State aid: Commission issues guidance to speed up implementation of state aid recovery decisions
Brussels, 26 October 2007
The European Commission has adopted a Notice on the implementation of decisions ordering Member States to recover unlawful and incompatible state aid. The notice provides guidance to Member States as to how to achieve a more immediate and effective execution of recovery decisions. Effective and prompt recovery is essential to ensure that distortions of competition resulting from illegal and incompatible aid are put to an end. The Notice emphasises that improving the enforcement of state aid decisions is a shared responsibility between the Commission and the Member States. It recalls the principles applying to the recovery of state aid as confirmed by the Community Courts' case law and defines the respective roles of the Commission and of the Member States in the recovery procedures.
Competition Commissioner Neelie Kroes said: "We have been working closely with Member States to improve the execution of recovery decisions. This Notice consolidates our progress and sets out how we can cooperate even more effectively in the future to ensure that recovery decisions are quickly implemented in full".
Under EU state aid rules, the Commission has the duty to order Member States to recover state aids that have been found incompatible with the Single Market and have been granted without prior notification to the Commission.
The Member States are responsible for the implementation of the Commission's recovery decisions. They must adopt all necessary measures to recover the aid from the beneficiaries without delay. The EU state aid rules provide that recovery is to be carried out in accordance with national procedures, provided that these procedures allow immediate and effective execution of Commission recovery decisions.
In its State Aid Action Plan of 2005 (see IP/05/680), the Commission already highlighted the long delays in the execution of recovery decisions at national level and subsequently took steps to improve their enforcement, for example through a closer monitoring of national recovery proceedings.
These measures have proved to be effective. The amount of illegal aid recovered has increased to some €7.2 billion from €6 billion in 2005, and the backlog of recovery decisions that have not been implemented has fallen significantly (as shown in the June 2007 State Aid Scoreboard, see IP/07/955). In recent judgments, the European Court of Justice has clearly ruled in favour of an effective execution of recovery decisions (see Case C-415/03, Commission against Greece, case C-232/05, Commission against France and C-441/06, Commission against France).
With the Notice, the Commission has for the first time consolidated past experience in the recovery field with a view to build on the progress made in recent years. Long delays in the execution of recovery decisions undermine their effectiveness as a remedy to remove the distortion of competition caused by the granting of illegal and incompatible aid. It is therefore essential to ensure that recovery decisions are fully implemented within the deadline set out in the Commission's decision.
Improving the enforcement of the state aid rules is a shared responsibility between the Commission and the Member States. This is why the Notice provides "best practice" guidance for both. For the Commission, the main challenge is to ensure that its recovery decisions are complete and clear, if possible specifying the identity of the beneficiaries from whom aid has to be recovered and the aid amounts involved.
The Member States' role is to adopt the most effective measures available in their national legal systems to proceed to a rapid and effective recovery of the illegal and incompatible aid. This implies that Member States, after having determined the aid to be recovered, notify without delay the recovery order to the beneficiary and ensure that the aid is repaid within the deadline prescribed by the Commission Decision. The Notice also recalls the principles applying in case of litigation before European and/or national courts. In addition, the Notice details the rules applying in the case of insolvent beneficiaries and defines Member States' duties to ensure that the Community interest is duly taken into account in bankruptcy proceedings.
Finally, the Notice recalls the possible consequences of a failure by a Member State to implement a Commission recovery decision. It emphasises that the Commission will require Member States to suspend the payment of any new - even compatible - aid to beneficiaries who have not yet repaid incompatible aid previously granted to them (in application of the European Court of Justice ruling in the Deggendorf case).