C-15/98

ITALY AND SARDEGNA LINES V COMMISSION

OPINION OF ADVOCATE GENERAL FENNELLY delivered on 13 April 2000 *

Table of Contents

I — The factual and legal context I - 8860 A — The Sardinian legal regime I - 8860 (i) The original regime I - 8860 (ii) The 1988 modifications to the original regime I-8861 (iii)The further 1996 modifications I-8862 B — The aid received by Sardegna Lines I - 8862 C — The Commission Decision I - 8863 II — Scope of the applications I - 8864 III — Admissibility I-8865 A — Italy's application (Case C-15/98) I - 8865 (i) The material scope I - 8865 (ii) The characterisation of the 1988 Law Regime I-8866 B — Sardegna Lines' application (Case C-105/99) I-8867 IV — Consideration of the applications I - 8868 A — The alleged flaws in the administrative procedure I - 8868 B — The infringement of the Seventh Directive I - 8870 C — The sufficiency of the Commission's statement of reasons I-8872 (i) Synthesis of the observations I - 8873 (ii)Analysis I-8874 D — The classification of the impugned aid as 'altered' aid I - 8880 (i) Synthesis of the observations I-8881 (ii)Analysis I-8882 The approach adopted in the 1997 Decision I-8882 The adequacy of the statement of reasons I - 8884 The correctness of the classification I - 8886

* Original language: English.

I - 8859

(i) The original regime 1 — Bolletino Ufficiale della Regione Autonoma della Sardegna, 15 October 1952. 2 — Bolletino Ufficiale della Regione Autonoma della Sardegna, 23 August 1954. 3 — It is noteworthy that the original version of Article 1, as set 2. The aid scheme involved in the present out in the 1951 Regional Law, provided merely that the beneficiaries of the loans were required to be 'regional case dates from 1951. It is necessary, undertakings'.

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ITALY AND SARDEGNA LINES V COMMISSION

(ii) that only undertakings having their (hereinafter 'the 1988 Regional Law'), seat, fiscal domicile and port of fit- which inserted new Articles 2 and 13 into ting-out in the Region of Sardinia were the 1951 Regional Law, as well as adding a eligible for such loans (Article 2); 4 second paragraph to the existing Arti- cle 9. 5 Article 2 of the modified regime (hereinafter 'the 1988 Law Regime') pro- vided:

I - 8861

OPINION OF MR FENNELLY — JOINED CASES C-15/98 AND C-105/99

I - 8862

ITALY AND SARDEGNA LINES V COMMISSION

Lines — Servizi Marittimi della Sardegna Despite several letters of reminder sent by SpA, a company registered in Cagliari, the Commission in 1994 and 1995, no Sardinia (hereinafter 'SL') — a loan of further reply was received from the Italian ITL 9 600 million towards the purchase authorities. of an ITL 16 000 million passenger ship named Moby Dream. The amount of the loan was equal to 60% of the total amount to be invested since SL had not previously benefited from national aids. The loan proceeds were to be provided in one payment after SL paid the difference 9. Consequently, the Commission informed between the loan and the total cost of Italy by letter of 24 June 1996 (hereinafter acquiring the vessel. Repayments were Opening Letter I') of its decision to com- scheduled not to begin until the third year mence a contentious investigation under following the date upon which the Moby Article 93(2) of the EC Treaty (now Arti- Dream was put into service. There were to cle 88(2) EC) regarding the aids granted be 12 a n n u a l payments of pursuant to the 1988 Law Regime. 8 In ITL 993 445 913, which represented the Opening Letter I, the Commission charac- total of the capital lent plus interest at the terised the aids in question as 'new' aids. It rate of 3.5%. is common ground that neither Italy nor the Region of Sardinia contested this charac- terisation during the course of the consul- tative procedure. 9Sardegna Lines, how- ever, did not participate in that procedure.

C — The Commission Decision

in violation of Article 93(3) of the EC 11. On 14 November 1997, the Commis- Treaty; (iii) it did not fulfil the criteria for sion notified Italy by letter (hereinafter the exceptions to Article 92(1) set out in 'Opening Letter II') of its decision to com- either Article 92(2) or (3) thereof (Arti- mence a separate consultative procedure cle 1). The Commission also directed Italy under Article 93(2) of the EC Treaty in to recover the illegal aids granted pursuant respect of the regime introduced by the to the 1988 Law Regime (Article 2). As 1996 Regional Law. 11 In Opening Let- regards the classification of the aid as State ter II, the Commission explicitly stated that aid, the Commission stated, in Part IV of its appraisal of the 1996 Law Regime the recitals in the preamble to the 1997 would not concern the 1988 Law Regime. Decision (hereinafter 'Part IV of the Deci- While noting that the 1996 Law Regime sion'), that: 'no longer contains provisions which con- stitute discrimination on grounds of nation- ality ...', the Commission based its decision on several enumerated 'serious doubts' which it retained regarding the regime's compatibility. 12

I - 8864

ITALY AND SARDEGNA LINES V COMMISSION

annulment of the 1997 Decision and an I I I— Admissibility order of costs against the Commission. 13

A — Italy's application (Case C-15/98)

13. The Commission raises a number of objections regarding the admissibility of Italy's application. The grounds of annul- ment invoked by the applicants largely (i) The material scope overlap. However, Italy also accuses the Commission of having improperly institu- ted two formal investigations instead of one and, thus, of changing the nature of the 15. The Commission accepts that a single administrative procedure that led to the application may include requests for the adoption of the 1997 Decision, as well as of annulment of more than one act, but that: violating Article 92(2) and (3) of the EC (i) the general principle should be that only Treaty by considering the 1988 Law a single act can be covered: Article 174 of Regime to be incompatible with Commu- the EC Treaty (now Article 231 EC) and nity law because the conditions governing Article 19 of the EC Statute of the Court of the aid granted thereunder infringed other Justice speak of 'act' in the singular; (ii) fundamental Treaty provisions. For its part, where there is such a connection as to merit SL contends that the 1997 Decision is a single application, the grounds of com- invalid because it ignores the relevance of plaint should be formulated precisely and Council Directive 90/684/EEC of clearly; (iii) the Court has recognised, in 21 December 1990 on aid to shipbuild- exceptional cases, that an application can ing. 14 attack several decisions, but only if they are parallel in terms of time, procedure and subject-matter, or if one is the logical consequence of or constitutes a preliminary step linked to the other, which is not so in the present case. 15

17. The Commission does not dispute that several acts can 'be contested in a single action'. 16 I agree with the Commission that (ii) The characterisation of the 1988 Law there must, however, be a sufficient con- Regime nection between such acts to justify the Court's dealing with them in the context of one procedure encompassing the parties' observations or pleadings, written and oral, the Opinion of the Advocate General and 20. The Commission also contests the the judgment of the Court. admissibility of Italy's application in so far as it contests the characterisation of the 1988 Regional Law adopted by the 1997 Decision. Since the characterisation of the 1988 Law Regime as altered aid adopted by the Commission in Opening Letter I had 18. I do not think, contrariwise, that it is binding legal effects in accordance with the appropriate to establish formal categories Cenemesa 17 and Italgrani 18 case-law, that of connection such as those proposed by letter could, therefore, have been contested the Commission. It should suffice that the by Italy. These are effects erga omnes acts and the grounds for attacking them are flowing from the letter that are not sufficiently closely connected to warrant absorbed by the final decision. Not having their being considered in one action. In the challenged Opening Letter I, Italy is too present case, I agree with Italy that there is late to contest the 1997 Decision in so far a sufficient connection. The subject-matters as it confirms that classification. Further- of the 1997 Decision and of Opening more, the Commission asserts that the Letter II are closely related. The grounds challenge to the characterisation adopted invoked by Italy as against each are almost by it in Opening Letter II is also out of time identical, whatever their respective merits. as it has never authorised the 1988 Law Regime.

was no right to challenge a decision to open desirous of preserving all their legal rights, a consultative procedure. In this case, the to initiate annulment actions against the Commission reasons a contrario; not only choice made by the Commission at the may a Member State challenge a classifica- outset of the consultative procedure. tion of a measure as State aid adopted in a decision to open such a procedure but, in fact, it must do so or forgo the right later to challenge that classification if it is main- tained in the Commission's final decision. 24. Since it is not contested that Italy's action was introduced against both the 1997 Decision and the decision adopted in Opening Letter II within the two-month period required by the fifth paragraph of Article 173 of the EC Treaty, as supple- 22. This view finds no support, in my mented by the relevant delay for distance, opinion, in the Court's reasoning in those there is no temporal bar to Italy's right to cases. Where the Commission, in opening a contest the Commission's classification of consultative procedure, forms the view that either the 1988 or the 1996 Law aid actually comprises new or altered State Regimes. 20 aid, this classification has significant legal consequences. It precludes the Member State concerned from granting the aid until the Commission decides that it is compa- tible with the common market — or that it does not, after all, constitute State aid. The Court was thus concerned to ensure that interested parties could challenge 'a choice B — Sardegna Lines' application (Case by the Commission of the applicable rules C-105/99) of procedure ... [which] ha[d] legal effects'. 19

27. Italy alleges that the Commission has IV — Consideration of the applications infringed its right to a fair hearing by improperly separating into two procedures its examination of what constitutes sub- stantially the same aid scheme. It asserts that it is a normal legal practice to review alterations effected to an aid regime in the 26. In the light of the considerable overlap procedure during which that regime is between the pleas regarding the alleged investigated. 24 The effect of this scission inadequacy of the statement of reasons in was to change the initial consultative the 1997 Decision and the supposedly procedure commenced by Opening Letter I unjustified classification of the aid as from one concerned with the compatibility altered aid, I shall initially consider two of the regime as a whole to one concerned discrete general pleas, of which each appli- with individual payments of aid in the cant advances one respectively, but both of period between 1988 and 1996. In Italy's view, the Commission's power to review aid schemes is limited to those that remain 22 — See, initially, Case 730/79 Philip Morris v Commission in force and pursuant to which aid may in [1980] ECR 2671, paragraph 5 (hereinafter 'Philip Mor- ris'), Case 323/82 Intermitls v Commission [1984] future be granted. This was not the case ECR 3809, paragraph 5, and Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek with the 1988 Law Regime when the 1997 v Commission [1985] ECR 809, paragraph 13 (hereinafter Decision was adopted. Moreover, by alter- 'Leeuwarder'. In Case C-188/92 TWD Textilwerke Deg- gendorf [1994] ECR I-833, paragraph 24, the Court ing the effective nature of the ongoing explicitly acknowledged that the recipient of State aid could have challenged the Commission decision declaring investigation, the Commission infringed the aid unlawful and incompatible with the common not only Italy's right to defend itself but market pursuant to Article 173 of the EC Treaty. This was implicitly confirmed in Pleuger, ibid. It is clear from Joined Cases C-329/93, C-62/95 and C-63/95 Germany and also that of the other interested parties, Others v Commission [1996] ECR I-5151 (hereinafter who, like Italy, were entitled to conclude 'Bremer Vulkan') that the transfer of an individual annulment action to the Court from the Court of First from the initial investigation that the Instance cannot affect its admissibility. Commission was concerned with assessing 23 — In Joined Cases 67/85, 68/85 and 70/85 Van der Kooy and Others v Commission [1988] ECR 219, individual horti- cultural producers who had benefited from a preferential gas tariff were denied standing to challenge a Commission decision that the tariff amounted to an incompatible State 24 — Joined Cases 91/83 and 127/83 Heineken Brouwerijen v aid because, as members of a broad group of growers, they Inspecteur der Vennootschapsbelasting, Amsterdam and lacked individual concern; see paragraph 15. Utrecht [1984] ECR 3435 (hereinafter 'Heineken').

28. The Commission submits that, under Article 93 of the EC Treaty, it is required to open a consultative procedure each time it believes that a plan to grant or alter State aid is not compatible with the common market. 25 This requirement applies to both the grant and the alteration of aid. Since it formed such a view of the amendments introduced by the 1996 Regional Law, it was obliged to take the decision set out in Opening Letter II. Moreover, that decision was justified in the interest of procedural 30. Moreover, this view is fully consistent economy. If it were obliged to consider new with Heineken, where alterations were amendments to an aid regime within the made to an aid proposal during the course framework of an existing investigation, a of its adoption by the Netherlands Parlia- Member State could always prolong the ment. 26 The Court's statement that the aim procedure with continuing amendments to of Article 93(3) of the EC Treaty 'could not the regime under review. It was clear from be achieved if the Commission were Opening Letter I that the Commission informed only of the initial plans and not intended to examine not an abstract regime of subsequent alterations' and that 'such but the particular aids granted pursuant to information [could] be supplied to the the 1988 Law Regime. Commission in the course of the consulta- tions which take place between the Com- mission and the Member States concerned following the initial notification' does not require, as Italy alleges, that the Commis- sion always simultaneously examine an original aid scheme and subsequent amend- ments to it. 27 There is clearly no such 29. I am satisfied, for the reasons given by obligation '... where the alteration in ques- the Commission, that it has not improperly tion is in actual fact a separate aid measure bifurcated its investigation of the 1988 and which should be assessed separately and 1996 Law Regimes. It is clear from the which is therefore not such as to influence language of Article 93 of the EC Treaty the assessment which the Commission has that the Commission has both the right and already made of the initial plan'. 28 the duty to review State-aid regimes at all

31. The Commission is, therefore, not the aid scheme pursuant to which those precluded from forming the view that the aids were granted has ceased to exist. To amendment, particularly after a consider- accept Italy's argument would significantly able period of time (eight years in this case), reduce the Commission's power to control has elapsed, of earlier amendments to an State aid and therefore call into question existing aid scheme must be assessed sepa- the effectiveness of Community law on rately. Indeed, I agree with the Commission State aid. 31 that, once it forms the view that new or altered aid has been granted without its having been notified, it must, in accordance with Rover, commence a fresh consultative examination of such supposed aid. 29 This is also the case where the earlier amend- ments have, as in this case, been under review — albeit not pursuant to an Arti- 33. I am satisfied that Italy's plea regarding cle 93(2) of the EC Treaty consultative an unjustified scission by the Commission procedure — for a number of years prior of its investigations of the 1988 and 1996 to the adoption by the Member State Law Regimes should be rejected. As Italy concerned of later amendments. does not advance any other autonomous plea capable of affecting the validity of the decision contained in Opening Letter II, and since its validity cannot, in my opinion, necessarily be affected by any successful plea made in respect of the 1997 Decision, I have no doubt that Italy's action, in so far as it is directed against Opening Letter II, although admissible, is unfounded. 32. Moreover, I have no doubt that Italy's argument that the Commission may only review aids granted under schemes that remain capable of being applied in the future is unfounded. The Court has con- sistently stressed that unlawfully granted aids must, in principle, be recovered so as to restore the status quo ante. 30 The distortion of competition caused by parti- cular State aids that are incompatible with B — The infringement of the Seventh the Treaty does not cease merely because Directive

35. In its defence, the Commission points out that, although in its 1997 guidelines on State aid to shipping companies it accepts 'All forms of aid to shipowners or to third that those guidelines do not apply to aid to parties which are available as aid for the shipbuilding, it must, none the less, ensure building or conversion of ships shall be that aid to shipowners does not effectively subject to the notification rules in Arti- operate to benefit shipbuilding in contra- cle 11'; vention of the requirements of the Seventh Directive. 33 This, the Commission explains, is the meaning of the allusion in the 1997 Decision (Part VI of the Decision) to the absence of any 'mechanism' to ensure the adherence of the 1988 Law Regime to 'Whereas there is every reason, for the sake the shipbuilding rules. Since this finding has of transparency and equity, to continue to not been disputed by SL, it submits that SL's include in the present aid policy indirect aid plea is unfounded. In its rejoinder, the granted to shipbuilding through investment Commission additionally contests SL's aid to shipowners for the building and assumption that, as the Seventh Directive conversion of ships.'

(emphasis added), is subject to an addi- specified cases, from the prohibition of aid tional mandatory 'special' notification which would otherwise be incompatible'. 34 requirement under Article 11 of the The Seventh Directive could, therefore, Seventh Directive. Article 11(1)(a) specifi- only have benefited SL if it had afforded cally provides for the notification of '... any an additional basis upon which the 1988 aid scheme — new or existing — or any Law Regime could have been declared amendment of an existing scheme covered compatible with the common market. Yet by this Directive'. To assert that the Seventh SL refers to no such basis. Thus, its plea is Directive alone applied to the aid provided without purpose inasmuch as it asserts that under the 1988 Law Regime would, there- the Commission has infringed that Direc- fore, effectively amount to accepting that a tive in confining its analysis in the 1997 supplementary violation of Community Decision to the grounds of possible com- law was committed by the Italian autho- patibility set out in Article 92(3) of the EC rities, viz. their failure to notify even the Treaty. original regime to the Commission. As the Commission referred to no such alleged violation in Opening Letter I, it clearly correctly treated the 1988 Law Regime as an aid to shipowners that fell to be considered by reference only to the less 38. I am therefore satisfied that the plea onerous notification obligations imposed alleging a violation by the Commission of by the Treaty. the Seventh Directive should be rejected.

41. SL noted that the only point relevant to the possible adverse effects on competition and intra-Community trade of the aid to which allusion was made by the Commis- (i) Synthesis of the observations sion in Opening Letter I was that 'since trade between the Italian continent, Sardi- nia and Corsica has a Community aspect, any aid granted by a company operating in the market in question may be regarded by the Commission as distorting or threaten- ing to distort competition'. 3 7 This was not, 40. Italy, supported by SL, asserts that, however, repeated in the 1997 Decision. It although in certain cases it may result from is not possible to deduce from the island the very circumstances in which aid is status of Sardinia alone, as the Commission granted that these conditions are satisfied, would appear to have done, that aid to the Commission must, none the less, refer undertakings based there inevitably affects to those circumstances in its decision. The intra-Community trade. SL contends that 1997 Decision, however, contains no ana- the 1997 Decision contains no market lysis of the aid's potential to distort com- analysis, no reference to the beneficiaries' petition and no discussion of its alleged share of the relevant market and no coher- effects on inter-State trade. The reasoning ent discussion of the effect of the aid on requirement prescribed by Article 190 of trade. the EC Treaty (now Article 253 EC) for a secondary Community act, as defined by the Court, particularly in Leeuwarder, is not satisfied. 35 The reference to the statis- tics for the transport of goods and services between Sardinia and the Member States in Part IV of the Decision (quoted in para- 42. The absence of reasoning regarding the graph 10 above) does not establish that the relevant market is particularly telling when aid affected trade between Member States. it is recalled that, by virtue of Article 6(2) Such a high degree of dependence on of Council Regulation (EEC) No 3577/92 maritime transport is natural having regard of 7 December 1992 applying the principle to Sardinia's island status. In any event, of freedom to provide services to maritime even if the Commission had analysed in the 1997 Decision the extent to which shipping companies operating from France and 36 — In its reply, Italy points out that 89% of goods transported from Sardinia are transported by sea to the Italian Spain provided services to Sardinia, it mainland, while the remaining 11% are transported to both Atlantic and Mediterranean ports in France and to ports in Spain. As regards passenger transport, traffic with the Italian mainland comprises 97%. 37 — See the last sentence of the eighth paragraph of the letter; 35 — Loc. cit., footnote 22 above. OJ 1996 C 368, p. 1, at p. 2.

transport within Member States (maritime a specific reference to the Community cabotage), 'island cabotage in the Mediter- nature of trade between the Italian main- ranean' was not liberalised until 1 January land, Sardinia and Corsica, which was not 1999 38 I n t h e absence of competition retained in the latter because it was self- between Italian and other Community- evident. Moreover, the fact that aid recipi- based shipping companies at the material ents only engage in internal Member State time (1988-1996), the aid could not, by trade does not suffice to preclude adverse definition, have affected intra-Community effects on intra-Community trade from trade. flowing from the aid because it may help them to maintain their competitive posi- tion. 4 2 SL's reference to Regulation No 3577/92 is irrelevant because the pro- visional derogation in respect of cabotage for which it provided did not preclude the provision of international-shipping services between Sardinia and other Member States or shipping companies from operating internal services between Sardinia and the 43. The Commission contends that the Italian mainland. In its rejoinder in SL's 1997 Decision is adequately reasoned since action, the Commission adds that the aid granted selectively to undertakings Regulation did not, in addition, preclude enables them to improve their position non-Italians from registering their vessels in vis-à-vis their competitors and thus clearly Italy and thus engaging in cabotage with distorts competition and affects trade Sardinia, a point repeated in answer to a between Member States. 39 The analysis written question from the Court. employed replicates that used in Opening Letter I, which was not challenged by Italy during the consultative investigation. In such circumstances, neither a detailed mar- ket analysis nor a discussion of the effects of the aid on trade was, in the Commis- sion's opinion, necessary. 40 This is borne out by the fact that the Court has held that even the relatively small amount or the (ii) Analysis relatively minor size of the recipient under- taking do not preclude the aid provided from being classified as State aid. 41 The Commission also denies that there is a disparity between Opening Letter I and the 44. Although the reasoning employed in 1997 Decision; both refer to the same the 1997 Decision is (at best) laconic, the transport statistics while the former made Commission effectively alleges that the applicants were well aware of the reasons underlying the Decision, which in any 38 — OJ 1992 L 364, p. 7. event, it alleges, are obvious. The alleged 39 — It cites Philip Morris, op. cit., footnote 22 above, para- graph 11 and Case C-303/88 Italy v Commission [1991] obviousness is thus a factor which should ECR I-1433 (hereinafter 'ENI-Lanerossi'), paragraph 27. 40 — Case T-214/95 Vlaams Gewest v Commission [1998] ECR II-717, paragraph 67. 41 — Joined Cases C-278/92 to C-280/92 Spain v Commission 42 — Case 102/87 France v Commission [1988] ECR 4067, [1994] ECR I-4103 (hereinafter 'Hytasa'), paragraph 42. paragraph 19.

46. In Philip Morris, the appropriate start­ ing point in respect of the reasoning '[A]though under Article 190 of the EEC requirement in State-aid cases, the Court Treaty the Commission is required to state was faced with a plea that the impugned the factual matters justifying the adoption Commission decision 4 6 contained an of a decision, together with the legal 'inadequate or at least incomprehensible considerations which have led to its adopt­ and/or contradictory' statement of reasons ing it, the article does not require the as regards the requirement that the pro­ Commission to discuss all the matters of posed aid in question (to increase the fact and of law which may have been dealt production capacity of one of the appli­ with during the administrative proceedings. cant's Netherlands cigarette factories) have The statement of reasons on which a an effect on trade and distort competi­ decision adversely affecting a person is tion. 4 7 In particular, the applicant alleged based must allow the Court to exercise its that the discussion contained no market power of review as to the legality of the analysis and that no account was taken of decision and must provide the person the negligible effect of the proposed aid on concerned with the information necessary future production costs at the factory. The to enable him to decide whether or not the Court rejected the plea. It referred to the decision is well founded.' accepted fact that, when the planned investment was completed, the applicant

'When State financial aid strengthens the position of an undertaking compared with 47. The Court was, thus, satisfied that the other undertakings competing in intra- information mentioned in the impugned Community trade the latter must be regar- decision supported the conclusion drawn ded as affected by that aid. In this case the by the Commission. I agree with SL that the aid which the Netherlands Government Court did not enunciate a principle that the proposed to grant was for an undertaking mere grant of aid to certain specific domes- organised for international trade and this is tic undertakings, which, indeed, is inherent proved by the high percentage of its in the nature of State aid, necessarily production which it intends to export to justifies the conclusion that it satisfies all other Member States. The aid in question the criteria for constituting State aid for the was to help to enlarge its production purpose of the Treaty. 50 The Commission capacity and consequently to increase its cannot merely assume that aid to particular capacity to maintain the flow of trade undertakings affects intra-Community including that between Member States. On trade and distorts competition. Indeed, this the other hand the aid is said to have emerges from the seminal statement-of- reduced the cost of converting the produc- reasons case of Germany v Commission, tion facilities and has thereby given the where the Court found that the Commis- applicant a competitive advantage over sion had inadequately reasoned its decision manufacturers who have completed or to refuse a request for a tariff quota of intend to complete at their own expense a 450 000 hectolitres of wine but to grant similar increase in the production capacity one for 100 000 hectolitres. 5 1In particu- of their plant. lar, the Court noted that '[a]part from general considerations, which apply with- out distinction to other cases, or which are confined to repeating the wording of the Treaty, the Commission has been content to

rely upon "the information collected", sufficient to show that the aid is capable of without specifying any of it, in order to affecting trade between Member States and reach a conclusion "that the production of of distorting or threatening to distort wines in question [i.e. within the Commu- competition, the Commission must at least nity] is amply sufficient"'. 52 set out those circumstances in the statement of reasons for its decision. In this case it has failed to do so since the contested decision does not contain the slightest information concerning the situation of the relevant market, the place of Leeuwarder in that market, the pattern of trade between 48. It emerges very clearly from Leeuwar- Member States in the products in question der that the Commission may not rely on or the undertaking's exports' (emphasis presumptions to form the basis of its added). statement of reasons in State-aid cases. 53 In that case, which concerned the acquisi- tion by a public-development undertaking of a shareholding in a paperboard manu- facturer, the Netherlands and Leeuwarder challenged the adequacy of the reasoning of the Commission in the contested decision in respect of both the classification of the 49. Bremer Vulcan is also of assistance. acquisition as constituting aid and its The Court found in that case that 'the finding that it was capable of distorting assertions in the contested act and the data competition and affecting intra-Commu- quoted there [did] not constitute adequate nity trade. It was only in respect of the reasons to support the conclusions it adequacy of the reasoning in the second reached', namely that a guarantee to one respect that the applicants succeeded. The undertaking (BV) to facilitate it acquiring approach of the Court is highly relevant for another (KAE) could distort competition considering the validity of the Commis- and affect intra-Community trade. 55 The sion's decision in the present case: 54 reasoning as regards those criteria was found to be inadequate because: 56

51. Since that reasoning is, at the very best, ambiguous, it provides little or no support for the Commission's classification of the aid as State aid. Furthermore, it is clear, to my mind, from the precision '[a]s regards point (d) above' ('[p]er quanto riguardo la lettra d)') which precedes the reference to those trade figures, that they were uniquely intended to substantiate the Commission's 50. I am satisfied that Part IV of the finding in respect of that point, namely that Decision (quoted in paragraph 10 above) the 'aid affects trade between Member fails to meet the standard applied by the States' ('l'aiuto incide sugli scambi tra Stati abovementioned case-law. Apart from membri'). The Commission contends that merely reciting, in effect, that the four the criteria of distorting competition and principal conditions required for classifica- affecting inter-State trade are so closely tion of aid as State aid for the purposes of linked that the natural effect of the 'selec- the Treaty are met by the aid provided tive' ('selettivo', referred to in point (c)) under the 1988 Law Regime, the Commis- nature of the aid was to reinforce the sion has relied — but even then only in position of the recipients in comparison support of its finding that intra-Commu- with that of their competitors. Even if this nity trade was affected — on some very statement were statistically correct, it does general statistics on maritime transport of not appear in the 1997 Decision as a goods and tourist traffic between, respec- justification for the conclusion that the tively, the 'Member States' and 'Sardinia' aid distorted competition. It is, on the and 'the Community' ('Stati membri' in the contrary, both a statement of fact and a authentic Italian version) and 'Sardinia'. conclusion which, in either case, would While the Commission's agent recognised require justification but in respect of which in response to a question posed at the none is furnished by the Commission in the hearing that this allusion was a mistake and 1997 Decision. In my view, the Commis- should — as is somewhat clearer from the sion's submission, based on Philip Morris French text of the 1997 Decision — have and Vlaams Gewest v Commission, that referred to trade between Italy and Sardi- once State or regional resources are pro- nia, on the one hand, and between Sardinia vided selectively to certain undertakings the and the other Member States, on the other, the recipients of the aid — and other interested parties who might have consid- ered challenging it — were entitled to rely 57 — Although in respect of the transport of goods, the French version of the 1997 Decision refers to goods transported on the authentic Italian version and, thus, 'from Member States' ('provenant des États membres') to Sardinia and from Sardinia 'to the Member States' ('vers to assume that the Commission based its les États membres'), as regards tourist traffic the reference is to trade 'between the mainland and Sardinia' ('entre le reasoning on global trade figures for trade continent et la Sardaigne').

53. I am also satisfied that SL's contention regarding the relevance of Regulation 52. Furthermore, a contextual comparison No 3577/92 is well founded and that the of the 1997 Decision with Opening Letter I 1997 Decision is for that reason also does not assist the Commission. As SL inadequately reasoned. Since that Regula- points out, that letter contained one clear tion permitted Italy to continue to preclude statement regarding the 'Community maritime cabotage 59 at the material time, aspect' of trade between the mainland of recipients of aid under the 1988 Law Italy, Sardinia and Corsica. Such a state- Regime like SL would, given the reference ment, which was accompanied by a refer- to Corsica in Opening Letter I, have had all ence to global trade figures that differed the more reason to assume that the Com- only marginally from those set out in the mission viewed only Italian-based shipping 1997 Decision, could easily have led reci- companies, providing services between pients of the aid to form the impression mainland Italy, Sardinia and Corsica, as that the Commission would concentrate its their potential competitors. 60 However, it investigation on the aid's potential to emerges clearly from the Commission's oral distort competition on that particular sec- observations and from its answer to the tion of the market for the provision of Court's written question that it considered maritime-transport services. However, it Regulation No 3577/92 to be irrelevant seems from the Commission's rejoinder in because it did not preclude undertakings Italy's action, from its answer to the Court's from other Member States — particularly written question and from its oral observa- from (mainland) France and Spain — from tions that it actually had in mind the

I - 8879

OPINION OF MR FENNELLY — JOINED CASES C-15/98 AND C-105/99

providing international maritime-transport prior to (see the eighth paragraph of services competing with those provided by Opening Letter I) and during the consulta- the beneficiaries of aid under the 1988 Law tive investigation (Italy accepts in its Regime and because the benefit of the defence that it failed to respond to a regime was not limited to undertakings Commission request of 25 November engaged in the provision of cabotage ser- 1996 for various information including a vices. In my opinion, the inclusion by the 'detailed note' on the structure of the Commission of even a brief reference to maritime-transport services market). A such considerations in the 1997 Decision Member State may not, merely because it would probably have sufficed to render it considers that the Commission has unrea- compatible with Article 190 of the EC sonably requested it to provide a detailed Treaty. market analysis for the purpose of a consultative procedure, refuse to furnish those statistics which are available to it and which might facilitate the Commission's investigation. 62Italy's conduct in this case would, in my opinion, have entitled the Commission to base the reasoning of its decision on whatever statistics in respect of 54. Moreover, such a reference would also competition from French and Spanish ship- have served to ensure consistency between ping companies regarding the provision of that Decision and a number of contem- maritime-transport services to and from poraneous Commission decisions concern- Sardinia were available to it. 63 No such ing road haulage in Italy in which reference statement was, however, made by the is made by the Commission to the relevance Commission. It merely assumed that the or otherwise of the corresponding Commu- existence of such competition was obvious. nity legislation concerning the opening up of cabotage in respect of road-transport services. 61 I am therefore convinced that the 1997 Decision should be annulled.

of the statement of reasons justifying the never used. Thus, it could not be regarded Commission's classification of the 1988 as altering the nature of the aid. The Law Regime as State aid, it would strictly requirements that a beneficiary have its not need to consider the compatibility of head office and port of registration in the further classification of the amend- Sardinia were already established by Arti- ments introduced by that Law as notifiable cle 2 of the original regime, while the alterations for the purposes of Article 93(3) obligation that all its ships be registered in of the EC Treaty. However, as the appro- Sardinian ports, that those ports be used as priateness of the approach underlying that the centre of its shipping activity and that classification constitutes one of the most ship repairs be carried out in Sardinia had important and certainly the most novel of very limited practical effect because they the issues raised by the present actions, I applied to undertakings that already had to propose to consider the various arguments have their port of registry in Sardinia. The invoked by the applicants. requirement for certain beneficiaries to use crew registered on the roll of their Sardi- nian port of registry derives from national legislation providing for the mandatory employment of seafarers registered on the roll of each port and its effect was, there- fore, merely to favour Sardinian over other Italian ports. (i) Synthesis of the observations

(ii) Analysis

61. Essentially two important questions are raised by this aspect of the actions. The first is the correctness of approach adopted by 60. The Commission submits that it is the Commission in the 1997 Decision; the unnecessary to conduct line-by-line com- second is the question of the adequacy of parisons of an existing aid with later the reasons given by the Commission for its amendments to it, since Article 93(3) of conclusion that the original regime was the EC Treaty requires the notification of altered by the 1988 Regional Law, which is all such amendments, whether to the under- intimately related to the question whether lying aid scheme or to the terms upon the Commission's assessment was substan- which individual aids are granted. In its tively correct. view, it is for the Commission and not the Member States, subject to review by the Court, to determine whether amendments substantially affect existing aid. 66 Alterna- tively, it submits that, in the present case, the amendments, even considered sepa- rately, but a fortiori when assessed together, The approach adopted in the 1997 Deci- manifestly constituted a substantial altera- sion tion of the original regime. As for SL's reliance on Namur, it observes that there is not only a new law in the present case, viz. the 1988 Regional Law, but that the said 62. It is clear from the 1997 Decision that Law introduced a number of substantial the Commission has not deemed the aid amendments, all of which were cited in Part granted under 1988 Law Regime to be III of the recitals in the preamble to the 'altered' aid merely because it was granted

64. It was precisely because there was no 63. This emerges from a careful reading of change to the original legislative provisions Namur. The circumstances of that case and because they did not restrict the range were rather unusual. OND was a Belgian of commercial activities open to OND that public undertaking which received State the Court was satisfied that a later renun- aid, pursuant to a 1939 Law, in the form of ciation of what had effectively been a various advantages, which, '[a]part from voluntarily assumed restriction was not adjustments not affecting the substance of tantamount to an 'alteration' of the original those advantages, ... remained unchanged scheme. In my view, Namur does not on 1 February 1989'. 69 The Court had to therefore support the proposition that once consider whether the fact that, from that the legislation underpinning an existing aid date, OND could be regarded as having scheme is modified the adjustments must be been permitted by the Belgian Ministers regarded as notifiable 'alterations'. On the who ultimately controlled it to enlarge the contrary, the Court manifestly viewed field of its commercial insurance activities changes to the scope of the aid as being amounted to an alteration of the underlying indicative of whether it has been altered; if its scope is affected in substance by the alleged 'alteration' it must be notified. Only 68 — See the fifth paragraph of Part III of the Decision such a common-sense approach would (emphasis added) and the first paragraph of Opening Letter I. The authentic Italian version of the Decision permit a satisfactory degree of legal cer- speaks of 'modificata in modo sostanziale', while in Opening Letter I reference is made to 'sostanzialmente modificata' (emphasis added). 69 — Loc. cit., footnote 64 above, paragraph 23. 70 — Ibid., paragraph 28.

65. Support for this interpretation also emerges from the Opinion of Advocate '[did] not require the imposition on Mem- General Lenz in Natnur. He observed ber States of an absolute obligation to that: 72 notify the Commission of every aspect. In other words the State must notify the Commission of alterations which, because of the effect that they have on undertakings or their competitive relationship, may influence the Commission's decision. It is not on the other hand necessary to com- municate alterations which are merely '[W]hether aid has been granted or altered formal and which do not pose a threat to depends ... on whether in the portfolio of the freedom of competition.' measures of a Member State providing for advantages in the nature of aid for the benefit of undertakings a change has occurred which has affected the content or extent of those advantages. In this connection, it is clear from a comparison between paragraphs 1 and 3 of Article 93 that the term "aid" is synonymous with the The adequacy of the statement of reasons expression "system of aid" in paragraph 1. It follows that an aid is granted within the meaning of Article 93(3) where a new 66. SL asserts that the reasons given in the 1997 Decision in support of the Commis- sion's assessment that the amendments 71 — Namur, paragraph 33. The need for legal certainty in this respect has arguably been increased by the recent adop- effected to the original regime by the tion, on the basis of Article 94 of the EC Treaty (now 1988 Regional Law were substantial are Article 89 EC), of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the inadequate. Having regard to the principles application of Article 93 of the EC Treaty, OJ 1999 L 83, p. 1. Article 1(b) thereof includes in the definition of which are discussed above (paragraphs 44 'existing aid' aid which is so deemed '... because it can be to 54) regarding the requirement to give established that at the time it was put into effect it did not constitute an aid, and subsequently became an aid due to the evolution of the common market and without having been altered by the Member State'. 72 — Paragraph 77 of his Opinion (emphasis added). 73 — Loc. cit., paragraph 5 of his Opinion (emphasis added).

reasons, I am, not without some hesitation, they should accompany its conclusion that satisfied that the reasons given in Part III of the amendments were substantial, but, as the Decision satisfy the requirements of the Court's case-law already discussed Article 190 of the EC Treaty. confirms, it would suffice if they emerged from other parts of the relevant decision. In the present case, notwithstanding the absence of explicit reasons for the Com- mission's conclusion that the 1988 Regio- nal Law introduced substantive amend- 67. The Commission, despite criticising ments to the original regime, I am satisfied Italy and SL for conducting in their plead- that, viewed as a whole, the 1997 Decision ings a line-by-line comparison of the provi- satisfies the requirements of Article 190 of sions of the 1988 Regional Law with those the EC Treaty. of the 1951 and 1954 Regional Laws before the Court, effectively contents itself in Part III of the Decision with a not dissimilar approach. It summarises the main provisions of the original regime before declaring, as noted above, that the 1988 Regional Law made 'substantive amendments' to that regime and then setting out the pertinent new provisions of the latter Law. However, it does not seek in any way to substantiate its assertion that the amendments were substantial. On the contrary, later in Part V of the recitals in 69. First, it is clear from a mere compar- the preamble to the 1997 Decision (herein- ison of the relevant provisions of the after 'Part V of the Decision'), it merely original and the 1998 Law Regimes set reasserts that the 1951 Regional Law 'was out in Part III of the Decision, and even substantially amended by [the 1988 Regio- without the benefit of the analysis provided nal Law] ...'. In substance, the Commission by the Commission in its pleading before has effectively assumed that a mere com- the Court, that a number of potentially parison of the provisions of the original and important changes were introduced by the the 1988 Law Regimes would reveal that 1988 Regional Law. Thus, it is clear that the amendments were substantial. the requirements relating to the aid bene- ficiary's place of administrative headquar- ters, shipping business, main stores, depots and accessory equipment were all new, as was that concerning making Sardinian ports the centre of its shipping activities 68. The Commission should avoid such and that of having all of its ships normally assumptions. The statement of reasons refitted at Sardinian shipyards. Novel too should explain explicitly why it considers was the obligation for those beneficiaries certain amendments to be substantial. The acquiring ships with a gross tonnage of reasons given need not be detailed, parti- more than 250 tonnes to use locally cularly where, as in the present case, it registered crew, a fact which the Commis- forms the view that the significance of the sion characterised as introducing a discri- relevant amendments is obvious. Ideally, mination on grounds of nationality in

favour of 'Sardinian' seafarers both in Parts conclusion that substantive amendments I and VI of the recitals in the preamble to were made to the original regime by the the Decision (hereinafter 'Parts I and VI of 1988 Regional Law. the Decision'). As regards the lease-pur- chase option, the language used by the Commission ('the aid scheme also intro- duced') pointed clearly to its novelty. Second, the classification was not contested by either Italy or the Sardinian authorities during the consultative investigation which preceded the adoption of the 1997 Deci- sion. While, for the reasons discussed above The correctness of the classification (paragraphs 20 to 24), this does not, of course, preclude that classification now being challenged, particularly by SL, it is a factor which may be taken into consid- eration by the Court in considering the 70. Italy and SL have, however, also con- adequacy of the Commission's statement of tested the correctness of the Commission's reasons provided some reasoning is given as conclusion that the 1988 Regional Law to the substantive nature of the amend- amendments were substantial. They assert ments. The Commission's clear description that they merely introduced points of detail of the amendments as being 'substantial' or precision to the original regime which constitutes such reasoning in this case. had little practical effect. I cannot share this Finally, the analysis contained in Part VI benign assessment. Although to require aid of the Decision is significant. The Commis- recipients, in addition to having in Sardinia sion not only states there unequivocally its their head office and place of fiscal dom- view that the 1988 Regional Law conflicts icile as required under the original regime, with fundamental principles of Community also to have there their administrative law, to wit the freedom of establishment headquarters might be regarded as a further and non-discrimination on grounds of detail designed to ensure that only local nationality, but also identifies certain undertakings benefited from the financial aspects of it which exacerbate the infringe- assistance available, the same cannot be ments of those principles already contained said of the new prerequisites that they also in the original regime. Thus, in the third use Sardinian ports as the centre of their paragraph of Part VI of the Decision, the shipping activities, register all of their Commission refers explicitly to the require- vessels at those ports and maintain there ment that all of the aid recipient's vessels be their main stores, depots and accessory registered in Sardinia, while in the fourth, it equipment, presumably in respect of all alludes to the discrimination on grounds of those vessels. These amendments are sig- nationality that in practice results from the nificant. They effectively rendered it impos- prerequisite of employing 'locally based sible for non-Sardinian undertakings to crew'. Such reasoning clearly supports its benefit from the financial assistance avail- able, while they also extended, a point stressed by the Commission in Part VI of the Decision, the indirect benefit of the aid to various other, almost inevitably Sardi- nian, undertakings operating at Sardinian ports.

71. Furthermore, by imposing a general 'alterations' for the purpose of Arti- condition that the beneficiaries utilise local cle 93(3) of the EC Treaty. First, as the shipyards for all their refitting needs, the Commission's agent pointed out, in answer 1988 Regional Law was clearly capable, at to a question at the hearing, such a least indirectly, of benefiting Sardinian reduction in scope is irrelevant where it is shipyards. The Commission's concern that achieved by amendments which exacerbate this novel provision could infringe the the discriminatory and, thus, potentially Seventh Directive is obviously justified. distorting effects of the underlying aid The intention underlying the requirement scheme. Secondly, I do not accept that to employ Sardinian crew was equally amendments which, while reducing the unequivocal and important. In 1988, the potential number of direct beneficiaries of relevant national Italian legislation, to an aid, operate indirectly to extend its which counsel for Italy alluded at the benefits to a wide range of other a priori hearing, required the maintenance, inter national beneficiaries, such as the local alia, of registers of crew. Although he shipyards and crew in the instant case, contended that the provision in the 1988 could ever be classified as insignificant and, Regional Law was required to respect that therefore, as capable of falling outside the legislation, he omitted to allude to the notification obligation imposed by Arti- directly discriminatory nationality require- cle 93(3) of the EC Treaty. ment contained in that legislation, a requirement which the Court explicitly considered to be incompatible with Com- munity law in Porto di Genova. 74 Since the imposition of a requirement to engage Sardinian seafarers inevitably led to the exclusion of all non-Italian seafarers, the 73. Finally, it 'is common ground that the Commission was manifestly correct, parti- introduction, by Article 100 of the 1988 cularly in the light of Porto di Genova, to Regional Law, of the lease-purchase option characterise such a condition as a notifiable constituted, in principle, a notifiable altera- alteration. tion of the original regime. Italy, supported by SL, asserts, however, that as no aid was granted pursuant to this option during the relevant period (1988-96), it may not be considered for the purpose of determining whether Italy should have notified the other amendments. This argument is miscon- ceived and should be rejected. 72. Although the direct effect of the amendments introduced by the 1988 Regional Law was to reduce the range of the undertakings capable of benefiting from the original regime, and thus, potentially at least, to reduce the amount of aid granted, such a possibility does not preclude such 74. I agree with the view expressed by amendments from being classified as Advocate General Lenz in Namur that 'it is clear from a comparison between para- graphs 1 and 3 of Article 93 that the term 74 — Case C-179/90 Merci Convenzionali Porto di Genova "aid" is synonymous with the expression [1991] ECR I-5889 (hereinafter 'Porto di Genova'), para- graphs 11 to 13. "system of aid" in paragraph 1' and that

'[i]t follows that an aid is granted within it only emerged in the procedure before the the meaning of Article 93(3) of the EC Court that no individual aid had been Treaty where a new system of aid is granted pursuant to the lease-purchase created, whilst the alteration of aid pre- option during the relevant period. supposes a substantive change in a system of aid'. 75 The introduction of a wholly new method of providing effectively the same level of aid manifestly constituted a sig- nificant amendment of the original regime. To accept Italy's argument would permit Member States substantially to amend existing aid schemes, or to introduce what 75. Accordingly, I recommend that the are in effect new aid schemes by way of an Court reject the applicants' arguments amendment to the legislation providing for contesting the validity of the Commission's an existing aid scheme, without having to classification of the amendments intro- notify such amendments to the Commis- duced by the 1988 Regional Law as sion until such time as they propose to substantive notifiable 'alterations' for the implement the amendments. It would, thus, purpose of Article 93(3) of the EC Treaty. ignore the fact that Article 93(3) of the EC Treaty explicitly requires Member States to inform the Commission 'of any plans to grant or alter aid'. The narrow construction of the Member States' obligation to notify amendments to existing aid that underlies Italy's submission would, in my opinion, also undermine the efficacy of the preven- tive review which the Treaty envisages the Commission exercising under Article 93(3) of the EC Treaty. The need to ensure the E — The compatibility of the impugned effectiveness of that control has consis- aid scheme with the common market tently been upheld by the Court. 76 I have no doubt, therefore, that the Commission was entitled to have regard to the amend- ment introduced by Article 100 of the 1988 Regional Law when considering whether the various amendments introduced by that Law amounted overall to substantive 76. If the Court rejects my principal recom- 'alterations'. This is a fortiori the case since mendation regarding the inadequacy of the Commission's statement of reasons, but accepts my alternative recommendation as to the validity of its classification of the 75 — Paragraph 77 of his Opinion, quoted in full in para- graph 65 above, emphasis added. 1988 amendments as constituting substan- 76 — See Heineken, op. cit., paragraph 14, Boussac, op. cit., tive notifiable 'alterations' to the original footnote 62 above, paragraph 17, Cenemesa, op. cit., regime, it will be necessary to consider the paragraph 16 and Italgrani, op. cit., paragraph 24. It would also conflict with the rationale underlying Case C-295/97 industrie Aeronautiche e Meccaniche Rinaldo applicants' alternative pleas, which chal- Piaggio v International Factors Italia (IFITALIA) and lenge the Commission's finding that the Others [1999] ECR I-3735, where the Court confirmed that the Commission has no discretion to classify as impugned aid was incompatible with the existing aid measures adopted after the entry into force of the EC Treaty where the measures in question have not common market. I propose therefore only been notified to it; see paragraphs 44 to 49. very briefly to consider those pleas.

79. Support for this conclusion may also be drawn from the Court's decision in Com- mission v France, which concerned aid to 78. The Court has consistently held that farmers that was initially investigated by Article 92 of the EC Treaty may not be the Commission pursuant to a consultative used to frustrate the other Treaty rules such procedure which the Commission then as those concerning the free movement of broke off to initiate an infringement pro- goods, 'since those rules and the Treaty cedure under Article 169 of the EC Treaty provisions relating to State aid have a (now Article 226 EC). 79 The Court held common purpose, namely to ensure the that 'although the existence of [the] specific free movement of goods between Member procedure' under Article 93(2) of the EC States under normal conditions of competi- Treaty 'in no way prevents the compatibil- tion'. 77 The Commission is, therefore, ity of an aid scheme in relation to Com- entitled to take account of possible infrin- munity rules other than those contained in gements of other Treaty rules when con- Article 92 from being assessed under the sidering the compatibility of a State aid procedure provided for in Article 169, the scheme with the common market. While I Commission must, however, use the proce- would agree with the view expressed by dure laid down in Article 93(2) if it wishes Advocate General Saggio in his recent to establish that that scheme, as aid, is incompatible with the common market'. 80 77 — Case C-21/88 Du Pont de Namours Italiana [1990] ECR I-889, paragraph 20. See also Case 249/81 Commis- sion v Ireland [1982] ECR 4005 (hereinafter 'Buy Irish'), 78 — Case C-156/98, Opinion of 27 January 2000, para- where the Court held (paragraph 18) that 'the fact that a graph 43. substantial part of the campaign [to buy Irish goods] [was] financed by the Irish Government, and that Articles 92 and 79 — Case 290/83 [1985] ECR 439. 93 of the Treaty may be applicable to financing of that 80 — Ibid., paragraph 17 (emphasis added). See also the Opi- kind, does not mean that the campaign itself may escape nion of Advocate General Mancini, [1985] ECR 439, the prohibitions laid down in Article 30'. pp. 443 and 444.

81. The Court has consistently recognised that the Commission enjoys a wide margin of appreciation in determining the compat- ibility of State aid with the common market, since the performance of its task involves complex economic and social assessments which must be made in a 82 — See, for example, AIUFFASS and AKT v Commission, Community context. 81 Thus, it will only ibid., paragraph 50, which was upheld on appeal by the Court; see Case C-55/97 P AIUFFASS and AKT v Com- annul a Commission State-aid decision, in mission [1997] ECR I-5383, paragraphs 22 to 26. this respect, if it is clear that the Commis- 83 — See Hytasa, op. cit., paragraphs 51 to 58. 84 — See Commission Decision 94/629/EC of 29 July 1994 on the establishment of the Community support framework for Community structural assistance for tne Italian regions concerned by Objective 1, which are Abruzzo, Basilicata, 81 — See Philip Morris, op. cit., paragraph 24. See also Hytasa, Calabria, Campania, Molise, Puglia, Sardinia and Sicily; loc. cit., footnote 41 above, paragraph 51, Case C-311/94 OJ 1994 L 250, p. 21. Ijssel-Vliet v Minister van Economische Zaken [1996] ECR I-5023, paragraph 27, Belgium v Commission, op. 85 — SEC(89) 921 final. cit., footnote 44 above, paragraph 11 and Case T-380/94 86 — OJ 1997 C 205, p. 5. AWFFASS and AKT v Commission [1996] ECR II-2169, 87 — See Case C-313/90 CIRFS and Others v Commission paragraph 56. [1993] ECR I-1125, paragraphs 36 and 44 et seq.

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ITALY AND SARDEGNA LINES V COMMISSION

There is, in my opinion, no lysis that the 1988 Law Regime did not reason in principle to treat notifiable respect the transparency requirement amendments to existing aid any differently imposed by both the abovementioned from new aid. Whenever 'the Commission guidelines and the Seventh Directive. It finds that aid granted by a State or through could not approve aid where it was not State resources is not compatible with the satisfied that the aid ceiling permitted in common market', it may decide 'that the respect of aid for Italian shipyards would State concerned shall abolish or alter such not be circumvented by the indirect benefits aid within a period of time to be deter- flowing, for Sardinian shipyards in parti- mined by [it]', and that '[w]here, contrary cular, from the 1988 Law Regime. to the provisions of Article 93(3), the proposed aid has already been granted, the decision may take the form of an order to the national authorities to recover the aid'. 88 Given 'the mandatory nature of the supervision of State aid by the Commission under Article 93 of the Treaty, undertak- ings to which aid has been granted may not, in principle, entertain a legitimate F — Recovery expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in that article'. 89 In this case, it seems clear that it was simply assumed by all concerned, including SL,

annulled. Having considered each of those arguments, I am satisfied that they are all unfounded. 88 — See Alcan, op. cit., footnote 30 above, paragraph 22. See also Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 24, and Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR I-4103, para-

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OPINION OF MR FENNELLY — JOINED CASES C-15/98 AND C-105/99

munity-law interest in ensuring respect for (EC) No 659/1999, whose Article 15(1) Article 93(3) of the EC Treaty. provides that '[t]he powers of the Commis- sion to recover aid shall be subject to a limitation period of 10 years'. 92

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ITALY AND SARDEGNA LINES V COMMISSION

VI — Conclusion

88. In the light of the foregoing, I recommend that the Court:

(1) Annul Commission Decision 98/95/EC of 21 October 1997 concerning aid granted by the Region of Sardinia (Italy) to shipping companies in Sardinia;

(2) Order the Commission to pay the costs of Sardegna Lines in Case C-105/99 and order the Italian Republic and the Commission to bear their own costs in Case C-15/9 8.