C-305/89

The Italian Government shall inform the Commission, within two months from the The aid in the form of capital contributions date of notification of this decision, of the totalling LIT 615.1 billion awarded by the measures taken to comply herewith. Italian Government through the public holding companies IRI and Finmeccanica to Alfa Romeo is unlawful and therefore incompatible with the common market within the meaning of Article 92(1) of the EEC Treaty because it was provided in contravention of the rules of procedure laid down in Article 93(3). The aid is also incompatible because it does not satisfy the conditions for exemption provided for in Pursuant to Article 173 of the EEC Treaty, Article 92(3). the Italian Government requests the Court to annul that decision, and puts forward no * Original language: Dutch. fewer than 14 pleas. After a review of the 1 — OJ L 394, p. 9. factual background (sections 2 to 4) I shall

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These Industrial Restructuring Agency), had are the pleas (the second, third and fifth) already been operating at a loss for 14 concerning the application of the criterion years. 5 During the period from 1979 to of the private investor in the present case 1986 the group accumulated losses of (sections 9 to 14), having regard also to the LIT 1 484.5 thousand million and fresh particular context of the sale of Alfa capital of LIT 1 387.5 thousand million was Romeo's assets to Fiat (section 15), then the contributed by the Italian Government. 6 pleas (the seventh, eighth, ninth, tenth, eleventh and twelfth) which relate to justifi- cation for the aid (sections 16 to 19) and, finally, the (fourteenth) plea relating to recovery of the aid from a person other than its immediate beneficiary (sections 20 to 24).

2. It appears from the contested decision that at the time of the capital contributions 3 — Third paragraph of Part VI of the contested decision In which form the subject matter of the 1985 the net financial liabilities of Alfa Romeo amounted decision the Alfa Romeo group, 2 the second to LIT I 427.7 thousand million. largest car manufacturer in Italy had to 4 — First paragraph of Part VI of the contested decision 5 — First paragraph of Part V of the contested decision contend with a very serious crisis.

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the beginning of 1984 Alfa Romeo sought cover losses and to reduce the debt burden under the revised plan to bring about a (see below, at section 4), were justified, in drastic reduction of production and the Italian Government's view, by that operating costs and the restructuring of its investment programme. 13 At no time did the resources in general. The company now set Italian Government notify that contribution a much lower break-even level (220 000 of capital to the Commission for approval. instead of 300 000 vehicles a year), completely renewing the production process and optimizing the model range produced, which entailed large cuts in the workforce. 9 It appears from the contested decision that for some of the investments required under the restructuring plan Alfa Romeo received public aid in the form of subsidies, soft loans and interest relief, which were approved by the Commission in November 1983, July 1984 and December 1984. 10

9 — Fourth paragraph of Part V of the contested decision. 13 — With regard to the capital contribution for 1986, see the 10 — Fifth paragraph of Part V of the contested decision. fifth paragraph of Part X of the contested decision; with regard to the capital contribution for 1985 see the 11 — Fifth paragraph of Part X of the contested decision ; and application, at p. 6, third paragraph. see also the application, at p. 6, third paragraph. In the contested decision the Commission states that the 14 — In 1986, production capacity was still 400 000 vehicles per investment plan (1986 to 1988) was also aimed at the year with a rate of utilization of 42% (second paragraph development of new markets, but that was contested by the of Part VI of the contested decision). Italian Government during the written procedure 15 — Sixth paragraph of Part V and second paragraph of Part (application, p. 49, first paragraph). VI of the contested decision. 12 — Fifth paragraph of Part X of the contested decision. 16 — Second paragraph of Part VII of the contested decision.

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prepared to make massive investments. 17 Finmilano and Sofinpar respectively. The contested decision shows that at the In June 1987 those companies were sold to beginning of 1986 the world's leading auto- Banco di Roma and Credito Italiano mobile manufacturers were approached to respectively for a total of LIT 198.9 find out whether they were interested in thousand million. Prior to that sale, the taking over Alfa Romeo, either wholly or in remaining assets and liabilities of Finmilano part. 18 and Sofinpar were transferred to Finmec- canica, except for certain financial credits which those companies had obtained from Finmeccanica. 21

4. Alarmed by press reports that Alfa Romeo had received aid in 1985 in the form In May 1987, Alfa Romeo SpA and Alfa of a capital injection of LIT 209 thousand Romeo Auto changed their names to million, on 1 October 1986 the Commission requested further information from the 17 — Seventh paragraph of P a n V of the contested decision. In Italian Government. By a letter dated the contested decision the Commission does not discuss the conclusions of those assessments in detail owing to 21 November 1986 the Italian Government their 'confidential' nature. In the course of the written procedure, the Commission stated that an assessment by confirmed that new capital in the amount of the First Boston Corporation showed inter aha that Alfa LIT 206.2 thousand million had been Romeo would incur tosses until 1996, and that the group required massive investments (LIT 4 000 thousand million allocated to Alfa Romeo SpA, through according to Ford and LIT 5 000 thousand million Finmeccanica and IRI, in order to cover according to Fiat) which, owing to the limited levels of production, could not offer an appropriate return on investment (ROI) 21 — Fifteenth paragraph of Part V of the contested decision. 18 — Eighth paragraph of Part V of the contested decision. Ftnmilano and Sofinpar retained the possibility of utilizing 19 — Twelfth paragraph of Part V of the contested decision. tax credits accumulated through the losses, which was the 20 — Thirteenth and fourteenth paragraphs of Part V of the main reason for the acquisition by the two banks. contested decision Fiat also took over LIT 700 thousand 22 — Second paragraph of Part XI of the contested decision million of the net financial liabilities of the Alfa Romeo The decision speaks of the liquidation of 'Alfa Romeo group (fourteenth paragraph of Part V of the contested SpA'. which had however changed its name to 'Finmilano' decision). in May 1987

losses. 23 During the written procedure In the course of that procedure it came to before the Court, the Italian Government light that in 1986 a second capital injection stated that that capital contribution was of LIT 408.9 thousand million had been linked to the decision to proceed with the made, this time in favour of Alfa Romeo triennial investment programme (1986 to Auto. On 10 May 1988, the procedure 1988) mentioned above. 24 initiated in July 1987 was extended to that second capital injection. 26 According to the contested decision, the Italian Government explained that that capital contribution was made in order to reduce the net financial debt of the Alfa Romeo group.

Upon the Commission's request, the Italian Government supplied more detailed infor- mation on 30 January, 27 March and 2 July 1987. On 29 July 1987, the Commission decided to initiate the procedure provided for in Article 93(2) of the EEC Treaty in respect of the injection After a thorough examination of the of capital amounting to LIT 206.2 thousand conditions of sale, the Commission found million into Alfa Romeo in 1985 and in that the acceptance of Fiat's offer contained respect of an alleged subsidy included in the no aid element as compared to Ford's terms on which Fiat acquired Alfa Romeo's assets. 25 26 — Parts II and III of the contested decision.

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offer29 and that the price paid by Fiat Aid provided by the State or aid publicly (although less than the net book value) was funded in any way a fair reflection of the value of the assets acquired, taking into account the operating losses which could be expected and the significant investment necessary to restore profitability. 30 However, in the decision contested by the Italian Government in these proceedings, the Commission concluded that the capital contributions in 6. As its first plea the Italian Government 1985 and 1986 totalling LIT 615.1 argues that the capital injections in 1985 thousand million were incompatible with the and 1986 did not constitute State aid within common market within the meaning of the meaning of Article 92(1) because those Article 92(1) of the EEC Treaty. 31 It contributions were not the result of therefore required the Italian Government decisions taken by the public authorities but to recover the aid granted from Finmec- were autonomous corporate decisions taken canica. 32 by the directors of IRI and/or Finmec- canica. Moreover, the public funds were not specifically earmarked for the contributions in question.

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within the meaning of Article 92(1) of the threaten to distort competition and did not EEC Treaty. 34 affect trade between Member States (sixth plea). It points out that Alfa Romeo's share of the European market amounted to only 1.6% and that the aid did not cause a reduction in the market share held by Alfa Romeo's competitors. Although it is impossible to point to any specific earmarking of public funds for capital contributions, it can hardly be denied that the contributions were carried out with funds originating directly or indi- rectly from the State. 35 Moreover, it should It is implicit but clear from the judgment in be observed that no such specific Case 102/87 37 38 that where a recipient of earmarking is required in order for there to aid is active in a market in which there is be State aid. 36 If there were such a competition amongst producers from requirement the Treaty provisions on State various Member States — which is certainly aid could easily be circumvented. the case here — the Commission is entitled to assume that the condition of an 'effect on trade between Member States' is satisfied, even if the undertaking does not itself export to other Member States. Although Aid which distorts or threatens to distort the market share of competitors did not competition and/or affects trade between diminish as a result of the aid granted to Member States Alfa Romeo, the artificial continuation in business of Alfa Romeo (which held 14.6% of the Italian car market) did prevent them from increasing their market share. In a sector characterized by over-capacity aid is certainly capable of distorting competition 7. The Italian Government further submits and affecting trade between Member States that the capital contributions made to Alfa in that way. Romeo in 1985 and 1986 did not constitute State aid within the meaning of Article 92(1) because they did not distort or

the Commission cannot be criticized for the and that they were therefore subject to prior belated initiation of the procedure provided notification to the Commission. for in Article 93(2). It is true that the procedure was initiated only in July 1987 and that the contested decision was made in May 1989, while the aid was granted in 1985 and 1986 and the Commission requested information for the first time In that context it should also be stated that in October 1986. However, it is apparent the Commission found the capital contri- from the contested decision that responsi- butions in question to be incompatible with bility for the belated initiation of the the common market on the basis inter alia procedure lies entirely with the Italian of an infringement of the duty of notifi- Government, first because it did not give cation contained in Article 93(3) of the EEC prior notification of the aid and secondly Treaty, and that the Italian Government has because it supplied the information disputed this reasoning (thirteenth plea). In requested by the Commission only bit by bit the judgment in Case 301/87 (the 'Boussac' and at the latter's insistence. 39 case), which was delivered after the contested decision, the Court clearly stated that breach of the duty of notification was not in itself sufficient to justify a decision that aid is incompatible with the common market. 41The Commission conceded this point during the written procedure. It is therefore no longer at issue in the present case.

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holdings may constitute State aid. 42 In (5) the existence of the triennial investment applying that criterion in this specific case, programme (1986 to 1988) to which the the Italian Government argues, the capital contributions were linked and Commission took no (or insufficient) which could reasonably be expected to account of a number of special circum- result in Alfa Romeo's ultimate stances such as: recovery; 47 and finally,

(1) the fact that in the car industry investments come to fruition only after several years and that it could not be inferred from the absence of immediate results that the investments would not bring about the recovery of the under- (6) the adverse consequences for Finmec- taking; 43 canica were Alfa Romeo to become insolvent, in particular the difficulty of selling it on favourable conditions, 48 the (2) the size of undertakings in the car increase in Finmeccanica's liability as industry and the size and financial parent company for the debts of the capacity of IRI and Finmeccanica; 44 Alfa Romeo companies, 49 the negative impact on its 'credit rating' 50 and the costs incurred as a result of the dismissal of Alfa Romeo's workers. 51 (3) the fact that private undertakings such as Ford and Fiat were prepared to buy Alfa Romeo and to invest very considerable sums; 45

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10. For its part, the Commission backs up What private investor is contemplated here? its assessment that a 'private investor’ would It appears from the case-law that the Court not have made any fresh capital contri- is contemplating first of all an 'ordinary' bution by referring to the rapid increase in private investor, that is to say, not a losses since 1983, the considerable increase company which already has a shareholding in Alfa Romeo's debt burden, its negative significant enough to influence the cash flow and the lack of any reasonable management of the undertaking in receipt return on the capital injected. 52 As has of aid, or seeks to acquire such a holding. already been mentioned, 53 the injection of That is apparent from the Court's LIT 206.2 thousand million in 1985 was judgments in which the 'private shareholder' intended, as the Italian Government is defined as a shareholder who ‘in similar acknowledges, to cover the losses suffered circumstances. . . having regard to the fore- by Alfa Romeo SpA in 1984 and during the seeability of obtaining a return and leaving first quarter of 1985, while the contribution aside all social, regional-policy and sectoral of LIT 408.9 thousand million in 1986 was considerations, would have subscribed the intended to recapitalize Alfa Romeo Auto, capital in question'. 56 since otherwise that company would have had to be liquidated. Alfa Romeo Auto used the funds made available to it to repay its debts to Alfa Romeo SpA, whereby the latter was enabled to reduce its own debt burden. In other words, the capital injections were exclusively intended to reduce the net financial liabilities of the Alfa Romeo group 54 and were not intended to help finance the implementation of an investment programme.

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rightly so — to considerations of employ- of public holding companies is directly or ment and economic development. 57 indirectly financed by public funds. 58

13. I have examined in greater detail the criterion of the private investor — or rather, the reasonable investor — in order to dispel any misunderstanding with regard to 12. It seems to me that the criterion of the inequality of treatment as between private 'private' investor must take into account and public undertakings. In concrete terms, both categories of investors and must conse- however, this discussion is of less relevance, quently be understood as referring to a because the 'reasonable' investor criterion, 'reasonable' investor, whether private or whether it is applied to one of the categories public in nature. In that way the criterion of investors or the other, means that a may be used in order to assess the conduct contribution of risk capital to a loss-making of both a private and a public investor, and undertaking which is heavily in debt and has the submission with regard to the unequal insufficient cash flow may be deemed to be treatment of private and public undertakings reasonable only where the undertaking can must therefore fail. put forward a general restructuring plan which is sufficiently detailed, credible and realistic. Only on the basis of such a plan may a 'reasonable investor' be persuaded that the undertaking in difficulties has a real chance of recovery and that a fresh injection of capital will be effective.

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reduction in overheads and the development bodies showed that Alfa Romeo could not of new products. 59 be made profitable unless it was taken over by a large automobile manufacturer which would provide it with massive support (see section 3 above). The injection of the new funds in question thus appears to be one of many attempts to ensure the group's survival. A capital injection intended to absorb accumulated losses and to alleviate For its part, the Commission observes that the debt burden is of course an essential that investment plan, which gave effect to element of any restructuring plan. However, the 1983/84 revision of the 1980 ten-year this is not sufficient unless other aspects of plan (see section 2 above), did not serve to the plan provide for a drastic reduction in resolve the fundamental structural problems costs and major investments in order to of the undertaking. The newly procured rationalize production capacity and improve resources were exclusively intended to cover labour productivity. That is certainly true in losses and to improve the financial situation a sector faced with a problem of of the Alfa Romeo group. It therefore considerable surplus capacity. considers that they did not assist in reducing the considerable surplus production capacity, unlike, for example, the aid which the Commission authorized the French Government to provide to the Renault group or the United Kingdom Government to the Rover group. 60

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and restructuring costs but also for a contested decision,, the Commission rightly reduction in assembly and component observed 64 that such 'rescue aid' can be production capacity in order to increase accepted only under restrictive conditions, productivity and capacity utilization. 63 The with regard to the (brief) period, for Commission nevertheless decided even in example six months, during which a new those cases that the aid granted was incon- restructuring plan is actually drawn up. In sistent with Article 92, although the aid was the present case, those conditions were not partially authorized on the basis of Article met. 92(3)(c) (see section 18 below). I therefore come to the conclusion that the Commission was entitled to form the view that the 1985 and 1986 capital injections would not have been made by a private investor and that those contributions therefore constitute aid within the meaning of Article 92(1) of the In so far as that argument relates to the Treaty. subsequent takeover by Fiat and the funda- mental restructuring carried out by it, it is far from clear whether the aid measures in question can in fact be linked to it. It is not sufficient to refer in general terms to the need to maintain certain assets of the under- Aid granted with a view to the takeover of taking — put in those terms that argument the undertaking could be made at any time — if there is no prospect of a sale giving rise to that necessity. It may be inferred from the grounds for the decision, and the Italian Government also admits that there was no 15. In the course of the written procedure specific link between the capital contri- before the Court, the Italian Government bution made in 1986 (and thus a fortiori the argued that the contested aid measures were contribution made in 1985) and the justified because they were intended to subsequent decision to sell, although the protect the undertaking from possible liqui- Italian Government asserts that the capital dation pending its sale (second plea) or the injection was made in order to provide a successful outcome of a restructuring plan 'radical solution' to the structural crisis (fifth plea). affecting Alfa Romeo. 65

16. The Italian Government submits a number of pleas relating to possible grounds on which the aid granted might be justified. With reference to Article 92(3)(a) and (c) of the EEC Treaty, it points out that the aid was intended to maintain employment in areas of the Mezzogiorno (eighth plea) and For example, that kind of assessment took that it sought to promote the development place, as is apparent from the grounds of of certain forms of economic activity or the Commission decision of 13 July 1988, 66 certain regional economies under the on the grant of aid in the form of a fresh conditions laid down by the Commission in capital injection by the United Kingdom its abovementioned decision in the Rover Government to the Rover group in case 68 (eleventh plea). It further points out connection with the sale of the group's that the grant of the aid may also be remaining car and jeep divisions to British justified in the context of the ECSC Treaty Aerospace. The aid granted also formed as conversion aid in areas where there is part of a comprehensive restructuring of considerable unemployment as a result of Rover by the new shareholder. In the the crisis in the steel industry (ninth plea). present case, Fiat also conducted a major In assessing the interests at stake, the restructuring of Alfa Romeo after its Commission, moreover, failed to take acquisition, with the help, moreover, of account of the positive compensatory effects State aid, 67 but there is nothing to indicate of the aid on the development of specific that the capital contributions made in 1985 regions or activities (seventh plea). In any and 1986 which are at issue in the present event, in the present case the Commission case formed part of any such comprehensive adopted a less accommodating attitude than investment and restructuring plan agreed in other cases, such as Daimler Benz, 69 or with the prospective purchaser. In those Renault 70 (tenth plea). The reasoning upon circumstances, judged at the time when they which the decision is based is inadequate, were made, those capital contributions may particularly with regard to the link between be regarded only as aid measures intended the aid and the restructuring of Alfa Romeo to prolong the life of undertakings within 68 — Cited above in footnote 62 66 — Cited above in footnote 62 69 — See footnote 63- 67 — Contested decision. Part V, sixteenth paragraph. 70 — Cited above in footnote 61

at which that aid was directed (twelfth development of areas where the standard plea). of living is abnormally low or where there is serious under-employment' (Article 92(3)(a))or of 'aid to facilitate the devel- opment of certain economic activities or of certain economic areas' (Article 92(3)(c)). Aid which does not envisage any lasting effect does not fall within those provisions The Commission replies to these and in sectors where intra-Community trade submissions by pointing out that the is intense it is likely merely to affect trading contested aid is purely and simply rescue aid conditions in a manner harmful to and not investment aid linked to a compre- Community interests. hensive and credible restructuring plan, and that the aid measures were not therefore capable of making a permanent contribution to the development of certain activities or regions or to the maintenance of employment. That is the feature which distinguishes this case from the cases in which the Commission deemed aid to the The existence of a comprehensive and car industry to be acceptable. In the present credible restructuring plan is thus of decisive case, the aid was intended artificially to significance not only in the classification of maintain an unprofitable undertaking, which a capital contribution as an aid measure entailed distortions in competition and in within the meaning of Article 92(1) of the ¡ntra-Community trade. Nor, according to EEC Treaty, where it is necessary to the Commission, does the contested aid determine whether a reasonable investor satisfy the conditions laid down by it for would make such a contribution (see section regional aid, and it was certainly not 14 above). It is also decisive in assessing the granted in compliance with the procedural justification of a measure which must be rules applicable to ECSC conversion aid. deemed in principle to be an aid measure, in relation to a large undertaking which in view of its importance is in a position to influence sectoral or regional devel- opment.71 In the case of an undertaking of that size, the restructuring and the reorgan- ization of the undertaking will also lead to a 17. With regard to the plea relating to the lasting improvement in the economic devel- ECSC Treaty, I share the Commission's opment and employment in the sector or view that there is nothing to indicate that region. the aid at issue was granted in conformity with the applicable provisions (see Article 56 of the ECSC Treaty). All the other pleas once again come down to the question whether the two capital contributions formed part of a restructuring plan aimed at the complete reorganization of Alfa Romeo which, if it were successful, would contribute to lasting prosperity and stable 18. The Commission has a wide discretion employment in the sector and region in assessing the circumstances under which concerned. Only in such a case is it possible 71 — See the Boussac judgment cited above in footnote 41, at to speak of 'aid to promote the economic paragraph 54.

an aid measure may exceptionally be auth- Commission did not exceed the limits of its orized on the basis of Article 92(3). In the discretion. exercise of that discretion, it sets out in detail in Part X of the contested decision the reasons for which the measures examined by it do not accord with its policy. In that connection, it attaches great importance to the lack of a restructuring 19. In relation to the statement of the plan containing measures to reduce unused reasons on which the decision is based, I production capacity. It points out that in a should like to make a further general obser- sector which in 1985 and 1986 had vation. It appears from a reading of considerable excess production capacity in decisions in similar cases, such as Renault the Community, only recovery measures and Rover, and from a comparison of them capable of assisting in resolving that with the present decision, that the statement problem may be deemed to assist in the of reasons in the former decisions is more recovery of that sector. 72 It emphasizes that specific and more detailed. In those cases it has consistently adopted that attitude in the aid measures were notified to the similar cases such as the grant of aid to Commission beforehand and/or were Renault and Rover. 73 discussed with the Commission under the 'Article 93(2)' procedure on the basis of detailed information. Where a Member State's failure to notify aid measures and the inadequacy of the information supplied by it hampers the administrative investigation and affects the reasoning on which the decision taken is based, responsibility for that situation lies solely with the Member State concerned. It may, moreover, be inferred from the Court's case law that the legality of a contested decision must be assessed on I have already said that in my opinion the the basis of the information available to the Commission was entitled to take the view Commission at the time when it took its that the capital contributions in 1985 and decision. 75 1986 did not form part of a restructuring and investment plan intended to ensure Alfa Romeo's complete recovery; nor has it been shown that that was required by the pros- pective purchaser as a condition of the takeover (see above, sections 14 and 15). Recovery of the aid With regard to the latter point, it has not been shown, as is required by the Court's case law, 74 that in the absence of those aid measures the buyer would not have made the investments contemplated. Since it has also been shown that the aid is such as to 20. Article 2 of the contested decision affect intra-Community trade (see section 7 provides that the Italian Government must above), I am of the view that the recover the aid referred to in Article 1 from Finmeccanica within a period of two 72 — Contested decision. Part X, sixth paragraph months. The Italian Government alleges 73 — Contested decision. Part X, seventh paragraph 74 — Judgment in Case 730/79 Philip Marris v Commission 75 — See, for example, the Meura ludgment cited in footnote 42 [1980] ECR 2671, at paragraphs 16 and 17 above, at paragraph 16.

that that recovery requirement is not of an aid measure to be effective, it may be justified (fourteenth plea). First of all, it accompanied by an obligation to repay the observes that the EEC Treaty provides for aid found to be contrary to the Treaty. 76 the abolition or alteration of aid measures, Recovery, the judgment in Case C-142/87 and not recovery of aid granted. It goes on adds, is the 'logical consequence' of a to argue that even if recovery of aid may, finding of invalidity, 77 which, it may be nevertheless, be required, such requirement inferred, thus requires no specific reasoning. does not follow automatically from the illegality of the aid. Recovery may be required by the Commission only when that is necessary in order to bring an end to the distortion of competition caused by the aid and such a decision must contain an explicit statement of reasons, which the Commission did not provide. Moreover, the recovery of the aid from Finmeccanica cannot bring an end to distortion of competition in the motor vehicle sector — on the supposition that any distortion remains following the sale of the main assets to Fiat — since Finmeccanica is not itself active in that sector. The recovery from Finmeccanica of the aid must therefore be regarded as a Similarly, in the contested decision, the penalty which is not provided for by the Commission requires the Italian Treaty. Finmeccanica should be liable only Government to recover the aid not from the for Alfa Romeo's old debts and hidden actual recipient, the Alfa Romeo group, but liabilities, and cannot be liable to any from Finmeccanica. It seems to me that in penalties. this respect specific reasoning is required on the Commission's part, and that is provided in the contested decision. The Commission points to the particular circumstances of the case. First of all, as a result of the failure of the Italian Government to notify the aid, the Commission was able to initiate the 'Article 93(2)' procedure only belatedly, that is to say after the sale of Alfa Romeo's assets. Secondly, when Fiat took over the main assets, paying a proper price for them, it limited its financial liability for Alfa Romeo's debts to LIT 700 thousand million. 78 In view of those factors, the Commission is of the view that Finmec- canica is liable to pay back the aid, as the party liable for the remaining liabilities of 21. As regards the observations concerning Alfa Romeo not taken over by Fiat and the the possibility of recovering aid and the reasoning requirement, it is sufficient to 76 — Judgment in Case 70/72 Commission v Germany [1973] refer to the Court's case law. As early as ECR 813, paragraph 13. 1973, in its judgment in Case 70/72, the 77 — See the Tubemeuse judgment cited above in footnote 42, and the judgment in Case 310/85 Deufil v Commission Court held that in order for the abolition or [1987] ECR 901, at paragraph 24. alteration (as provided for in Article 93(2)) 78 — Contested decision, Part XI, second and third paragraphs.

sole beneficiary of all the proceeds of the of the aid from Finmeccanica. During the sale of Alfa Romeo's assets. 79 administrative procedure and subsequently in the written observations submitted to the Court, the Italian Government in fact considered Finmeccanica's liability to be established under national law. 82 Itseems to me that in stating reasons for the recovery obligation the Commission may take account of relevant provisions of national 22. It seems to me correct that recovery law and the existence of agreements validly may in no event be required of Fiat, since entered into under national law. that undertaking took over only certain specified assets of Alfa Romeo for a price found by the Commission to be appropriate, and restricted its financial liability for Alfa Romeo's debts on the takeover to LIT 700 thousand million (indeed, the acquirer of specific assets would not normally have any

It is thus of such repayment amounts to a penalty for no significance, in my view, that, as the which there is no liability). Italian Government reiterates, the distortion of competition and of intra-Community trade occasioned by the aid can no longer be remedied by recovery, or that the aid granted can no longer have any effect on the motor vehicle sector. As the Court has held, recovery of the aid is the logical consequence of the finding that the grant of the aid is unlawful, 8 3 irrespective, it seems, In those circumstances, I consider that the of the consequences of recovery or Commission was entitled to order recovery non-recovery. If the Court nevertheless wishes to take account of those conse- 79 — Contested decision, Part XI, fourth paragraph. 80 — Contested decision, Part V, fifteenth paragraph. quences, it must also take account of the 81 — In the Italian Government's application, it is stated at page fact that if the unlawfully granted aid is not 5 4 'Moreover, Finmeccanica in fact merely took over previous debts and unforeseen liabilities of Alfa Romeo' Ibut with the exception, it goes on, of what it calls 82 — It is not clear whether that liability is based on Article penalties) To justify recovery of the aid from Finmeccanica 2362 of the Civil Code, as the Commission states in us the Commission refers, on page 20 of us defence, to 'the defence, cited above in footnote 81, or whether it stems liability of Finmeccanica (which held more than 99% of from a commitment freely entered into by Finmeccanica A l f a Romeo's capital), for the totahty of Alfa Romeo's or for which it is otherwise liable, whether or not in the debts in accordance with Anicie 2362 of the Italian Civil context or as a result of the liquidation of the Alfa Romeo Code ' ln its replv, the Italian Government docs not dispute companies (sec contested decision, Pan XI, second that obligation It merely asserts that 'in faci, it is not paragraph). relevant io argue that, under Italian law, Finmeccanica is 83 — See the Tubemeuse judgment cited above in footnote 42, at liable for Alfa Romeo's debts paragraph 66.