C-6/97

2. In the early 1990s, excise duties on fuel in Italy were among the highest in the Commu- nity. In April 1990, in response to the unrest in the road-haulage sector, which culminated in a strike which severely disrupted the eco- 4. By letter of 15 April 1992, the Commis- nomic and social life of the country, the Italian sion asked the Italian Government for detailed Government undertook to reduce the costs information on the new rules, and indicated which hindered the sector's competitiveness that the measures provided for therein were and, in particular, to grant a tax credit to liable to constitute an infringement of Article reduce the effective price of diesel fuel. 92(1) of the Treaty establishing the European

* Original language: Spanish. 1 — GURI No 25 of 31 January 1992.

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Economic Community (hereinafter 'the Trea- provided for in Article 92(2) and (3) or ty'). The Italian Government replied that the the conditions in Regulation (EEC) N o special bonus was not to be regarded as aid 1107/70; 3 within the meaning of Article 92 of the Treaty, but as a measure of a purely fiscal nature which sought to offset the effects of the par- ticularly high taxes on fuel and lubricants levied on transport undertakings, and that it did not give rise to any distortion of competi- tion. By letter of 26 October 1992, the Com- mission informed the Italian Government of (b) ordered Italy to abolish that scheme, and, its intention to initiate the procedure pro- within two months, to recover the deduc- vided for in Article 93(2) of the Treaty. tions already made, together with the attendant interest, and to inform the Com- mission of the measures taken.

Italy can benefit from the measure. Those since they had been deducted from numerous operators compete with operators in the other payments on account and amounts remaining means of transport and operators from other due in respect of various taxes. Member States. The cash flow which results from the measure thus clearly leads to a dis- tortion of competition in favour of those benefiting from the measure.'

9. In its reply of 24 November 1993, the Commission stated that it was clear from the wording of the decision that it had taken into 7. The Italian Republic neither contested the account not only the fact that the bonus decision nor took action to recover the bonuses scheme treated Italian hauliers more favour- granted. Moreover, it extended the scheme to ably than those from other Member States, the 1993 fiscal year and, at the same time, but also the fact that it was contrary to the extended it to transport undertakings from common market in so far as it introduced in other Member States by granting aid calcu- favour of a particular sector — road haulage lated on the basis of the diesel fuel consumed for hire or reward — advantages not granted by them in Italy. 5 The amount of that aid, generally, thus distorting competition. The and the procedure for granting it, remained Commission concluded that the extension of to be confirmed by the corresponding imple- the bonus scheme and the failure to recover menting legislation. That legislation has never the bonuses constituted a failure to comply been adopted. with the decision.

8. By letter of 26 August 1993, the Italian Government informed the Commission that the extension of the contested scheme to 10. The Italian Government none the less undertakings from other Member States extended the scheme to the 1994 fiscal year, 6 removed the main flaw identified in it by the limiting it in the second half of that year to decision. It also stated that, technically, it the first one hundred vehicles per under- would be very difficult and onerous for the taking. tax authorities to recover the bonuses granted

The action for failure to fulfil obligations this time with the bonus scheme as applied to the 1993 and 1994 fiscal years. This scheme differed from that introduced by the 1992 Ministerial Order in that it provided for com- pensation for hauliers from other Member States ('compensation scheme'). The amount of the compensation, once the corresponding 11. O n 18 August 1995, following a further implementing legislation had been adopted, exchange of correspondence, the Commission was to be equivalent to that provided for brought an action under Article 93(2) of the under the bonus scheme. In the same let- Treaty seeking a declaration that the Italian ter, the Commission requested the Italian Republic had failed to fulfil its obligations Government to provide it with further in- under Decision 93/496, in particular the obli- formation and to suspend the aid scheme gation to recover, as from the 1992 fiscal year, immediately. the aid first introduced by the Ministerial Order of January 1992.

12. In the proceedings before the Court of Justice, the Italian Government did not call 14. By letter of 26 March 1996, the Italian into question the validity of the decision, Republic informed the Commission that it having failed to contest it in time, but focused had not yet enacted legislation regarding the its defence on the difficulties involved in amount of the compensation and the condi- recovering the bonuses in question. Having tions governing the application of the scheme. rejected that plea, the Court, in its judgment of 29 January 1998, 7 found that Italy had failed to comply with Decision 93/496.

'Article 1 Article 3

The scheme of aid in favour of professional road hauliers introduced by Italy in the form The Italian Government shall inform the of a tax credit, as provided for in Law N o Commission, within two months of the date 162 of 27 May 1993 (GURI N o 123,28.5.1993), of notification of this decision, of the meas- Law N o 84 of 22 March 1995 (GURI N o 68, ures taken to comply with it.' 22.3.1995) and Decree-Law N o 402 of 26 September 1995 (GURI N o 226, 27.9.1995), is unlawful on the grounds that it was intro- duced in breach of the procedural rules laid down in Article 92(3), and is also incompat- ible with the common market within the 16. O n 10 January 1997, the Italian Govern- meaning of Article 92(1) of the Treaty, in so ment brought the present action. far as it meets none of the conditions for the exemptions provided for in Article 92(2) and (3) nor the conditions in Regulation (EEC) N o 1107/70.

17. The scheme at issue in these proceedings has not been extended beyond the 1994 fiscal year. Article 2

The plea of nullity raised

Italy shall abolish the aid referred to above, refrain from adopting new legislative or regu- latory instruments introducing any new aid in the form described above and recover the aid. The aid shall be reimbursed in accor- 18. Italy considers that, by adopting Deci- dance with the procedures and provisions of sion 97/270, the Commission has infringed Italian law, together with interest calculated and misapplied Articles 92 and 93 of the

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20. In the view of the Italian Government, (a) do not constitute a scheme of State aid; measures consisting in granting to a particular category of transport undertaking a bonus calculated on the basis of consumption of fuel and lubricants are purely fiscal in nature. Proof of this, it contends, lies in the fact that the same result could have been achieved by (b) do not, under any circumstances, produce reducing the excise duty on fuel across the a distortion of competition; and board, an approach rejected because it would have led to an unacceptable fall in tax rev- enue. The bonus scheme makes it possible to customise the tax burden for each category of user by reducing the amount of tax payable (c) have not given rise to discrimination by those who would otherwise be at a genuine between Italian undertakings and under- disadvantage in relation to foreign competi- takings from other Member States. tors. Given the considerable difference in the

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price of fuel in Italy as compared with neigh- relative disadvantage suffered by Italian bouring countries — France, in particular — hauliers — there was no longer any logical and taking into account the autonomy of reason for the aid and it was not extended modern industrial vehicles, European hauliers beyond the 1994 fiscal year (see paragraph 17 would have been able to enter Italian terri- above). The latter fact was confirmed with tory with a full tank and carry out cabotage absolute clarity by counsel for the Italian work on substantially more favourable terms Government at the hearing. than their Italian counterparts, had it not been for the bonus measures. Accordingly, the intervention in question is not, in the opinion of the Italian Government, a scheme of finan- cial aid but an indirect refund of part of the excise duty on fuel.

21. Strictly speaking, those arguments are suf- ficient in themselves to justify rejection of the principal branch of the plea in law put for- ward by the Italian Government. The bonus scheme whose lawfulness it seeks to defend in these proceedings is manifestly intended to improve the position of a national transport sector with respect to the competition between 22. First of all, I fully understand the Italian it and other Member States. That is to say, it Government's concern to characterise the is an example of precisely the type of conduct measure at issue as being purely fiscal in which Community legislation on State aid nature. Since 1961, the Court of Justice has seeks to eliminate. consistently interpreted the concept of aid solely by reference to its effects: 9 the decisive criterion is not the form that the intervention takes, nor, of course, its legal nature or the aim it pursues, 1 0but the result to which it leads. 1 1Any intervention which gives rise to an economic advantage, accompanied by a Knowing the purpose of the scheme makes it correlative decrease in State resources, and easier to understand its characteristics. Thus, benefits a particular undertaking or sector of the reason the amount of the bonus increased at a rate more than proportionate to the size of the vehicle was in order to favour larger- 9 — 'Interventions which, in various forms, mitigate the charges capacity vehicles, that is to say, vehicles better which are normally included in the budget of an undertak- able to compete on the international market. ing', Case 30/59 Steenkolenmijnen v High Authority [1961] ECR 1, p. 19. It also explains the temporary nature of the 10 — Unless, as in this case, that aim is diametrically opposed to arrangement: once the considerable disparity the ratio legis of the provisions of the Treaty. 11 — 'Article 92 does not distinguish between the measures of between fuel prices in Italy and those in State intervention concerned by reference to their causes or neighbouring countries had disappeared in aims, but defines them in relation to their effects', Case 173/73 Italy v Commission [1974] ECR 709, point 13, second 1995 or thereabouts — and along with it the paragraph.

(a) where the State conducts itself like a pri- vate commercial operator; 1 3 I likewise find it inconceivable that the tax credit was granted pursuant to obligations of

12 — See the definition of general measures proposed in the 'Sec- ond Survey on State Aids in the EC in the Manufacturing and Certain Other Sectors', Commission of the European Communities, Luxembourg, 1991, pp. 4 and 5. 14 — See Case 61/79 Amministrazione delle Finanze dello Stato v Denkavit Italiana [1980] ECR 1205, paragraph 31. 13 — This criterion is based on the opportunities open to the undertaking of acquiring the amounts in question on the 15 — Italy v Commission, cited in footnote 11, point 15, third capital market; see the judgment in Case C-301/87 France v paragraph. Commission [1990] ECR I-307, paragraph 39. 16 — See the fourth recital in part IV of Decision 97/270.

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17 — What matters is not the formal name given to the measure (exemption, reduction, bonus, deduction, relief etc.) but its nature as a fiscal provision creating an exceptional situation in favour of one or more taxable persons. 27. I recognise that the dividing line between 18 — Only then are they genuine 'bonuses'; of the various deduc- tions provided for in respect of different types of tax, those measures which may constitute public subsi- which conform to the same taxation principle as the taxes themselves are not, technically speaking, bonuses but abso- dies, on the one hand, and measures forming lute tax rules in the same way, for example, as provisions for part of a State's general system of taxation, on calculating the tax base (see in this regard Joachim Lang, Systematisierung der Steuervergünstigungen, 1974, p. 73 et the other, may sometimes be difficult to draw. seq., cited by Karl Alois Frick, Einkommensteuerliche Steuervergünstigungen und Beihilfeverbot nach dem However, any system of fiscal bonuses has EG-Vertrag, 1994, p. 28). Thus, deductions for dependent the effect of exempting a group or sector of children permitted in respect of income tax are not bonuses per se, since they are based on the same principle of taxable taxable persons from the tax system generally capacity as the tax itself.

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28. It must therefore be concluded that the 1993, 19 there can be no doubt — and the scheme covered by the contested decision Italian Government does not deny it — that unquestionably constitutes State aid within the aid in question affects intra-Community the meaning of Article 92 of the Treaty. trade. The second of the two conditions set out above is fulfilled in this case, and it only remains to determine whether the contested scheme adversely affects free competition, actually or potentially.

30. According to the information sent by the I shall now examine each of those three con- Member States to the Commission — which tentions, after which I shall conclude with an is contained in the 17th recital in part IV of overall assessment. the contested decision — approximately 16% of Italian road haulage operations for hire or reward in 1992 were international operations. 19 — Pursuant to Council Regulation (EEC) No 881/92 of 26 Furthermore, between 1990 and 1993, 14% March 1992 on access to the market in the carnage of goods by road within the Community to or from the territory of of Community road cabotage was carried out a Member State or passing across the territory of one or more Member States (OJ 1992 L 95, p. 1) and Council in Italy. Taking into account the additional Regulation (EEC) No 3118/93 of 25 October 1993 laying impact which the gradual liberalisation of down conditions under which non-resident carriers may operate national road haulage services within a Member State road-haulage services has had since January (OJ 1993 L 279, p. 1).

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34. In reply to the Italian Government's con- tention that the contested scheme, far from distorting competition, placed national under- The Italian Government states on the one takings on an equal footing with Community hand that notification of the contested deci- competitors by reducing the greater financial sion led to the procedure for adopting the burden which the former were previously implementing legislation being frozen and, on required to bear, it must be stated, to para- the other, that the lack of such legislation did phrase the judgment in Italy v Commission not prevent Community hauliers from making (cited in footnote 11), that the point of depar- the relevant applications under Article 14 of ture must necessarily be the competitive posi- the Decree-Law. The reason no such applica- tion existing within the common market before tions were made, it maintains, lies in the fact the adoption of the measure at issue. This that it was not in the economic interests of position is the result of numerous factors non-Italian undertakings to do so, the easier having varying effects on production costs in alternative for them being to enter Italian ter- the different Member States. The unilateral ritory with their tanks full of fuel.

21 — At the hearing, counsel for the Italian Government sug- gested that such applications could have been submitted by 20 — GURI N o 21 of 27 January 1993. way of protest.

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contend with exclusion from the aid scheme, The subsidiary branch of the plea in law in so far as their economies of scale serve to mitigate the economic disadvantage they suffer as a result of such exclusion.

39. I would simply reiterate that the impact 41. In the alternative, the Italian Government of the bonus is not a decisive criterion. Fur- claims that the Court should annul the provi- thermore, the granting of State aid in order to sion of the Decision of 22 October 1996 eliminate or reduce the economic advantages imposing on Italy the obligation to recover achieved through the proficient organisation the amounts granted under the aid scheme of the means of production is in particular declared unlawful and incompatible with the contrary to the objectives pursued by free common market (see paragraph 15 above). It competition. maintains that it is absolutely impossible for it to recover the bonuses authorised because of the insuperable difficulties and the social unrest which any attempt at recovery would entail.

— Assessment

Conclusion

44. Having regard to the foregoing considerations, I propose that the Court of Justice:

— dismiss the application by which the Italian Republic seeks annulment of Commission Decision 97/270/EC of 22 October 1996 on a tax credit scheme introduced by Italy for professional road hauliers (C 45/95 ex N N 48/95);

— order the Italian Republic to pay the costs.

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