court must rule on the issues submitted to it, Article 21 of the Protocol of the Statute of the Court of Justice of the European Union and Article 44(1) of the Rules of Procedure of the General Court by raising of its own motion a plea relating to the substantive legality of the decision at issue. It submits that, in paragraphs 39 to 44 of the judgment under appeal, the General Court, by defining the scope of the second ground of appeal raised before it, reclassified that ground. It thus examined of its own motion the issue whether the system of staggered payments had to be classified as existing aid and not new aid owing to the allegedly insubstantial nature of the alteration made to it by the Italian authorities, which led it to annul in part the decision at issue. In the originating application that issue was raised by that Member State only in relation to the alleged infringement of Article 4(1) of Regulation No 794/2004.
13 The Italian Republic alleges that that ground of appeal must be rejected as being unfounded.
14 It follows from the rules governing proceedings before the EU Courts, in particular Article 21 of the Statute of the Court of Justice of the European Union, applicable before the General Court pursuant to the first paragraph of Article 53 of that Statute and Article 44(1) of the Rules of Procedure of the General Court, in the version applicable when the originating application was lodged, that the case is in principle determined and delimited by the parties and that the EU Courts cannot adjudicate ultra petita (see, to that effect, judgment of 10 December 2013, Commission v Ireland and Others, C‑272/12 P, EU:C:2013:812, paragraph 27).
15 While certain pleas may, and indeed must, be raised by the courts of their own motion, such as the question whether a statement of reasons for the decision at issue is lacking or is inadequate, which falls within the scope of essential procedural requirements, a plea going to the substantive legality of that decision, which falls within the scope of infringement of the Treaties or of any rule of law relating to their application, within the meaning of Article 263 TFEU, can, by contrast, be examined by the Courts of the European Union only if it is raised by the applicant (judgment of 10 December 2013, Commission v Irelandand Others, C‑272/12 P, EU:C:2013:812, paragraph 28 and the case-law cited).
16 In the present case, it must be observed that it is apparent from the actual wording of the second plea in law raised by the Italian Republic before the General Court that that plea concerns the infringement of Article 1(c) of Regulation No 659/1999, which defines the concept of ‘new aid’. Moreover, the complaint concerning the infringement of that provision is formulated differently from the one concerning the infringement of Article 4(1) of Regulation No 794/2004 and the failure to state adequate reasons.
17 In addition, in paragraphs 54 to 56 of the originating application, the Italian Republic claimed that the withdrawal of the aid resulting from the deferral of payment, in itself, is equivalent to the consequence laid down in the TFEU in the event of a finding that that aid is unlawful, and therefore should not also lead to the withdrawal of aid legally granted beforehand under the system of staggered payments. In paragraph 56 of its application, it claimed, in that regard, that ‘there is no evidence capable of establishing that the beneficiaries of the existing aid who benefited from the measure at issue are required to repay not only the amount corresponding to the measure at issue, but also that received as part of the existing aid (and therefore, on the basis of the authorisation decision, the interest unpaid on the first staggered payment)’.
18 Furthermore, in paragraph 57 of that application, the Italian Republic argued: ‘Nor is it possible to take the view that the recovery decision may be extended to existing aid as a result of a substantial alteration to that aid which is capable of resulting in those two measures being regarded as a single new aid, not notified to the Commission and therefore unlawful’. Such a finding, in its opinion, would be ‘the clear result of a distortion of the concept of “alteration of existing aid”, relevant for the application of Article 1(c) of Regulation No 659/1999’, as is apparent from the first sentence of paragraph 58 of that application.
19 Therefore, contrary to what the Commission submits, the Italian Republic argued in its application at first instance that the Commission had infringed Article 1(c) of Regulation No 659/1999 by classifying, in the decision at issue, the staggering of payments as new and unlawful aid, and by wrongly requiring that Member State to recover that aid.
20 In addition, as the Advocate General stated in point 38 of his opinion, it is clear from paragraphs 22 and 32 to 36 of the defence lodged by the Commission before the General Court that the Commission had indeed understood that complaint which it summarised and refuted in its pleading.
21 It follows that the General Court, contrary to what the Commission argues, did not raise of its own motion a plea relating to the substantive legality of the decision at issue by ruling on the second plea in law of the application before it.
22 In the light of the foregoing, the first ground of appeal must be rejected as unfounded.
23 The second ground of appeal essentially comprises two parts. The first part of that ground relates to the fact that the General Court wrongly classified the aid implemented, in breach of the conditions for authorising existing aid and not new aid. By the second part of that ground, the Commission claims that the General Court, in making such a finding, did not take into account the institutional balance between the Council and the Commission.
24 It is appropriate to commence the examination with the first part of that ground.
25 By the first part of its second ground of appeal, the Commission claims that the General Court erred in law in its interpretation of the concepts of ‘new aid’ and ‘existing aid’. Essentially, it challenges the General Court’s assessment, in paragraphs 74 to 91 of the judgment under appeal, that the system of staggered payments, which constitutes an existing aid scheme, having been granted conditional authorisation from the Council and having subsequently been altered in breach of the authorisation conditions for that system, must be regarded as an existing aid scheme and not as a new aid scheme, on the ground that the Commission did not establish that that alteration affects the actual substance of the pre-existing measure.
26 The Italian Republic contends that the General Court correctly required the Commission, for the purposes of reclassifying the existing aid as new aid, to provide evidence that the infringement of the authorisation conditions for the existing aid scheme constitutes a substantial alteration to that scheme, which, in the opinion of that Member State, must be assessed having regard to Article 4(1) of Regulation No 794/2004. It is apparent from the case-law that it is only where the alteration made to existing aid is not clearly severable from the original aid scheme and that alteration also affects the actual substance of that original scheme that the latter is transformed into a new aid scheme (judgment of the Court of Justice of 9 October 1984, Heineken Brouwerijen, 91/83 and 127/83, EU:C:1984:307, paragraphs 21 and 22, and judgment of the General Court of 30 April 2002, Government of Gibraltar v Commission, T‑195/01 and T‑207/01, EU:T:2002:111). Furthermore, it follows from the case-law of the Court of Justice that the criteria laid down by case-law also apply where the alteration constitutes an infringement of the authorisation conditions for an existing aid scheme (judgment of 13 June 2013, HGA and Others v Commission, C‑630/11 P to C‑633/11 P, EU:C:2013:387, paragraphs 91, 94 and 95).
27 In that regard, the Italian Republic argues that, if existing aid may, as a result of alterations, be reclassified as new aid where those alterations have not affected the actual substance of the existing aid, that would lead to the nature of the procedure for reviewing State aid being transformed, which would therefore take on the characteristics of a penalty.
28 The Italian Republic adds that, in any event, the Commission has the option of using other procedures when reviewing State aid.
29 Thus, although the alteration made to existing aid itself constitutes new and therefore unlawful aid, the Commission could adopt a decision prohibiting the implementation of the measure introducing that new aid, or, if that measure has already been implemented, order recovery of the new aid, thus restoring the conditions under which the existing aid had been authorised. That solution is the one which was adopted in the judgment under appeal.
30 By the first part of this ground of appeal, the Commission challenges the interpretation of the concepts of ‘new aid’ and ‘existing aid’, within the meaning of Article 1(b) and (c) of Regulation No 659/1999, on which the General Court’s reasoning in paragraphs 74 to 91 of the judgment under appeal is based.
31 As a preliminary point, it must be observed that, in paragraphs 69 to 76 of that judgment, the General Court relied on, among the various procedures which the Commission could have used where a Member State had not complied with a decision which declared aid or an aid scheme compatible with the internal market subject to certain conditions, the procedure relating to unlawful aid, laid down in Chapter III of Regulation No 659/1999.
32 In that regard, the General Court stated, in paragraphs 69 and 70 of that judgment, that ‘since the infringement attributed to the Italian Republic consisted in the granting of a measure likely to be classified as new aid, the Commission was entitled to use [that procedure] … in order to examine that measure, as it decided to do in the present case’, but ‘had to comply, in that context, with the substantive conditions enabling it to classify not only the deferral of payment taken in isolation but also the whole of the pre-existing system of staggered payments as aid or as an aid scheme which is new and unlawful’.
33 The General Court considered, in paragraph 76 of that judgment, ‘that the possibility, for the Commission, of classifying as new, and, where necessary, unlawful, aid not only the alterations of existing aid, but also all the existing aid to which that alteration relates, was subject, as regards the substance, to the condition that the Commission establish that the alteration affected the very substance of the pre-existing measure’. It added that, ‘in the event that the Member Sate concerned submits, during the administrative procedure, either that that alteration is clearly severable from the pre-existing measure, or that it is purely formal or administrative in character and is not capable of influencing the assessment of the compatibility of that measure with the internal market, the Commission must justify why [the arguments of that Member State] appear to it to be unfounded’.
34 In paragraphs 78 to 80 of the judgment under appeal, the General Court considered that the Commission had not demonstrated in the decision at issue that the deferral of payment affected the actual substance of the system of staggered payments, a question which it considered to be irrelevant.
35 The General Court thus concluded, in paragraphs 81 and 82 of that judgment, that the Commission not only ‘misconstrued the concept of “new aid” by reclassifying an existing aid scheme as new unlawful aid without complying with the substantive conditions laid down in Regulation No 659/1999’, but also wrongly ordered the recovery of the aid granted under the existing aid scheme. In doing so, it rejected, in paragraphs 83 to 91 of that judgment, the arguments put forward by the Commission to show that the failure by the Italian authorities to comply with one of the conditions in the declaration of compatibility adopted by the Council entailed, in essence, the reclassification of the existing aid scheme as new and unlawful aid.
36 The Court must therefore ascertain whether, as the Commission claims, the General Court’s reasoning is vitiated by an error of law.
37 Under the terms of the Council decision, the Italian Republic was authorised in 2003, as is apparent from Article 1 of that decision, to take the place of its milk producers and to pay to the European Union the sum owed by those producers by virtue of the additional levy on milk and milk products for the period 1995/1996 to 2001/2002, and to allow those producers to repay their debt to the Italian Republic by way of an interest-free deferral of payment over a number of years. The aid scheme authorised by that decision thus consisted, essentially, in granting to the Italian milk producers interest-free loans which were to be repaid in instalments over a number of years.
38 It follows from Article 1 of the Council decision that the Council considered, ‘exceptionally’, the system of staggered payments to be compatible with the internal market and made that compatibility subject to the condition that, first, ‘repayment shall be in full by yearly instalments of equal size,’ and secondly, ‘the repayment period shall not exceed 14 years, starting from 1 January 2004.’
39 Recital 8 of the Council decision relating to the reasons underpinning that decision, states that the Council considered that, ‘in order to avoid the imposition of heavy financial burdens on the individual Italian milk producers concerned, which would probably be caused by the immediate recovery in full of all the amounts due [to the Community by virtue of the additional levy on milk and milk products as a result of those producers exceeding the reference quantities in the periods 1995/1996 to 2001/2002] and thus to alleviate the existing social tensions’, ‘exceptional circumstances … [justified] considering the aid which the Italian Republic [intended] to grant to these milk producers in the form of an advance and a deferred payment to be compatible with the [internal] market in derogation from Article [107 TFEU], if the conditions laid down in this Decision are fulfilled’.
40 It thus follows from Article 1 of the Council decision, read in the light of recital 8 of that decision, that the Council made the grant of that exceptional aid expressly dependent on the milk producers complying with two conditions, that is to say, first, the producers are required to repay the aid granted in full by yearly instalments of equal size, and secondly, the repayment period will be limited by an instalment plan beginning on 1 January 2004 and must not go beyond 14 years.
41 Thus, it follows from that decision that, in the opinion of the Council, the compatibility of that scheme with the internal market and ultimately the authorisation of that scheme are subject to compliance with the conditions laid down in Article 1 of that decision.
42 However, by legge n. 10, Conversione in legge, con modificazioni, del decreto-legge 29 dicembre 2010, n. 225, recante proroga di termini previsti da disposizioni legislative e di interventi urgenti in materia tributaria e di sostegno alle imprese e alle famiglie (Law No 10, converting into law, with amendments, Decree-Law No 225 of 29 December 2010, extending time-limits laid down by legislative provisions and urgent interventions in tax matters and to support undertakings and families) of 26 February 2011 (GURI No 47 of 26 February 2011, Ordinary Supplement No 53), which entered into force on 27 February 2011, the Italian Republic deferred until 30 June 2011 payment of the annual instalments due on 31 December 2010.
43 That deferral of payment did not take into account the condition laid down in Article 1 of the Council decision, under which interest-free loans granted by the Italian Republic are to be reimbursed in yearly instalments of equal size, where compliance with that condition was regarded by the Council as ensuring compatibility of the aid with the single market.
44 Consequently, it must be observed that the legislative alteration referred to in paragraph 42 above had the effect of transforming the aid scheme authorised by the Council decision into new and unlawful aid.
45 That finding follows from the examination of the wording, context and aim of Article 1(c) of Regulation No 659/1999.
46 Thus, by virtue of Article 1(c) of that regulation, ‘new aid’ is defined as ‘all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid’. Since that provision is established in broad terms, it is capable of covering not only the alteration itself, but also the aid concerned by that alteration.
47 In addition, it must be pointed out that, according to Article 1(b)(ii) of that regulation, ‘existing aid’ is understood as being, inter alia, ‘authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council’. Thus, aid which was the subject of an authorisation decision and which, as a result of an alteration that did not satisfy a condition laid down by that decision in order to ensure the compatibility of that aid with the internal market, is no longer covered by the decision which authorised it, may constitute new aid.
48 The deferral of payment does not constitute an alteration of a purely formal or administrative nature, nor can it be qualified as an increase in the original budget of an aid scheme within the meaning of Article 4(1) of Regulation No 794/2004. That measure was taken in breach of an authorisation condition governing the repayment of aid authorised exceptionally by the Council under the third subparagraph of Article 108(2) TFEU, a condition which the Council decided would ensure the compatibility of the aid scheme at issue with the internal market. Thus, contrary to what the Italian Republic maintains, the Commission was correct in concluding that new aid had been granted, relying solely on the failure to satisfy that condition.
49 It must be added that a sufficiently broad interpretation of the concept of ‘new aid’, within the meaning of Article 1(c) of Regulation No 659/1999, covering not only the alteration made by the Member State concerned to an existing aid scheme, in breach of the authorisation conditions for that scheme, but also the entire aid scheme as altered, makes it possible to ensure the effectiveness of the system of review of State aid in the European Union by promoting compliance by the Member State concerned with the authorisation conditions for the aid scheme. Thus, if a Member State makes an alteration to an existing aid scheme in breach of an authorisation condition for that scheme, that Member State will have no guarantee that the authorised aid scheme is not affected by that alteration and that the advantages granted on the basis of that scheme will therefore be retained.
50 The case-law of the Court of Justice relied on by the Italian Republic in support of its arguments, set out in paragraph 26 above, is not relevant to the present case.
51 First, it is apparent from paragraph 21 of the judgment of 9 October 1984, Heineken Brouwerijen (91/83 and 127/83, EU:C:1984:307), that, if a plan initially notified has in the meantime undergone an alteration of which the Commission has not been informed, the prohibition on implementation in Article 108(3) TFEU applies to the plan as altered in its entirety. The position would be different only if that alteration in fact constituted a separate aid measure which should be assessed separately and which would therefore not be such as to influence the assessment which the Commission already made of the original aid plan; in that case, the prohibition applies only to the aid measure introduced by the alteration. In the light of the finding in paragraph 43 above, that scenario does not concern the alteration at issue, in that it affects a condition to which the declaration of compatibility of the original aid plan was subject.
52 Secondly, in paragraphs 89 to 95 of the judgment of 13 June 2013, HGA and Others v Commission (C‑630/11 P to C‑633/11 P, EU:C:2013:387), the Court of Justice examined the issue whether the alteration made to an original aid scheme in breach of the approval conditions for that aid scheme constituted an alteration of existing aid, within the meaning of Article 1(c) of Regulation No 659/1999, thereby giving rise to new and unlawful aid. It did not, however, examine the effects of that alteration on the original aid scheme.
53 The General Court, in paragraph 76 of the judgment under appeal, required the Commission to establish that the alteration to the existing aid affects the very substance of the pre-existing measure, in order to classify as new, and where necessary, unlawful, aid, not only that alteration, but also all the existing aid to which that alteration relates.
54 In doing so, the General Court misconstrued the concept of ‘new aid’, within the meaning of Article 1(c) of Regulation No 659/1999, and therefore committed an error of law. As is apparent from paragraphs 46 to 52 above and as was observed, in essence, by the Advocate General in point 76 of his Opinion, existing aid which has been altered in breach of the compatibility conditions imposed by the Commission or the Council can no longer be regarded as authorised and, as a result, loses the status of existing aid in its entirety.
55 Therefore, the General Court, having held, in paragraphs 81 and 82 of the judgment under appeal, after examining the grounds of the decision at issue in paragraphs 77 to 80 of that judgment, that ‘the Commission [had] not only misconstrued the concept of “new aid” by reclassifying an existing aid scheme as new unlawful aid without complying with the substantive conditions laid down in Regulation No 659/1999 and the case-law on that subject’, but ‘also, and consequently, wrongly ordered the recovery, from the milk producers who benefited from the deferral of payment, … the individual aid granted … under that existing aid scheme’ committed another error of law.
56 In view of the foregoing considerations, the second ground of appeal should be upheld and paragraphs 1 and 2 of the operative part of the judgment under appeal should be set aside, without it being necessary to examine either the second part of the second ground of appeal or the third ground of appeal.
57 In view of the fact that the judgment under appeal is to be partially set aside, the General Court’s decision on costs, and therefore paragraph 4 of the operative part of the judgment under appeal, must also be set aside.
58 In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, if the Court of Justice quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits. That is the case here.
59 It follows from paragraphs 30 to 52 above that the Italian Republic’s complaints in its second plea in law in its action before the General Court relating to the merits of the decision at issue must be rejected as being unfounded. Since the first plea in law and the other complaints raised in the second plea in law were rejected by the General Court, the action must be dismissed in its entirety.
60 Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to the costs.
61 Under Article 138(1) of those Rules of Procedure, applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
62 Since the Commission has applied for costs and the Italian Republic has been unsuccessful, the latter must be ordered to bear its own costs and to pay those incurred by the Commission relating to the appeal proceedings. Furthermore, since the Italian Republic’s action before the General Court has been dismissed in its entirety, it must be ordered to bear its own costs and to pay those incurred by the Commission in the proceedings at first instance.