C-349/93

5 Origina! language: English. 1 — Sec also Case C-348/93 'Alfa Romeo' and Case C-350/93 'Lanerossi'. 3 — Cazzata Uffiaale della Repubblica Italiana No 301 of 1986, 2 — OJ 1990 L 118, p. 42. Ordinary Supplement No 1.

I-345

OPINION OF MR JACOBS — CASE C-349/93

4. Once the Commission learnt of the deci­ The Italian Government may not convert sion of the Italian Government to provide the two loans of LIT 70 000 million and funds for investments in the State-owned LIT 30 000 million into equity capital. aluminium industry, it requested the Italian authorities to provide further information. On the basis of the information thus obtained the Commission took the view that the provision of funds amounting to LIT 100 000 million to Alumínia and Comsal was State aid within the meaning of Arti­ cle 92(1) of the Treaty and on 28 September Article 2 1988 it initiated the procedure provided for in Article 93(2). That procedure led to the adoption on 24 May 1989 of the decision in issue, Articles 1 and 2 of which provide as follows:

The Italian Government shall inform the Commission within two months of the date of notification of this decision of the meas­ 'Article 1 ures it has taken to comply therewith.'

6. Following the judgment of the Court the Commission points out that that aid was Commission invited the Italian Government, paid more than five years ago. It states that by letters dated 3 December 1991 and the plan for the privatization of public 27 January 1992, to take the necessary mea­ undertakings referred to by the Italian Gov­ sures to recover the illegal State aid in accor­ ernment does not justify Italy's failure to dance with the decision and to inform the implement the decision. Commission accordingly. The Government did not respond to those letters. Conse­ quently, on 26 June 1992 the member of the Commission responsible for competition wrote to the Government stating that he would propose to the Commission that 8. The Italian Government states that, enforcement proceedings should be insti­ within the framework of the programme for tuted. By a letter of 14 October 1992 the the privatization of public undertakings, it Italian authorities requested an additional decided by Decree-Law No 340 of 18 July period of grace, stating that the abolition of 1992 to liquidate EFIM, which was facing the aid in question had to be addressed grave financial difficulties. Decree-Law within the general framework of the pro­ No 340 was confirmed by Decree-Law gramme for the privatization of public No 362 of 14 August 1992, Decree-Law undertakings which the Italian Government No 414 of 20 October 1992 and Decree-Law was proposing to implement. By a letter No 487 of 19 December 1992. That Decree- dated 10 March 1993 the Commission Law was converted by the Italian Parliament 5 stressed the urgent need to eliminate the dis­ into Law No 33 of 17 February 1993. Law tortions of competition arising from the fail­ No 33 provided that, as part of the liquida­ ure to implement the decision and fixed tion of EFIM, all public undertakings which 31 March 1993 as the final date for its imple­ belonged to EFIM, including Alumínia and mentation. Since the Commission did not Comsal, would be wound up or sold to third receive any response to that letter, it initiated parties. Depending on their individual cir­ the present proceedings. cumstances, some undertakings would be sold immediately, others would be sold after restructuring, and others would be wound up. With regard to undertakings in the alu­ minium sector, Article 2(2)(e) of Law No 33 expressed a preference for their restructuring in view of the fact that they were located in under-developed areas with a high level of unemployment.

their assets create objective difficulties in 11. The Government states that, according implementing the decision. It concedes that to Article 4(3) of Law No 33, the liquidation those difficulties do not exonerate it from the of EFIM must be completed within a period obligation to recover the unlawfully paid aid. of two years, which expires on 21 January However, it claims that the decision should 1995. Any undertakings belonging to EFIM be implemented in a manner to be deter­ which remain unsold at that time will be liq­ mined in cooperation with the Commission uidated. Where an undertaking is sold, in the framework of the programme for the recovery of aid takes place upon the sale; restructuring of the aluminium industry, where an undertaking is liquidated, recovery which accompanies the liquidation of EFIM. of aid takes place upon liquidation. With It points out that the compatibility of that regard to Comsal, recovery of aid, and there­ programme with Article 92 of the Treaty is fore compliance with the decision, is subject currently under examination by the Com­ to the control of the Commission in the con­ mission. text of the procedure under Article 93(2) initiated by the Commission's notice of 17 March 1993. Given the difficulties sur­ rounding the liquidation of EFIM and the possibility that the aid in question may be recovered when the liquidation is completed, the Italian Government concludes that there is no failure to comply with the decision.

14. According to the case-law of the Court, a Member State may not plead provisions, practices or circumstances existing in its internal legal system in order to justify a fail­ ure to comply with its obligations under 8 Community law. The only defence which a Member State may raise in proceedings under Article 93(2) is that the proper imple­ mentation of the decision is absolutely 9 impossible. In the present case, the Italian Government does not claim that the imple­ mentation of the decision is absolutely 16. So interpreted, the principle of coopera­ impossible nor does it provide any argu­ tion may alleviate the harsh consequences of ments which might support that conclusion. the rule that the only defence which a Mem­ ber State may raise in proceedings under Article 93(2) is that the proper implementa­ tion of the decision is absolutely impossible. However, in order for a Member State to benefit from that principle, certain condi­ tions must be fulfilled. First, it must make genuine efforts to recover the unlawfully paid aid. In principle, those efforts must 15. The Court has held that if, in giving commence immediately after the adoption effect to a decision adopted under Arti­ by the Commission of its decision ordering cle 93(2), a Member State encounters unfore­ the recovery of the unlawful aid. Secondly, if seen or unforeseeable difficulties or perceives the Member State encounters objective diffi­ culties it must inform the Commission promptly of those difficulties. Thirdly, it 8 — Case C-5/89 Comminimi v Germany [1990] ECR 1-3437, paragraph 18 of the judgment. 9 — Case 52/84 Commission v Belgium [1986] ECR 89 ('Boch' case), paragraphs 14 and 16 of the judgment; Case 10 — Case 52/84 Commission v Belgium, cited in note, paragraph 94/87 Commission v Germany [1989] ECR 175, paragraphs 16 of the judgment; Case 94/87 Commission v Germany, 8 and 9; Case C-183/91 Commission v Greece [1993] ECR cited in note 9, paragraph 9; Case C-183/91 Commission v 1-3131, paragraph 10. Greece, cited in note, paragraph 19.

21. In that notice the Commission states 11 — See above, paragraph 6. that, although the Italian authorities

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COMMISSION v ITALY

informed the Commission of the measures 23. It is clear from the Commission's notice placing EFIM into liquidation, they did not that the Commission has initiated the proce­ comply with the obligation of notification dure provided for in Article 93(2) in respect provided for in Article 93(3). Any aid of aid granted to the EFIM group which is granted will therefore be treated by the different from the aid which is the subject- Commission as non-notified. The Commis­ matter of the decision. Contrary to what the sion also states that undertakings once Italian Government argues, the fact that the owned by the EFIM group are being sold or liquidation of EFIM and the financial situa­ transferred to other Italian State-owned tion of Comsal are under investigation by undertakings as part of the liquidation of the Commission in the context of a new pro­ EFIM. No indication of the method of the cedure under Article 93(2) does not mean valuation of the assets of those undertakings that the Commission should not have initi­ has been given and, in view of the lack of ated the present proceedings. Although the transparency, it is not possible to determine possibility cannot be excluded that, follow­ whether or not the normal liquidation proce­ ing the liquidation of EFIM, the unlawful aid dure is being followed and thus whether or which is the subject-matter of these proceed­ u not aid is included in the disposals. The ings may be recovered at some time in the Commission explains the various ways in future, the case remains that Italy has failed which, in its view, aid might be granted. to comply with the decision without a valid excuse.

that similar principles apply to proceedings 26. In the present proceedings, however, it is under Article 93(2) and asks the Court to not necessary for the Court to make the make an express statement to that effect in its statement sought by the Commission to the judgment in the present case. effect that a judgment against a Member State may establish the basis of liability which that Member State may incur towards third parties. Such a statement may be appropriate in infringement proceedings under Article 169 to show that the Commis­ sion has an interest in continuing the enforcement proceedings even after the 25. There can be no doubt that a declaration defendant Member State has put an end to by the Court that a Member State has failed 15 to fulfil its obligations under the Treaty by the infringement. In this case, however, the failing to recover unlawfully paid State aid interest of the Commission in bringing pro­ may establish the basis of liability which that ceedings is not in question. It is therefore not Member State may incur as a result of its necessary for the Court to make a statement default. In particular, such a declaration may concerning the liability which Italy may be of importance to undertakings competing incur as a result of the judgment to be given with the beneficiary of the unlawful aid. in this case.

Conclusion

27. Accordingly, I am of the opinion that the Court should:

(1) declare that , by failing to implement Commission Decision 90 / 224 / EEC of 24 May 1989 on aid granted by the Italian Government to Aluminia and Com- sal, two State-owned undertakings in the aluminium industry , the Republic of Italy has failed to fulfil its obligations under the EEC Treaty;