Italian Republic v Commission of the European Communities.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Macken
• ECLI: ECLI:EU:C:2003:278
• Date: 15 May 2003
• Docket Number: C-298/00
• Procedure Type: Recurso de anulación

OPINION OF ADVOCATE GENERAL

ALBER

delivered on 15 May 2003 (1)

Case C-298/00 P

Italian Republic

v

Commission of the European Communities

(State aid – Carriage of goods by road – Existing and new aid – Principle of protection of legitimate expectations – Principle of proportionality – Duty to state reasons – Cross-appeal – Admissibility of the action at first instance – Concern to individuals of a decision regarding an aid scheme)

I – Introduction

1. The present dispute concerns State aid granted by the Friuli-Venezia Giulia Region to road haulage undertakings between 1981 and 1995. In its decision of 30 July 1997 (2) the Commission declared the aid in question to be partly incompatible with the common market and to that extent ordered that it be recovered. The Court of First Instance, ruling on an action brought by undertakings affected by that decision, declared the decision to be partly void. (3)

2. In the present action the Italian Republic, which at first instance supported certain applicants as intervener, challenges the judgment of the lower court. The Commission has lodged a cross-appeal claiming that the action brought before the Court of First Instance was inadmissible. It considers that the decision addressed to Italy concerning an aid scheme prescribed by law is not of individual concern to the beneficiaries even if recovery of the aid is ordered in the decision. In the Commission’s opinion, the Court of First Instance ought to have examined the issue of admissibility of its own motion.

3. The Italian Republic has likewise brought an action before the Court for the Commission’s decision to be annulled. That action is pending under reference C‑372/97. (4)

4. The main point at issue is the extent to which the aid in question was such as to distort competition in the markets concerned, which at least in the early part of the period in which the aid was paid were not yet fully liberalised. Another point at issue is whether the principle of the protection of legitimate expectations and the principle of proportionality militate against a requirement that the aid be recovered.

II – Legal framework and background to the dispute

A – Community law

5. In the area of transport the general provisions concerning State aid contained in Article 92 of the EC Treaty (now, after amendment, Article 87 EC) and Articles 93 and 94 of the EC Treaty (now Articles 88 and 89 EC) are applicable save where the special provisions of Article 77 of the EC Treaty (now Article 73 EC) apply. Council Regulation (EEC) No 1107/70 of 4 June 1970 on the granting of aids for transport by rail, road and inland waterways (5) sets out the conditions under which the Member States may grant permissible aid within the meaning of Article 77 of the EC Treaty.

6. During the period in which the aid at issue was granted, road haulage in the Community was still in the process of liberalisation. In this connection a distinction must be made between, on the one hand, the international road haulage market for cross-border transport and, on the other, cabotage, that is to say the carriage of goods within one Member State by a carrier established in another Member State.

7. The international road haulage market was opened up between 1969 and 1992, beginning with Council Regulation (EEC) No 1018/68 of 19 July 1968 concerning the establishment of a Community quota for road haulage between the Member States (hereinafter ‘Regulation No 1018/68’). (6) The Community quota provided for in the Regulation and subsequently expanded by stages was divided among the Member States. Undertakings were entitled to provide, within the quotas allocated to their respective Member States, cross-border haulage services. This market was fully liberalised as from 1 January 1993. (7)

8. Liberalisation of cabotage did not begin until 1 July 1990. Here again quotas were established in the first instance; these were expanded by stages through to complete opening of the market on 1 July 1998. (8)

B – The contested aid provisions of the Friuli-Venezia Giulia Region

9. Friuli-Venezia Giulia Regional Law No 28 of 18 May 1981, on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter ‘Law No 28/1981’), provided for certain aid measures in favour of road haulage contractors established within that region.

10. The scheme introduced by that law was replaced by Regional Law No 4 of 7 January 1985 on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the carriage of goods by road for hire or reward (hereinafter ‘Law No 4/1985’), which essentially contained the same provisions on aid.

11. The above laws provided for three measures, which in simplified terms can be described as follows:

– subsidies in respect of interest on loans contracted for the purpose of the development of infrastructures (construction, purchase and modernisation of premises) and for the purchase of equipment, including road transport vehicles (Article 4 of Law No 4/1985);

– financing of the cost of leasing vehicles, trailers and semi-trailers, together with equipment for the maintenance and repair of vehicles and for the handling of goods (Article 5 of Law No 4/1985); and,

– in favour of groups and other forms of association, financing of up to 50% of investment in the construction or purchase of particular installations and equipment (Article 6 of Law No 4/1985).

12. Between 1981 and 1995, 2 202 applications were accepted and aid totalling in excess of EUR 22 million was disbursed.

13. The Friuli-Venezia Giulia Region suspended allocation of the aid concerned with effect from 1 January 1996 and, between September and December 1997, sent letters to the undertakings concerned notifying them of the Commission’s decision and informing them that the aid was to be recovered.

C – The contested decision

14. On 30 July 1997 the Commission adopted the contested decision, (9) on completion of the administrative procedure. The operative part of that decision is worded as follows:

‘Article 1

Subsidies granted under Laws No 28/1981 and No 4/1985 [...] up to 1 July 1990 to companies exclusively engaged in transport operations at local, regional or national level do not constitute State aid within the meaning of Article 92(1) of the Treaty.

Article 2

The subsidies not covered by Article 1 of this Decision constitute aid within the meaning of Article 92(1) of the Treaty and are illegal since they were introduced in breach of Article 93(3).

Article 3

The subsidies for financing equipment specifically adapted for, and used solely for, combined transport constitute aid within the meaning of Article 92(1) of the Treaty but are compatible with the common market by virtue of Article 3(1)(e) of Regulation (EEC) No 1107/70.

Article 4

The subsidies granted from 1 July 1990 onwards to companies engaged in transport operations at a local, regional or national level and to undertakings engaged in transport operations at an international level are incompatible with the common market since they do not fulfil any of the conditions for derogation provided for in Article 92(2) and (3) of the Treaty, or the conditions provided for in Regulation (EEC) No 1107/70.

Article 5

Italy shall abolish and recover the aid referred to in Article 4. The aid shall be reimbursed in accordance with the provisions of domestic law, together with interest, calculated by applying the reference rates used for assessment of regional aids, as from the date on which the aid was granted and ending on the date on which it is actually repaid.

[...]’

15. In its statement of reasons, the Commission explained inter alia that the subsidies covered by Article 1 did not constitute aid within the meaning of Article 92(1) of the Treaty because the cabotage market had been closed to competition until 1 July 1990. Otherwise, however, competition had already existed in the markets concerned – albeit in the framework of quota arrangements – and the measures at issue were potentially such as to affect that competition.

III – Proceedings before the Court of First Instance and the contested judgment

16. A total of 165 undertakings to which the decisions were of concern brought actions (gathered into group actions in some cases) before the Court of First Instance for the annulment, in whole or in part, of the contested decision.

17. In its judgment of 15 June 2000, (10) the Court of First Instance allowed the applications in part and found Article 2 of the decision to be null and void in so far as it declared aid granted from 1 July 1990 onwards to undertakings engaged solely in local, regional or national transport to be illegal. The corresponding order, in Article 5 of the contested decision, that such aid be recovered was also set aside. For the rest the applications were rejected.

18. The Court of First Instance considered that aid granted after 1 July 1990 to undertakings engaged solely in transport operations within Italy constituted existing aid and not, as the Commission took to be the case, new aid. The aid scheme had been introduced at a time when the cabotage market had not yet been liberalised and did not therefore at that juncture infringe Article 92 of the Treaty. The liberalisation, for which the Member State concerned was not responsible, could not result in existing and previously permissible aid becoming new aid that had to be notified to the Commission. (11)

19. The Court of First Instance also annulled the order for the recovery of the aid wrongly classed by the Commission as new aid, on the ground that existing aid could only be held incompatible with the common market ex nunc. (12)

20. The other pleas in law were rejected by the Court of First Instance. It held in particular that the small size of the undertakings concerned, the fact that...