Italy

• Author: Th. Jestaedt; J. Derenne; T. Ottervanger
• Profession: Jones Day; Lovells; Allen & Overy
• Pages: 285-347

Contenidos

• 2. Availability of procedures in Italy.
• 2. 1 Introduction: Direct applicability and supremacy of EC legislation.
• 2. 2 Application of Article 88 (3) EC by the Italian courts.
• 2.2. 1 Constitutional Court.
• 2.2. 2 Civil courts.
• 2.2. 3 Administrative courts.
• 2.2. 4 Court of Auditors.
• 2. 3 Conclusions.
• 2. 4 Research methodology.
• 2.4. 1 Sources.
• 2.4. 2 Italian key words used to research cases.
• 3. List of cases.
• 3. 1 Proceedings before the Constitutional Court ("Corte Costituzionale").
• 3.1. 1 Constitutional Court ("Corte Costituzionale"), Judgment of 4 June 2003, No. 186
• 3.1. 2 Constitutional Court ("Corte Costituzionale"), Judgment of 19 October 2001, No. 337
• 3.1. 3 Constitutional Court ("Corte Costituzionale"), Judgment of 23 March 1999, No. 85
• 3.1. 4 Constitutional Court ("Corte Costituzionale"), Judgment of 22 July 1996, No. 271
• 3.1. 5 Constitutional Court ("Corte Costituzionale"), Judgment of 29 April 1996, No. 134
• 3.1. 6 Constitutional Court ("Corte Costituzionale"), Judgment of 30 March 1995, No. 94
• 3.1. 7 Constitutional Court ("Corte Costituzionale"), Judgment of July 1969, No. 120
• 3.1. 8 Constitutional Court ("Corte Costituzionale"), Judgment of 9 April 1963, No. 49
• 3. 2 Proceedings before Civil Courts.
• 3.2. 1 Supreme Court ("Corte di Cassazione"), Judgment of 4 March 2005, No. 4769, D.S. et al. v. E.S.P.I. Ente Siciliano Promozione Industriale In Liquidazione
• 3.2. 2 Supreme Court ("Corte di Cassazione"), Judgment of 8 February 2005, No. 2534, Banca Antoniana Popolare Veneta S.c.a.r.l. v. C. Produzione Industriale S.p.A. in amministrazione straordinaria
• 3.2. 3 Supreme Court ("Corte di Cassazione"), Judgment of 21 September 2004, No. 18915, Banca Fideuram S.p.A. v. F.S. S.rl. in amministrazione straordinaria
• 3.2. 4 Supreme Court ("Corte di Cassazione"), Judgment of 16 July 2004, No. 13165, Intesa Gestione Crediti S.p.A. v. C.D.C.R. S.r.l. in amministrazione straordinaria
• 3.2. 5 Supreme Court ("Corte di Cassazione"), Judgment of 30 April 2004, No. 8319, Ministero dell'Economia e delle Finanze v. Cassa di Risparmio di Firenze S.p.A. and Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San Miniato S.p.A
• 3.2. 6 Supreme Court ("Corte di Cassazione"), Judgment of 19 March 2004, No. 5561, C. Torino S.p.A. in amministrazione straordinaria v. Banca S. Paolo Torino IMI S.p.A
• 3.2. 7 Supreme Court ("Corte di Cassazione"), Judgment of 17 December 2003, No. 19365, Ministero delle Finanze e Agenzia delle Entrate v. Fondazione Cassa di Risparmio della Spezia
• 3.2. 8 Supreme Court ("Corte di Cassazione"), Judgment of 4 April 2003, No. 5241, Comit S.p.A. v. Docks Siderurgici S.p.A. in Amministrazione Straordinaria
• 3.2. 9 Supreme Court ("Corte di Cassazione"), Judgment of 10 December 2002, No. 17564, Ministero delle Finanze v. Torrefazione Caffè Mattioni S.r.l
• 3.2. 10 Supreme Court ("Corte di Cassazione"), Judgment of 16 September 2002, No. 13470, Banca Commerciale Italiana Comit S.p.A. v. Ferdofin Siderurgica S.r.l. in amministrazione straordinaria
• 3.2. 11 Supreme Court ("Corte di Cassazione"), Judgment of 23 June 2000, No. 8539, Ditta De Filippi Leonardo v. Mario Maraldi S.p.A. in amministrazione straordinaria
• 3.2. 12 Supreme Court ("Corte di Cassazione"), Judgment of 19 April 2000, No. 5087, Fallimento Traghetti Mediterraneo S.p.A. v. Tirrenia di Navigazione S.p.A
• 3.2. 13 Supreme Court ("Corte di Cassazione"), Judgment of 11 September 1999, No. 9681, Ecotrade S.r.l. v. Altiforni Ferrieri Servola S.p.A. in amministrazione straordinaria
• 3.2. 14 Supreme Court ("Corte di Cassazione"), Judgment of 23 May 1980, No. 3397, Comafrica S.p.A. v. Smo-Società Mercantile Oltremare
• 3.2. 15 Supreme Court ("Corte di Cassazione"), Judgment of 15 April 1980, No. 2441, Amministrazione Finanze dello Stato v. Ditta Perricone e Leone
• 3.2. 16 Supreme Court ("Corte di Cassazione"), Judgment of 1 March 1979, No. 1317, Amministrazione Finanze dello Stato v. Isolabella e Figlio S.p.A
• 3.2. 17 Supreme Court ("Corte di Cassazione"), Judgment of 1 March 1979, No. 1321, Amministrazione Finanze dello Stato v. Ferraretto Giovanni F&C S.r.l
• 3.2. 18 Supreme Court ("Corte di Cassazione"), Judgment of 11 December 1978, No. 5939, Amministrazione Finanziaria dello Stato v. Oleificio S. Leonardo
• 3.2. 19 Court of Appeal of Venice ("Corte d'Appello di Venezia"), Judgment of 26 June 2003, Banca Intesa S. p.A. v. Cavirivest S.p.A. in a.s
• 3.2. 20 Court of Appeal of Turin ("Corte d'Appello di Torino"), Judgment of 23 May 2002, Berutti & C. S.r.l. v. Amm. straordinaria Infos Telematica S.p.A
• 3.2. 21 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 4 April 2002, Banca Nazionale del Lavoro v. Fedorfin Siderurgica S.r.l. in amministrazione straordinaria
• 3.2. 22 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 12 February 2002, Amm. straord. Presafin S.p.A. v Banca Monte dei Paschi di Siena S.p.A
• 3.2. 23 Court of Appeal of Milan ("Corte d'Appello di Milano"), judgment of 8 January 2002, Banca Nazionale dell'Agricoltura S. p.A. v Redaelli Tecnologie dell'Acciacio, Tecna in a.s. S.p.A
• 3.2. 24 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 24 December 2001, Cordifin S. p.A. v Ferdofin Siderurgica S.r.l. in amministrazione straordinaria
• 3.2. 25 Court of Appeal of Cagliari ("Corte d'Appello di Cagliari"), Decree of 21 July 1999, Exol S. p.A. v Nuova Cartiera di Arbatax S.p.A
• 3.2. 26 Court of Appeal of Naples ("Corte d'Appello di Napoli"), judgment of 13 July 1999, Alilauro S. p.a. v CAREMAR
• 3.2. 27 Court of First Instance of Genova ("Tribunale di Genova"), judgment of 24 September 2003, Soc. IAM Piaggio v Soc. Ismar Chimica
• 3.2. 28 Court of First Instance of Milano ("Tribunale di Milano"), judgment of 19 March 2003, Soc. coop. Fleres v Soc. International Factors Italia
• 3.2. 29 Court of First Instance of Trieste ("Tribunale di Trieste"), judgment of 3 August 2002, Soc. Altiforni Ferriere Servola
• 3.2. 30 Court of First Instance of Torino ("Tribunale di Torino"), judgment of 26 July 2001, Cons. agr. prov. Varese v Ist. Bancario S. Paolo-Imi
• 3.2. 31 Court of First Instance of Genova ("Tribunale di Genova"), judgment of 22 November 2001, Soc. IAM Rinaldo Piaggio v Dornier Luftfarth GmbH
• 3.2. 32 Court of First Instance of Piacenza ("Tribunale di Piacenza"), judgment of 17 January 2001, Soc. ind. Mandelli v Rolo Banca 1473
• 3.2. 33 Court of First Instance of Trapani ("Tribunale di Trapani"), judgment of 10 July 2000 Soc. off. meccanica navale Drepanum v Soc. cantiere navale Trapani
• 3.2. 34 Court of First Instance of Turin ("Tribunale di Torino"), judgment of 7 July 2000, Soc. Ferdofin siderurgica v Soc. Cordofin
• 3.2. 35 Court of First Intance of Genoa ("Tribunale di Genova"), judgment of 15 November 1999, Soc. Piaggio Industrie Aeronautiche v Less Costruzioni S.r.l
• 3.2. 36 Court of First Instance of Genova ("Tribunale di Genova"), ordinance of 26 April 1993, Grandi traghetti di navigazione S. p.A. v. Viamare di navigazione S.p.a. and Finmare S.p.A
• 3.2. 37 Court of First Instance of Cagliari ("Tribunale di Cagliari") judgment of 14 April 1992, Nuova Cartiera di Arbatax S. p.A
• 3.2. 38 Court of First Instance of Trento ("Tribunale di Trento"), judgment of 15 November 1980, Denkavit Italiana S. r.l. v Ministero delle Finanze
• 3. 3 Proceedings before administrative courts.
• 3.3. 1 Administrative Supreme Court ("Consiglio di Stato"), judgment of 27 October 2003, No. 6610, Soc. Coop. ASTER v Camera di Commercio di Gorizia
• 3.3. 2 Administrative Supreme Court ("Consiglio di Stato"), judgment of 16 September 2003, No. 5250, Ministero dell'Industria v Società Siderurgica Lucchini
• 3.3. 3 Administrative Supreme Court ("Consiglio di Stato"), judgment of 9 May 2003, Ministero dell'Industria, del Commercio e dell'Artigianato v Società Industrie cantieri metallurgici italiani S. p.A
• 3.3. 4 Administrative Supreme Court ("Consiglio di Stato"), judgment of 25 February 2003, No. 1029, AEM S.p.A. v Autorità Energia Elettrica e Gas
• 3.3. 5 Administrative Supreme Court ("Consiglio di Stato"), Judgment of 10 October 2002, No. 5449, Pincieri Umberto v Ministero dell'Economia e delle Finanze et a
• 3.3. 6 Administrative Supreme Court ("Consiglio di Stato"), judgment of 27 September 2002, No. 4946, Ministero delle Attività Produttive v DIANO S.p.A
• 3.3. 7 Administrative Supreme Court ("Consiglio di Stato"), judgment of 29 January 2002, No. 465, Del Verde S.p.A. v Ministero dell'Industria, del Commercio e dell'Artigianato et a
• 3.3. 8 Administrative Supreme Court ("Consiglio di Stato"), judgment of 22 January 2002, No. 360, Acciaierie Ferriere Lombarde Falck S.p.A. v Ministero dell'industria, del commercio e dell'artigianato and others
• 3.3. 9 Administrative Supreme Court ("Consiglio di Stato"), judgment of 1 April 2000, No. 1885, S.E.A. Aeroporti di Milano S.p.A. v Presidenza del Consiglio dei Ministri and others
• 3.3. 10 Administrative Supreme Court ("Consiglio di Stato"), judgment of 15 October 1996, No. 1331, Presidente del Consiglio dei Ministri et a. v. Istituto di Vigilanza Città di Pescara et a
• 3.3. 11 Administrative Supreme Court ("Consiglio di Stato"), judgment of 31 July 1991, No. 1074, Industria Farmaceutica Lucana et a. v. U.S.L. No. 11 of Pordenone
• 3.3. 12 Administrative Supreme Court ("Consiglio di Stato"), judgment of 24 January 1989, No. 30, Società cooperativa carrettieri La Rinascita et al. v. Ministero dei trasporti and others
• 3.3. 13 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment 16 July 2004, No. 6998, Liquidatore di Eurofood Ifsc Ltd and Bank of America N.A
• 3.3. 14 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment of 8 February 2003, No. 805, Fondazione Monte dei Paschi di Siena v. Ministero dell'Economia e delle Finanze
• 3.3. 15 Regional Administrative Court of Sicily, Catania ("Tribunale Amministrativo Regionale della Sicilia, Catania"), judgment of 5 July 2000, No. 1389, C.A. and others v. Assessorato Regionale Agricoltura
• 3.3. 16 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No. 2786 of 23 September 1999, Iris Biomedica V. Ministero dell'Industria Commercio e Artigianato
• 3.3. 17 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No. 2155 of 14 July 1999, Aeroporti di Milano v. Presidenza del Consiglio dei Ministri
• 3.3. 18 Regional Administrative Court of Lazio, Rome ("Tribunale Amministrativo Regionale del Lazio, Roma"), Judgment of 11 June 1990, No. 1071, Società Fonderia A. v. Ministero dell'Industria et a
• 3.3. 19 Regional Administrative Court of Veneto ("Tribunale Amministrativo Regionale del Veneto"), Judgment of 26 July 1989, No. 1102, Compagnia Oasi di Malcesine v. Region of Veneto et a
• 3.3. 20 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No. 1746 of 6 December 1988, TERNI - Soc. Per l'Industria e l'Elettricità S.p.A. v. Cassa Conguaglio per il Settore Elettrico
• 3.3. 21 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment of 17 November 1988, No. 1582, Soc. Laboratori Bruneau v. Unità Sanitaria Locale RM/24
• 3.3. 22 Regional Administrative Court of Puglia, Bari ("Tribunale Amministrativo Regionale della Puglia, Bari"), Judgment of 26 October 1988, No. 255, Società Roussel Maestretti v. U.S.L. No. 12 di Bari et a
• 3.3. 23 Regional Administrative Court of Friuli Venezia Giulia ("Tribunale Amministrativo Regionale del Friuli-Venezia-Giulia"), Judgment of 31 December 1987, No. 394, Industria farmaceutica lucana et a. v. U.S.L. No. 11 of Pordenone
• 3.3. 24 Regional Administrative Court of Tuscany ("Tribunale Amministrativo Regionale della Toscana"), Judgment of 23 October 1987, No. 1166 and Ordinance No. 1167 of 23 October 1987, Società Du Pont de Nemours Italiana v. U.S.L. No. 2 of Carrara et a
• 3.3. 25 Regional Administrative Court of Lombardia, Milan ("Tribunale Amministrativo Regionale della Lombardia, Milano"), Judgment of 2 December 1986, No. 949, Bozzi et a. v. Ente Ferrovie dello Stato - FF.SS. et a
• 3.3. 26 Regional Administrative Court of Sicily, Palermo ("Tribunale Amministrativo Regionale della Sicilia, Palermo"), Judgment of 18 November 1986, No. 875, Società Enosicilia et. a. v. Istituto regionale Vite e Vino et a
• 3.3. 27 Regional Administrative Court of Lazio, Rome ("Tribunale Amministrativo Regionale del Lazio, Roma"), Judgment of 22 January 1985, No 103, Società Cooperativa Trasporto Latte et a. v. Banca Nazionale del Lavoro
• 3. 4 Procedures before the Italian Court of Auditors ("Corte dei Conti").
• 3.4. 1 Court of Auditors ("Corte dei Conti"), Sec. controllo, Decision of 14 June 1996, No. 88, ("Ministero del Tesoro")
• 3.4. 2 Court of Auditors (Corte dei Conti), Sec. controllo, Decision of 23 Mrch 1994, No. 43, Ministero del Tesoro
• 3.4. 3 Court of Auditors (Corte dei Conti), Sec. controllo, Decision of 23 March 1994, No. 18, Ministero del Tesoro
• 3.4. 4 Court of Auditors ("Corte dei Conti"), Sec. controllo, Decision of 16 March 1993, No. 3, Ministry of the Treasury, Unione Nazionale Incremento Razze Equine (UNIRE) ed Enti Ippici
• 3.4. 5 Court of Auditors ("Corte dei Conti"), Sec. controllo, Decision of 5 November 1991, No. 105, Ministry of Defence

Page 285

2. Availability of procedures in Italy

2. 1 Introduction: Direct applicability and supremacy of EC legislation

Under Italian law, the direct applicability of EC law stems from:

(i) Article 11 of the Italian Constitution ("the European Clause"), according to which Italy agrees to limit its sovereignty to the extent necessary to adhere to international organisations aimed at ensuring peace and justice among the States, and to promote and favour the international organisations that pursue such goal;

(ii) Law No. 1203 of 14 October 1957 ("Law No. 1203/1957"), ratifying the EC Treaty; and

(iii) A series of subsequent judgments of the Constitutional Court ("Corte Costituzionale").

With its Judgment No. 170 of 8 June 1984, in the Granital case, the Constitutional Court ruled that both Article 11 of the Constitution and Law No. 1203/1957 resulted in the withdrawal of Italian sovereignty on matters entrusted to the common European institutions pursuant to the EC Treaty. The Court clarified that directly applicable EC legislation preempts conflicting national legislation and should be applied by the national courts.

The acceptance of the principle of supremacy of EC law over national law has not been unconditional: since its Judgment No. 183 of 27 December 1973, in the Frontini case, the Constitutional Court has stated that it would continue to review the exercise of power by the institutions of the EC to ensure that there is no infringement of fundamental rights or the basic principles of the Italian constitutional system. This position was confirmed and widened by the Constitutional Court in its subsequent Judgment No. 232 of 21 April 1989, in the Fragd case, where the Constitutional Court clarified that a Community measure could not be applied in Italy if it contravened a fundamental principle of the Italian Constitution on the protection of human rights, even if the ECJ had upheld the validity of the measure under EC law.

2. 2 Application of Article 88 (3) EC by the Italian courts

As clarified by the ECJ, the power of national judges to apply EC legislation on State aid is based on Article 88 (3) EC²⁵³. The obligations arising under this article are directly applicable, i.e. (i) the obligation to provide the Commission with sufficient prior notice of any plans to grant or modify State aid; and (ii) the requirement to await the Commission's final decision before enacting the proposed measure.

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Italian judges can therefore directly apply Article 88 (3) EC²⁵⁴. Besides ascertaining whether a measure constitutes State aid, they can also order recovery and payment of damages in relation to the loss suffered as a consequence of illegally granted State aid²⁵⁵.

Under Article 88 (3) EC, a violation of EC law by the State occurs whenever:

i) the State fails to notify its plans to grant or modify State aid to the Commission ("illegal aid");

ii) the State grants State aid before the end of the two-month time limit from the date of notification ("illegal aid");

iii) the State grants State aid while the Commission's procedure, pursuant to Article 88 EC, is still pending ("illegal aid");

iv) the State grants State aid irrespective of the Commission's ruling that the State aid could be incompatible with the Common Market ("unlawful aid").

In all the above circumstances, individuals showing a sufficient legal interest may commence court proceedings, before both administrative and civil courts, claiming that the State aid is illegal, request an injunction and also apply for damages.

Hereinafter are examined judgments relating to State aid issues issued by (i) the Constitutional Court (sections 3.1); (ii) the civil courts (sections 3.2); (iii) the administrative courts (sections 2.2.3 and 3.3); and (iv) the Court of Auditors (sections 2.2.4 and 3.4).

2.2. 1 Constitutional Court

One of the main tasks of the Constitutional Court in Italy is to supervise the legitimacy of legislative acts in accordance with the principles set out in the Italian Constitution. The Court must, on the one hand, verify the formal legitimacy of the acts, i.e. whether the criteria established for the enactment of legislative acts have been respected, and, on the other hand, the need to comply with the Constitution.

Not only are laws subject to the jurisdiction of the Constitutional Court, but also all those legislative acts which have the same legal value as a law, such as legislative decrees, law decrees and laws issued by the regions. On the contrary, all acts which are subject to compliance with the above mentioned legislation are assessed by the national courts.

Proceedings concerning State aid can be initiated before the Constitutional Court if the measure conflicts with constitutional principles. This might be the case, for instance, with aPage 287 legislative measure granting benefits to some undertakings or products, thus infringing the principle of the equality of all citizens under Article 3 of the Constitution.

In relation to compliance of a legislative act with the Constitution, two kinds of proceedings can be initiated before the court. They differ in respect of the legitimacy to commence proceedings:

(i) first, when the party challenging the lawfulness of a legislative act is the Italian government or a region. Only these bodies are entitled to refer an issue to the court concerning the question of whether an act complies with the Constitution notwithstanding the effective application of that act to a particular case. This kind of referral might be seen as reciprocal monitoring between the Italian government and the regions, since the former can seek a declaration of the constitutional invalidity of regional acts while the latter may raise a constitutional question in relation to national measures or laws issued by other regions.

(ii) secondly, the "incidental procedure" allows ordinary or administrative judges to refer questions to the Constitutional Court where, in their opinion, there is a doubt about the compliance with the Constitution of an act that should be applied in the proceedings pending before them. In other words, where, during the proceedings, a legislative act should be applied but the judge, at the parties' suggestion or of its own motion, considers the possibility of non-compliance of that act, the issue can be referred to the Constitutional Court. Therefore, private parties are not entitled to refer an issue of constitutional validity to the Constitutional Court without a judicial authority acting as intermediary. Once a referral to the Constitutional Court has been made, the proceedings, i.e. before an ordinary or administrative court, will be suspended until the Constitutional Court has ruled on the lawfulness of the act concerned.

Should the State aid granted by the legislative measure that is subject to the assessment of the Constitutional Court be considered unconstitutional, it can no longer be applied. The decision of the Constitutional Court is of general effect both in the case of a direct referral, from the State or a region, and in the case of a preliminary ruling.

The direct procedure, as it is shown in section 3.1 below, has been more widely used than the first one in relation to State aid. In particular, there have been eight relevant cases before the Constitutional Court, all of which were commenced by the Italian government or the regions.

Almost all of them (see sections 3.1.1 to 3.1.8) had as their object the alleged violation of Article 88 EC and, consequently, Article 11 of the Italian Constitution. One case addressed the question of the constitutionality of the legal standing of Italian public authorities to submit notifications to the Commission under Article 88 (2) EC (see sections 3.1.1 below).

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2.2.1.1. Actions contesting the legality of State aid

In three cases, the claim was upheld (see sections 3.1.3; 3.1.7 and 3.1.8 below). In particular, the Constitutional Court stressed that in order for an act granting State aid to undertakings to be valid from a constitutional point of view, it must be adopted in full compliance with the procedure under Article 88 EC (see section 3.1.7) below²⁵⁶.

The Constitutional Court has also analysed, on several occasions, the relationship between Italian national laws and regional laws concerning State aid. All these relevant decisions were sought by the State filing a petition against Sicily (see section 3.1 below)²⁵⁷. In one of the judgments (No. 49/1963, see section 3.1.8 below) regarding State aid to Sicily, the Constitutional Court declared that a Sicilian regional law of January 1962 enacting measures in favour of shipping companies was in breach of the Constitution. Although the Italian government had notified the regional measure to the Commission under Article 93 (3) EC, Sicily implemented the program without awaiting the Commission's decision and pending a request for information from the Commission. The Constitutional Court thus established a fundamental principle regarding conflicts between the State and the regions. The Constitutional Court stated that, although Italian regions are not bound by international treaties, such as that establishing the European Communities, nevertheless, since both State aid granted by a region or the State implies the State's sole responsibility vis-à-vis the European institutions, a regional law granting illegal aid is unlawful even though the regional statute (i.e. the regional "constitutional law") does not provide for limitations similar to those set forth in Article 88 EC. The implementation of the aid scheme by the Sicilian Regional Parliament ("Assemblea Regionale Siciliana") was thus declared unlawful, being in conflict with the Italian Constitution, and in particular with Article 5 which regulates the relationship between the State and the Italian regions. A similar reasoning was followed in Judgment No. 120/1969 (see section 3.1.7 below).

Judgments No. 94/1995 (see section 3.1.6 below) and No. 271/1996 (see section 3.1.4 below) concerned the violation of Article 93 EC and, consequently, of Article 11 of the Constitution ("the European clause"). However, in both cases, the relevant regional acts were declared to be in compliance with the Constitution. In its Judgment No. 94/1995, the Constitutional Court ruled that simple modifications to laws granting State aid were not subject to the formal procedure under Article 93 EC, and that an informal communication to the Commission was sufficient.

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With reference to Articles 87 and 88 EC, the Constitutional Court stated that irrespective of the fact they were entitled to interpret laws - as are judicial and administrative authorities - all judicial and administrative bodies in the Italian court system entitled to enforce laws were also legally entitled to deny enforcement of national rules which are incompatible with the provisions of the EC Treaty²⁵⁸. In Judgment No. 271/1996 (see section 3.1.4 below), the Constitutional Court held that regional laws did not necessarily have to contain specific clauses making their effect conditional upon Commission approval.

No new principles were introduced with Judgments No. 337/2001, No. 85/1999 and No. 134/1996 (see respectively sections 3.1.1; 3.1.3 and 3.1.5 below).

2.2. 2 Civil courts

Proceedings between private parties are governed by the Italian Code of Civil Procedure and, in part, by the Italian Civil Code. The ultimate arbiter is the Supreme Court ("Corte di Cassazione"), which is only competent in respect of questions of law.

Civil courts have jurisdiction over actions brought by private parties against (i) other private parties; and (ii) the Administration, as long as proceedings are not aimed at the annulment of administrative acts.

There are several civil court decisions concerning State aid. The majority of them dealt with the compatibility of recovery actions with the Common Market under the Prodi Law (see section 2.2.2.2) below. The direct effect of EC State aid law and Commission decisions was also addressed (see section 2.2.2.1 and 2.2.2.4 below).

There have been no actions for damages from the State (see section 2.2.2.4 below), while those few cases brought by competitors against alleged beneficiaries of illegal/unlawful State aid have all been dismissed (see section 2.2.2.5 below).

2.2.2.1. Actions contesting the legality of State aid

In its Judgment No. 5241/2003 (see section 3.2.8 below), the Supreme Court recalled the principle according to which national courts cannot implement State aid unless it has been declared compatible with the Common Market by the Commission, clarifying that Commission decisions are binding on Member States and all institutions of the Member State. Should national courts doubt the validity of the decision of the Commission, they can (or must, if they are courts of last instance) refer the matter to the ECJ under Article 234 EC (see also, in this regard, Judgment No.8319/2004, section 3.2.5 below).

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On a number of occasions, civil courts expressly recognised, with certain limitations, that the compatibility of a national measure with EC State aid rules could be assessed ex officio²⁵⁹ The contrary view was taken by the Court of Appeal of Milan in a judgment of 8 January 2002 (see section 3.2.23 below). In its previous Judgment No. 5939 of 11 December 1978, (see section 3.2.18 below), the Supreme Court had held that it is the claimant's duty, when claiming a violation of Article 93 EC, to support the claim with evidence.

2.2.2.2. Actions contesting the legality of measures under the Prodi Law

A number of decisions have as their object the compatibility with the Common Market of a number of measures under the Prodi Law. The Supreme Court, in accordance with EC case law, held in its Judgment No. 18915/2004 (see section 3.2.3 below) that a system derogating from ordinary law relating to insolvency is to be regarded as resulting in the grant of State aid only to the extent that it differs from the ordinary insolvency rules.

The Supreme Court also clarified - in its Judgments No. 2534/2005, No. 13165/2004, No. 5561/2004, No. 5241/2003 and No. 9681/1999 (see sections 3.2.2, 3.2.4, 3.2.6, 3.2.8 and 3.2.13 below) - that it is not the Prodi Law in its entirety, but only specific measures adopted within its framework that amount to granting State aid.

The same conclusions were drawn by the Court of Appeal of Turin²⁶⁰, by the Court of First Instance of Genoa²⁶¹, by the Court of First Instance of Milan²⁶², by the Court of First Instance of Trieste²⁶³, by the Court of First Instance of Piacenza²⁶⁴, and by the Court of First Instance of Trapani²⁶⁵.

Conversely, the Court of Appeal of Venice²⁶⁶ claimed that the Prodi Law, rather than single provisions included therein, was incompatible with EC law and should therefore not be applied by the national courts. The Court of First Instance of Genoa²⁶⁷ stated that the Prodi Law did amount to State aid. In its judgment of 15 November 1999 (see section 3.2.35 below) that the Court of First Instance of Genoa also clarified that the Prodi Law could not be enforced by the national courts since it was illegal.

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Finally, the Court of First Instance of Turin²⁶⁸ stated that those provisions of the Insolvency Law ("Legge Fallimentare") having a content similar to that of the Prodi Law must be deemed to breach the EC Treaty provisions on State aid.

Regarding the so-called "second Prodi Law" (Legislative Decree No. 270/99), the Supreme Court has now clarified that actions for revocation under such a procedure are not in breach of EC State aid provisions (Judgment No. 8539/2000, see section 3.2.11 below).

2.2.2.3. Enforcement of negative Commission's decisions

In its Judgment No. 17564/2002 (see section 3.2.9 below) the Supreme Court expressly recognized, for the first time, the direct effect of a negative decision of the Commission under Article 88 (2) EC remarking that, besides the State's duty to adopt all necessary means to abrogate national legislative measures that are incompatible with the Common Market, all national authorities (including judicial ones) are bound by Commission decisions adopted under Article 88 (2) EC. Failing State intervention to abrogate the legislative measure which granted the aid, the Supreme Court stated that the Commission decision under Article 88 (2) EC had direct effect, since it was sufficiently clear and precise, unconditional, and did not confer on the Italian government discretional powers in its implementation. The Supreme Court further specified that it was not necessary for the decision to be final in order to have direct effect. Should the decision not be final and should the national court doubt its validity, then the national court can refer the matter to the ECJ under Article 234 EC. This case law was subsequently affirmed by Judgment No. 4769/2005 (see section 3.2.1 below).

2.2.2.4. Actions for liability and/or damages from the State

Competitors that suffer loss arising from the granting of illegal aid may, in principle, commence court proceedings before the civil courts under Article 2043 of the Italian Civil Code, which provides for compensation for liability in tort.

In particular, the liability of the State and, thus, the possibility for a third party to be entitled to compensation, depends on the existence of:

* damage to the claimant, that could be represented by the anti-competitive effect resulting from the aid. The fact that one or more undertakings have benefited from the aid would constitute damage to their competitors;

* "injustice" of the damage, i.e. the fact that the damage was not caused directly or indirectly by the negligence or by a voluntary act on the part of the claimant;

* wilful or negligent behaviour on the part of the State; andPage 292 a causal link between the damage sustained by the third party and the unlawful behaviour on the part of the State.

However, no relevant cases have been found in this regard.

2.2.2.5. Competitors' actions for liability of and/or damages from the beneficiary and interim measures

There are only three published cases (see sections 3.2.12, 3.2.26 and 3.2.36 below) where competitors brought a civil action in order to stop the granting of alleged State aid to competitors, claiming unfair competition under Article 2598 of the Italian Civil Code. All claims were lodged by companies active in the sector of sea transportation.

If appropriate, interim measures can be requested before the civil courts under Articles 669 bis et seq. of the Italian Code of Civil Procedure (see Part II, section 7.1.3). The use of interim measures is subject to two essential conditions: (i) there must be a risk of imminent damage in respect of the contested right ("periculum in mora"); and (ii) there must be a prima facie case ("fumus boni iuris"). In the case set out at section 3.2.36 interim measures were also requested by the claimant.

However, all claims were dismissed by the competent courts.

In another case (see section 3.2.14 below) a company lodged an action claiming that a competitor had infringed Article 87 EC and requesting damages for loss suffered due to unfair competition. The case was brought directly before the Supreme Court pursuant to Article 41 of the Italian Code of Civil Procedure (i.e. proceedings to determine jurisdiction under Article 41 of the Italian Code of Civil procedure). The Supreme Court recognised the jurisdiction of the Italian courts but did not pronounce itself on the merits.

2.2.2.6. Legal standing

In its judgment of 13 July 1999 (see section 3.2.25 below), the Court of Appeal of Cagliari stated that any legal person or entity which is not directly affected by a Commission decision is not entitled to have standing to enforce the decision, even if that legal person or entity has a material interest that coincides with the interest underlying the Commission decision. The Court of First Instance of Genoa²⁶⁹ stated, obiter dicta, that the grant of illegal aid constitutes a violation of the national rules on unfair competition by both the State and the beneficiary of the State aid.

Singularly, the Court of Appeal of Naples, in its judgment of 13 July 1999 (see section 3.2.26 below) stated that, (i) in the event that a claim under Article 82 is pending before the Commission, the national judge is not obliged to stay the proceedings in relation to a claim for breach of Article 88 (3) EC; (ii) in accordance with Article 15 of Law No. 287 of 10Page 293 October 1990 (i.e. the Italian Antitrust Law), the suspension of the State aid is a measure which may only be adopted by the Italian Antitrust Authority ("Autorità Garante della Concorrenza e del Mercato").

2.2.2.7. Recovery

No published case law has been found in this regard. In principle, should a company refuse to refund sums provided to it as State aid, the State may (i) seek a payment order ("decreto ingiuntivo"); or, alternatively, (ii) bring ordinary proceedings before the competent civil court.

(1) Payment order ("procedimento di ingiunzione")

A procedure for a payment order allows the State to obtain, from the court, a payment order that can be enforced against the beneficiary (i.e. the defendant). This remedy is available only in relation to claims for payment of undisputed sums of money when performance of the obligation is overdue.

In order to obtain a payment order, the State can lodge an ex parte action, stating the exact amount claimed and providing the competent court with written evidence supporting the claim, pursuant to Article 633 of the Italian Code of Civil Procedure. Moreover, pursuant to Article 635 of the Italian Code of Civil Procedure, the Administration's mandatory books or registers, duly completed and signed by an authorised officer or a notary public, could be used as written evidence supporting the State's claim.

Both the order and the application must be served on the defendant. Service of the application marks the start of the proceedings. Having served the order, the defendant may oppose the order during the period set out in Article 641 of the Italian Code of Civil Procedure concerning voluntary compliance (i.e. usually 40 days). In principle, the order is not enforceable without further authorisation from the court, which is usually given on application by the claimant when the period for opposing the order has expired. However, on application by the claimant, the order may be made enforceable on an interim basis where the debt is based on a bill of exchange, a banker's draft, a cheque, a certificate of stock market liquidation (in cases where a stockbroker has become insolvent) or an instrument acknowledged before a notary public or other authorised public officer (Article 642 (1) of the Italian Code of Civil Procedure). The competent court may also make the order enforceable on an interim basis if delay would give rise to a risk of serious harm to the claimant (Article 642 (2) of the Italian Code of Civil Procedure).

If the beneficiary opposes the payment order within the prescribed time limit, the ordinary inter partes civil procedure will be followed (Article 645 of the Italian Code of Civil Procedure), in which case the claimant will be able to satisfy its claim only if and when a favourable judgment is obtained in the main proceedings.

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If the order is not opposed, enforcement proceedings could be commenced approximately two to three months from the filing of the initial application. Where the action is unopposed, the competent court will declare the order enforceable, simply on application by the claimant.

Should the court refuse to grant a payment order, considering that the application discloses no reasonable grounds, the State may bring an ordinary action against the beneficiary. Pending the ordinary proceedings, the claimant could request the judge to grant a payment order (i) relating to any undisputed sums - pursuant to Article 186 bis of the Italian Code of Civil Procedure; or (ii) when the requirements set out in Article 633 of the Italian Code of Civil Procedure are met - pursuant to Article 186 ter of the Italian Code of Civil Procedure.

(2) Ordinary proceedings

In principle, where State aid has been granted by contract, the action brought by the State could be based on the alleged nullity of the contract. Under Article 1418 of the Italian Civil Code, a contract is void when it breaches mandatory rules, unless Italian law provides otherwise. In this respect, pursuant to Italian doctrine and case law, mandatory rules are those aiming to protect a public interest, which therefore cannot be amended by means of an agreement.

A void contract is totally ineffective as of the date it is entered into by the parties. Therefore, contractual performances carried out pursuant to it must be "returned" in order to restore the situation existing before execution. In particular, a party that made an "undue payment" is entitled to restitution of the sums paid (plus interest thereon). Italian case law has specified that any payments made pursuant to an agreement that is subsequently found to be contrary to mandatory rules (and therefore, null and void) must be considered as "undue".²⁷⁰

Italian law also provides for an action for unjust enrichment ("arricchimento senza causa"). Such an action may be brought if the following three conditions are met: (i) enrichment of an individual or entity to the detriment of another; (ii) the enrichment cannot be justified; and (c) no other action can be brought by the injured party in order to obtain compensation for the damage sustained.

2.2. 3 Administrative courts

It is common practice for the Administration to grant or deny State aid by means of an administrative act ("atto amministrativo") in compliance with a statute. Accordingly, when State aid is denied to an individual or a company, although it believes to be entitled to it, such individual or company would usually lodge an administrative claim ("ricorso gerarchico") with the agency denying the aid. If the agency, or the authority supervising it, decides that the claim should be rejected, the parties may file a claim before a regional administrative court ("tribunale amministrativo regionale", "TAR") asking for the annulment of the negative act.

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Subsequently, the TAR judgment may be challenged by lodging an appeal with the Administrative Supreme Court ("Consiglio di Stato"). The claimant may claim that the administrative act is unlawful and, consequently, infringes its legitimate interests. Administrative courts may grant interim measures and may annul administrative acts, which are then declared illegal.

- Legal Standing

In order to be eligible to challenge an administrative act the claimant must have a current and specific interest in that act, i.e. it must cause prejudice to the claimant. The claimant must summon the public authority concerned (i.e. the defendant) to court as well as those parties if any, which would be directly and negatively affected by a judgment in the claimant's favour ("counter-interested parties"). The parties involved in proceedings before the administrative courts are therefore the claimant (i.e. the party challenging an administrative act), the defendant (which is the public body that enacted the administrative act which is challenged by the claimant), and the counter-interested parties (i.e. the parties that would be directly and negatively affected by a judgment in favour of the claimant). Any other person claiming to have an interest of fact in the proceedings (on the claimant's or on the defendant's side) may participate in the proceedings by filing an application to intervene in the proceedings in order to support the claimant or the defendant (by filing a defence, documents etc.).

- Suspension orders

When an appeal is filed against an administrative act, the latter keeps its effectiveness until it is eventually declared null and void by the court by means of a final decision. In order to obtain the suspension of the effectiveness of the challenged administrative act during the course of the proceedings before TAR, the claimant must file an ad interim, or cautionary, application, alleging a risk of serious and irrecoverable harm which the contested administrative act could cause to the claimant's interests during the proceedings and before final judgment is given. The application is usually aimed at obtaining a stay of execution of the administrative act in order to temporarily stay its effects. The ad interim application cannot be filed prior to the main petition. It is usually filed together with the petition, or it may be filed thereafter. The administrative courts deal with ad interim applications in the ordinary case pending before them. The ad interim application for a stay of execution is discussed in a single hearing ("camera di consiglio"), which must be held immediately after the filing of the application (usually within 15 to 20 days from the filing of the application). The parties may file a defence and documents, and may attend the hearing (which is held privately).

Both the defendant and the other interested parties have the opportunity to contest the claimant's claim of serious imminent harm in their defence and then orally by participating in the hearing. The court's judgment issuing an order, allowing or rejecting the application is generally published the day after the hearing. The court may issue an order allowing the application where (i) there is a prima facie case ("fumus boni juris"); and (ii) if the claimantPage 296 proves that there is a risk of "imminent danger" in respect of the contested right ("periculum in mora"). Orders allowing ad interim applications are not easily granted, although they are not regarded as extraordinary relief. It may happen that, at the hearing of the ad interim application, the claimant and/or the other parties try to convince the administrative court that it would be better (for instance, due to the complexity of the case) to fix an urgent hearing date for the discussion of the merits of the case, instead of discussing the ad interim application. The president of the court (taking into account, for instance, the importance of the case, the reasons for the urgency and the workload of the court) will sometimes indicate a possible early date for a hearing on the merits of the case to the parties. If the claimant waives its application for ad interim measures, the president will fix a date for a hearing on the merits. The typical effect of an order allowing the application is a stay of execution ("suspension of the effect") of the contested administrative measure until a decision on the merits of the case is rendered. The order may also be a mandatory or prohibitory injunction. Sometimes, the order also sets the date for the hearing on the merits of the case. The order may be appealed to the Consiglio di Stato.

- Damages

Regional administrative courts have recently been granted - by Article 7 of Law No. 205 of July 2000, which amended Article 33 of Law No. 1043 of 6 December 1971 - the power to order the Public Administration to compensate the claimant for the harm suffered as a result of an illegitimate administrative act, provided that the claimant is able to prove the harm suffered and to quantify damages. This power can, however, be exercised by regional administrative courts only in the specific areas of law laid down by Article 33 of Law No. 1043/1971, which does not include State aid. It cannot be excluded, however, that an extensive interpretation of Article 33 of Law No. 1034/1971, as amended by Article 7 of Law No. 205/2000, may bring State aid within the scope of the above-mentioned power of regional administrative courts.

- Recovery

No specific legislation exists in Italy regulating the procedure by which public entities may enforce negative Commission decisions and recovery obligations, nor is there a central body having responsibility for coordinating the implementation of negative Commission decisions. While the first point of call for the Commission is the Permanent Representation of Italy to the EU, which liaises with the presidency of the Council of Ministers, it is the duty of the authorities that have granted the State aid to take all appropriate actions provided for under national law in order to achieve immediate and effective enforcement of Commission decisions.

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A variety of instruments have been used by the Italian authorities for recovery purposes. Legislation has been adopted where the effects of the State aid were widespread and general and, in general, any time that State aid has been granted through legislative measures.

Conversely, ad hoc measures and administrative acts have been employed when the aid has not had a general effect. Such administrative acts are issued in accordance with administrative procedures that are characterised by the participation of the beneficiary in the proceedings. When the procedure for the recovery of State aid implies the issuance of administrative acts, the beneficiary may appeal to the administrative courts against any such act, namely the regional administrative courts ("tribunali amministrativi regionali" or "TAR"), in the first instance, and the Administrative Supreme Court ("Consiglio di Stato") as a court of appeal where appropriate, in order to have the administrative act declared null and void.

2.2.3.1. Actions against refusal of State aid

Most of the decisions before the administrative courts are commenced by petitions filed by companies that were denied State aid following a negative decision of the Commission (see sections 3.3.3, 3.3.5, 3.3.6, 3.3.7, 3.3.8, 3.3.11, 3.3.12, 3.3.13, 3.3.14, 3.3.18, 3.3.19, 3.3.23, 3.3.25, 3.3.26, 3.3.27 below).

Regional administrative courts have confirmed the legitimacy of the refusal of State aid even in cases where companies had concluded civil contracts in the legitimate expectation of receiving aid from the State (see Judgment No. 103/1985, section 3.3.27 below). The Consiglio di Stato also clarified that administrative authorities enjoy a high degree of discretion, within a scheme approved by the Commission, in calculating the amount of State aid to be granted to eligible undertakings (see Judgment No. 5549/2002, section 3.3.5 below) and that the granting of aid is not an act imposed by law but rather a prerogative of the State (see Judgment No. 360/2002, section 3.3.8 below). The Consiglio di Stato recently clarified that some types of State aid may be compatible with the Common Market and that it is for the European institutions to assess their compatibility under Article 93 EC (see Judgment No. 6610/2003, section 3.3.1 below).

2.2.3.2. Enforcement of negative Commission decisions

Administrative courts, and, first and foremost, the Regional Administrative Court of Lazio have expressly stated that State aid granted under a provision of national law will be permissible only if express prior authorisation of the Commission is obtained and that the proposed beneficiary cannot claim the State aid if the relevant authorisation is denied by the Commission²⁷¹. The Regional Administrative Court of Lazio has upheld this principle since 1990, reversing an opposing view adopted in the past by the Consiglio di Stato and somePage 298 regional administrative courts, according to which Commission decisions on State aid were not directly applicable²⁷².

The Consiglio di Stato has changed its approach since then, having recognised the direct effect of Commission decisions. The Consiglio di Stato has clearly stated²⁷³ that Commission decisions "shall be binding in [their] entirety upon those to whom [they are] addressed" and that these decisions are directly effective without being implemented by Italian legislation. This is confirmed, in the view of the Consiglio di Stato, by the fact that the EC system provides for the beneficiary's right to appeal Commission decisions. Finally, the Consiglio di Stato has noted that it would be inconsistent for a State to grant an aid that must then be recovered under EC law. The Consiglio di Stato has also expressly clarified that, in the absence of specific authorisation by the Commission, State aid cannot be granted²⁷⁴.

A further issue addressed by the administrative courts concerned the type of legal act necessary to revoke a State aid once the Commission has denied approval. In 1990, the Administrative Court of Lazio (section 3.3.18) confirmed a previous decision of 1985 (section 3.3.27) stating that, should the Commission decide that aid to a specific industry pursuant to an Italian scheme is incompatible with the Common Market, all administrative bodies must halt the application of the scheme despite the existence of contrary national legislation that has not yet been repealed. It is worth noting that the Consiglio di Stato had adopted a different approach in its previous decision, requiring modification of the legislation prior to corresponding modification of the administrative act.²⁷⁵ More recent case law by the Consiglio di Stato corrected this position, as explained above.

A further issue concerned the relevant date of refusal. Case law has confirmed the validity of the principles of tempus regit actum and non-retroactivity. In particular, administrative courts have ruled that public tender procedures reserving a certain percentage of supply to companies based in southern Italy were compatible with the Common Market if announced before the Commission decision declaring them to be in breach of Article 92 EC has been issued (see section 3.3.22 below). In this regard, it has also been stated that the act of denial takes effect as of the enactment of the new law changing the rules (see section 3.3.26 below).

2.2.3.3. Actions contesting the legality of the aid

As regards the merits, the decisions are limited to inquiries into procedural compliance by State or regional authorities granting State aid. In five cases (sections 3.3.9, 3.3.13, 3.3.14, 3.3.19 and 3.3.25) the regional administrative courts attempted to ascertain whether the behaviour of public authorities could be deemed to result in the granting of State aid under Article 92 EC. In all cases the answer was negative.

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In particular, the Regional Administrative Court of Lazio has affirmed the compatibility of Legislative Decree No. 347 of 23 December 2003 with EC provisions on State aid, which introduces urgent measures for the restructuring of large insolvent undertakings (see section 3.3.13 below) and, also, the taxation regime established by the Italian law on banking foundations, i.e. Ministerial Decree No. 217 of 2 August 2002 (see section 3.3.14 below). The Regional Administrative Court of Veneto has held that regional aid granted to a hotel could be justified on the grounds that it was restricted to a particular territory and context (see section 3.3.19 below).

The Consiglio di Stato also addressed the issue of privatisation and took a position which is line with EC case law and Commission decisions, clarifying that the privatisation of a publicly owned company does not imply that State aid within the meaning of Article 87 (1) EC has been granted, where (i) the company is sold by a competitive tender that is open, transparent and unconditional, or an equivalent procedure; (ii) the company is sold to the highest bidder; and (iii) bidders have enough time and information to carry out a proper valuation of the assets on which to base their bids (see section 3.3.9 below).

Finally, national courts seem to be willing to refer a case to the ECJ for a preliminary ruling under Article 234 EC, if appropriate. A question was referred by the Consiglio di Stato in order to obtain a preliminary ruling on whether a certain regime adopted by the Electricity and Gas Authority amounted to State aid (see section 3.3.4 below). Requests for a preliminary ruling were also lodged in cases 3.2.5 on tax benefits, 3.2.13 on the interpretation of the Prodi Law as well as 3.3.21 and 3.3.24 on public procurement procedures.

2.2.3.4. Competitors' actions against Member State and interim measures

Only a limited number of decisions (see section 3.3.22 to 3.3.24 below) were the result of a complaint lodged by competitors. They all dealt with public procurement procedures reserved for companies based in Southern Italy. The claimants claimed that such procedures were in breach of Article 92 EC, since they provided State aid to their competitors. However, none of the proceedings were successful. In one case, the judge stated that individuals are not entitled to request that national courts ascertain the compatibility of State aid with EC law (see section 3.3.23 below); in another case, the competent court suspended the procedure and made a reference for a preliminary ruling to the ECJ (see section 3.3.24 below). In the third case, the judge considered that the Commission decision on the unlawfulness of the measures could not take precedence over the principle of non-retroactivity (see section 3.3.22 below).

As to the possibility of requesting interim measures, although there is no case law in this regard, it is worth noting that, should State aid be granted by an administrative act, competitors may appeal to the competent regional administrative court in order to obtain the suspension of the measure (see Part II, section 5.1.3 below).

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2.2. 4 Court of Auditors

Once an administrative court has declared the act granting State aid illegal, the parties can also bring a petition to the Court of Auditors ("Corte dei Conti") to enforce the obligation imposed on the beneficiaries to repay the illegal aid. In a number of cases (section 3.4.5 below), the Court of Auditors has pronounced itself on State aid related matters.

The Court of Auditors is a body that is independent from the State and also acts as a judicial body competent to carry out State accounting. Its competences are listed in Article 100 (2) of the Italian Constitution, according to which "the Court of Auditors will exercise formal legal control on the Government's acts before their enactment. It will exercise control over the State budget after its adoption. It will be competent, with other bodies, to control the financial accounting books of bodies normally financed by the State. It will be obliged to present a final report to the Parliament concerning its control". The Court of Auditors is entrusted with three main types of external audit, which can be identified as follows: (i) a priori compliance audit of acts; (ii) a posteriori audit on management as an indicator of the effectiveness, efficiency and the economic character of the administrative action; and (iii) an economic and financial audit with a view to reporting to the elective assemblies.

In addition to its auditing functions, the Court of Auditors also has jurisdictional functions in matters of public accounting and other matters laid down by law. Article 103 of the Italian Constitution gives the Court of Auditors exclusive jurisdiction in "matters of public accounting", which means that the Court of Auditors has jurisdiction over accounting agents, public administrators and executives, with regard to all issues that concern the management of public resources (in the broad sense). Jurisdiction in matters of public accounting also covers judgements on the administrative and accounting liability of executives and public administrators for damage caused in the exercise of their functions²⁷⁶.

2. 3 Conclusions

An examination of published case law testifies to the, overall, correct application of EC State aid rules by Italian courts, especially in more recent cases. The length of judicial proceedings before both civil and administrative courts, however, remains one of the main obstacles to effective application of EC State aid rules.

It is worth noting that both the Consiglio di Stato and the Supreme Court have expressly and definitely recognised that Commission decisions have direct effect. The Supreme Court has also repeatedly accepted the principles according to which (i) national courts can enforce State aid only if the aid has been declared compatible with the Common Market by thePage 301 Commission, and (ii) Commission decisions are binding on Member States as well as all national institutions.

The majority of civil court decisions relate to the interpretation of the Law No. 95 of 3 April 1979, providing for special treatment of large insolvent undertakings ("the Prodi Law"), following the judgments of the ECJ in Ecotrade²⁷⁷ and Piaggio²⁷⁸ and the decision of the Commission of 16 May 2000, declaring the Prodi Law incompatible with the Common Market²⁷⁹.

Recourse to litigation for the enforcement of negative Commission decisions as well as actions for recovery of illegal State aid have been, on the contrary, negligible in Italy to date. Published case law shows that no actions before civil courts have been brought by public authorities to recover illegal and/or unlawful aid.

As to civil actions brought by competitors in order to stop the granting of alleged State aid, there are only three published cases. All claims were lodged by companies active in the sector of sea transportation and based on unfair competition under Article 2598 of the Italian Civil Code.

Recovery issues in proceedings before administrative courts have been marginal, too. Most decisions before the administrative courts are commenced by petitions filed by companies that were denied State aid following a negative decision of the Commission.

Finally, only a limited number of decisions were the result of a complaint lodged by competitors before administrative courts. They all dealt with public procurement procedures reserved for companies based in Southern Italy.

2. 4 Research methodology

2.4. 1 Sources

- CD ROM Opere Iuris Data, Giuffrè Editore S.p.A.;

- CD ROM Il Foro Italiano, Repertorio 1981-2005;

- CD ROM Infoutet, Legislazione e Giurisprudenza;

- Association of the Councils of State and Supreme Administrative Jurisdictions of the European Union i.n.p.a: database in French with decisions by national administrative courts applying EC law;Page 302

- http://193.191.217.21/fr/jurisprudence/jurisprudence_fr.lasso; or

- http://www.raadvst-consetat.be/Juradmin/home.html (website of the Belgian Conseil d'Etat).

2.4. 2 Italian key words used to research cases

- aiuto di stato

- regimi di aiuti

- articolo 87 CE

- articolo 88 CE

- articolo 92 CE

- articolo 93 CE

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3. List of cases

3. 1 Proceedings before the Constitutional Court ("Corte Costituzionale")

3.1. 1 Constitutional Court ("Corte Costituzionale"), Judgment of 4 June 2003, No 186

The Constitutional Court declared a question relating to the constitutionality of the legal standing of Italian public authorities to submit notifications to the Commission under Article 88 (3) EC inadmissible.

Facts and legal issues: The Province of Trento sought a declaration of constitutional invalidity in respect of the provision contained in Article 2 (10) of Law No. 499/1999, according to which State aid schemes granted to the agricultural and food industry and contained in the programmatic document created by the above law ("Documento

Programmatico Agroalimentare") had to be notified by the Italian government to the Commission under Article 88 EC. The Province of Trento contended that it was competent to notify such State aid to the Commission and, thus, State filings were not required.

Decision: The Constitutional Court declared the complaint inadmissible. It did not pronounce itself on the issue concerning the necessity and/or opportunity for the State to notify State aid under Article 88 (3) EC, observing that the State's filings (i) do not frustrate possible previous filings by the Province; and (ii) in any case, do not breach any constitutional right of the Province itself.

3.1. 2 Constitutional Court ("Corte Costituzionale"), Judgment of 19 October 2001, No 337

In October 2001, the Constitutional Court dismissed a claim questioning the constitutional validity of Law No. 448 of 23 December 1998, which granted certain tax benefits to undertakings based in Southern Italy ("Law No. 448").

Facts and legal issues: The Region of Lombardia challenged the validity of a number of provisions of Law No. 448, also under Articles 92 and 93 EC and, consequently, Article 10 of the Italian Constitution.

Decision: The Constitutional Court declared the question of the compatibility of Law No. 448 with Articles 92 and 93 EC and, consequently, Article 11 of the Italian Constitution (rather than Article 10, as erroneously pointed out by the Region of Lombardia) inadmissible, as it was time-barred. The Court noted in passing that the State aid had been declared compatible with the Common Market by the Commission.

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3.1. 3 Constitutional Court ("Corte Costituzionale"), Judgment of 23 March 1999, No 85

In March 1999, the Constitutional Court declared that the Regional Law of Abruzzi of 11 June 1997 ("the Abruzzi Law") infringed Article 10 of the Italian Constitution.

Facts and legal issues: The President of the Council of Ministers claimed that the Abruzzi Law, which granted aid to cooperatives active in the fishery sector, was in breach of Article 92 EC and thus of Article 10 of the Italian Constitution. In the Abruzzi Law, the aid to be granted to the fishing sector was qualified and treated as de minimis, therefore not triggering the notification requirement provided for by Article 93 EC.

Decision: That provision of the Abruzzi Law was found to infringe the EC Treaty, since the de minimis exemption did not apply to the fishing sector. Consequently, the Abruzzi Law also breached Article 11 (rather than Article 10, as erroneously pointed out by the President of the Council of Ministers) of the Italian Constitution, which permits such limitations on sovereignty as are necessary for an organisation ensuring peace and justice among nations and promoting international organisations that pursue such ends.

3.1. 4 Constitutional Court ("Corte Costituzionale"), Judgment of 22 July 1996, No 271

The Constitutional Court ruled that a regional law concerning financial aid for the promotion of employment in Sicily was compatible with the provisions of the Italian Constitution since it complied with Article 93 EC.

Facts and legal issues: Regional Law No. 85 of 21 December 1995 granted financial aid for the promotion of employment in various sectors (i.e. self-employment, agriculture and handicraft). The State Commissioner in Sicily claimed that the Regional Law No. 85 was constitutionally invalid since it infringed Article 93 EC and, consequently, Article 11 of the Constitution. He claimed that, although Regional Law No. 85 had been notified to the Commission under Article 93 EC, the entry into force of Regional Law No. 85 had not been subject to Commission approval. Not only did Regional Law No. 85 lack such a clause, but it had also been passed as an immediately enforceable "urgent law".

Decision: The Court held that a specific clause making the entry into force of Regional Law No. 85 subject to Commission approval was not necessary in order to comply with Article 93 EC and thus Article 11 of the Italian Constitution. Since Regional Law No. 85 contained a general clause subordinating the activity of the region under Regional Law No. 85 to compliance with EC law, the Constitutional Court declared that Regional Law No. 85 did not breach Article 93 EC or Article 11 of the Constitution.

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3.1. 5 Constitutional Court ("Corte Costituzionale"), Judgment of 29 April 1996, No 134

The Constitutional Court dismissed a claim relating to the alleged constitutional invalidity of a regional law granting special aid to carriers which had become victims of the Mafia.

Facts and legal issues: A regional law of 4 August 1995 granted special aid to some carriers that had suffered loss caused by Mafia incendiary attacks. The State Commissioner of Sicily challenged the constitutional validity of that regional law under Article 11 of the Italian Constitution ("the European Clause"), since Article 93 EC would have been violated. The State Commissioner of Sicily claimed that the provisions of the regional law made no reference to the fact that the said measures had been authorised by the Commission under Article 93 EC.

Decision: Since the defendant filed with the Constitutional Court a formal opinion from the Commission, which confirmed that the provisions of the law did not qualify as State aid, the Constitutional Court declared that the law did not infringe the Italian Constitution.

3.1. 6 Constitutional Court ("Corte Costituzionale"), Judgment of 30 March 1995, No 94

The Constitutional Court held that two regional acts granting aid to fisheries complied with the provisions of the Italian Constitution, since they had been issued in accordance with Article 93 EC.

Facts and legal issues: The State Commissioner of Sicily challenged the validity of two legislative acts adopted by the Regional Assembly of Sicily under Article 93 EC and, consequently, Article 11 of the Italian Constitution ("the European Clause"). The two acts were:

(i) a regional deliberation of 4 March 1994 (i.e. a regional law not yet in force), passed by the Regional Assembly of Sicily and granting aid to the fishing industry; and

(ii) a regional law of 10 May 1994, based on a previous one, providing for aid to the fishing industry.

Decision: The Constitutional Court ruled that the two acts were compliant with Article 93 EC. In doing so, the Constitutional Court referred to ECJ case law. In particular, the Constitutional Court emphasised that the ECJ had clarified²⁸⁰ that once a region had formally notified the regulation granting the aid to the Commission, any further and subsequent legislative acts based on the regulation could be served informally, as in this case. The Constitutional Court therefore dismissed the claim.

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3.1. 7 Constitutional Court ("Corte Costituzionale"), Judgment of July 1969, No 120

The Constitutional Court ruled that a regional law, passed by the Regional Assembly during the session on 11 June 1969, which granted certain benefits to the citrus fruit market was in breach of the Italian Constitution, since the said law failed to comply with the provisions of Articles 92 and 93 EC.

Facts and legal issues: The State Commissioner of Sicily sought a declaration of the constitutional illegality of the regional law introducing "Intervention Measures in the Food and Agricultural Sector" on the grounds that it infringed the provisions of Articles 92 and 93 EC. In order to promote the citrus fruit market, the regional law authorised the Sicilian Authority for Industrial Promotion ("Ente siciliano di promozione industriale", "ESPI") to grant compensation to companies which had suffered loss due to the purchase of considerable amounts of citrus fruit before the above mentioned regional law came into force. Compensation was offered exclusively in connection with the products purchased by the company, provided that a threshold of 50 tons per producer was not exceeded.

Decision: The Constitutional Court ruled that the regional law was incompatible with the Italian Constitution, referring to the findings in its Judgment No. 49 of 9 April 1963 (see section 3.1.8 below). Furthermore, the Constitutional Court stated that aid relating to market intervention in the fruit and vegetable sector would only be deemed to comply with Articles 92 and 93 EC if authorised by the Commission.

3.1. 8 Constitutional Court ("Corte Costituzionale"), Judgment of 9 April 1963, No 49

The Constitutional Court ruled that a regional law on aid measures for shipping companies was in breach of the Italian Constitution as the said law failed to comply with the procedure set forth in Article 93 EC.

Facts and legal issues: On 5 November 1962, the Regional Assembly of Sicily passed a regional law providing for measures in favour of shipping companies. In July 1962, the regional law was notified to the Commission in accordance with Article 93 (3) EC. Thereafter, the Sicilian regional government did not await Commission approval before implementing the regional law. A claim was therefore brought before the Constitutional Court by the State Commissioner of Sicily, who represented the Italian government and was in charge of the approval of Sicilian regional laws prior to their implementation, in order to seek the annulment of such law for breach of Article 93 (3) EC. The Region of Sicily argued that Article 93 (3) EC was only applicable to Member States and not also to regions.

Decision: The Constitutional Court decided that the Sicilian regional government had acted in breach of the Italian Constitution, referring in its reasoning mainly to Article 5 of the Italian Constitution, which regulates the relationship between the State and the regions. The regional law concerned an area of law, i.e. an international treaty, where compliance must bePage 307 confirmed by the central government. The Constitutional Court held that it was illegal for a region to grant aid without prior approval of the Commission under Article 93 (3) EC Treaty.

3. 2 Proceedings before Civil Courts

3.2. 1 Supreme Court ("Corte di Cassazione"), Judgment of 4 March 2005, No 4769, D.S. et al. v. E.S.P.I. Ente Siciliano Promozione Industriale In Liquidazione

In this judgment, the Supreme Court recognised that a negative decision of the Commission under Article 88 (2) EC had direct effect.

Facts and legal issues: A number of employees of SIRAP S.p.A., a company declared bankrupt on 1 October 1993, sued E.S.P.I. Ente Siciliano Promozione Industriale In Liquidazione ("ESPI") asking for damages for loss suffered as a result of the bankruptcy of SIRAP S.p.A.. The employees alleged that the bankruptcy of SIRAP S.p.A. had been caused by ESPI's refusal to pay certain contributions to SIRAP S.p.A., as provided for by Article 4 of the Sicilian Regional Law No. 23/1991 of 15 May 1991. The request was dismissed both by the Tribunal and the Court of Appeal of Palermo.

Decision: The Supreme Court cited the decision of the Commission of 2 February 1994, whereby the contributions provided for by Article 4 of Regional Law No. 23/1991 were declared to constitute unlawful State aid. In line with its previous case law (Judgment No. 17564/2002, see section 3.2.9 below), the Supreme Court stated that decisions of the Commission under Article 88 EC are binding both on national courts and national governments and clarified that the former comply with such decisions, whereas the latter must repeal legislative acts granting unlawful State aid. The Supreme Court ruled that, since the contributions amounted to unlawful State aid, ESPI correctly refused to grant the aid to SIRAP S.p.A.. On these grounds, the Supreme Court dismissed the claimants' request.

3.2. 2 Supreme Court ("Corte di Cassazione"), Judgment of 8 February 2005, No 2534, Banca Antoniana Popolare Veneta S.c.a.r.l. v. C. Produzione Industriale S.p.A. in amministrazione straordinaria

In this judgment, the Supreme Court addressed in detail a number of questions regarding the interpretation of Law No. 95/75 providing for the special treatment of large insolvent undertakings ("Prodi Law")²⁸¹. In particular, the Supreme Court confirmed, referring to previous case law, that it is not the Prodi Law in its entirety, but only single provision included therein that amount to illegal State aid.

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Facts and legal issues: C. Produzione Industriale S.p.A., a company subject to the special administration regime provided for by the Prodi Law, sued Banca Antoniana Popolare Veneta S.c.a.r.l. by bringing an action for recovation. The request was upheld by the Tribunal of Padova and by the Court of Appeal of Venice. Banca Antoniana Popolare Veneta S.c.a.r.l. appealed to the Supreme Court, alleging that the Prodi Law was in breach of Articles 87 and 88 EC.

Decision: The Supreme Court cited its previous case law (Judgment No. 13165/2004, see section 3.2.4 below), in which it had clarified that, according to the relevant case law of the ECJ²⁸², it is not the Prodi Law in its entirety but only specific measures adopted within its framework that amount to the granting of (illegal) State aid. The Supreme Court also specified that, in its view, the Commission's decision of 16 May 2000 was fully compliant with the case law of the ECJ. In particular, the Supreme Court cited paragraph 50 of the Commission's decision, according to which the Prodi Law referred back to the Italian Bankruptcy Law and, in cases where the Prodi Law provided for the application without derogation of the mechanisms and procedures of that law, these mechanisms constituted general measures that were not in any way selective. Only specific provisions of the Prodi Law, including the granting of a number of special advantages involving public resources to identifiable recipients, constituted State aid within the meaning of Article 87 EC. The Supreme Court therefore stated that the Prodi Law could be enforced in all those cases where the specific measures adopted under it did not amount to State aid. A case-by-case analysis was required in order to ascertain whether a specific measure adopted under the Prodi Law amounts to State aid. On the merits, the Supreme Court observed that, since it had not been shown that the action for revocation under the Prodi Law had been commenced prior to the suspension of the company's activities, that action was not selective and did not therefore amount to State aid. The Court also clarified that, since measures which did not constitute State aid did not need to be notified to the Commission under Article 88 EC, it was irrelevant for the purposes of the case that the Prodi Law had not been notified to the EC Commission in its entirety.

3.2. 3 Supreme Court ("Corte di Cassazione"), Judgment of 21 September 2004, No 18915, Banca Fideuram S.p.A. v. F.S. S.rl. in amministrazione straordinaria

In this judgment, the Italian Supreme Court upheld a judgment of the Court of Appeal of Turin on the interpretation of Law No. 95/79 which provides for the special treatment of large insolvent undertakings ("Prodi Law").

Facts and legal issues: F.S.S.r.l. in amministrazione straordinaria, a company subject to the special administration regime provided for by the Prodi Law, sued Banca FideuramPage 309 S.p.A. before the Tribunal of Turin for an alleged infringement of Article 67 of the Italian Bankruptcy Law (i.e. Royal Decree No. 267 of 16 March 1942). The decision of the Tribunal, which partially allowed the request of F.S.S.r.l. in Amministrazione Straordinaria, was appealed to the Court of Appeal of Turin by Banca Fideuram S.p.A.. On appeal, Banca Fideuram S.p.A. claimed that the Prodi Law was incompatible with the Common Market for violation of Article 87 EC. The appeal was unsuccessful, so Banca Fideuram S.p.A. brought this case before the Supreme Court.

Decision: The Italian Supreme Court dismissed the claim. It recalled the judgment of the ECJ in Piaggio²⁸³ and the Commission decision of 16 May 2000, and stated that the application of a system derogating from ordinary rules on insolvency must be regarded as granting State aid within the meaning of Article 87 EC in situations where the undertaking (a) was permitted to continue trading in circumstances in which that would not be permitted if ordinary insolvency rules applied, or (b) enjoyed one or more advantages, such as a State guarantee, a reduced rate of taxation, an exemption from the obligation to pay fines and from other pecuniary penalties or a total or partial de facto waiver of public debts which could not have been claimed by an insolvent undertaking to which the ordinary insolvency rules applied. The Court also clarified that the compatibility of national law with EC law may be assessed ex officio by the national courts.

3.2. 4 Supreme Court ("Corte di Cassazione"), Judgment of 16 July 2004, No 13165, Intesa Gestione Crediti S.p.A. v. C.D.C.R. S.r.l. in amministrazione straordinaria

In this judgment, the Supreme Court addressed a number of questions regarding the interpretation of Law No. 95/75, providing for the special treatment of large insolvent undertakings ("Prodi Law"). In particular, the Supreme Court clarified that it is not the Prodi Law in its entirety, but only single provision included therein, that amount to illegal State aid.

Facts and legal issues: C.D.C.R. S.p.A., a company subject to the special administration regime provided for by the Prodi Law, sued Cassa di Risparmio di Puglia, bringing an action for revocation. The request was upheld by the Tribunal and the Court of Appeal of Bari. Intesa Gestione Crediti S.p.A., in its capacity as purchaser of Cassa di Risparmio di Puglia, appealed to the Supreme Court, alleging that the Prodi Law was in breach of Articles 87 and 88 EC.

Decision: The Supreme Court cited the relevant case law of the ECJ²⁸⁴ and stated that it is not the Prodi Law in its entitrety but only specific measures adopted within its framework that amount to the granting of (illegal) State aid. The Supreme Court also specified that, in its view, the Commission's decision of 16 May 2000 was fully compliant with the ECJ case law. In particular, the Supreme Court cited paragraph 50 of the Commission's decision, according to which the Prodi Law referred back to the Italian Bankruptcy Law and, in cases where thePage 310 Prodi Law provided for the application without derogation of the mechanisms and procedures of that law, these mechanisms constituted general measures that were not in any way selective. Only specific provisions of the Prodi Law, including the granting of a number of special advantages involving public resources to identifiable recipients, constituted State aid within the meaning of Article 87 EC. The Supreme Court therefore stated that the Prodi Law could be enforced in all those cases where the specific measures adopted under it did not amount to State aid. A case-by-case analysis was required in order to ascertain whether a specific measure adopted under the Prodi Law amounted to State aid. On the merits, the Supreme Court declared the grounds of appeal inadmissible. Although the compatibility of the Prodi Law in its entirety with EC law may be assessed ex officio by the national courts, the evaluation of the compatibility of some of its provisions (rather than the Prodi Law as a whole) with Articles 87 and 88 EC would involve a new investigation of the facts, which is an activity reserved to the Supreme Court.

3.2. 5 Supreme Court ("Corte di Cassazione"), Judgment of 30 April 2004, No 8319, Ministero dell'Economia e delle Finanze v. Cassa di Risparmio di Firenze S.p.A. and Fondazione Cassa di Risparmio di San Miniato and Cassa di Risparmio di San Miniato S.p.A

This judgment concerned the compatibility with EC State aid rules of certain tax benefits granted to bank foundations. The Supreme Court confirmed the direct effect of Article 87 (3) EC and asked for a preliminary ruling under Article 234 EC.

Facts and legal issues: The Fondazione Cassa di Risparmio di San Miniato ("the bank") and other parties sued the Italian Ministry of Finance in the regional tax court in order to claim a tax benefit for profits from a participation held in a bank ("Cassa di Risparmio di Firenze S.p.A."), according to the provisions of Presidential Decree No. 601 of 29 September 1973 and Law No. 1745 of 29 December 1962. The request of the bank was dismissed by the Court of First Instance but heard on appeal by the competent regional tax court. The Italian Ministry of Finance appealed the decision to the Supreme Court, seeking the annulment of the regional tax court's decision.

Decision: First, the Italian Supreme Court recalled Commission Decision No. C 54/B/2000 of 22 August 2002, which excludes banking foundations from the scope of the State aid rules on the grounds that they do not constitute "undertakings" under Article 87 EC. Having recalled the general principle according to which national courts cannot implement State aid measures unless these have been declared compatible with the Common Market by the Commission, the Supreme Court held that (i) the compatibility of the tax benefit with EC law, in particular with the principles of effectiveness and non-discrimination, must be verified, also ex officio, by national courts; (ii) decisions of the Commission assessing the compatibility of the measure with the Common Market are binding on Member States and all institutions ofPage 311 the Member State; and (iii) should the national courts doubt the validity of a Commission decision, they can (or as courts of last instance must) refer the matter to the ECJ under Article 234 EC. Since the Supreme Court found that there were significant doubts as to the validity of the Commission decision, it referred the matter to the ECJ under Article 234 EC.

3.2. 6 Supreme Court ("Corte di Cassazione"), Judgment of 19 March 2004, No 5561, C. Torino S.p.A. in amministrazione straordinaria v. Banca S. Paolo Torino IMI S.p.A

In this judgment, the Italian Supreme Court considered a number of issues regarding the interpretation of Law No. 95/79, providing for the special treatment of large insolvent undertakings ("Prodi Law"), and whether there is scope for appeal to the Supreme Court.

Facts and legal issues: C. Torino S.p.A. in amministrazione straordinaria, a company subject to the special administration regime provided for by the Prodi Law, sued Banca S. Paolo Torino S.p.A. in the Trinunal of Udine for an alleged infringement of Article 67 of the Italian Bankruptcy Law (Royal Decree No. 267 of 16 March 1942), governing actions for revocation under the Prodi Law. The action was allowed by the Tribunal of Udine and by the Court of Appeal of Trieste. Banca S. Paolo Torino S.p.A. appealed to the Supreme Court on the grounds that Law No. 95/79 was in breach of Articles 92 and 93 EC.

Decision: The Supreme Court recalled its relevant case law²⁸⁵ according to which the Supreme Court cannot decide matters ex officio if this involves a new investigation of the facts and/or changing the legal argument underlying the dispute. Since the question of the compatibility of Law No. 95/79 with the EC State aid rules had not been brought before either the Tribunal of Udine or the Court of Appeal of Trieste, the Supreme Court dismissed this ground of appeal. The Supreme Court also specified that it is not the Prodi Law in its entirety, but only specific measures adopted within its framework that may amount to State aid, if the undertaking subject to the Prodi Law enjoys one or more advantages that cannot be claimed under general insolvency rules.

3.2. 7 Supreme Court ("Corte di Cassazione"), Judgment of 17 December 2003, No 19365, Ministero delle Finanze e Agenzia delle Entrate v. Fondazione Cassa di Risparmio della Spezia

In this judgment, the Supreme Court assessed the compatibility of certain tax benefits granted to banking foundations with the EC State aid rules.

Facts and legal issues: Fondazione Cassa di Risparmio della Spezia sued the Italian Ministry of Finance in the competent tax court in order to claim certain tax benefits under Article 6 of Presidential Decree No. 601 of 29 September 1973 and Article 10 bis of Law No. 1745 of 29 December 1962. The action was upheld by the Court of First Instance andPage 312 affirmed on appeal. The Ministry of Finance appealed to the Supreme Court, seeking the annulment of the regional tax court's decision.

Decision: The Supreme Court rejected the appeal, recalling the Commission's decision of 22 August 2002 (C 54/b/2000), that excluded banking foundations from the scope of EC State aid rules on the grounds that the latter do not constitute "undertakings" within the meaning of Article 87 EC. The Supreme Court also clarified that it is necessary to carry out a case-by-case analysis to assess whether the relevant activities are to be considered "economic" for the purpose of the State aid assessment.

3.2. 8 Supreme Court ("Corte di Cassazione"), Judgment of 4 April 2003, No 5241, Comit S.p.A. v. Docks Siderurgici S.p.A. in Amministrazione Straordinaria

In this judgment, the Italian Supreme Court considered a number of issues regarding the interpretation of Law No. 95/79, providing for the special treatment of large insolvent undertakings ("Prodi Law").

Facts and legal issues: Docks Siderurgici S.p.A. in amministrazione straordinaria, a company subject to the special administration regime provided for by the Prodi Law, sued Banca Commerciale Italiana S.p.A. in the Tribunal of Udine for an alleged infringement of Article 67 of the Italian Bankruptcy Law (Royal Decree No. 267 of 16 March 1942), governing actions for revocation under the Prodi Law. The action was allowed by the Tribunal of Udine and by the Court of Appeal of Trieste. Banca Commerciale Italiana S.p.A. appealed to the Supreme Court on the grounds that Law No. 95/79 was in breach of Articles 92 and 93 EC.

Decision: First, the Supreme Court noted that (i) the question of the compatibility of Law No. 95/79 with the EC State aid rules was not brought before either the Tribunal of Udine or the Court of Appeal of Trieste, and that it was raised only before the Supreme Court; and that (ii) it was not the Prodi Law in its entirety, but only specific measures adopted within its framework that could amount to State aid, with reference to the judgment of the ECJ in Ecotrade²⁸⁶.

The Supreme Court remarked that the compatibility of the Prodi Law with EC law may be assessed ex officio by national courts. However, it stressed that the Supreme Court cannot decide ex officio matters that involve a new investigation of the facts and/or change the legal argument underlying the dispute. Accordingly, the Supreme Court dismissed these grounds of appeal.

3.2. 9 Supreme Court ("Corte di Cassazione"), Judgment of 10 December 2002, No 17564, Ministero delle Finanze v. Torrefazione Caffè Mattioni S.r.l

The Italian Supreme Court rendered this groundbreaking judgment in December 2002, in which the Supreme Court considered a number of issues regarding the relationship betweenPage 313 EC law and national law. In this judgment, the Italian Supreme Court expressly recognised the direct effect of a negative decision of the Commission under Article 88 (2) EC for the first time.

Facts and legal issues: Torrefazione Caffè Mattioni S.r.l. sued the local tax authority and the Italian Ministry of Finance in the Tax Court of Gorizia to claim certain tax benefits provided for by Law No. 26 of 29 January 1986. The action was upheld by both the local and regional tax courts. The Italian Ministry of Finance and the local tax authority appealed to the Supreme Court, claiming that the Commission had declared that the aid granted under Law No. 26/1986 was incompatible with the Common Market. The Supreme Court annulled the decision of the regional tax court on these grounds.

Decision: First, the Supreme Court remarked that (i) the Italian government was under a duty to enforce negative decisions of the Commission under Article 88 (2) EC, adopting all necessary means to abrogate the legislative measures declared incompatible with the Common Market; (ii) national authorities, including judicial ones, are bound by Commission decisions adopted under Article 88 (2) EC; and (iii) the decision of the Commission had become definitive, since it had not been challenged under Article 230 EC within the prescribed time limit.

The Supreme Court stated that, if the Italian government fails to abrogate a legislative measure granting aid, which the Commission declared incompatible with the Common Market, that decision of the Commission under Article 88 (2) EC has direct effect, if it is sufficiently clear, precise and unconditional and does not give discretionary powers to the Italian government in its implementation. The Supreme Court also specified that (i) the decision must not be final to have direct effect. Should the decision not be final and should the national courts doubt its validity, the national courts can then refer the matter to the ECJ under Article 234 EC; and (ii) the compatibility of a measure with EC law may be assessed ex officio by national courts.

3.2. 10 Supreme Court ("Corte di Cassazione"), Judgment of 16 September 2002, No 13470, Banca Commerciale Italiana Comit S.p.A. v. Ferdofin Siderurgica S.r.l. in amministrazione straordinaria

In this judgment, the Italian Supreme Court considered a number of issues regarding the interpretation of Law No. 95/79, providing for the special treatment of large insolvent undertakings ("Prodi Law").

Facts and legal issues: Ferdofin Siderurgica S.r.l. sued Banca Commerciale Italiana S.p.A. in the Tribunal of Turin for an alleged infringement of Article 67 of the Italian Bankruptcy Law (Royal Decree No. 267 of 16 March 1942), governing actions for revocation under the Prodi Law. The action was upheld by both the Tribunal and the Court of Appeal of Turin. BancaPage 314 Commerciale Italiana S.p.A. appealed to the Supreme Court claiming that Law No. 95/79 was in breach of Articles 92 and 93 EC.

Decision: First, the Supreme Court noted that the question of the compatibility of Law No. 95/79 with EC State aid rules had not been brought before either the Tribunal or the Court of Appeal of Turin but had been raised before the Supreme Court for the first time. The Supreme Court observed that it could not decide this issue ex officio, since a new investigation of the facts would be necessary and Italian procedural rules did not provide for this. The Supreme Court also clarified that a judgment by the ECJ assessing the incompatibility of national law with EC law is not to be regarded as a source of new law ("jus superveniens"), but is of a declaratory nature. On these grounds, the Supreme Court dismissed the appeal.

3.2. 11 Supreme Court ("Corte di Cassazione"), Judgment of 23 June 2000, No 8539, Ditta De Filippi Leonardo v. Mario Maraldi S.p.A. in amministrazione straordinaria

In this judgment, the Supreme Court clarified that actions for revocation under Decree No. 270/99 ("second Prodi Law") are not in breach of EC State aid rules.

Facts and legal issues: Mario Maraldi S.p.A., a company subject to the special administration regime provided for by the Prodi Law, sued Ditta De Filippi Leonardo, bringing an action for revocation. The request was upheld by the Tribunal of Forlì and by the Court of Appeal of Bologna. Ditta De Filippi Leonardo appealed to the Supreme Court.

Decision: Although the issue of the compatibility of actions for revocation with Articles 87 and 88 EC was not explicitly raised by the appellant, the Supreme Court clarified that actions for revocation under the second Prodi Law complied with EC State aid rules. The second Prodi Law clarifies that actions for revocation are admissible only once the liquidation phase has started, thereby implementing the case law developed under the (first) Prodi Law, according to which only actions for revocation brought during the liquidation phase, i.e. after attempts to continue the business activity have failed (and only after such phase has ended), are deemed to comply with EC State aid rules.

3.2. 12 Supreme Court ("Corte di Cassazione"), Judgment of 19 April 2000, No 5087, Fallimento Traghetti Mediterraneo S.p.A. v. Tirrenia di Navigazione S.p.A

The Supreme Court upheld a decision of the Court of Appeal of Naples, rejecting a claim for unfair competition by means of State aid.

Facts and legal issues: Fallimento Traghetti Mediterraneo S.p.A. sued Tirrenia Navigazione S.p.A. in the Tribunal of Naples, claiming unfair price competition and unfair solicitation of clients. In particular, Fallimento Traghetti Mediterraneo S.p.A. argued that Tirrenia benefited from State aid granted by Law No. 684/74, which allowed Tirrenia to set tariffs below costs.

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The Tribunal of Naples dismissed the claim. The Court of Appeal of Naples confirmed the decision of the Tribunal. Fallimento Traghetti Mediterraneo appealed to the Supreme Court, alleging, inter alia, that the financial aid granted to Tirrenia Navigazione S.p.A. amounted to unlawful State aid, which had not been notified to the Commission.

Decision: The Supreme Court dismissed the claim. The argument relating to the notification of Law No. 684/74 to the Commission was not addressed. The Supreme Court acknowledged that State aid is, in theory, generally prohibited, as long as it affects trade between Member States and distorts competition on the market. The Supreme Court, however, affirmed that the distortion of competition test is irrelevant in order to assess the compatibility of a State aid, since such a distortion is the necessary consequence of granting State aid. It stated, therefore, that a State aid can be compatible with the Common Market, even where it distorts competition, if the State aid is aimed at protecting interests that could not otherwise be satisfied (such as public transport services).

3.2. 13 Supreme Court ("Corte di Cassazione"), Judgment of 11 September 1999, No 9681, Ecotrade S.r.l. v. Altiforni Ferrieri Servola S.p.A. in amministrazione straordinaria

In the course of these proceedings, the Italian Supreme Court asked for a preliminary ruling under Article 177 EC from the ECJ concerning the interpretation of Law No. 95/79, providing for the special treatment of large insolvent undertakings ("Prodi Law"). The ECJ answered the questions raised by the Italian Supreme Court in its well-known Ecotrade judgment of 1 December 1998²⁸⁷.

Facts and legal issues: The tribunal and the Court of Appeal of Trieste upheld the request of Altiforni Ferrieri under Article 67 of the Italian Bankruptcy Law (Royal Decree No. 267 of 16 March 1942), governing actions for revocation under the Prodi Law. Ecotrade appealed to the Supreme Court, asking for, inter alia, a declaration of incompatibility of the Prodi Law with Article 93 EC.

Decision: The Supreme Court complied with the decision of the ECJ and held that, in order to verify the compatibility of the Prodi Law with EC rules on State aid, it was necessary to compare the effects resulting from the application of the Prodi Law with those resulting from the application of general insolvency rules. The Supreme Court referred the case to the Court of Appeal of Trieste, the judicial authority competent to carry out this comparative analysis.

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3.2. 14 Supreme Court ("Corte di Cassazione"), Judgment of 23 May 1980, No 3397, Comafrica S.p.A. v. Smo-Società Mercantile Oltremare

The Supreme Court declared that national courts have jurisdiction to interpret Article 92 EC and its direct effect on individuals.

Facts and legal issues: Smo-Società Mercantile Oltremare sued its competitor Comafrica S.p.A. before an Italian civil court, claiming that it had infringed Article 92 EC and requesting damages for loss suffered due to unfair competition. Comafrica imported bananas from Martinique and benefited from financial aid granted by the French government.

Comafrica appealed directly to the Supreme Court pursuant to Article 41 of the Italian Code of Civil Procedure in order to settle the question of jurisdiction.

Comafrica argued that:

a) Article 92 EC only addressed Member States and could not therefore be infringed by an individual;

b) as Smo's claim concerned the compliance by the French State with Article 92 EC, the issue could only be settled at EC level and not by an Italian judge; and

c) only administrative courts, and not civil courts, had the power to suspend or modify an administrative importation licence.

Decision: The Supreme Court held that

i.) Article 92 EC has direct effect;

ii.) Italian courts may also assess cases of unfair competition arising from State aid within the meaning of Article 92 EC ; and

iii.) The remedy ordered by a civil court does not necessarily lead to the suspension or modification of the importation licence, and, accordingly jurisdiction of the civil courts must be acknowledged in cases concerning unfair competition connected with State aid, without further inquiring into the legal meaning of the importation licences in question.

3.2. 15 Supreme Court ("Corte di Cassazione"), Judgment of 15 April 1980, No 2441, Amministrazione Finanze dello Stato v. Ditta Perricone e Leone

The Supreme Court addressed a number of questions relating to the relationship between EC law and national law. This case is a good example of the old approach adopted by the Italian courts in relation to this question, showing an inclination to subordinate EC legislation to national constitutional rules.

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Facts and legal issues: Ditta Perricone e Leone was a Sicilian olive oil producer. According to Article 26 of Law No. 21/1970, which provided for special measures for Sicily after the earthquakes of 1967 and 1968, Ditta Perricone e Leone was exempt from paying of excise tax. The Italian government sued Ditta Perricone e Leone in the Tribunal of Palermo in order to obtain payment of the excise tax. The action by the Italian government was dismissed by the Tribunal of Palermo and the Court of Appeal of Palermo. The Italian government appealed to the Supreme Court, alleging, inter alia, that the measures contained in Article 26 of Law No. 21/1970 amounted to illegal State aid.

Decision: The Supreme Court observed, as a matter of principle, that (i) any measure constituting State aid - including aid compatible with the Common Market under Article 92 (2) EC - must be notified to the Commission; (ii) national laws adoped in breach of EC law are unconstitutional under Article 10 of the Italian Constitution; (iii) relevant cases should therefore be referred to the Contitutional Court; and (iv) a referral to the Constitutional Court can be made without first referring the case to the ECJ.

However, the Supreme Court dismissed the claim on the grounds that the Italian government had failed to prove, in the course of the proceedings, that Law No. 21/1970 had not been notified to the Commission and that it was therefore unconstitutional.

3.2. 16 Supreme Court ("Corte di Cassazione"), Judgment of 1 March 1979, No 1317, Amministrazione Finanze dello Stato v. Isolabella e Figlio S.p.A

In this case, the Supreme Court addressed the issue of the relationship between Article 92 EC, a decision of the Commission authorising State aid and the provisions of Article 95 EC.

Facts and legal issues: Isolabella e Figlio S.p.A., an importer of cognac, sued Amministrazione Finanze dello Stato in the Tribunal of Milan in order to obtain the reimbursement of certain customs duties, alleging that higher fiscal charges on imported products than national products amounted to a breach of Article 95 EC. The Tribunal of Milan and the Court of Appeal of Milan upheld the claim. The Supreme Court partially annulled the decision of the Court of Appeal of Milan and sent the case back to the Court of Appeal of Bologna that upheld the claim. Amministrazione Finanze dello Stato appealed to the Supreme Court, asking for the annulment of the judgment of the Court of Appeal of Bologna, alleging, inter alia, that lower fiscal charges on national products amounted to State aid that had been notified to and approved by the Commission.

Decision: The Supreme Court upheld the claim, stating that (i) the imposition of a lower fiscal charge on national products had been duly authorised by the Commission in its opinion to the Italian Republic of 28 February 1969; and (ii) this formal authorisation justified an exception to Article 95 EC.

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3.2. 17 Supreme Court ("Corte di Cassazione"), Judgment of 1 March 1979, No 1321, Amministrazione Finanze dello Stato v. Ferraretto Giovanni F&C S.r.l

In this case, which mirrors the case mentioned at section 3.2.16 above, the Supreme Court addressed the issue of the relationship between Article 92 EC, a decision of the Commission authorising State aid and the provisions of Article 95 EC.

Facts and legal issues: Ferraretto Giovanni F&C S.r.l., an importer of cognac, sued Amministrazione Finanze dello Stato in the Tribunal of Milan in order to obtain the reimbursement of certain custom duties, alleging that higher fiscal charges on imported products than national products amounted to a breach of Article 95 EC. The Tribunal of Milan and the Court of Appeal of Milan upheld the claim. The Supreme Court partially annulled the decision of the Court of Appeal of Milan and sent the case back to the Court of Appeal of Turin that upheld the claimant's request. Amministrazione Finanze dello Stato appealed to the Supreme Court, asking for the annulment of the judgment of the Court of Appeal of Turin, alleging, inter alia, that lower fiscal charges on national products amounted to State aid that had been notified to and approved by the Commission.

Decision: The Supreme Court upheld the claim, stating that (i) the imposition of a lower fiscal charge on national products had been duly authorised by the Commission in its opinion to the Italian Republic of 28 February 1969; and (ii) this formal authorisation justified an exception to Article 95 EC.

3.2. 18 Supreme Court ("Corte di Cassazione"), Judgment of 11 December 1978, No 5939, Amministrazione Finanziaria dello Stato v. Oleificio S. Leonardo

The Supreme Court upheld a decision by the Court of Appeal of Palermo of 27 February 1976 IN which the Court of Appeal authorised fiscal aid for the production of olive oil. The Supreme Court agreed with the findings of the Court of Appeal that, in cases of emergency, fiscal aid such as that granted by the Region of Sicily to areas where the standard of living is much lower than national average and which had suffered damage from earthquakes was in accordance with Articles 92 (2) (b) and 92 (3) (a) EC.

Facts and legal issues: Olive oil production tax was levied on the olive oil produced by the owner of Oleificio S. Leonardo, an olive oil producer. He filed a petition with the Court of First Instance of Palermo against the Ministry of Finance, raising the inapplicability of the olive oil production tax levied under the legislation passed by the Region of Sicily, granting tax benefits to the inhabitants of certain areas of Sicily which had been affected by an earthquake. The Court of First Istance of Palermo and the Court of Appeal of Palermo upheld the petition. The Ministry of Finance appealed to the Supreme Court.

The Ministry of Finance argued that the financial aid granted by the Region of Sicily and implemented by regional legislation infringed Article 92 EC and, consequently, the Italian Constitution, since (i) no evidence of Commission communications or authorisationsPage 319 addressed to the Region of Sicily had been placed before the court; and (ii) financial aid had been granted to some areas of Sicily long after the earthquake, favouring particular undertakings or products which distorted competition.

Decision: The Supreme Court affirmed the decision of the Court of Appeal of Palermo, according to which:

(i) financial aid after natural disasters, such as earthquakes, is treated by Article 92 EC as being compatible with the Common Market; and

(ii) pursuant to the provisions of Articles 92 and 93 EC, Member States may grant aid to promote the economic development of areas where the standard of living is much lower than national average or with a high rate of unemployment, provided that the Commission is formally notified thereof.

The Supreme Court decided that the compatibility of State aid with the Common Market must be assessed in accordance with the procedure provided for by Article 93 (3) EC. As the claimant had failed to prove that the Region of Sicily had not notified the aid to the Commission, the claim relating to the constitutional invalidity of the regional legislation granting fiscal aid to certain Sicilian areas could not be upheld. According to the Supreme Court:

(i) the burden of proof regarding alleged infringements of Community law is on the claimant;

(ii) the claimant's main criticism related to the factual analysis rather than legal interpretation in this case, which is beyond the jurisdiction of the Supreme Court (that is strictly limited to legal interpretation); and

(iii) the issue whether the procedure set forth in Article 93 EC should be followed for every kind of aid (i.e. under Article 92 (2) as well as Article 92 (3)) is beyond the Supreme Court's jurisdiction and had to be referred to the ECJ under Article 177 EC.

3.2. 19 Court of Appeal of Venice ("Corte d'Appello di Venezia"), Judgment of 26 June 2003, Banca Intesa S p.A. v. Cavirivest S.p.A. in a.s

The Court of Appeal of Venice issued this judgement in June 2003, holding that Law No. 95/79, which provided for special treatment of large insolvent undertakings ("Prodi Law"), was contrary to EC law in its entirety, that it could therefore not be enforced and that the relevant exception could be raised ex officio by the Court.

Facts and legislation: Cavirivest S.p.A., a company subject to the special administration regime provided for by the Prodi Law, sued Banca Commerciale Italiana by bringing an action for revocation. When the Court of First Instance upheld the claim, Banca Commerciale Italiana appealed to the Court of Appeal of Venice.

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Decision: The Court of Appeal of Venice stated that the issue of compatibility of the action for revocation initiated by a company under the special administration regime provided for by the Prodi Law with Community law could be raised by the Court ex officio.

Moreover, the Court of Appeal of Venice held that the Prodi Law provides for State aid, which is contrary to the provision of Article 87 EC. The Prodi Law itself, rather than single provisions included therein (including that concerning the action for revocation), could not be enforced by the national courts since it was incompatible with Community law. In particular, the conclusion of the Court was based on the ECJ's judgment in Piaggio and the Commission decision of 16 May 2000, finding the Prodi Law incompatible with the Common Market.

3.2. 20 Court of Appeal of Turin ("Corte d'Appello di Torino"), Judgment of 23 May 2002, Berutti & C S.r.l. v. Amm. straordinaria Infos Telematica S.p.A

In May 2002, the Court of Appeal of Turin affirmed that the action for revocation started by a company under the special administration regime provided for by Law No. 95/79 ("Prodi Law") after the suspension of the company's activities was not incompatible with EC rules on State aid, since, at that stage, insolvency proceedings would only be aimed at winding up the company.

Facts and legal issues: The case concerned an action for revocation started by a company subject to the special administration regime provided for by the Prodi Law during the course of liquidation. The appellant claimed that the Prodi Law could not be applied, since it was incompatible with Community law to the extent that it provided for the grant of State aid in favour of the companies subject to this special regime.

Decision: Having analysed the relevant ECJ judgements²⁸⁸ as well as the Commission decision of 16 May 2000, the Court of Appeal of Turin excluded that they implied the obligation for national courts not to apply the Prodi Law as a whole. Instead, the Court of Appeal of Turin deemed that they implied such an obligation only for those provisions departing from ordinary insolvency rules. The regime provided for by the Prodi Law would then not be entirely inapplicable. Consequently, the Court of Appeal of Turin deemed that actions for revocation started by a company under the special administration regime provided for by the Prodi Law after suspension of the company's activity (in this case, in the course of liquidation proceedings) were not incompatible with the EC law prohibition on State aid, since no damage to the market can be caused by a company that has ceased all business activity.

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3.2. 21 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 4 April 2002, Banca Nazionale del Lavoro v Fedorfin Siderurgica S.r.l. in amministrazione straordinaria

In April 2002, the Court of Appeal of Turin affirmed that the action for revocation started by a company under the special administration regime provided by the Law No. 95/79 ("Prodi Law") after the suspension of or absent any business activity was not incompatible with EC rules on State aid.

Facts and legal issues: The case concerned an action for revocation started by Fedorfin Siderurgica S.r.l. in amministrazione straordinaria, a company in liquidation and subject to the special administration regime provided, for by the Prodi Law.

Decision: Having analysed the ECJ's judgments in Piaggio and Ecotrade²⁸⁹ and the Commission decision of 16 May 2000, the court of appeal in Turin excluded that they implied the obligation for national courts not to apply the Prodi Law in its entirety. Instead, the Turin Court deemed that they implied such obligation only for those provisions departing from ordinary insolvency rules. Following this approach of assessing each legal provision under the Prodi Law in relation to EC law on State aid, the Court of Appeal of Turin affirmed that actions for revocation started by a company under the special administration regime after the suspension of or absent any business activity are not incompatible with EC law, since no damage can be caused by a company that has ceased all business activity. Moreover, since the action for revocation may be started by the commissioner ("commissario") under the Prodi Law only in the course of insolvency proceedings, such provision is fully compatible with EC law on State aid.

3.2. 22 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 12 February 2002, Amm straord. Presafin S.p.A. v Banca Monte dei Paschi di Siena S.p.A

In February 2002, the Court of Appeal of Turin stated that, in order to comply with EC law, it was not necessary for the Italian courts to disregard Law No. 95/79 ("Prodi Law") in its entirety, but only those provisions departing from ordinary insolvency rules and granting benefits that would not normally be granted to insolvent companies.

Facts and legal issues: The Court of Appeal of Turin was requested to rule on the compatibility of the Prodi Law with Community law, with a view to assessing whether the admission of Presafin S.p.A. to the special administration regime provided for by the Prodi Law and the appointment of the special administration commissioners ("commissario") were valid.

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Decision: Having analysed the ECJ's judgments in Piaggio and Ecotrade²⁹⁰, as well as the Commission decision of 16 May 2000, the Court of Appeal of Turin excluded that they implied the obligation for national courts not to apply the Prodi Law in its entirety. Indeed, these Community decisions only required national courts not to apply the Prodi Law to the extent that it differed from ordinary insolvency rules, granting benefits that would not normally be granted to insolvent companies. Therefore, the Court of Appeal of Turin concluded that the decree opening the special administration proceedings under the Prodi Law and appointing the commissioner was a due act in the event that a company was declared insolvent. Therefore, and without prejudice to the above, the decree must be considered to be valid under Italian law.

3.2. 23 Court of Appeal of Milan ("Corte d'Appello di Milano"), judgment of 8 January 2002, Banca Nazionale dell'Agricoltura S p.A. v Redaelli Tecnologie dell'Acciacio, Tecna in a.s. S.p.A

In January 2002, the Court of Appeal of Milan stated that the issue of compatibility of the special administration regime provided for by Law No. 95/79 ("Prodi Law") with EC rules on State aid could not be assessed by the Court ex officio. Pursuant to national civil procedural rules, it could only be raised by an interested party.

Facts and legal issues: The case concerned an action for revocation brought by Redaelli Tecnologie dell'Acciacio, Tecna in a.s. S.p.A., a company subject to the special administration regime under the Prodi Law, against Banca Nazionale dell'Agricoltura S.p.A. for the reimbursement of payments made on or to the declaration of insolvency. The appellant raised the objection concerning the incompatibility of the Prodi Law with the EC law prohibition of granting State aid in its last submission, before the conclusion of the proceedings, rather than in its first submissions.

Decision: The Court of Appeal of Milan held that the issue raised by way of objection by the appellant fell outside the scope of the appeal and, since it introduced a new challenge, should have been submitted in accordance with the provisions of the civil procedure rules. Therefore, the Court of Appeal of Milan concluded that the Community decisions invoked by the appellant, which could have been the subject of an objection by an interested party (in due time), could not be considered by the Milan Court ex officio.

3.2. 24 Court of Appeal of Turin ("Corte d'Appello di Torino"), judgment of 24 December 2001, Cordifin S p.A. v Ferdofin Siderurgica S.r.l. in amministrazione straordinaria

In its judgment of December 2001, the Court of Appeal of Turin stated that the provisions of the Prodi Law governing the special administration procedure were not entirely and per se incompatible with the Community law on State aid. On the contrary, national courts had toPage 323 assess on a case-by-case basis whether the application of such rules resulted in the granting of State aid.

Facts and legal issues: Ferdofin Siderurgica S.r.l. in amministrazione straordinaria, a company subject to the special administration regime under the Prodi Law brought an action for revocation against Cordifin S.p.A., claiming the reimbursement of payments made to the latter during the year preceding the commencement of the special administration procedure.

Decision: The Court of Appeal of Turin confirmed that, in the context of the special administration procedure, an action for revocation started during the liquidation phase when attempts to continue the business had failed (and only after such phase has ended) did not give raise to State aid issues, but constituted a mere application of the general bankruptcy rules aimed at restoring the par condicio creditorum.

The Court of Appeal of Turin clarified that, within the framework of the Prodi Law, the possibility to start an action for revocation existed only during the liquidation phase and with express reference to the bankruptcy rules. The object of the law was therefore not the protection of the insolvent company subject to the special administration regime, but of its creditors, so that no State aid issues arose.

3.2. 25 Court of Appeal of Cagliari ("Corte d'Appello di Cagliari"), Decree of 21 July 1999, Exol S p.A. v Nuova Cartiera di Arbatax S.p.A

In July 1999, the Court of Appeal of Cagliari dismissed the action filed by Exol S.p.A. ("Exol") against Nuova Cartiera di Arbatax S.p.A. ("NCA").

Facts and legal issues: NCA applied to the Court of First Instance of Cagliari ("Tribunale di Cagliari") in order to be admitted to the special administration regime provided for by Law No. 95/79 ("Prodi Law") (see section 3.2.37 below). The application was based on the assumption that NCA was required to repay State aid. In April 1992, the Court of First Instance of Cagliari declared that NCA was insolvent and ordered that its decision be notified to the Ministry of Industry and Commerce for it to enact measures subsequent to such insolvency status. In October 1998, Exol, a creditor of NCA, asked the Court of Appeal of Cagliari to set aside Law No. 80/1993 ("the second Prodi Law"), following the Commission's decision of 20 March 1996 (which declared the second Prodi Law incompatible with Articles 92 and 93 EC and Article 61 EEA and asked therefore that NCA be declared bankrupt.

Decision: The Court of Appeal of Cagliari dismissed the action by Exol and declared that natural or legal persons which were not directly affected by a Commission decision were not entitled to bring an action to directly enforce it, even if they had a material interest which coincided with the interest underlying the Commission decision. Exol was found not to have such an interest and was thus not entitled to ask the Court of Cagliari to disregard the second Prodi Law.

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3.2. 26 Court of Appeal of Naples ("Corte d'Appello di Napoli"), judgment of 13 July 1999, Alilauro S p.a. v CAREMAR

In July 1999, the Court of Appeal of Naples dismissed the action filed by Alilauro S.p.A.("Alilauro"), a company, against Caremar.

Facts and legal issues: Alilauro claimed that Caremar used a high-speed motorboat for transporting people in the Gulf of Naples and sold the relevant tickets at a price below cost, such practice being subsidised by State aid. The charging of below-cost prices was allegedly driven by a predatory interest and aimed at creating a monopoly in the relevant market, in breach of Article 3 of Law No. 287/90. Alilauro therefore asked the Court of Appeal of Naples to suspend the aid granted to Caremar.

Decision: The Court of Appeal of Naples rejected all allegations made by Alilauro stating that (i) in the event that a claim under Article 82 EC is pending before the Commission, the national judge is not obliged to suspend national proceedings relating to an alleged breach of Article 88 (3) EC; and (ii) according to Article 15 of Law No. 287/90, the suspension of State aid is a measure which only the Italian Antitrust Authority ("Autorità Garante della Concorrenza e del Mercato") may adopt.

3.2. 27 Court of First Instance of Genova ("Tribunale di Genova"), judgment of 24 September 2003, Soc IAM Piaggio v Soc. Ismar Chimica

Law No. 95/79 of 3 April 1979, providing for special treatment of large insolvent undertakings ("Prodi Law"), would be deemed to be in breach of Article 87 EC and therefore incompatible with the Common Market, if the commissioner ("commissario") entrusted with the reorganisation of the insolvent undertaking did not provide sufficient evidence that the company had not benefited from State aid. In that case, the company was not entitled to the specific action aimed at preventing fraudulent diminution of the debtor's estate ("Azione revocatoria fallimentare").

3.2. 28 Court of First Instance of Milano ("Tribunale di Milano"), judgment of 19 March 2003, Soc coop. Fleres v Soc. International Factors Italia

Law No. 95/79 of 3 April 1979 providing for special treatment of large insolvent undertakings ("Prodi Law"), would not to be deemed to be in breach of Article 87 EC and would therefore be compatible with the Common Market if and to the extent that it laid down normal liquidation and winding-up procedures considering that, in that case, the treatment of large undertakings was similar to that of any other insolvent undertaking.

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3.2. 29 Court of First Instance of Trieste ("Tribunale di Trieste"), judgment of 3 August 2002, Soc Altiforni Ferriere Servola

Law No. 95/79 of 3 April 1979 providing for special treatment of large insolvent undertakings ("Prodi Law") should not, in its entirety, be deemed to be in breach of Article 87 EC. The Prodi Law could not therefore be set aside by the national judge in its entirety, but only the provisions granting State aid that were incompatible with the Common Market.

3.2. 30 Court of First Instance of Torino ("Tribunale di Torino"), judgment of 26 July 2001, Cons agr. prov. Varese v Ist. Bancario S. Paolo-Imi

The provisions of the Insolvency Law ("Legge Fallimentare") that are similar, in content and purpose, to the provisions of Law No. 95/79 of 3 April 1979, providing for special treatment of large insolvent undertakings ("Prodi Law"), were deemed to be in violation of the EC Treaty provisions on State aid.

3.2. 31 Court of First Instance of Genova ("Tribunale di Genova"), judgment of 22 November 2001, Soc IAM Rinaldo Piaggio v Dornier Luftfarth GmbH

The Court of First Instance of Genoa held that, in accordance with the decision of the ECJ in Piaggio²⁹¹, Law No. 95/79 of 3 April 1979, providing for special treatment of large insolvent undertakings ("Prodi Law"), constituted State aid. If new aid is not notified to the Commission under Article 93 (2) EC, national courts can assess the compatibility of the aid with relevant EC legislation. On the merits, the Court of First Instance of Genoa decided that the Prodi Law was in breach of Articles 92 and 93 EC since it (i) authorised insolvent undertakings to continue their business activities in circumstances where this would not have been permitted if ordinary rules on insolvency had been applied; and (ii) allowed those undertakings to enjoy a number of advantages that could not be claimed by an insolvent undertaking subject to the application of ordinary insolvency rules.

3.2. 32 Court of First Instance of Piacenza ("Tribunale di Piacenza"), judgment of 17 January 2001, Soc ind. Mandelli v Rolo Banca 1473

Law No. 95/75 of 3 April 1979, providing for special treatment of large insolvent undertakings ("Prodi Law") should not be deemed to be in breach of Article 87 EC and is therefore compatible with the Common Market to the extent that it provides for actions to prevent the fraudulent diminution of the debtor's estate ("azione revocatoria fallimentare") during the undertaking's liquidation process.

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3.2. 33 Court of First Instance of Trapani ("Tribunale di Trapani"), judgment of 10 July 2000 Soc off. meccanica navale Drepanum v Soc. cantiere navale Trapani

Law No. 95/75 of 3 April 1979, providing for special treatment of large insolvent undertakings ("Prodi Law") should not be deemed to be in breach of Article 87 EC and is therefore compatible with the Common Market to the extent that it lays down usual procedures for the liquidation of assets.

3.2. 34 Court of First Instance of Turin ("Tribunale di Torino"), judgment of 7 July 2000, Soc Ferdofin siderurgica v Soc. Cordofin

An undertaking that obtained financial contributions both from the EC and the Italian State under a fishery program in order to avail itself of a fishing boat lifting facility was not found to have infringed EC rules on State aid just because it used the lifting facility for lifting other types of boats, unless evidence was gathered that the entrepreneur, before obtaining the aid, already engaged in the activity o lifting other types of boats or that the facility is mainly used for lifting boats other than fishing boats.

3.2. 35 Court of First Intance of Genoa ("Tribunale di Genova"), judgment of 15 November 1999, Soc Piaggio Industrie Aeronautiche v Less Costruzioni S.r.l

Law No. 95/79, providing for special treatment of large insolvent undertakings ("Prodi Law") could not be enforced by the national courts since it had not been notified to and authorised by the Commission. Therefore, the request under Article 67 of the Italian Bankruptcy Law ("Royal Decree No. 267 of 16 March 1942"), governing actions for revocation under the Prodi Law, could not be upheld.

3.2. 36 Court of First Instance of Genova ("Tribunale di Genova"), ordinance of 26 April 1993, Grandi traghetti di navigazione S p.A. v. Viamare di navigazione S.p.a. and Finmare S.p.A

The Court of First Instance of Genoa dismissed the action filed by Grandi Traghetti di Navigazione S.p.A. ("GTN"), a maritime corporation, against Viamare di Navigazione S.p.A. ("VDN"), a maritime corporation owned by Finmare S.p.A., which is a competitor of GTN in the market of cargo ferry transportation.

Facts and legal issues: In July 1992, VDN began running a cargo ferry service between Genoa and Termini Imerese (Sicily). Over the following months, VDN added two further vessels to the service and started scheduled coasting trade. GTA filed a petition against VDN for unfair competition based on price cuts and unfair solicitation of clients. GTA argued that the price cuts could only have been implemented by means of financial aid granted by the Italian government, which had injected funds in Finmare, VDN's parent company. In particular, GTA requested the Court:

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a) to grant an injunction against VDN pursuant to Article 700 of the Italian Civil Procedure Code ("Codice di Procedura Civile"); and

(b) to request a preliminary ruling from the ECJ on whether such behaviour could be considered to constitute State aid under Articles 92 and 93 EC.

Decision: The Genoa Court held that granting State aid in breach of Articles 92 and 93 EC qualified as an act of unfair competition, not only for the State, but also for the beneficiary which may be the subject of an injunction granted by the civil judge.

In this particular case, however, the Genoa Court dismissed the action finding that:

(i) Article 92 EC was not applicable to shipping services, since until 1 January 1999 only Italian ships could provide such services pursuant to Article 6 of Regulation EC No. 3577/92;

(ii) financial aid granted to VDN by Finmare should not to be considered to amount to State aid, since it was channelled through the financial market, and the State had not granted any kind of guarantee to Finmare, which was owned by the State and 3,138 minority shareholders; and

(iii) accordingly, the State was not obliged to make a notification under Article 93 EC.

3.2. 37 Court of First Instance of Cagliari ("Tribunale di Cagliari") judgment of 14 April 1992, Nuova Cartiera di Arbatax S p.A

The Court of First Instance of Cagliari declared Nuova Cartiera di Arbatax S.p.A. ("NCA") insolvent and ordered that its decision be notified to the Ministry of Industry and Commerce for the Ministry to take subsequent measures.

NCA filed a petition with the Court of First Instance of Cagliari in order to be admitted to the special administration regime under Law No. 95/1979 ("Prodi Law"). The request was based, inter alia, on the assumption that NCA should repay ITL 67.529 billion of State aid after the Commission had declared the aid illegal by decision of 27 November 1991. Since NCA's capital amounted to ITL 100 billion, the amount due represented more than 51% of its capital (i.e. the percentage set by the Prodi Law as one of the conditions for admission to the special administration procedure). The Court of First Instance of Cagliari upheld NCA's request to be admitted to the special administration regime.

3.2. 38 Court of First Instance of Trento ("Tribunale di Trento"), judgment of 15 November 1980, Denkavit Italiana S r.l. v Ministero delle Finanze

The Court of First Instance of Trento acknowledged that taxes and other contributions collected by the State as a result of an infringement of EC legislation and returned thereafter to private citizens should not be considered as State aid. The Trento Court based its decisionPage 328 on case law of the ECJ²⁹² and rejected the claim brought by the Ministry of Finance ("Ministero delle Finanze") that the repayment of taxes pursuant to Article 2033 of the Italian Civil Code qualified as State aid and was therefore incompatible with the provisions of Article 92 EC.

3. 3 Proceedings before administrative courts

3.3. 1 Administrative Supreme Court ("Consiglio di Stato"), judgment of 27 October 2003, No 6610, Soc. Coop. ASTER v Camera di Commercio di Gorizia

The Administrative Supreme Court addressed a number of issues, including issues relating to (i) the different areas of jurisdiction of the European institutions and the national courts on State aid matters; and (ii) the different rationale behind actions for annulment under Article 230 EC and preliminary rulings under Article 234 EC.

Facts and legal issues: Aster and a number of other companies active in the transport sector appealed against a decision of the Administrative Court of Friuli Venezia Giulia. Aster alleged that fiscal incentives for mineral oils allowed by the Chamber of Commerce of Gorizia to undertakings with head offices in the province of Gorizia amounted to unlawful State aid and asked the Administrative Court of Friuli Venezia Giulia to make a reference for a preliminary ruling in that regard to the ECJ. The Administrative Court of Friuli Venezia Giulia rejected the claim and Aster appealed to the Administrative Supreme Court.

Decision: The Administrative Supreme Court stated that, under Article 92 EC some forms of State aid may be compatible with the Common Market. The Court stated that it is, in principle, the duty of the European institutions (European Council and Commission) to assess compatibility under Article 93 EC and clarified that the national measures in question had been duly authorised at European level²⁹³. The Administrative Supreme Court also explained that a review of the legality of acts adopted by the European institutions is to be carried out under Article 230 EC and that references for preliminary rulings under Article 234 EC cannot serve as an instrument for contesting the validity of an act, where that act does not give rise to doubts concerning its interpretation.

3.3. 2 Administrative Supreme Court ("Consiglio di Stato"), judgment of 16 September 2003, No 5250, Ministero dell'Industria v Società Siderurgica Lucchini

The Administrative Supreme Court recalled its previous case law (i.e. Judgment No. 465 of 29 January 2002, see section 3.3.7 below), confirming that Commission decisions declaring State aid incompatible with the Common Market are directly applicable and all subsequent national measures must therefore comply with them.

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Facts and legal issues: The Ministry of Industry did not implement an aid scheme for the steel industry provided for under Law No. 183/1976 and Decree No. 902/1976 of the President of the Republic, since it was incompatible with Community rules on aid to the steel industry established by Commission decisions No. 2320/81/ECSC of 7 August 1981 and No. 3484/85/ECSC of 27 November 1985. Società Siderurgica Lucchini appealed to the Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), which upheld its request to receive the aid. The Ministry of Industry appealed to the Administrative Supreme Court.

Decision: The Administrative Supreme Court upheld the appeal by the Ministry of Industry and quashed the decision of the Regional Administrative Court of Lazio. It stated that, since Commission decisions declaring State aid incompatible with the Common Market are directly applicable, national authorities must comply with them. National legislation that is not compliant with a Commission decision cannot be enforced, even if it had not been abrogated and would, therefore, still be in force. Allowing a company to benefit from the aid would also be in breach of the recovery obligation imposed on Member States. The Administrative Supreme Court also specified that the only way to challenge a Commission decision is to bring an action for annulment before the ECJ under Article 230 EC, or, at most, a request for a preliminary ruling under Article 234 EC.

3.3. 3 Administrative Supreme Court ("Consiglio di Stato"), judgment of 9 May 2003, Ministero dell'Industria, del Commercio e dell'Artigianato v Società Industrie cantieri metallurgici italiani S p.A

The Administrative Supreme Court upheld an appeal against a judgment of the Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio") stating that the Ministry of Industry, Trade and Craftsmanship ("Ministero dell'Industria, del Commercio e dell'Artigianato") unlawfully suspended a procedure for granting aid provided for under Italian law, on the grounds that the aid had been declared incompatible with the Common Market by ECSC decisions.

Facts and legal issues: the Ministry of Industry, Commerce and Craftsmanship did not implement an aid scheme provided for under national law in favour of Società Industrie Cantieri Metallurgici Italiani S.p.A., a company. The aid at issue was declared incompatible with the Common Market by the Commission, but the Italian law providing for the aid was not officially repealed. The company successfully appealed to the Regional Administrative Court of Lazio claiming that the Ministry was not competent to disregard an Italian law in order to enforce an ECSC decision.

Decision: the Administrative Supreme Court upheld the Ministry's petition against the decision of the Regional Administrative Court of Lazio, confirming that, under Article 249 EC, Commission decisions "shall be binding in [their] entirety upon those to whom [they are] addressed" and that these decisions are directly effective without needing to be implementedPage 330 by Italian legislation. This was confirmed, in the view of the Administrative Supreme Court, by the fact that the EC system provides for a beneficiary's right of appeal against Commission decisions.

3.3. 4 Administrative Supreme Court ("Consiglio di Stato"), judgment of 25 February 2003, No 1029, AEM S.p.A. v Autorità Energia Elettrica e Gas

The Administrative Supreme Court made a request for a preliminary ruling under Article 234 EC to the ECJ in order to clarify, inter alia, whether an administrative measure, which imposed an increased charge for access to and use of the electricity transmission system on certain undertakings in order to finance general revenue charges incurred by the electricity system, can be regarded as a State aid for the purposes of Article 87 EC.

Facts and legal issues: AEM S.p.A. and AEM Torino S.p.A. appealed against a decision of the Regional Administrative Court of Milan ("Tribunale Amministrativo Regionale della Lombardia") and contested two decisions (No. 231/2000 and No. 232/2000) of the Electricity and Gas Authority ("Autorità per l'Energia Elettrica e per il Gas") as well as a ministerial decree of 26 January 2000 which increased the charge imposed on certain hydroelectric and geothermal power stations for access to and use of the national electricity transmission system. AEM and AEM Torino claimed that the increased charge fell entirely within the regime of aid for the functioning of certain undertakings which is financed by levies on the supplies by other undertakings in that sector, which amounted to State aid within the meaning of Article 87 EC, granted contrary to the procedure laid down in the EC Treaty.

Decision: The Administrative Supreme Court deemed it necessary to clarify, first, whether the regime adopted by the contested decisions of the Electricity and Gas Authority amounted to State aid within the meaning of the rules laid down in Article 87 EC. Therefore, it decided to stay the proceedings and request a preliminary ruling from the ECJ on the following question: "Can an administrative measure which imposes on certain undertakings using the electricity transmission system an increased charge for access to and use of that system, intended to finance general revenue charges of the electricity system, be regarded as a State aid for the purposes of Article 87 et seq. of the [EC] Treaty?". The ECJ rendered its judgment on 14 April 2005²⁹⁴.

3.3. 5 Administrative Supreme Court ("Consiglio di Stato"), Judgment of 10 October 2002, No 5449, Pincieri Umberto v Ministero dell'Economia e delle Finanze et a

Facts and legal issues: In 2000, Mr Pincieri won a public bid and qualified for an aid under an Italian aid scheme for agriculture authorised by a Commission decision of 6 September 1999. However, whereas the costs of Mr Pincieri's project were equal to ITL 3.186 billion (approximately EUR 1.5 million), only ITL 2.7909 billion (approximately EUR 1.3 million) had been granted in aid.

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On 1 October 2001, Mr Pincieri lodged a claim before the Administrative Court of Molise ("TAR Molise"), which dismissed the claim. Mr Pincieri then appealed to the Administrative Supreme Court.

Decision: The Administrative Supreme Court dismissed the appeal on the grounds that the Commission decision of 6 September 1999, approving the scheme, granted a high degree of discretion to the administrative authorities when calculating the eligible amount.

3.3. 6 Administrative Supreme Court ("Consiglio di Stato"), judgment of 27 September 2002, No 4946, Ministero delle Attività Produttive v DIANO S.p.A

Facts and legal issues: By means of Decree No. 119 of 2 August 1995, the Ministry of Industry ("Ministero dell'Industria") admitted Diano S.p.A. ("Diano") to an investment program. By notice of 31 October 1995, the Ministry of Productive Activities ("Ministero delle Attività Produttive") rejected Diano's application for State aid on the basis of Commission decisions No. 2320/81/CECA and No. 3484/85/CECA. Diano appealed against the notice claiming that the Ministry had failed to give reasons for the rejection and the Regional Administrative Court ("tribunale amministrativo regionale") upheld the claim. The Ministry then appealed to the Administrative Supreme Court on the grounds that Diano failed to meet the requirements set out in the Commission decisions.

Decision: The Administrative Supreme Court upheld the Ministry's appeal holding that, without specific authorisation by the Commission, the aid could not be granted and that the notice from the Ministry of Productive Activities was, thus, in accordance with Commission decisions No. 2320/81/CECA and No. 3484/85, which were both directly applicable.

3.3. 7 Administrative Supreme Court ("Consiglio di Stato"), judgment of 29 January 2002, No 465, Del Verde S.p.A. v Ministero dell'Industria, del Commercio e dell'Artigianato et a

The Administrative Supreme Court dismissed an appeal brought against a judgment of the Regional Administrative Court of Abruzzo ("Tribunale Amministrativo Regionale dell'Abruzzo") upholding an act, which did not grant certain benefits provided for by a law on investment plans in Southern Italy, since that law had been declared incompatible with EC rules on State aid by the Commission.

Facts and legal issues: The Ministry of Industry, Trade and Craftsmanship ("Ministero dell'Industria, del Commercio e dell'Artigianato") did not assign certain benefits for investments in Southern Italy provided for by Law No. 120/1987 to Del Verde S.p.A., a pasta manufacturer. Del Verde petitioned to the Administrative Court of Abruzzo asserting its legal right to receive the aid and claiming that, even though the Commission had declared such aid incompatible with EC rules on State aid, a national entity could not disregard an Italian law on the basis of a decision by the Commission since that Italian law was still in force.

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Decision: The Administrative Supreme Court dismissed the petition, expressly departing from its findings in its previous Judgment No. 30/1989 (see section 3.3.12 below). The Administrative Supreme Court noted that, under Article 249 EC, Commission decisions "shall be binding in [their] entirety upon those to whom [they are] addressed" and that these decisions are directly effective without having to be implemented by an act of Italian legislation. This was confirmed, in the view of the Administrative Supreme Court, by the fact that the EC system provided for a beneficiary's right to appeal Commission decisions. Finally, the Administrative Supreme Court noted that it would be inconsistent for a State to grant aid that is to be recovered under EC law.

3.3. 8 Administrative Supreme Court ("Consiglio di Stato"), judgment of 22 January 2002, No 360, Acciaierie Ferriere Lombarde Falck S.p.A. v Ministero dell'industria, del commercio e dell'artigianato and others

In January 2002, the Administrative Supreme Court dismissed an appeal brought by Acciaierie Ferriere Lombarde Falck S.p.A. ("Falck") against a decision of the Regional Administrative Court of Lazio, in which that Court refused to quash a notice from the Italian government addressed to the ECSC of 28 May 1985 ("the Notice") and the consequential denial of access to an aid scheme for steel industries.

Facts and legal issues: in its Decision No. 2320 of 1981²⁹⁵, the ECSC laid down general rules for aid granted within the framework of restructuring programmes concerning the steel industry, requiring that such programmes be notified to the Commission by the Member States. Pursuant to later decisions, 31 May 1985 was indicated to be the ultimate deadline for such notification.

On 28 May 1985, the Italian government notified the aid schemes which it intended to implement for the restructuring of the Italian steel industry. In doing so, it provided for a relatively small aid in favour of privately owned steel industries, including Falck. Upon Falck's complaint, the Italian government notified an amended aid scheme providing for an increased aid package to privately owned steel industries on 22 July 1985. The ECSC dismissed the request as it was time-barred, and the Italian State refused to grant the increased aid package.

Falck brought an action before the ECJ, which confirmed the ECSC's decision not to authorise the amended aid scheme, and, also, an action before the Regional Administrative Court of Lazio ("TAR Lazio"), which upheld the Ministry's decision not to grant the increased aid package.

Decision: The Administrative Supreme Court, to which the judgment by the Regional Administrative Court of Lazio was appealed by Falck, upheld the previous judgment.

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The Administrative Supreme Court stated that the Italian government's discretion in granting the aid depended on political choices and was not an act due by law. It was therefore not possible to claim that any rights would be violated if the State did not exercise its discretion or exercised it in an unsatisfactory manner. Hence, the State's denial of further aid could not be challenged before the Court.

3.3. 9 Administrative Supreme Court ("Consiglio di Stato"), judgment of 1 April 2000, No 1885, S.E.A. Aeroporti di Milano S.p.A. v Presidenza del Consiglio dei Ministri and others

In April 2000, the Administrative Supreme Court dismissed an appeal brought by S.E.A. Aeroporti di Milano S.p.A. ("SEA") against the decision of the Regional Administrative Court of Lazio not to quash part of the Decree of the President of the Council of Ministers ("Decreto del Presidente del Consiglio dei Ministri") of 25 February 1999 ("the Decree"), concerning the State's divestment of its shareholding in the company Aeroporti di Roma S.p.A. ("ADR"). Among other grounds of appeal, SEA argued that there was an infringement of Article 88 EC.

Facts and legal issues: SEA is the company that runs Milan Airport. The President of the Council of Ministers ("Presidente del Consiglio dei Ministri") is the head of the Italian government. ADR is the company holding the exclusive concession to run Fiumicino Airport and Ciampino Airport, in Rome. At the time of the case, a shareholding equal to 54.2% in ADR's capital was held by I.R.I. S.p.A., a company that was wholly owned by the Italian Ministry of the Treasury ("Ministero del Tesoro"). ADR was therefore indirectly controlled by the Italian State.

Under the Decree, a public invitation to tender for the sale of the 54.2% shareholding was launched. Among other provisions, the Decree provided that companies whose publicly owned shares represented more than 2% of the company's total share capital were not eligible as purchasers of shares in ADR. SEA brought an unsuccessful appeal for the annulment of such provision before the Regional Administrative Court of Lazio ("TAR Lazio"). SEA then filed an appeal with the Administrative Supreme Court against the judgment of the Regional Administrative Court of Lazio.

Among other grounds of appeal, SEA claimed that when a privatisation is implemented other than through an open tender procedure it may be found that State aid has been granted for the benefit of the purchaser. The procedure should, therefore, be preliminarily notified to the Commission under EC rules on State aid and, pending its assessment, the procedure should be suspended.

Decision: The Administrative Supreme Court dismissed the appeal, since, inter alia, it found that the procedure for the privatisation of the public ADR shareholding did not give rise to State aid issues.

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In this respect the Administrative Supreme Court acknowledged that the Commission, in its decision in the Italstrade case²⁹⁶, had clarified that - as a general rule - the privatisation of public companies may result in a State aid being granted to (i) the acquirer if the purchase price is lower than the shares' market value, or (ii) to the privatised company if particular burdens are imposed on the acquirer in respect of the continuation of non-profitable activities.

The Administrative Supreme Court also noted that, on another occasion²⁹⁷, the Commission had clarified that the privatisation of a publicly owned company does not involve State aid within the meaning of Article 87 (1) EC where (i) the company is sold by a competitive tender that is transparent and unconditional or an equivalent procedure; (ii) the company is sold to the highest bidder; and (iii) bidders have enough time and information to carry out a proper valuation of the assets on which to base their bids. In that case, however, the Commission also specified that it is not mandatory to use the open procedure for privatisations. Therefore, the possibility that the imposition of a restriction on the eligibility of a purchaser amounts to State aid should be demonstrated by showing that the price paid by the purchaser was lower than the market value of the company. The Administrative Supreme Court deemed that this had not been demonstrated nor did it seem likely in the case at issue.

3.3. 10 Administrative Supreme Court ("Consiglio di Stato"), judgment of 15 October 1996, No 1331, Presidente del Consiglio dei Ministri et a. v. Istituto di Vigilanza Città di Pescara et a

The interrelationship between an interministerial decree ("Decreto Interministeriale") of 5 August 1994 providing for cuts in employers' social security and Article 92 EC was addressed by the Administrative Supreme Court in this decision. The Administrative Supreme Court confirmed the decision of the Regional Administrative Court of Abruzzo ("Tribunale Amministrativo Regionale dell'Abruzzo") on 23 February 1995.

3.3. 11 Administrative Supreme Court ("Consiglio di Stato"), judgment of 31 July 1991, No 1074, Industria Farmaceutica Lucana et a. v. U.S.L. No. 11 of Pordenone

In this judgment, the Administrative Supreme Court upheld an appeal brought against Judgment No. 394 of the Administrative Court of Friuli Venezia Giulia of 31 December 1987 (see section 3.3.23) and affirmed that EC rules, including their interpretation by the ECJ, were immediately applicable in the Member States when sufficiently clear and precise.

Facts and legal issues: According to Law No. 64/1986, 30% of the supplies contracted under public procurement procedures were to be awarded to companies based in Southern Italy. U.S.L. No. 11 of Pordenone ("USL"), a local administrative unit of the Department of Health, did not apply Law No. 64/1986 to a public tender it had called. USL had deemed LawPage 335 No. 64/1986 unlawful as it conflicted with Articles 30, 31, 92, 93 and 94 EEC (28, 87, 88 and 89 EC; Article 31 EEC was repealed by the Amsterdam Treaty).

The pharmaceutical company Industria Farmaceutica Lucana, based in Southern Italy, sued USL in the Regional Administrative Court of Friuli Venezia Giulia claiming that it was not within USL's powers to disregard the national law. Since the claim was upheld by the Regional Administrative Court of Friuli Venezia Giulia, USL filed an appeal against the judgment with the Administrative Supreme Court.

Decision: The Administrative Supreme Court quashed the judgment of the Regional Administrative Court of Friuli Venezia Giulia, clarifying that any national law that conflicts with EC law could not be applied by national judges. Furthermore, USL had correctly disregarded the national law in order to comply with EC rules (i.e. in particular, Article 30 EC). The judgment's reasoning is that national legislation in breach of Article 30 EC could not be justified on the grounds that it granted State aid under Article 92 EC.

3.3. 12 Administrative Supreme Court ("Consiglio di Stato"), judgment of 24 January 1989, No 30, Società cooperativa carrettieri La Rinascita et al. v. Ministero dei trasporti and others

In January 1989, the Administrative Supreme Court upheld an appeal brought by Coop. Carettieri La Rinascita against the decision of the Ministry of Transport ("Ministero dei Trasporti") to repeal two previous notices ("the Notices") by which it had implemented Law No. 815 of 27 November 1980 ("the Law No. 815") introducing an aid scheme (i.e. subsidised loans) for the period 1980-1983 in favour of hauling companies.

Facts and legal issues: Under Law No. 815, the Italian State provided for a subsidised loans programme for hauling companies. Law No. 815 was implemented by the Ministry of Transport by issuing the Notices. On the legal basis of the Notices, Coop. Carettieri la Rinascita was granted subsidised loans.

On 20 July 1983, the Commission decided that the subsidised loans programme introduced by Law No. 815 qualified as State aid and should have been notified to it prior to implementation. The Commission, having also noted that the subsidised loans scheme was capable of distorting competition and thus infringed Article 92 (1) EC, ordered that Italy revoke the aid scheme within three months.

Further to the Commission's decision, the Ministry of Transport annulled the Notices by means of a further notice of 23 February 1984. The appellant appealed to the Regional Administrative Court of Lazio ("TAR Lazio") claiming that the Ministry of Transport was not entitled to depart from Law No. 815, which provided for the subsidised loans that had been declared unlawful by the Commission.

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On the grounds of the principle of supremacy of Community law over national law, the Regional Administrative Court of Lazio dismissed the appeal. The appellant therefore appealed the decision of the Regional Administrative Court of Lazio to the Administrative Supreme Court.

Decision: The Administrative Supreme Court upheld the appeal and quashed the judgment of the Regional Administrative Court of Lazio.

The Administrative Supreme Court specified that Commission decisions on State aid are not directly applicable. The Commission decision at issue was addressed to the Republic of Italy and provided for, impliedly, the abrogation of the Law. The Ministry could not, prior to the abrogation of the Law, retrospectively annul the Notices, whereby it would comply with the Commission decision but infringe the Law.

3.3. 13 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment 16 July 2004, No 6998, Liquidatore di Eurofood Ifsc Ltd and Bank of America N.A

In July 2004, the Regional Administrative Court of Lazio dismissed an action filed by the Irish liquidator of Eurofood Ifsc Ltd, an Irish company belonging to the Parmalat group, and Bank of America N.A, requesting annulment of a decree of the Ministry for Productive Activities which made Eurofood Ifsc subject to the special administration regime provided for by Article 3 of Legislative Decree ("Decreto legislativo") No. 347 of 23 December 2003 ("Decree No. 347").

Facts and legal issues: the appellants appealed to the Regional Administrative Court of Lazio on the grounds that, inter alia, Decree No. 347/03 was in breach of Regulation (EC) No. 1346/2000 and the Community provisions on State aid.

Decision: the Administrative Court at Lazio dismissed the appeal, including the abovementioned ground of appeal, and stated, in particular, that Decree No. 347/03 did not conflict with the Community provisions on State aid for the following reasons:

(i) first, because (as stated by the Italian Supreme Court in its Judgment No. 5561 of 19 March 2004) the special administration regime may not be applied, should authorisation to operate the undertaking have the specific effect of treating it differently from the way it would be treated under an ordinary insolvency procedure, granting benefits to that undertaking that had been considered unlawful under EC Treaty provisions (as clarified by the ECJ in Ecotrade²⁹⁸);

(ii) secondly, since the procedural amendments provided for by Decree No. 347/03 were not per se in conflict with EC rules on State aid, provided that the grant of guarantees to thePage 337 undertaking subject to the special administration regime was notified to the Commission, as already laid down by Article 55 of Decree No. 270/99.

3.3. 14 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment of 8 February 2003, No 805, Fondazione Monte dei Paschi di Siena v. Ministero dell'Economia e delle Finanze

In February 2003, the Regional Administrative Court of Lazio delivered this judgment that confirmed that the taxation regime provided for by the Italian law on banking foundations ("Fondazioni bancarie") is compatible with EC rules on State aid.

Facts and legal issues: the Fondazione Monte dei Paschi di Siena claimed that Ministerial Decree ("Decreto Ministeriale") No. 217 of 2 August 2002 ("the Decree No. 217"), regulating banking foundations was void. The claim was based on the alleged constitutional illegality of Article 11 of Law No. 448 of 28 December 2001, on the basis of which the Decree had been adopted. In particular, Fondazione Monte dei Paschi based its claim on the fact that banking foundations did not constitute commercial undertakings.

Decision: having analysed the specific claims raised against Decree No. 217, the Regional Administrative Court of Lazio held that one of the contested provisions had been introduced by the Italian government in order to comply with a Commission decision of 11 December 2001. In that decision, the Commission declared the beneficial taxation regime for restructurings and mergers between banks incompatible with EC legislation. The Regional Administrative Court of Lazio recalled that, whereas the Italian government had suspended the beneficial taxation regime for banks, it had maintained an analogous beneficial taxation regime introduced for banking foundations. According to the Regional Administrative Court of Lazio, this solution was in accordance with the Commission decision, given that banking foundations were non-commercial undertakings and unable, as a result, to distort competition within the Common Market.

3.3. 15 Regional Administrative Court of Sicily, Catania ("Tribunale Amministrativo Regionale della Sicilia, Catania"), judgment of 5 July 2000, No 1389, C.A. and others v. Assessorato Regionale Agricoltura

Applications for funding of projects concerning the improvement and development of the structural efficiency of undertakings in the citrus fruit sector, Article 5 of Sicilian Regional Law of 4 April 1995 ("the Regional Law"), according to which the provision of aid thereunder was subject to the scrutiny of and authorisation by the Commission under Article 92 EC could not be applied "tout court". The principle laid down by the ECJ in its judgment in Italy v Commission²⁹⁹ must be applied instead. The commencement by the Commission of proceedings under Article 93 (2) EC did not therefore imply that payment of the aid should be suspended if it was already being granted.

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3.3. 16 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No 2786 of 23 September 1999, Iris Biomedica V. Ministero dell'Industria Commercio e Artigianato

The Administrative Court of Lazio stated that national public authorities must comply with a Commission decision declaring a State aid incompatible with the Common Market, even if the aid is granted pursuant to a law that has not yet been repealed.

Facts and Legal Issues: Iris Biomedica appealed to the Administrative Court of Lazio against a decision of the Ministry of Industry pursuant to which the Ministry refused to grant Iris Biomedica aid provided for by Article 6 of Law Decree No. 8 of 26 January 1987 (which became Law No. 120 of 27 March 1987). The Ministry's refusal was based on the grounds that the Commission and the ECJ had declared the aid incompatible with the Common Market.

Decision: The Administrative Court of Lazio rejected the claim. It pointed out that the Ministry had correctly refused to grant the aid and to apply Article 6 of Law Decree No. 8 of 26 January 1987. The Administrative Court of Lazio stated that, although the legislative measure granting the aid was still in force, the Ministry was bound by Commission No. 91/175/EEC of 25 July 1990 that had been upheld by the ECJ³⁰⁰, since negative Commission decisions had direct effect.

3.3. 17 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No 2155 of 14 July 1999, Aeroporti di Milano v. Presidenza del Consiglio dei Ministri

The Administrative Court of Lazio refused to assess a possible violation by the State of Article 88 (3) EC, considering that the grounds of appeal were inadmissible as they were time-barred.

Facts and legal issues: The appellant appealed to the Administrative Court of Lazio. In the course of the proceedings, the appellant alleged that the Decree of the President of the Council of Ministers of 25 February 1999 on the Privatisation of Aeroporti di Roma S.p.A. breached Articles 87 and 88 EC.

Decision: The Administrative Court of Lazio dismissed the appeal. It observed that the appellant had not alleged a violation of Article 88 (3) EC in its opening submissions of the claim, but only in its final statement. This allegation as well as the request to make a reference to the ECJ for a preliminary ruling were therefore declared inadmissible.

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3.3. 18 Regional Administrative Court of Lazio, Rome ("Tribunale Amministrativo Regionale del Lazio, Roma"), Judgment of 11 June 1990, No 1071, Società Fonderia A. v. Ministero dell'Industria et a

The Administrative Court of Lazio dismissed the claimant's petition concerning the right to receive State aid notwithstanding a Commission decision declaring such aid incompatible with Article 92 EC.

Facts and legal issues: The Ministry of Industry ("Ministero dell'Industria") refused to grant Società Fondiaria A. ("SFA") a reimbursement of electricity costs pursuant to Law No. 627/1981, which had been declared incompatible with the Common Market by the Commission in Decision No. 396/1983. SFA then appealed to the Administrative Court of Lazio asserting its legal right to receive the reimbursement.

Decision: The Administrative Court of Lazio dismissed SFA's petition. It declared that the Administration could set aside an internal act that was in conflict with a Commission decision, notwithstanding the existence of conflicting internal regulations that had not yet been repealed. An individual could benefit from State aid only if the aid was authorised by the Commission. In the absence of authorisation, SFA's claim for reimbursement could not be upheld³⁰¹.

3.3. 19 Regional Administrative Court of Veneto ("Tribunale Amministrativo Regionale del Veneto"), Judgment of 26 July 1989, No 1102, Compagnia Oasi di Malcesine v. Region of Veneto et a

The Administrative Court of Veneto ruled that loans guaranteed by the State constituted regional aid that was compatible with the Common Market if the grant of the loans was justified by certain regional characteristics, and therefore did not conflict with Article 92 EC.

Facts and legal issues: Compagnia OASI di Malcesine ("COM"), an Italian hotel chain, was granted an ITL 2.2 billion loan by the Council of Europe which had been guaranteed by the Italian State against risks of alteration. The Veneto Region then refused to grant regional aid to COM claiming that granting aid twice (i.e. aid from the region and the State) violated (i) a regional law of Veneto (i.e. Law No. 28/1997); and (ii) Article 92 EC. COM appealed the decision refusing to grant regional aid to the Regional Administrative Court of Veneto.

Decision: The Regional Administrative Court of Veneto held that

(i) the regional aid is compatible with the Common Market; and

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(ii) the regional aid to a hotel was justified because "it refer[red] to services offered in a given place, strictly connected to a particular regional area".

3.3. 20 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment No 1746 of 6 December 1988, TERNI - Soc. Per l'Industria e l'Elettricità S.p.A. v. Cassa Conguaglio per il Settore Elettrico

The Administrative Court of Lazio correctly stated that national public authorities (i) must comply with a Commission decision declaring an aid incompatible with the Common Market and (ii) correctly sought to recover an unlawful aid, although the aid had been granted pursuant to a law that had not yet been repealed.

Facts and legal issues: Cassa Conguaglio per il Settore Elettrico ("Cassa") refused to grant TERNI - Soc. Per l'Industria e l'Elettricità S.p.A. ("Terni") a reimbursement relating to the consumption of electric energy, as provided for by a ministerial decree of 26 January 1982 and Law No. 617 of 4 November 1981 converting Law Decree No. 495 of 4 September 1981. Cassa also asked Terni to repay any reimbursements previously made. Cassa observed that ECSC Decision No. 87/396 of 29 June 1983 clarified that (i) these reimbursements amounted to State aid; and (ii) only reimbursements granted to privately owned companies could be considered compatible with the Common Market. Terni appealed Cassa's decision to the Administrative Court of Lazio.

Decision: the Administrative Court of Lazio rejected the claim. It pointed out that, first, Terni must be regarded as a public undertaking in this case and recalled ECSC Decision No. 2320 of 7 May 1981 establishing Community rules for aid to the steel industry and ECSC Decision No. 87/396 of 29 June 1983. The Administrative Court of Lazio held that Cassa had correctly asked for repayment of the aid unlawfully granted, specifying that public authorities were bound by negative Commission decisions although the aid had been granted pursuant to a national legislative measure that was still in force.

3.3. 21 Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Judgment of 17 November 1988, No 1582, Soc. Laboratori Bruneau v. Unità Sanitaria Locale RM/24

Facts and legal issues: Unità Sanitaria Locale RM/24 ("USL") announced a public tender procedure under Article 17 of Law No. 64/1986, according to which the supply of products was reserved to companies based in Southern Italy. Laboratori Bruneau, a company that was not based in Southern Italy, appealed to the Administrative Court of Lazio, claiming that the public tender procedure reserved to companies from Southern Italy was unlawful, inter alia, on the basis of Articles 92 and 93 EC.

Elettrico; Administrative Supreme Court; Sec. VI; Judgment of 20 May 1995, No. 483, Fonderia S.p.a. v. Cassa Conguaglio Settore Elettrico.

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Decision: The Administrative Court of Lazio filed a request for a preliminary ruling from the ECJ in order to ascertain whether the said measures amounted to State aid or whether these were "measures having equivalent effect" under Article 30 EC.

3.3. 22 Regional Administrative Court of Puglia, Bari ("Tribunale Amministrativo Regionale della Puglia, Bari"), Judgment of 26 October 1988, No 255, Società Roussel Maestretti v. U.S.L. No. 12 di Bari et a

The Administrative Court of Puglia rejected the claimant's claim and confirmed the lawfulness of the public tender procedure reserving 30% of the supply of goods under the contract to companies based in Southern Italy which had been announced prior to a Commission communication denying its compatibility with the Common Market.

Facts and legal issues: Roussel Maestretti ("RM") is a pharmaceutical company based in Northern Italy and U.S.L., No. 12 di Bari ("USL") is a local administrative unit of the Department of Health.

USL announced two separate public tender procedures under Article 17 of Law No. 64/1986. The first procedure concerned 70% of the supply of goods and was open to all companies, whereas the second procedure reserved the remaining 30% of the supply of goods to companies based in Southern Italy. RM appealed to the Regional Administrative Court of Puglia, claiming that the public tender procedure reserved to companies from Southern Italy was unlawful, inter alia, on the basis of Articles 92 and 93 EC.

Decision: The Administrative Court of Puglia referred to a principle already established by the Administrative Court of Veneto, confirming the compatibility of Article 17 of Law No. 64/86 with the Common Market³⁰². However, the Administrative Court of Puglia acknowledged that the Commission had taken a different view, considering the aid granted pursuant to Law No. 64/86 incompatible with Community legislation. In 1987, the Commission had published a Commission communication declaring Article 17 of Law No. 64/86 incompatible with Article 93 (3) EC and had initiated the procedure under Article 93 (2) EC in relation to the aid granted in the area of the city of L'Aquila.

The Administrative Court of Puglia based its decision on the principles of tempus regit actum and non-retroactivity and ruled that public tender procedures reserving 30% of the supply to companies based in Southern Italy were compatible with the Common Market, if announced prior to the Commission communication declaring them incompatible with the Common Market under Article 93 (2) EC.

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3.3. 23 Regional Administrative Court of Friuli Venezia Giulia ("Tribunale Amministrativo Regionale del Friuli-Venezia-Giulia"), Judgment of 31 December 1987, No 394, Industria farmaceutica lucana et a. v. U.S.L. No. 11 of Pordenone

The Regional Administrative Court of Friuli Venezia Giulia affirmed that public bodies are under the obligation to comply with the requirements of Law No. 64/1986, namely to reserve 30% of their supplies contracted within the framework of public procurement procedures for companies based in Southern Italy.

Facts and legal issues: U.S.L. No. 11 of Pordenone ("USL"), a local administrative unit of the Department of Health, did not apply Law No. 64/1986 to its public tender and, consequently, did not reserve the stipulated share of contracted supply for companies based in Southern Italy. Industria farmaceutica lucana ("IFL"), a pharmaceutical company based in Southern Italy, therefore brought an action before the Administrative Court of Friuli Venezia Giulia.

USL claimed that Law No. 64/1986 was unlawful as it conflicted with Articles 30, 31, 92, 93 and 94 EEC.

Decision: The Administrative Court of Friuli Venezia Giulia rejected USL's claims, clarifying that

(i) according to Article 92 (3) EC "aids to promote the economic development of areas where the standard of living is much lower than the national average or where there is a high rate of unemployment" were considered to be compatible with the Common Market;

(ii) only Member States were obliged to inform the Commission of their plans to grant or alter aid pursuant to Article 93 (3) EC, whereas, according to established case law of the ECJ³⁰³, individuals could not request the national courts to ascertain the compatibility of State aid with Community law (with some exceptions which are not relevant to this case); and

(iii) no evidence had been filed in support of the alleged violation of Article 92 (3) EC³⁰⁴.

3.3. 24 Regional Administrative Court of Tuscany ("Tribunale Amministrativo Regionale della Toscana"), Judgment of 23 October 1987, No 1166 and Ordinance No. 1167 of 23 October 1987, Società Du Pont de Nemours Italiana v. U.S.L. No. 2 of Carrara et a

Facts and legal issues: In 1986, U.S.L. No. 2 of Carrara ("USL"), a local administrative unit of the Department of Health, issued a decision regulating a public procurement procedure,Page 343 stating that 30% of the contracted supplies must be reserved to industries based in Southern Italy. USL's decision was issued in compliance with Law No. 64/1986, which made it compulsory for public bodies, such as USL, to obtain a part of their supplies of goods from industrial, agricultural and handicraft businesses based in Southern Italy.

Società Du Pont de Nemours Italiana ("SDPNI"), an Italian company producing medical equipment, participated in the tender but was excluded because it did not meet the requirements specified under Law No. 64/1986. SDPNI appealed to the Administrative Court of Tuscany, alleging unlawful application of the supply limit, as it conflicted with the EEC rules on the free movement of goods and services within the Community. As a result, it filed a petition in order to obtain a preliminary ruling from the ECJ³⁰⁵.

Decision: The Regional Administrative Court of Tuscany applied for a preliminary ruling pursuant to Article 177 (now Article 234) EC to the ECJ.

3.3. 25 Regional Administrative Court of Lombardia, Milan ("Tribunale Amministrativo Regionale della Lombardia, Milano"), Judgment of 2 December 1986, No 949, Bozzi et a. v. Ente Ferrovie dello Stato - FF.SS. et a

The Administrative Court of Lombardia ruled that it was not competent to annul a law allowing FF.SS. (i.e. the Italian Railways) to be represented in court by the State Attorney, on the grounds that representation in court by the State Attorney amounted to State aid.

Facts and legal issues: FF.SS. claimed that the appeal should be dismissed. In particular, the claimant claimed that FF.SS's representation in court by the State Attorney was illegal because it amounted to State aid prohibited under Article 92 EEC.

Decision: The Administrative Court of Lombardia rejected the claimant's claim on the grounds that:

(i) the rules on State aid were not legally binding and directly applicable; and

(ii) the competence of the Administrative Court of Lombardia was limited to ruling on the non-application of national laws that conflict with legally binding Community laws, and consequently, the Lombardia Court could not set aside national laws that conflict with EEC rules on State aid.

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3.3. 26 Regional Administrative Court of Sicily, Palermo ("Tribunale Amministrativo Regionale della Sicilia, Palermo"), Judgment of 18 November 1986, No 875, Società Enosicilia et. a. v. Istituto regionale Vite e Vino et a

The Administrative Court of Sicily dismissed the appeal brought by Società Enosicilia ("SE") and Consorzio Produttori Vini Siciliani Cooperativa ("CPVSC"), requesting the annulment of an administrative order issued by Istituto Regionale Vite e Vino ("IRVV") that withdrew a regional aid for wine producers.

Facts and legal issues: SE and CPVSC were both producers and marketers of wine. IRVV was a regional administrative body responsible for the wine industry in Sicily, and the Assessore Agricoltura e Foreste Regione Siciliana ("AAFRS") was a member of the Sicilian Regional Assembly for forestry and agriculture. In 1973, the Region of Sicily enacted Regional Law No. 28/1973, granting State aid to IRVV for the marketing of Sicilian wine in Italy and abroad. However, in June 1982, the Commission delivered a reasoned opinion pursuant to Article 169 EEC (now Article 226 EC) stating that the Italian government had infringed Regulation No. 816/70 as amended, inviting Italy to comply with the provisions of the opinion.

As a result, the Region of Sicily enacted Regional Law No. 58/1983, repealing Regional Law No. 28/1973 and limiting the amount of State aid. IRVV then issued Regional Decree No. 3210/1983 ("Circolare No. 3210/1983") declaring that it had ceased to pay out the aid already approved for the years 1982 and 1983 to promote the wine sector. AAFRS then sent a facsimile to IRVV requesting immediate suspension of the aid to CPVSC.

SE and CPVSC appealed to the Administrative Court of Sicily asking for:

(i) the annulment of IRVV's Regional Decree;

(ii) the annulment of AAFRS's facsimile request; and

(iii) payment of aid for the years preceding the enactment of Law No. 58/1983 on the basis of the rule tempus regit actum.

Decision: The Administrative Court of Sicily dismissed the appeal. In particular, the Administrative Court of Sicily held that both IRVV 's regional decree and AAFRS's facsimile request were valid.

In addition, the Administrative Court of Sicily concluded that SE and CPVSC were not entitled to State aid for the years preceding the enactment of Law No. 58/1983 (with particular reference to aid for 1982 that had yet to be paid), as it was in breach of Regulation No. 337/1979 regulating the European wine industry.

Page 345

3.3. 27 Regional Administrative Court of Lazio, Rome ("Tribunale Amministrativo Regionale del Lazio, Roma"), Judgment of 22 January 1985, No 103, Società Cooperativa Trasporto Latte et a v. Banca Nazionale del Lavoro

The Administrative Court of Lazio dismissed the action filed by Società Cooperativa Trasporto Latte ("SCTL"), a milk transporting company requesting the annulment of a ministerial decree enacted by the Ministry of Transport ("the Decree"). By means of the Decree, two previous ministerial decrees enacted in 1981 granting aid were revoked. Banca Nazionale del Lavoro ("BNL") was the bank that had granted loans to SCTL and the other appellants.

Facts and legal issues: In 1981, the Ministry of Transport enacted two decrees in order to implement Law No. 815/1980, granting aid to companies for the purchase of vehicles. The aid was granted by means of government-assisted loans. However, the Commission found that Law No. 815/1980 was incompatible with the Common Market. Therefore, the Ministry of Transport repealed these two decrees and declared that SCTL and other companies were not entitled to the aid.

SCTL appealed to the Administrative Court of Lazio, requesting the annulment of the Decree according to which the aid had been withdrawn on the grounds that:

(i) having legitimately relied on the Decree, it had begun to renovate its fleet of vehicles and had therefore suffered serious loss; and

(ii) it had obtained significant bank loans which it intended to repay using the aid.

Decision: The Administrative Court of Lazio ruled that the Decree was lawful. Furthermore, the Administrative Court of Lazio stated that, when the Commission decided that aid was not compatible with the Common Market and requested annulment by the State within a given period of time, the Administration could have decided to annul the relevant ministerial decree immediately, without having to commence a formal procedure to revoke the legislative instrument³⁰⁶.

Page 346

3. 4 Procedures before the Italian Court of Auditors ("Corte dei Conti")

3.4. 1 Court of Auditors ("Corte dei Conti"), Sec controllo, Decision of 14 June 1996, No. 88, ("Ministero del Tesoro")

The Court of Auditors clarified that, since RAI is an undertaking of general economic interest, the Italian government could adopt measures under Article 90 (2) EEC in its favour, and a reduction in the licence fee payable by RAI to the State did not infringe EC rules on State aid. The decision of the Court of Auditors was also based on the grounds that the said measure could, in any case, not distort competition, since the reduction was aimed at bringing RAI's licence fees in line with fees paid by private undertakings.

3.4. 2 Court of Auditors (Corte dei Conti), Sec controllo, Decision of 23 Mrch 1994, No. 43, Ministero del Tesoro

The Court of Auditors clarified that the State cannot, in any case, itself assess the compatibility of State aid with the Common Market, as the Commission is the only competent authority in that regard. Only notification under Article 88(3) EC and a positive Commission decision can ensure that the aid must not be recovered and that an action for failure to act will not be brought against the State.

3.4. 3 Court of Auditors (Corte dei Conti), Sec controllo, Decision of 23 March 1994, No. 18, Ministero del Tesoro

The Court of Auditors confirmed that it had jurisdiction to request a preliminary ruling from the ECJ based on Article 177 (now Article 234) EC.

The Court of Auditors was asked to assess whether it was possible to amend a decree in order to finance a revenue-producing State monopoly ("Azienda Tabacchi Italiani S.p.A.").

However, the Court of Auditors held that, in this particular case, a preliminary ruling was not necessary because the undertaking came within the scope of Article 90 EC, concerning undertakings providing services of general economic interest or that are of a revenue-producing monopoly nature³⁰⁷.

3.4. 4 Court of Auditors ("Corte dei Conti"), Sec controllo, Decision of 16 March 1993, No. 3, Ministry of the Treasury, Unione Nazionale Incremento Razze Equine (UNIRE) ed Enti Ippici

The Court of Auditors issued a report to the Italian parliament on the management of UNIRE, a public body. The Court of Auditors stated that "the cut in State aid due to Community Page 347 legislation makes it necessary to completely revise aid policies and adopt distribution criteria based on effective selection and quality systems".

3.4. 5 Court of Auditors ("Corte dei Conti"), Sec controllo, Decision of 5 November 1991, No. 105, Ministry of Defence

The Court of Auditors issued this decision concerning public tender procedures reserved by law to undertakings based in Southern Italy and ruled that "a declarative judgment of the ECJ concerning rules [having] direct effect has the same legal status as the rules subject to interpretation". In March 1990, the ECJ ruled that public tender procedures reserved exclusively for businesses located in areas of central or Southern Italy, such as those provided for under Article 17 of Law No. 64/1986, were in breach of Articles 30, 92 and 93 EEC³⁰⁸

The Court of Auditors therefore declared that the public tender procedures were invalid.

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[253] See Case C-6/64, Costa v ENEL [1964] ECR 585 and Case C-77/72, Capolongo v Azienda Agricola Maya [1973] ECR 611.

Both decisions were rendered as a preliminary ruling and concern the interpretation of Articles 92 and 93 EC.

[254] See Case C-120/73, Gebr. Lorenz GmbH v Federal Republic of Germany [1973] (Preliminary Ruling) ECR 1471.

[255] See Case C-354/90, Fédération Nationale du Commerce Extérieur des Produits Alimentaires et Syndicat National des Négociants et Transformateurs des Saumon v French Republic [1991] ECR 5505. See also Orlandi, "Sull'applicabilità da parte del giudice Italiano degli articoli 92 e 93 deI Trattato istitutivo della CEE", Giurisprudenza di merito, I 994, 791.

[256] See Constitutional Court, Decision No. 120 of 8 July 1969 (see below, section 3.1.7); Constitutional Court, Judgment No. 49 of 9 April 1963 (see below, section 3.1.8). See also Supreme Court ("Corte di Cassazione"), Decision of 11 December 1978, No. 5839, Diritto Comunitario e degli Scambi Internazionali, 1979, 495. See Lenza, "Commento all'art. 93 del Trattato CEE", Commentario CEE, 755; Trigglani, "I poteri di controllo della Commissione sugli aiuti alle imprese pubbliche", Rivista Europea, 1990, 3, 500.

[257] None of the decisions originated from requests of parties or judges pending a case ("appello incidentale"). The Italian State is represented in each region by a State Commissioner ("Commissario di Stato") entrusted with the power to monitor the compatibility of regional laws with constitutional and international principles. In the presence of evidence of violation, the Commissioner may file a petition with the Constitutional Court in order to seek a ruling on the regional laws at issue. The numerous cases concerning Sicily are due to Sicily's special status, conferring upon it a higher degree of discretion in relation to decisions concerning tax allocation (although tax revenues are managed by the Italian government). Besides Sicily, other regions with a special status include Sardinia, Valle d'Aosta, Trentino Alto Adige and Friuli Venezia Giulia.

[258] Constitutional Court, Judgment of 4-11 July 1989, No. 389, cit.. See also Court of Auditors, Sec. Contributi Stato, judgment of 8 November 1991, No. 102; Administrative Court of Lazio ("T.A.R. Lazio"), Sec. III, Judgment of 11 June 1990, No. 1071, Rivista Italiana di Diritto Pubblico Comunitario, 1992, 981.

[259] Supreme Court, Judgments No. 10915/2004, see section 3.2.3 below; Judgment No. 8319/2004, see section 3.2.5 below; Judgment No. 5561/2004, see section 3.2.6 below; Judgment No. 5241/2003, see section 3.2.8 below; Judgment No. 17564/2002, see section 3.2.9 below; Judgment No. 13470/2002, see section 3.2.10 below; Court of Appeal of Venice, Judgment of 26 June 1993, see section 3.2.19 below).

[260] Judgments of 26 June 2003, 4 April 2002, 12 February 2002 and 24 December 2001; see, respectively, sections 3.2.20. 3.2.21. 3.2.22 and 3.2.24 below.

[261] Judgment of 24 September 2003; see section 3.2.27 below.

[262] Judgment of 19 March 2003; see section 3.2.28 below.

[263] Judgment of 3 August 2002; see section 3.2.29 below.

[264] Judgment of 17 January 2001; see section 3.2.32 below.

[265] Judgment of 10 July 2000; see section 3.2.33 below.

[266] Judgment of 26 June 2003; see section 3.2.19 below.

[267] Judgment of 22 November 2001; see section 3.2.31 below.

[268] Judgment of 26 July 2001; see section 3.2.30 below.

[269] Judgment of 26 April 1993; see section 3.2.36 below.

[270] See Supreme Court, Judgments No. 1252/00, No. 11973/95 and No. 11177/94.

[271] See Judgment No. 1071/1990, see section 3.3.18 below; see also Judgments No. 2786/1999 and No. 1746/1988, respectively sections 3.2.16 and 3.3.20 below.

[272] See Judgments No. 30/1989, No. 394/1987 and No. 949/1986, respectively at sections 3.3.12, 3.3.23 and 3.3.25 below.

[273] See Judgments No. 5250/2003 and No. 465/2002, respectively at sections 3.3.2 and 3.3.7 below.

[274] See Judgment No. 4946/2002 at section 3.3.6 below.

[275] See below, Case 3.3.27, footnote.

[276] Apart from the functions identified directly by Article 100 of the Italian Constitution, other functions introduced by ordinary laws have been added. Their constitutional legal basis is Article 97 of the Constitution (principle of good performance of public office), Article 81 (equilibrium of the budget) and Article 119 (coordination of public finances). The Court of Auditors is also responsible for deciding matters relating to civil, military and war pensions. Pension judgements concern both the existence of the right to a pension and the amount of the pension.

[277] Case C-200/97, Ecotrade v Altiforni e Ferriere di Serrola [1998] ECR I-7907.

[278] Case C-295/97, Industrie Aeronautiche e Meccaniche Rinaldo Piaggio SpA [1999] ECR I-3735.

[279] Commission Decision of 16 May 2000 on the aid scheme implemented by Italy to assist large firms in difficulty (Law No. 95/1979 that became Decree No. 26/1979 on special measures for extraordinary administration of large firms in crisis), OJ (2001) L 79/29.

[280] Joint Cases C-91/83 and C-127/83 Heineken Brouwerijen BV v Inspecteurs der Vennootschapsbelasting, Amsterdam and Utrecht [1983] ECR 3435.

[281] The Italian Insolvency Law provides that the Commissioner ("Commissario Straordinario") may propose to commence an action to recover all payments made by the insolvent company, with a view to paying as many creditors as possible before the company is liquidated. The Prodi Law, in oversimplified terms, provided for an alternative procedure for large insolvent undertakings with a view to, on the one hand, paying all creditors and, on the other, saving the insolvent company by avoiding liquidation.

[282] Case C-200/97, Ecotrade v Altiforni e ferriere di Serrola [1998] ECR I-7907.

[283] Case C-295/97, Piaggio v Ifitalia [1999] ECR I-3735.

[284] Case C-200/97, Ecotrade v Altifornie Ferriere di Serrola [1998], ECR I-7907 and Case C-295/97, Piaggio v Ifitalia [1999] ECR I-3735.

[285] Judgments No. 5241/2003, No. 13470/2002 and No. 9681/1999.

[286] Case C-200/97, Ecotrade v Altifornie Ferriere di Derrola [1998] ECR I-7907.

[287] Case C-200/97, Ecotrade v Altifornie Ferriere di Serrola [1998] ECR I-7907.

[288] Cases C-295/97, Piaggio v Ifitalia [1999] ELR I-3735 and C-200/97, Ecotrade v Altigornie Ferriere di Serrola [1998] ECR I-7907.

[289] Cases C-295/97, Piaggio v Ifitalia [1999] ELR I-3735 and C-200/97, Ecotrade v Altifornie Ferriere di Serrola [1998] ECR I-7907 respectively.

[290] Cases C-295/97, Piaggio v Ifitalia [1999] I-3735 and C-200/97, Ecotrade v Altifornie Ferriere di Serrola [1998] ECR I-7907 respectively.

[291] Case C-295/97, Piaggio v Ifitalia [1999] I-3735.

[292] Case C-61/79, Amministrazione delle finanze dello Stato v Denkavit Italiana S.r.l. [1980] ECR 1205.

[293] In particular, the Administrative Supreme Court referred to Council directives No. 92/81/EEC, No. 92/82/EEC and No. 94/74/EEC and Council decisions of 31 October 1992 and 30 June 1997.

[294] Joined Cases C-128/03 and C-129/03, AEM S.p.A., AEM Torino S.p.A. v Autorità per l'energia elettrica e per il gas.

[295] Commission Decision No. 2320/81/ECSC of 7 August 1981 establishing Community rules for aid to the steel industry, OJ (1981) L 228/14.

[296] Decision of 16 September 1998, OJ (1999) L 109/1.

[297] Decision of 11 April 2000, OJ (2000) L 265/15.

[298] Case C-200/97, Ecotrade v Altiforni Ferrieri di Servola [1998] ECR I-7907.

[299] Case C-47/91, Italy v Commission [1992] ECR I-4145.

[300] Case C-364/1990, Italian Republic v Commission [1993] ECR I-02097, judgment of 28 April 1993.

[301] For the appeal, see Administrative Supreme Court, Judgment of 16 March 1992, No. 167, Società Fondiaria Assicurazioni v. Cassa Conguaglio Settore Elettrico on appeal to the Administrative Court of Lazio ("T.A.R. Lazio"), Sec. III, Decision of 11 June 1990, No. 1071, asking for a preliminary ruling from the ECJ. For similar conclusions, see also Administrative Supreme Court, Judgment of 16 March 1992, No. 168, Società Terni et a. v. Cassa Conguaglio Settore Elettrico; Administrative Supreme Court, Sec. Vl, Società Terni v. Società Italsider and Cassa Conguaglio Settore Elettrico. See also Administrative Supreme Court, Sec.: VI, Judgment of 29 March 1995, No. 312, Società Terni Spa et a. v. Cassa Conguaglio Settore

[302] See Administrative Court of Veneto ("T.A.R. del Veneto"), Judgment of 10 June 1987, No. 616, according to which Article 17 of Law No. 64/86 "is a regulation which, although granting privileges, is aimed at promoting Constitutional social goals. For the same reason, it cannot be deemed in violation of the EC Treaty, as it considers as compatible with the Common Market those aids which "promote the economic development of areas where the standard of living is much lower than the national average or where there is a high rate of unemployment".

[303] See ECJ, Case C-77/72, Carmine Capdango v. Azienda Agricole Maya [1973] ECR 611, and Case C-73/76, lannelli & Volpi SpA v Ditta Paolo Merani [1977] ECR 557 and Case C-78/76, Steinike & Weinlig v Federal Republic of Germany [1977] ECR 595.

[304] A similar reasoning is also used in relation to the aids provided for by Article 10 of Law No. 60/1963, which reserved 70% of the contracts for areas of Southern Italy. See Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Sec. III, Ordinance of 23 October 1992, No. 1329, Lombardia v. C.I.P.E. et a.

[305] Similarly, Regional Administrative Court of Lombardia, Brescia ("Tribunale Amministrativo Regionale della Lombardia, Brescia"), Judgment of 12 August 1988, No. 634, Istituto Behring v. U.S.L. No. 34 of Chiari et a.; Regional Administrative Court of Lazio ("Tribunale Amministrativo Regionale del Lazio"), Sec. I, Judgment of 17 November 1988, No. 1582, Laboratori Bruneau v. U.S.L. RM-24. To the contrary, Regional Administrative Court of Campania, Naples ("Tribunale Amministrativo Regionale della Campania", Napoli), Judgement of 22 October 1990, No. 545, B. Braun v. U.S.L. No. 40 of Naples, according to which "the national judge is entitled to ascertain if domestic law provisions are in contrast with Community regulations [...]; furthermore the Regional Administrative Court is entitled to provide its interpretation of Community regulation, as [...] the request for a preliminary ruling from the Court of Justice is mandatory only for the Courts of last instance". According to this judgement, "pursuant to Art.[88 (3)] EC Treaty, States are under the obligation not to carry out plans to grant or alter aids timely notified to the Commission only if the Commission has started the procedure set forth in Art.[88 (2)]; if the Commission has not yet started the procedure, the Member States can implement their plans if a two-month time-span has expired. The two-month time-span is set forth by Articles 173 and 175 EC Treaty and is applicable by analogy to the cases of the [ECJ]".

[306] On appeal, however, the Administrative Supreme Court expressed a slightly different opinion. According to the Administrative Supreme Court the decisions taken by the Commission pursuant to Article 93 [now 88] EC have the same effect as Community Directives and, therefore, are not directly applicable. Consequently, when the Commission issued a decision requesting the annulment of State aid that was declared incompatible with the Common Market, the State must, first, modify its legislation and, then, repeal the administrative acts adopted to implement such legislation. See Administrative supreme Court, Sec.: VI, Judgment of 2 December 1988, Società Cooperativa Trasporto Latte v. Ministry of Transportation. See also Administrative Supreme Court, Sec.: VI, Judgment of 24 January 1989, Cooperativa Carrettieri "La Rinascita" et alia v. Ministero dei Trasporti et a..

[307] For similar conclusions, see Court of Auditors, Sec. Contributi Stato, 14 June 1996, No. 88, Department of Treasury.

According to this decision "derogations from competition allowed in the Treaty of Rome concerning revenue-producing monopolies or administrations of 'general economic interest' (Articles [86 and 87] EC), apply not only to absolute monopolies but a/so to 'mixed ownership' businesses, that is businesses in which both monopolies or general economic interest companies and profit-earning private companies operate."

[308] See ECJ, Case C-21/88, Du Pont de Nemours Italiana v Unità Sanitaria Locale No 2 di Carrara [1990] ECR 889.