Judgments nº T-277/00 of Court of First Instance of the European Communities, November 28, 2008

Resolution Date:November 28, 2008
Issuing Organization:Court of First Instance of the European Communities
Decision Number:T-277/00
SUMMARY

State aid - Relief from social security contributions for firms in Venice and Chioggia - Decision declaring the aid scheme incompatible with the common market and requiring recovery of the aid paid out - Admissibility - Individual concern - Conditions concerning effect on trade between Member States and competition - Derogations under Article 87(3)(b) to (e) EC and Article 87(2)(b) EC -... (see full summary)

 
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In Joined Cases T-254/00, T-270/00 and T-277/00, Hotel Cipriani SpA, established in Venice (Italy), represented initially by M. Marinoni, G.M. Roberti and F. Sciaudone, and later by G.M. Roberti, F. Sciaudone and A. Bianchini, lawyers, applicant in Case T-254/00, Società italiana per il gas SpA (Italgas), established in Turin (Italy), represented by M. Merola, C. Tesauro, M. Pappalardo and T. Ubaldi, lawyers, applicant in Case T-270/00, supported by Italian Republic, represented initially by U. Leanza, and later by I. Braguglia, acting as Agents, assisted by P. Gentili and S. Fiorentino, avvocati dello Stato, intervener in Case T-270/00, Coopservice - Servizi di fiducia Soc. coop. rl, established in Cavriago (Italy), Comitato -Venezia vuole vivere-, established in Venice, represented by A. Bianchini and A. Vianello, lawyers, applicants in Case T-277/00, v Commission of the European Communities, represented by V. Di Bucci, acting as Agent, assisted by A. Dal Ferro, lawyer, defendant, ACTION for annulment of Commission Decision 2000/394/EC of 25 November 1999 on aid to firms in Venice and Chioggia by way of relief from social security contributions under Laws Nos 30/1997 and 206/1995 (OJ 2000 L 150, p. 50), THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Sixth Chamber, Extended Composition), composed of A.W.H. Meij (Rapporteur), President, V. Vadapalas, N. Wahl, M. Prek and V. Ciuc-, Judges, Registrar: J. Palacio González, Principal Administrator, having regard to the written procedure and further to the hearing on 30 April 2008, gives the following Judgment  Background to the dispute A -  The scheme for relief from social security contributions under consideration 1         The Italian Ministerial Decree of 5 August 1994, notified to the Commission, lays down the allocation criteria for the relief from social security contributions provided for in Article 59 of the Decree of the President of the Italian Republic of 6 March 1978 setting up a special scheme for relief from social security charges owed by employers to the Istituto Nazionale de la Previdenza Sociale (-INPS-) (National Institute of Social Insurance) in the Mezzogiorno for the period between 1994 and 1996 (-the Mezzogiorno scheme-). 2         By Decision 94/455/EC of 1 March 1995 on the arrangements for reducing the social security contributions paid by firms in the Mezzogiorno and for assigning to the State some of those contributions (OJ 1995 L 265, p. 23), the Commission declared the Mezzogiorno scheme compatible with the common market, subject to certain conditions. In particular, the decision of 1 March 1995 required the Italian authorities to notify to the Commission the measures adopted for implementing the plan for the progressive dismantling of the Mezzogiorno scheme, as provided for under that decision. 3         The scheme for relief from social security contributions at issue in the present case was introduced by Italian Law No 206/1995, which extended the Mezzogiorno scheme for 1995 and 1996, and widened it to cover undertakings established on the island territory of Venice and Chioggia. Later, Italian Law No 30/1997 extended the Mezzogiorno scheme for the year 1997, and again widened it to cover undertakings established on the island territory of Venice and Chioggia. 4         Article 1 of the Ministerial Decree of 5 August 1994 provides for a general reduction in the social security contributions owed by employers. Article 2 of the decree provides for an exemption from social security contributions for net job creation in undertakings for a period of one year from the date on which an unemployed worker is taken on. 5         It can be seen from Commission Decision 2000/394/EC of 25 November 1999 on aid to firms in Venice and Chioggia by way of relief from social security contributions under Laws Nos 30/1997 and 206/1995 (OJ 2000 L 150, p. 50; -the contested decision-), that according to data supplied by INPS for the period under consideration between 1995 and 1997, the reductions in social security contributions accorded to undertakings located on the island territories of Venice and Chioggia pursuant to Article 1 of the Ministerial Decree of 5 August 1994 (-the social security reductions at issue-) amounted to an annual average of ITL 73 billion (EUR 37.7 million), shared between 1 645 undertakings. The exemptions accorded to undertakings located on the island territory of Venice and Chioggia pursuant to Article 2 of that decree (-the social security exemptions at issue-) amounted to ITL 567 million (EUR 292 831) per year, shared between 165 undertakings. B -  Administrative procedure 6         By letter dated 10 June 1997, the Italian authorities communicated the text of the abovementioned Law No 30/1997 to the Commission, in accordance with the provisions of Decision 95/455 (see paragraph 2 above). By letter of 1 July 1997, followed by a reminder dated 28 August 1997, the Commission asked for further information concerning the extension of the scope of the abovementioned scheme to undertakings located in Venice and Chioggia. 7         Since it received no reply, the Commission notified the Italian Republic by letter dated 17 December 1997 of its decision to initiate the procedure laid down in Article 88(2) EC regarding the aid provided for by Law No 206/1995 and Law No 30/1997, which extended to the island territory of Venice and Chioggia the scope of the reduction of social security contributions for the Mezzogiorno. 8         The Italian authorities suspended the scheme for relief from social security contributions under consideration (-the scheme under consideration-) with effect from 1 December 1997. 9         The decision to initiate the procedure was published in the Official Journal of the European Communities on 18 February 1998. By letter of 17 March 1998, the applicant - the Comitato -Venezia vuole vivere- (-the Committee-), an association which brings together the principal organisations of industry and commerce in Venice and which was formed following the initiation of the abovementioned formal investigation procedure in order to co-ordinate action intended to remedy the disadvantageous situation of traders located in Venice - submitted its comments and a report, accompanied by a study carried out by the Consorzio per la ricerca e la formazione (-COSES-) (Consortium for Research and Training) dated March 1998 concerning the difficulties encountered by undertakings operating in the area of the lagoon as compared with those located on the mainland. On 18 May 1998, the City of Venice also submitted comments, accompanied by an earlier study carried out by COSES on the same subject, dated February 1998. In its observations, the City of Venice explained that municipal undertakings providing public services of general economic interest were also beneficiaries of the scheme. It requested the application of Article 86(2) EC in favour of those undertakings. All of those comments were forwarded to the Italian Republic. 10       The Italian authorities notified their comments by letter dated 23 January 1999. By letter of 10 June 1999, they informed the Commission that they fully supported the comments submitted by the City of Venice. 11       By decision of 23 June 1999, the Commission gave the Italian Republic notice to provide it with all the documentation, information and data necessary to enable it to determine the role of the municipal undertakings and to assess the compatibility of the social security reductions at issue with the common market. The Italian authorities replied by letter of 27 July 1999. The Italian authorities met with the Commission-s representatives at a meeting in Brussels on 12 October 1999. C -  The contested decision 12       The Commission finds in the contested decision that the relief from social security contributions provided for by the abovementioned laws, which refer to Article 2 of the Ministerial Decree of 5 August 1994, constitutes State aid which is compatible with the common market where it is granted to firms, located in the territories of Venice and Chioggia, which are small and medium-sized enterprises (SMEs) within the meaning of the Community Guidelines on State aid for small and medium-sized enterprises (OJ 1996 C 213, p. 4), or firms located in an area eligible for a derogation under Article 87(3)(c) EC, or firms which hire groups of workers experiencing particular difficulties entering or re-entering the labour market as referred to in the Community Guidelines on aid to employment (OJ 1995 C 334, p. 4; first paragraph of Article 1 and recital 105 of the contested decision). 13       With regard to the categorisation of the scheme as State aid, the Commission states in its conclusions that it found, on the basis of its assessment of the measures considered in the contested decision (recital 110), that measures which comply with the de minimis rule do not fall within the scope of Article 87 EC except in regard to sectors covered by the ECSC Treaty, to shipbuilding, to transport, to agriculture or to fisheries, in accordance with its notice on de minimis aid (OJ 1996 C 68, p. 9). 14       Under the second paragraph of Article 1 of the contested decision, the aid provided for in Article 2 of the Ministerial Decree of 5 August 1994 is incompatible with the common market where it is granted to firms which are not SMEs and are located outside areas eligible for derogation under Article 87(3)(c) EC. 15       Under Article 2 of the contested decision, the social security reductions at issue constitute State aid which is incompatible with the common market. 16       Under Article 3 of the contested decision, the aid which the Italian Republic granted to ASPIV (Azienda servizi pubblici idraulici e vari), a municipal undertaking, and Consorzio Venezia Nuova is compatible with the common market since it qualifies for a...

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