Commission of the European Communities v Italian Republic.

• Jurisdiction: European Union
• Celex Number: 61993CC0350
• ECLI: ECLI:EU:C:1995:20
• Court: Court of Justice (European Union)
• Date: 02 February 1995
• Procedure Type: Recurso por incumplimiento – fundado
• Docket Number: C-350/93

61993C0350

Opinion of Mr Advocate General Jacobs delivered on 2 February 1995. - Commission of the European Communities v Italian Republic. - Failure to fulfil obligations - State aid incompatible with the common market - Recovery - Public holding. - Case C-350/93.

European Court reports 1995 Page I-00699

Opinion of the Advocate-General

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1. This is one of three related cases in which the Commission has instituted proceedings under Article 93(2) of the Treaty against Italy. (1) In the present case the Commission seeks a declaration that, by failing to implement its Decision 89/43/EEC of 26 July 1988 on aids granted by the Italian Government to ENI-Lanerossi, (2) Italy has failed to fulfil its obligations under the Treaty. The proceedings raise the same issue as that raised in Case C-348/93, namely whether, in a case where unlawful State aid has been paid indirectly through a public undertaking, the aid must be repaid to that undertaking or to the State. I shall therefore refer where appropriate to my Opinion in Case C-348/93.

2. ENI (Ente Nazionale Idrocarburi), a State holding company, took over the Lanerossi group in 1962 with a view to resolving the financial problems of a number of textile and clothing companies which were part of that group. Despite restructuring efforts, four subsidiaries of Lanerossi in the men' s outer wear sector, namely Lanerossi Confezioni, Intesa, Confezioni di Filottrano, and Confezioni Monti ("the four subsidiaries") continued to make heavy operating losses which, for a number of years, were made up by the State.

3. By a letter of 20 May 1983 addressed to the Italian Government ("the Government"), the Commission stated that it had not objected to the grant of aid until the end of 1982 in view of the social and regional importance of the four subsidiaries. It doubted, however, whether financial assistance from public funds could continue to be paid to them in the future without interfering with the orderly functioning of the common market. It invited the Government to notify it of any plans to grant aid in the future in accordance with Article 93(3) of the Treaty.

4. Although the Government responded that no further aid was envisaged for the four subsidiaries, it continued to cover their operating losses through public funds after the end of 1982. The Commission took the view that that was State aid and that the Government had failed to fulfil its obligations under Article 93(3) since it had granted the aid without prior notification. Consequently, it initiated the procedure provided for in Article 93(2) by a letter of 19 December 1984.

5. On the basis of information submitted by the Government during that procedure, the Commission established that, between 1983 and 1987, ENI had received State aid in the form of capital injections in order to cover the operating losses of the four subsidiaries. The total amount of aid was LIT 260.4 thousand million. In particular, ENI received aid of LIT 78 thousand million in 1983, LIT 56.8 thousand million in 1984, LIT 42.2 thousand million in 1985, LIT 45.9 thousand million in 1986 and LIT 37.5 thousand million in 1987. (3) The Commission took the view that the aid was incompatible with the common market.

6. On 26 July 1988, the Commission adopted the decision in issue in these proceedings, Articles 1, 2 and 3 of which provide as follows:

"Article 1

The aids granted between 1983 and 1987 to ENI/Lanerossi in the form of capital injections in favour of the group' s men' s outer wear subsidiaries and amounting to LIT 260.4 billion are illegal as they were provided in violation of the provisions of Article 93(3) of the EEC Treaty. Moreover, they are incompatible with the common market within the meaning of Article 92 of the Treaty.

Article 2

These aids shall be withdrawn by recovery.

Article 3

The Italian Government shall inform the Commission within two months of the date of notification of this Decision of the measures taken to comply herewith."

7. The decision was notified to the Government by letter of 10 August 1988. The Government did not take the measures necessary to recover the aid. It brought an action for the annulment of the decision which was dismissed by the Court in its judgment in Case C-303/88 Italy v Commission, (4) hereafter referred to as "Lanerossi I". Among the submissions of the Government which were rejected by the Court in "Lanerossi I" were submissions to the effect that the Commission attributed unlawful effects to Italy' s failure to notify the aid, that the order for recovery of the aid was insufficiently reasoned, and that it was impossible to recover the aid. In response to the Government' s argument that it was uncertain from whom the aid was to be recovered, the Court held that the aid was to be recovered from the undertakings which actually benefited from it, namely the four subsidiaries. (5) In "Lanerossi I", however, the Court examined only the issue which entity is responsible for repaying the aid. It did not examine the issue to which entity the aid must be repaid in order to comply with the decision. (6)

8. Following the judgment of the Court, the Commission invited the Government to take the necessary measures to comply with the decision. On 24 May 1991 the Italian authorities informed the Commission that recovery of the aid was proving difficult. In particular, although the Minister responsible...