C-303/88

The aids granted between 1983 and 1987 to ENI/Lanerossi in the form of capital injections in favour of the group's mens outer wear subsidiaries and amounting to LIT 260.4 [thousand million] are illegal as they were provided in violation of the 2. It appears from the contested decision provisions of Article 93(3) of the EEC that in 1962 Lanerossi SpA was taken over Treaty. Moreover, they are incompatible by the State holding company Ente with the common market within the Nazionale Indrocarburi (ENI) in order to meaning of Article 92 of the EEC Treaty. resolve the economic and financial problems of a number of private textile and clothing companies which had in turn been taken Article 2 over for that purpose by Lanerossi. 2It also appears that by means of considerable restructuring efforts it was possible over the These aids shall be withdrawn by recovery. years to return some of those subsidiaries to viability but that four subsidiaries in the mens' outer wear sub-sector (Lanerossi Article 3 Confezioni, Intesa, Confezioni di Filottrano and Confezioni Monti) continued to make losses and to receive financial assistance The Italian Government shall inform the from the State in the form of loss compen- Commission within two months of the date sation. 3

* Original language Dutch 2 — Contested decision, Part I, first paragraph 1 — OJ 1989 L 16. p. 52 3 — Contested decision, Part I, second and third paragraphs

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In a reminder dated 22 July 1983, the defendant reiterated that no further aid in favour of those undertakings could, in view of their history and the state of the market concerned, be regarded as compatible with In a letter of 20 May 1983 the defendant the common market. 9 By letter of 2 concluded that past efforts to restructure the November 1983 the applicant informed the four undertakings had not been successful. defendant that no further aid was envisaged, Losses between 1980 and 1982 had reached and that ENI/Lanerossi's management well over LIT 150 thousand million and a regarded those factories as unrestructurable, speedy recovery was not to be expected. 5 so that the restructuring programme for The defendant went on to point out that the 1983 to 1986 would not be implemented. 10 applicant had informed it of the restruc- turing programme for the year from 1983 to 1986 and that the undertakings were expected to continue to rely heavily on State intervention and public funds in order to make up their losses. 6In view of the social and regional importance of those under- takings, the defendant raised no objections Following press reports that the factories to the aid granted until the end of 1982, but concerned continued to suffer losses and, in expressed doubts as to whether assistance order to avoid insolvency, would probably from public funds in order to cover have to solicit aid from the State again, the operating deficits could in future be defendant repeatedly asked the applicant to submit information as to the true state of 4 — Contested decision, Part I, third and fourth paragraphs. affairs. By letter of 30 August 1984 the 5 — Contested decision, P a n I, sixth paragraph. It may be noted that in the same letter the defendant informed the applicant that in respect of another of Lanerossi's sub- sidiaries in the same sub-sector, namely Lebole SpA, the 7 — Contested decision, Part I, seventh paragraph. assistance which it had received in the form of compen- 8 — Contested decision, Part I, eighth paragraph. sation for losses was matched by restructuring efforts 9 — Contested decision, Pan I, ninth paragraph. already implemented and to be implemented shortly afterwards, with the result that the aid granted could 10 — Contested decision, Part I, tenth paragraph. The applicant benefil from the derogation in Article 92(3)(c) (contested has so far failed to produce, at the Court's request, a copy decision, Part I, fifth paragraph). of that letter, whose contents it does not dispute, with the result that the form in which it is reproduced in the 6 — Contested decision, Part I, sixth paragraph. decision may be considered accuraie.

applicant acknowledged that in respect of that had been promised, and even then it 1983 it had granted compensation for losses was incomplete. 14 At a bilateral meeting on and at the same time transmitted to the 12 June 1986 the applicant confirmed that defendant a summary of a new restructuring the factories in question had received aid programme. It was clear from that summary from the State in the form of loss compen- that losses would have to be made up in the sation amounting to LIT 78 thousand future as well. 11 The credibility of that million in 1983, LIT 56.8 thousand million structuring programme, however, is open to in 1984 and LIT 42.2 thousand million in question since it appeared from that letter 1985, and that the factories would either be that ENI/Lanerossi's management still transferred to the private sector, or recon- considered the factories to be unrestruc- vened to other activities, or both. 15 A turable. definitive solution, the applicant reiterated, would take time. After the Commission had

require further intervention by the State. 12 At a bilateral meeting held on 21 June 1985 the applicant announced additional infor- mation on the new programme 'to restructure certain parts of these factories and to reconvert others' and indicated that this would shortly lead to a definitive 4. At a bilateral meeting on 11 September solution. 13 1987, it transpired that a transfer of the factories to the private sector and a recon- version to other activities was under way but had not yet been finalized. 17 Finally, the

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1987. As it had already stated at the meeting on 26 January 1988, the applicant confirmed that as a result of the various transfers, of the original 3 563 employees in 1983 38% would have taken early retirement, 25% would have been trans- ferred to the private mens' outer wear sector In reply to the Court's request that it submit (civil), 20% to the private mens' outer wear all the relevant restructuring programmes, sector (military) and 17% to other explain how those programmes eliminated sub-sectors of the textile and clothing or reduced over-capacity between 1979 and industry and other branches of industry, for 1987 and furnish proof that production instance shoes. 19 According to the applicant, capacity had been reduced, the applicant production (capacity) had been reduced and was unable to refer to any restructuring transferred in the same manner and to plans other than those mentioned above. the same extent. 20 According to the The applicant confined itself to an a Commission, however, it was by no means posteriori description of a complex series of certain that production capacity had really corporate transactions in which the various been reduced by 5 5 % , as the applicant establishments of the four businesses asserted. 21 concerned changed hands (although the reasons for those transactions are not always clear) and to a factual survey of the changes in the workforce (-40% between 1983 and 1990), the volume of production (-38% between 1980 and 1985), production capacity (-30% between 1983 and 1987),

In other be worked out in detail, even though the words, the applicant has failed to establish a factories had been regarded as unrestruc- clear link between reductions observed turable by the management itself since 1983. subsequently and specific restructuring measures drawn up in advance. 18 — Contested decision, Part III, tenth and twelfth paragraphs. 19 — Contested decision, Part III, tenth and twelfth paragraphs. 22 — Contested decision, Part III, sixth and twelfth paragraphs; 20 — Contested decision, Part III, tenth paragraph. and Part VII, seventh, tenth, eleventh and twelfth para- 21 — Contested decision, Part IX, fourth paragraph. graphs.

In a recent judgment of 2 February 1988, 24 the Court acknowledged, moreover, that the grant of a financial benefit to energy Aid granted by a Member State or through consumers through the lowering of tariffs State resources in any form whatsoever (thus forgoing profits) by a company incor- porated under private law 50% of whose capital is held by the State, which also appoints half of the members of the super- visory board, must be regarded as State aid since it was also clear that the undertaking 6. According to Article 92(1) of the EEC did not enjoy 'full autonomy' but acted Treaty, 'any aid granted by a Member State under the control and on the instructions of or through State resources in any form the public authorities. whatsoever . . . ' is incompatible with the common market where it distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and affects 7. In this case the aid was implemented and intra-Community trade. The requirement of financed by ENI through its wholly owned an adverse effect on trade will be discussed subsidiary Lanerossi SpA. below (in section 17 et seq.), following consideration of the distortion or threatened distortion of competition (in section 8 et seq.).

creation by law and organization as a In those circumstances it cannot, in my company incorporated under public law view, be disputed that the funds provided by (Article 1), strict State supervision over all ENI through its subsidiary Lanerossi SpA of its organs (Articles 11 to 17) and over the constitute indirect State aid, and were also adoption of important decisions (Articles 4, granted through State resources in the 8, 10, 21 and 23), the possibility of broad sense applied by the Court in its obtaining expropriation orders for its benefit case-law. It makes no sense, therefore, as (Article 23), monopoly rights (Article 2) and the applicant still advocated at the hearing, so on. In my view, it is clear from that to demand proof that State resources were scheme and from the structure of its powers specifically earmarked or that there was an that ENI and its wholly-owned subsidiaries official, published and specific instruction are State bodies for the purposes of Article from the government to ENI to rescue 92(1) through which State aid is chan- Lanerossi's four subsidiaries. That would nelled. 26 deprive the provisions of the EEC Treaty on aid of their effectiveness and greatly facilitate their circumvention.

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criterion as the relevant criterion for its (eighth recital). In this case it was the assessment: absence of the possibility of raising finance on the private capital market which indicated that the contribution in question amounted to aid in the light of three ‘3.3 … there is State aid where fresh capital factors, namely the financial structure of the is contributed in circumstances that would undertaking, its urgent need for not be acceptable to a private investor replacement investments and the over- operating under normal market economy capacity in the paperboard-processing conditions. sector. In the Commission's opinion those factors made it unlikely that the under- taking would be able to raise on the private capital markets the funds essential to its This is the case: survival (ninth recital) [paragraph 20].

(i) where the financial position of the company, and particularly the structure That statement of reasons satisfies the and volume of its debt, is such that a requirements of Article 190 of the EEC normal return (in dividends or capital Treaty since it is sufficient to permit a gains) cannot be expected within a review by the Court and gives those reasonable time from the capital concerned an appropriate opportunity to invested; …’ express their views on the accuracy and relevance of the alleged facts and circum- stances [paragraph 21].’

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taking would be able to obtain the sums in It follows from the foregoing considerations question on the private capital markets. In that, in the light of the information available the case of an undertaking whose capital is to it at the time, the Commission was right held by the public authorities, the test is, in to consider that the undertaking would very particular, whether in similar circumstances probably be unable to raise the sums a private shareholder, having regard to the essential for its survival on the private foreseeability of obtaining a return and capital markets and that the additional leaving aside all social, regional-policy and subscription of capital by SRIW therefore sectoral considerations, would have constituted a State aid [paragraph 17].' subscribed the capital in question [paragraph 14].

12. In the light of that case-law, the applicant claimed that the four subsidiaries In so far as the Belgian government concerned were in fact the object of a contends that the subscription of capital in restructuring operation which, however, question was linked to the implementation lasted longer than anticipated, and that the of a plan for reorganizing the undertaking, capital injected in connection with that it must be emphasized that the legality of operation was necessary for the under- the contested decision is to be assessed in takings' survival. Those injections of capital the light of the information available to the must therefore be considered permissible Commission when the decision was since it would have been reasonable for a adopted. Although the existence of a reor- private investor to have acted in the same ganization plan was in fact briefly way. mentioned by the Belgian authorities in their correspondence with the Commission, the 35 — See the judgment in Case C-142/87 Belgium v Commission content of that plan was never notified to it [1990] ECK 1-959, at paragraphs 26 to 30, and the in the course of the procedure under Article judgment in Case C-301/87 France v Commission [1990] ECR 1-307, at paragraphs 38 to 41 and 54. 93 of the Treaty [paragraph 16]. 36 — Contested decision, Part II.

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However, it Unequal treatment of public and private would be in breach of its obligations undertakings towards its shareholders, creditors and employees if it covered the losses of under- takings operating in a sector characterized by over-capacity and accumulated losses amounting to a substantial share or even the 13. Carrying on from the foregoing, it is whole of its turnover without drawing up a necessary to consider the principle of equal serious restructuring plan and attempting to treatment of public and private under- implement it to the best of its ability. takings.

14. It seems to me that in that regard public assessed in the light of Article 92) to grant and private undertakings do not operate in aid over a number of years, not to say fundamentally different ways. The phrase in decades, if it transpired on the expiry of a the Mettra judgment to the effect that the reasonable period that restructuring was public authorities must be compared with a private shareholder in similar circumstances 37 — Judgment in Case 234/84 Belgium v Commission [1986] who takes a decision to subscribe capital ECR 2263, at paragraph 14.

impossible and that this was acknowledged justify the compatibility of the aid with the by the management as well. It seems to me common market. According to the that the behaviour of a public holding applicant, at least one of the factories of the company should not be assessed in a funda- four subsidiaries concerned is located in a mentally different manner. Admittedly, a province which is regarded as eligible for holding company of that kind must pay Community aid under Council Regulation special attention to social and policy No 219/84; 3 8on that ground, it says, considerations but it cannot and may not compensation for losses is exempt under ignore the laws of the market place, Article 92(3)(a) of the Treaty. precisely on account of the principle of equality between public and private under-

The argument that a private holding company would not allow the group's reputation to 16. In my view, the Commission's position be tarnished by an insolvency cuts both is correct. Since the Court's judgment in ways. In a specific case it may be equally Philip Morris it has been clear that the damaging to the credibility of a holding Commission has a broad discretion with company, whether public or private, for it regard to the grant of exemption under to keep in operation subsidiaries which Article 92(3) of the EEC Treaty; 40 in other continue to sustain losses equal to their words, there is no enforceable, let alone turnover. directly applicable, right to exemption for national measures based on considerations of regional policy. In the contested decision (Parts VII and VIII) the Commission explained convincingly that the applicant had failed to comply with the guidelines

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42 — Judgment in Case 234/84 Belgium v Commision [1986] Preventing the distortion of competition in ECR 2263, at paragraph 22. Reference in the penultimate paragraph of Part VIII of the contested decision. favour of an entire sector of domestic 43 — Part VIII, first paragraph; and Part VI, second paragraph. industry is an aim of Article 92 which is of 44 — Part VI, third paragraph, and P a n VII, eleventh paragraph. 48 — Case 259/85 France v Commission [1987] ECR 4393, at 45 — Contested decision, Part VI, third paragraph. paragraph 24. 46 — Contested decision, Part VI, first paragraph. 49 — Judgment in Case 102/87 France v Commission [1988] 47 — Contested decision, Part VI, tenth paragraph. ECR 4067, at paragraph 19.

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'In that regard, the French Government claims that the loan at issue cannot be Those facts were not contested by the regarded as affecting trade between French Government. However, it pointed Member States and competition. It also out that the Commission neither found alleges that there is nothing in the decision over-capacity in the brewing sector nor to elucidate the Commission's reasoning on indicated the borrowing undertaking's share that point [paragraph 17]. of exports to other Member States. However, aid to an undertaking may be such as to affect trade between the Member States and distort competition where that undertaking competes with products coming from other Member States, even if it does It must be observed that the contested not itself export its products. Such a decision examines the beer market in situation may exist even if there is no over- capacity in the sector at issue. When a 50 — In thai connection, see the Eighteenth Repon on Compe- Member State grants aid to an undertaking, tition Policy — 1988, 1989, point 164, third paragraph. domestic production may for that reason be 51 — In its judgments in Case 730/79 Philip Morris v maintained or increased with the result that, Commission [1980] ECR 2671, at paragraph 11, and in Case 259/85 France v Commission (1987] ECR 4393, at in circumstances such as those found to paragraph 16, adopted by the Court in its judgment of 21 March 1990 in Case C-142/87 Belgium v Commission exist by the Commission, undertakings (Tubemeuse) 11990] ECR 1-959, at paragraph 43, the Court established in other Member States have less pointed out that the small size of the undertaking in receipt of aid or the small amount of aid does not as such exclude chance of exporting their products to the the possibility that trade between Member States may be market in that Member State. Such aid is affected The judgment in SEB, however, goes even further. therefore likely to affect trade between

Article 93(3) and the failure to notify the aid It is implicitly but unmistakably apparent from those considerations that once an undertaking in receipt of aid operates in a market in which producers from different Member States are actually in competition 21. The applicant claims to have complied with one another, the Commission can with Article 93(3) in substance. In its view, reasonably conclude that the requirement of the defendant was given an opportunity to an adverse 'effect on trade between Member submit its comments in good time. The aid States' is satisfied. According to the Court, a was paid only when the defendant refrained situation of that kind can arise even when from stating its position for four years. there is no over-capacity in the sector Since the survival of an undertaking is a concerned, unlike the position in this case. matter of some importance, the Commission It follows, in my view, that it is only in should have reacted sooner if it intended to respect of products in which there is no do so at all. cross-frontier trade on account of very high transport costs or other particular circum- stances that it is still possible in the present state of market integration to conceive of aid which does not satisfy the requirement The applicant's plea to the effect that it of an effect on trade. complied with Article 93(3) has no basis in fact, because the aid granted from 1 January 1983 onwards was not properly notified even though the applicant had undertaken by telex message of 24 June 1983 to notify ail future measures (see section 2 above). 52 It was only some considerable time after the material events — and after repeated In the light of that case-law, it seems to me insistence on its part, its suspicions having that the applicant's plea cannot succeed. been aroused by press reports — that the The figures produced at the Court's request defendant was officially informed of the fact in no way detract from that conclusion: the that aid had nevertheless been granted in Italian producers' share of the market in the 1983 and subsequent years. It is self-evident textile and clothing sector as a whole rose that the requirement of notification applied from 27.1% to 29.1% between 1983 and in respect of every measure making up 1987; for the four categories of mens' outer losses which took place after 1 January wear at issue in this case, their average 1983. Since the defendant had made it clear market share between 1983 and 1987 remained fairly stable at a high level, 52 — Contested decision, Part I, eight paragraph, referred to in namely between 3 5 % and 40%. I therefore section 2 above. The applicant has still not succeeded in producing a copy of that telex at the Court's request, and conclude that the Commission remained nas not contested its contents, so that the form in which it is reproduced in the Commission's decision may be within the limits of its power of assessment regarded as accurate.

that no further operating aid could be Recovery of the aid — legitimate expec- allowed after the end of 1982 and the tations applicant had already notified the Commission in November 1983 that the management regarded the undertakings concerned as unrestructurable, the applicant should have assumed that it would not 23. The applicant puts forward various obtain authorization to grant such aid. arguments in support of the view that the However, that is no excuse for infringing recovery of the aid complained of, required the duty of notification, quite the contrary. by the Commission, is unlawful. In the first place, it adduces an argument based on the principle of the protection of legitimate expectations. Secondly, it states that it is impossible to recover the sums paid to make up losses because no account was taken of the possibility of recovery when the conditions for the sale of the four subsi- 22. In addition, the applicant and the diaries to the private sector were laid down. defendant have also expressed their views Thirdly, the applicant claims that recovery on a matter which is not relevant to the presupposes the exercise of discretion, for solution of the present dispute, namely which reasons must be stated, which was whether the absence of notification is in not done in this case, and that the identity itself sufficient to bring the aid into conflict of the persons who are to enforce the order with the Treaty. A significant indication in for recovery is not made clear. that regard emerged from the Court's judgment in the Boussac case. 53 In that judgment, the Court considered that the absence of notification did not necessarily render any examination of the fundamental Taking the last argument first, the requirements superfluous: it is only where Commission states in reply that it is the Member State has disregarded a specific immediately apparent from Article 93(2) of order from the Commission to provide the Treaty — which provides for the information concerning aid which has not abolition (or alteration) of aid — that the been notified that the Commission can call order for recovery does not need to be for the recovery of the aid without a based on specific reasons. It can be inferred (thorough) examination of the conditions from the Court's judgment in Case 70/72 for exemption in Article 92(2) and (3) (see that the reasons which the Commission paragraph 22). must state in its decision relate to the incompatibility of the aid with the Treaty; 54 if reasons are stated in that regard, the Commission can require the aid to be recovered at once. That is correct, in my view. The abolition or alteration of aid and, consequently, its recovery if it has already As I have said, this matter is not relevant been granted is the 'logical consequence' 55 here since in this case the aid was in fact 54 — Judgment in Case 70/72 Commission v Germany [1973] examined in relation to the fundamental ECR 813, at paragraph 20. requirements of Article 92. 55 — Judgment in Case C-142/87 Belgium v Commission [1990] ECR 1-959, at paragraph 66, with reference to the judgment in Case 310/85 Deitfil v Commission [1987] ECR 53 — Case 301/87 France v Commission [1990] ECR 1-307. 901.

It is quite proper for the Commission to 25. As the defendant rightly contends, this state as accurately as possible from whom plea cannot be upheld. It is quite clear from the aid is to be recovered. Usually, it is the the chronological order of events, as set out recipient of the aid, that is to say in this in the contested decision and not disputed case, according to Article 1 of the contested in any way by the applicant, that any delay decision, 'ENI/Lanerossi', which means the on the defendant's part in initiating subsidiaries in receipt of the aid, the 'parent' proceedings was attributable primarily to the (Lanerossi SpA) and the 'grandparent' applicant's delay in providing information (ENI). In a situation such as this, in which and to the applicant's breach of the duty of there was a failure to notify the grant of aid notification which it had undertaken to in advance and which is far from trans- comply with. parent, that information is sufficient. As I shall point out (in section 27), moreover, it is for the Member State concerned to submit proposals to the Commission, where appropriate, concerning the procedure for recovery and, consequently, the persons from whom recovery is to be claimed. The The latter point is apparent from the fact applicant's first argument must therefore be that in a telex message of 24 June 1983 the rejected. applicant undertook to notify all future measures in favour of the four subsidi- aries. 57 The Court requested the applicant to produce a copy of that telex message, but the applicant has not yet done so. Having received information that the four under- 24. I now turn to the argument concerning takings were continuing to suffer the protection of legitimate expectations. considerable losses, the defendant sent the According to the applicant, the Court's applicant a reminder on 22 July 1983. 58 In a judgment in the RSV case must be applied letter of 2 November 1983 the applicant in this case. 56 In that judgment, the Court replied that no further aid was envisaged in stated that by allowing 26 months to elapse favour of the four subsidiaries. 59 The before terminating the procedure under applicant has not produced that letter either. Article 92, the Commission had failed to 57 — Contested decision, Part I, eighth paragraph. 56 — Judgment in Case 223/85 RSVv Commisiion [1987] ECR 58 — Contested decision, Paa I, ninth paragraph. 4617. 59 — Contested decision, Part I, tenth paragraph.

On 14 December 1984, thirteen months aher 26. It is also difficult to maintain that the the applicant had confirmed for the second length of the official procedure itself, from time that no further aid would be granted in its initiation in December 1984 until the 1983 or in subsequent years without prior notification of the contested decision in notification and authorization, the August 1988, can in any way assist the defendant officially requested the applicant applicant in its arguments. A chronological to submit its observations in accordance survey of that period in the contested with the procedure under the first decision reveals an impressive series of subparagraph of Article 93(2). 61 Is that delaying factors: applications for an period of thirteen months so long as to extension of time, missing or incomplete arouse in the applicant a legitimate expec- answers, constantly renewed and tation that the State aid was compatible with purportedly definitive restructuring the Treaty? I think not, in view of the proposals for the near future, and an ever- specific circumstances of the case. Unlike changing policy: from restructuring to the situation in the RSV case, in this case reconversion and then privatization. In the the defendant clearly and repeatedly gave end it was not until the end of 1987 or the the applicant to understand that any aid beginning of 1988 that the defendant granted after 1982 would in all likelihood received all the information which it had be considered unlawful. The applicant, for sought for so long, 64 and on the basis of its part, failed to abide by its formal under- which it adopted the contested decision on taking to notify any fresh aid, which it had 26 July 1988. That is sufficient to preclude announced it would discontinue. When any attempt to rely on the principle of the questioned on that point by the defendant protection of legitimate expectations in following the publication of articles in the respect of that period also. It may be press, in August 1984 the applicant pointed out for the sake of completeness submitted a summary of a new restructuring that the applicant granted unauthorized aid programme which the defendant must even after the initiation of the procedure in reasonably have examined in order to make December 1984. a full appraisal. Apart from that, it is ques- tionable in the first place whether a Member State which is in breach of its duty of notifi- cation can still rely on the principle of the protection of legitimate expectations. 62 Furthermore, it must be borne in mind that Finally, the applicant cannot rely on the it was only from a letter dated 30 August principle of the protection of legitimate expectations to justify its failure to 60 — See Annex III to the Commission's defence implement the decision (through recovery). 6! — See the contested decision, P a r t II, eighth paragraph, in In its judgment in Case 94/87 the Court which the date is 19 December instead of 14 December. 62 — For the same view, see the Opinion of Advocate Genera] Jacobs in Case C-301/87 France v Commission, cited 63 — Contested decision, Part II, first paragraph. above, at paragraphs 21 and 22. 64 — Part III of the contested decision.

'Impossibility" of recovering the aid after transfer of the undertakings It clearly follows from those judgments that it is for the Member State concerned, which in any event has the most detailed knowledge of national procedural rules, to 27. The question remains whether the auth- inform the Commission of the manner in orities' obligation to recover aid must be which recovery is to be effected. It is under- fulfilled unconditionally even when the standable, therefore, that in Article 3 of the undertakings in receipt of the aid have been contested decision the Commission required sold, possibly as separate establishments or the applicant to inform it, within two in smaller units, and the consequences of months of the date of notification, of the any recovery were not provided for in the measures taken by the applicant to comply conditions of sale. This question raised by with the duty to recover the aid. The the Italian Government must be set in its question which arises in these proceedings proper context. for annulment is whether the Commission has made a proper exercise of its powers in imposing on the applicant a duty to recover aid which is couched in general terms and is not accompanied by a separate statement of The Court has consistently held that in reasons, while leaving it to the Member principle the recovery of unlawfully granted State to decide how to comply. Conversely, aid must, in the absence of specific rules of it is unnecessary at this stage to establish Community law, be carried out in whether the steps which have or have not accordance with the relevant procedural been taken by the Member State to effect provisions of national law, subject, however, recovery are sufficient for the purpose of to the proviso that those provisions may not fulfilling its obligation under Community be applied in such a way as to make law. That is a matter, where appropriate, for recovery as required by Community law proceedings under Article 169. In such a practically impossible. 66 In order to effect case the Member State will be held to be in default, unless it was absolutely impossible 65 — Judgment in Case 94/87 Commission v Germany [1989] for it to enforce the recovery order ECR 175, at paragraph 9. See also the judgment in Case 52/84 Commissions Belgium [1986] ECR 89, at paragraph correctly, where it has failed to give notice 16. The rule that a Member State cannot usually rely on of the measures taken by it within the the principle of the protection of legitimate expectations has once again been strongly reaffirmed by the Court in period prescribed by the Commission 68 or it the recent judgment in Case C-5/89 Commission v is apparent that it has taken no steps what- Germany [1990] ECR I-3437, at paragraphs 17 and 18. 66 — Judgment in Case C-142/87 Belgium v Commission [1990] ECR 1-959, at paragraph 61, and the judgment in Case C-5/89 Commission v Germany, cited in the previous 67 — See the judgments cited in footnote 65, in particular the footnote, at paragraph 12. See also the judgment in Joined judgment in Case 52/84, at paragraph 16. Cases 205 to 215/82 Deutsche Milchkontor v Germany 68 — Judgment in Case 52/84, cited in footnote 65 above, at [1983] ECR 2633. paragraph 15.

70 — As pointed out above (in section 23), this is normally the ultimate recipient, that is to say the undertaking in receipt of the aid. In some cases, others may be required to repay the aid, for instance a parent company which has taken over the undertaking's assets and liabilities as part of a settlement, or has otherwise obtained the undertaking's 'added value' resulting from the grant of aid That question arises in another case pending before the Court, namely Case C-305/89 Italy v Commission (Alfa Romeo). 69 — Judgment in Case 94/87, cited in footnote 65 above, at paragraph 10, and the other two judgments cited in that 71 — Judgment in Case C-142/87, cited in footnotes 55 and 66 footnote. above, at paragraph 63

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