State aid: Commission refers Italy to Court of Justice for failure to recover illegal aid
European Commission - IP/07/648 10/05/2007
Brussels, 10th May 2007
The European Commission has decided to initiate proceedings before the European Court of Justice in view of Italy's failure to comply with the Commission's decision of 25 November 1999 ordering Italy to recover illegal and incompatible state aid granted to companies in Venice and Chioggia (see IP/99/887). More than seven years after the Commission adopted this decision, Italy has only recovered a small part - about 1% - of the total aid amount to be recovered.
Competition Commissioner Neelie Kroes said "Ensuring recovery is part and parcel of an effective State aid policy, so the Commission has to deal strictly with Member States that fail to implement its state aid decisions."
This strict approach is in line with the State Aid Action Plan presented by the Commission in June 2005, which is designed to ensure the effectiveness and credibility of state aid controls through the implementation of Commission decisions (see IP/05/680 and MEMO/05/195).
In order to execute the Commission's recovery decision, Italy sent out recovery orders to the companies that had received the unlawful and incompatible aid. These recovery orders were challenged by the beneficiaries before the national courts, who decided in many cases to suspend the proceedings until the European Court of First Instance (CFI) decided on the appeals introduced by some of the beneficiaries against the Commission's recovery decision (cases T-218/00 and others, pending before the CFI).
However Article 242 of the EC Treaty provides that appeals by beneficiaries against the Commission's 1999 recovery decision before the Court of First Instance do not suspend the obligation to repay the illegal and incompatible aid. It is therefore for the national authorities and the national courts to take the necessary steps to secure immediate and effective application of the Commission's decision and so restore fair competition.
In this instance, the national court rendered the Commission decision unenforceable by ordering the suspension of proceedings pending the verdict of the CFI, without requiring the beneficiaries to reimburse the aid illegally granted.
On 25 November 1999, the Commission adopted a decision stating that an aid scheme granted by Italy by way of relief from social security contributions was incompatible with the Single market.
The relief from social security contributions was applied from 1995 to 1997 according to Law No 30/1997 and law n° 206/1995 concerning all companies in the regions of Venice and Chioggia. A reduction in social security contributions was granted to all companies situated in Venice and Chioggia for maintaining jobs. The scheme was suspended with effect from 1 December 1997.
More than seven years after its 1999 recovery decision, the Commission finds that Italy has not implemented correctly the decision, as only a minimal part of the aid has been reimbursed. The total number of beneficiaries is 494, out of which 33 have fully reimbursed the aid. The total amount to be recovered is €44.2 million, of which only €400.000 has been reimbursed.