C-298/00

OPINION OF MR ALBER — CASE C-298/00 P

OPINION OF ADVOCATE GENERAL ALBER delivered on 15 May 2003 1

I — Introduction the decision addressed to Italy concerning an aid scheme prescribed by law is not of individual concern to the beneficiaries even if recovery of the aid is ordered in the 1. The present dispute concerns State aid decision. In the Commission's opinion, the granted by the Friuli-Venezia Giulia Region Court of First Instance ought to have to road haulage undertakings between examined the issue of admissibility of its 1981 and 1995. In its decision of own motion. 30 July 1997 2the Commission declared the aid in question to be partly incompa- tible with the common market and to that extent ordered that it be recovered. The Court of First Instance, ruling on an action brought by undertakings affected by that decision, declared the decision to be partly 3. The Italian Republic has likewise void. 3 brought an action before the Court for the Commission's decision to be annulled. That action is pending under reference C-372/97. 4

A — Community law 7. The international road haulage market was opened up between 1969 and 1992, beginning with Council Regulation (EEC) No 1018/68 of 19 July 1968 concerning the establishment of a Community quota for 5. In the area of transport the general road haulage between the Member States provisions concerning State aid contained (hereinafter 'Regulation No 1018/68'). 6 in Article 92 of the EC Treaty (now, after The Community quota provided for in the amendment, Article 87 EC) and Articles 93 Regulation and subsequently expanded by and 94 of the EC Treaty (now Articles 88 stages was divided among the Member and 89 EC) are applicable save where the States. Undertakings were entitled to pro­ special provisions of Article 77 of the EC vide, within the quotas allocated to their Treaty (now Article 73 EC) apply. Council respective Member States, cross-border Regulation (EEC) No 1107/70 of 4 June haulage services. This market was fully 1970 on the granting of aids for transport liberalised as from 1 January 1993. by rail, road and inland waterways5 sets out the conditions under which the Member States may grant permissible aid within the meaning of Article 77 of the EC Treaty.

9. Friuli-Venezia Giulia Regional Law No 28 of 18 May 1981, on action to promote and develop transport of concern to the Friuli-Venezia Giulia Region and the — financing of the cost of leasing vehicles, carriage of goods by road for hire or trailers and semi-trailers, together with reward (hereinafter 'Law No 28/1981'), equipment for the maintenance and provided for certain aid measures in favour repair of vehicles and for the handling of road haulage contractors established of goods (Article 5 of Law No 4/1985); within that region. and

— in favour of groups and other forms of 10. The scheme introduced by that law was association, financing of up to 50% of replaced by Regional Law No 4 of 7 Jan- investment in the construction or uary 1985 on action to promote and purchase of particular installations develop transport of concern to the Friuli- and equipment (Article 6 of Venezia Giulia Region and the carriage of Law No 4/1985). goods by road for hire or reward (herein- after 'Law No 4/1985'), which essentially contained the same provisions on aid.

12. Between 1981 and 1995, 2 202 appli- cations were accepted and aid totalling in excess of EUR 22 million was disbursed.

11. The above laws provided for three measures, which in simplified terms can be described as follows:

13. The Friuli-Venezia Giulia Region sus- pended allocation of the aid concerned with effect from 1 January 1996 and, between September and December 1997, sent letters to the undertakings concerned notifying — subsidies in respect of interest on loans them of the Commission's decision and contracted for the purpose of the informing them that the aid was to be development of infrastructures (con- recovered.

Article 5

The subsidies not covered by Article 1 of this Decision constitute aid within the meaning of Article 92(1) of the Treaty and are illegal since they were introduced in Italy shall abolish and recover the aid breach of Article 93(3). referred to in Article 4. The aid shall be reimbursed in accordance with the provi- sions of domestic law, together with inter- 9 — Cued m footnote 2. est, calculated by applying the reference

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rates used for assessment of regional aids, 17. In its judgment of 15 June 2000, 10the as from the date on which the aid was Court of First Instance allowed the applica- granted and ending on the date on which it tions in part and found Article 2 of the is actually repaid. decision to be null and void in so far as it declared aid granted from 1 July 1990 onwards to undertakings engaged solely in local, regional or national transport to be illegal. The corresponding order, in Article 5 of the contested decision, that such aid be recovered was also set aside. For the rest the [...]' applications were rejected.

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20. The other pleas in law were rejected by though this haulage market was not fully the Court of First Instance. It held in liberalised until 1 January 1993. At all particular that the small size of the under- events, the Court of First Instance had not takings concerned, the fact that their provided sufficient reasoning in support of activities were to a very large extent limited the contested judgment. to the region and the existence of quotas did not preclude the possibility of the measures at issue inhibiting intra-Commu- nity trade or threatening to distort competi- 24. It maintains, secondly, that the order tion. for recovery infringes the principles of the protection of legitimate expectations and of reasonableness (principio di ragionevo- lezza). 21. The Court of First Instance further rejected the complaint that the order for recovery of the aid plus interest was in breach of the principles of the protection of 25. In its response, the Commission has legitimate expectations, legal certainty and lodged a cross-appeal in which it questions proportionality. the admissibility of the action at first instance.

26. The Italian Republic claims that the Court should: IV — The appeals

22. On 3 August 2001 the Italian Republic (1) set aside in its entirety the judgment lodged an appeal against the judgment delivered on 15 June 2000 by the delivered by the Court of First Instance. It Court of First Instance in Joined Cases is supported by the company Collorigh Edo T-298/97, T-312/97, T-313/97, and a further 12 undertakings which were T-315/97, T-600/97 to T-607/97, applicants in the action brought in the T-l/98, T-3/98 to T-6/98 and T-23/98; lower court.

(2) set aside the judgment of the Court of First Instance in its entirety or at least — characterises the aid granted in so far as it partly sets aside the between 1981 and 1995 to under- Commission's decision; and takings engaged in international transport as new aid, and

— requires the Member States to (3) order the Italian Republic and the recover the aid purported to be applicants at first instance to bear the illegal. costs of the proceedings in the lower and higher courts.

alternatively, set the Commission's decision aside in so far as it orders recovery of the aid plus interest (Arti- cle 5), or, in the second alternative, set 29. A more detailed presentation of the the recovery order aside in so far as it pleas in law and arguments of the parties is exceeds a specified amount and provided in conjunction with the legal includes interest; assessment. I - 4098

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V — Legal assessment of First Instance have, it points out, rejected the actions as inadmissible in a series of comparable cases. 13

30. The cross-appeal must be examined first as it concerns the admissibility of the action brought before the Court of First Instance. 33. The judgment of the Court of First Instance in Case T-55/99 CETM, 14 which might point to another conclusion, relies, in the Commission's view, on inadequate reasoning and fails to convince. And while the Court, in its judgment in Sardegna Lines, 15 found the action brought by an undertaking in a similar situation to be A — The cross-appeal lodged by the admissible, the case is not, in the Commis- Commission (inadmissibility of the action) sion's view, comparable in that the aid scheme affected very few economic agents and the Commission had examined the particular case of the applicant in the formal procedure.

13 — The Commission refers to the judgments in Case 282/85 DEFI v Commission [1986) ECR 2469, paragraph 16, in Joined Cases 67/85, 68/85 and 70/85 Van der Kooy and Others v Commission [1988] ECR 219, paragraphs 14 to 16, and in Case C-6/92 Federmineraria and Others v Commission [ 1993] ECR I-6357, paragraphs 11 to 16, and 32. The contested decision does not declare also to the judgments of the Court of Eirst Instance in Case T-398/94 Kahn Scheepvaart v Commission [1996] ECR II- any individual instance of aid in favour of a 477, paragraphs 39 to 43, and Case T-86/96 Arbeitsge- particular undertaking, but rather an aid meinschaft Deutscher Luftfahrt-Unternehmen and Others v Commission [1999] ECR II-179, paragraphs 42 to 54. scheme, to be incompatible with the com- 14 — Judgment in Case T-55/99 CETM [2000] ECR II-3207, mon market. Such a decision is not of paragraphs 22 to 25. individual concern to past, present or future 15 — Judgment in Joined Cases C-15/98 and C-105/99 Italy and Sardegna Lines v Commission [2000] ECR I-8855, recipients of aid. The Court and the Court paragraphs 31 to 35.

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decision. According to the judgment in ordered, but also the aid scheme itself, TWD Textilwerke Deggendorf, 16 this path which was to cease to operate. The decision is not, however, open to the parties affected thus also affected the interests of an by the decision where a direct application indeterminate number of further potential for annulment of the decision would be beneficiaries. admissible.

38. Secondly, the decision declares only 35. The Commission accepts that none of particular categories of aid granted under the parties raised the issue of admissibility the Regional Laws to be incompatible with before the Court of First Instance. The the common market. Only the Member latter should however have done so of its State and the individual undertaking con- own motion, in line with consistent case- cerned would be in a position to judge, with law. 17 The failure by the Court of First regard to the activity in which the under- Instance to comply with this obligation can taking is engaged in the particular case, therefore be claimed in the appeal proceed- whether the aid should be reimbursed. ings.

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them by reason of certain attributes pecu- 2. Assessment liar to them or by reason of factual circumstances which differentiate them from all other persons. (a) Obligation to assess admissibility

44. The Court has consistently held that the admissibility of an action must, as an essential precondition for a case to be tried, be assessed of the Court's own motion. 21 The Court of First Instance is also under an 41. The Commission observes that, accord- obligation to perform such an assessment, ing to case-law, it is possible for a generally unless, for reasons of proper administration applicable legal instrument simultaneously of justice, an assessment of admissibility to affect particular economic agents indivi- can be dispensed with because the action is dually. 1 9That does not however alter the in any case unfounded. 22 fact that in this respect the criteria devel- oped in Plaumann 2 0would have to be met.

45. The fact that the Court of First Instance did not, in the contested judgment, com- ment on the admissibility of the action does not necessarily mean, however, that it failed to assess its admissibility and thus infringed 42. In this regard, the applicants have not a corresponding obligation. Assuming the pointed to anything that would differentiate action was admissible, there would be no them in any particular way. Nor does the reason to state this point explicitly, as long decision affect their legal position in such a as the defendant had not entered a plea of way that it would have been incumbent inadmissibility. The fact that the Court of upon the Commission, in adopting it, to First Instance assessed the appeal on the have taken their particular situation into merits and allowed it in part points rather account. to the conclusion that it found the action admissible.

unfounded and stated expressly that there pleas where these involve a question of was consequently no need for it to rule on a public policy (moyens d'ordre public). 26 plea of inadmissibility entered by the The Court has consistently held that the Council. In its judgment on the appeal admissibility of an action must likewise, as lodged by the Council, the Court confirmed an essential precondition for a case to be that the Court of First Instance had not tried, be raised by the Court of its own ruled by way of decision on the admissi- motion, so that is of no consequence bility of the action and had been under no whether a complaint of inadmissibility obligation to do so. 24 If however, as in the was in fact put forward (in due time). 27 present case, the Court of First Instance grants a case in part, on the merits, there is an implicit acknowledgment of admissibil- ity. 49. It should be noted too that the question whether the contested decision affects the applicants individually is primarily a point of law, which can be examined in the appeal procedure. 47. The question to be considered is not therefore whether the Court of First Instance erred in law in not assessing the admissibility of the action of its own motion but rather whether its implicit conclusion that the action was admissible (b) Direct and individual concern was correct.

national authorities, which are required to tion of legitimate expectations. 29 If, how- recover the aid that is incompatible with the ever, the aid concerned has not been common market from the beneficiaries. notified, the Member State's discretion to refrain from recovering the aid is severely restricted. For the Court proceeds on the basis that the recipient may rely on the regularity of the aid only where it was granted in conformity with the procedure laid down in Article 93 of the EC Treaty. 30 52. The Court's case-law shows that, for The fact that the Commission's decision in an individual to be directly concerned by a the matter of recovery calls for an imple- Community measure, the latter must menting measure by the national authorities directly affect the legal situation of that does not therefore prevent that decision individual and leave no discretion to the from being of direct concern to the appli- addressees of that measure who are cants. 3 1 entrusted with the task of implementing it, such implementation being purely auto- matic and resulting from Community rules without the application of other intermedi- ate rules. 28 55. Whether the contested decisions are of individual concern to the applicants is less clear-cut.

53. The contested decision firmly estab- lishes the extent to which the Regional 56. According to the form of words devel- Laws provide for aid incompatible with the oped in the judgment in Plaumann, 32 common market, leaving no discretion to persons 'other than the addressees of a the Italian Republic as regards that assess- decision may claim to be individually ment. It also orders the aid to be recovered. concerned only if the decision affects them This order too is in principle mandatory for by reason of certain attributes peculiar to the Member State. them or by reason of factual circumstances

57. According to the Court's case-law, a measure has general application and is not, in principle, of individual concern where it 59. There can be no doubt that the applies to objectively defined situations and decision, in so far as it declares the aid produces legal effects for categories of scheme to be incompatible with the com- economic operators who satisfy a number mon market and orders that the rules in of conditions defined in a general and question should cease to be applied, is of abstract manner. 34 On the other hand, a concern only to a category of economic provision applying to all the economic operators who satisfy a number of condi- operators concerned may, in certain cir- tions defined in an abstract manner. The cumstances, be of individual concern to decision thus produces legal effects for some of the economic operators involved. 35 those undertakings that have already received aid but also for an indeterminate number of potential future beneficiaries. According to the case-law already cited, this does not however mean that the same measure may not also be of individual concern to particular economic operators. 58. The Commission concludes from the fact that the contested decision concerns an aid scheme prescribed by law that that

61. The question arises whether the Com- mission's decision can be regarded as of individual concern to the applicants by 'In so far as the applicant represents the reason of certain attributes peculiar to them interests of those economic agents, it must or of factual circumstances which differ- be stated that the aid plan does not entiate them from all other persons in that determine which undertakings are to they received unlawful aid whose recovery receive aid and that consequently any has been ordered by the Commission. undertaking wishing to bring an action in that connection is no more concerned by the Commission decision than all the other economic agents in the sector in ques- tion.' 37 62. The Commission invokes a series of judgments, from which it concludes that the Court has considered a decision not to be of individual concern to a group of persons where that decision pertained to an aid 64. This judgment does not however pro- programme or an aid scheme prescribed by vide any guidance as to how the question law. under consideration should be answered in so far as the contested decision in that case concerned aid that had not yet been implemented and did not therefore include an order for recovery of aid already 63. In the judgment in DEFI, 36 a commit- granted. The judgment does, moreover, rest tee established to promote the textile sector primarily on the particular status of the (Comité de développement et de promotion DEFI. du textile et de l'habillement — DEFI) appealed against a Commission decision addressed to the French Republic. The committee's income was to come from a quasi-fiscal levy. That money was to be 65. The Commission refers further to the used to carry out measures to promote the judgment in Van der Kooy 38 This case textile sector. In the contested decision, the concerned a Commission decision in which Commission stated the duly notified pro- a preferential tariff for the supply of gas to motional programme to be incompatible

'The contested decision is of concern to the applicants solely by virtue of their objective 67. The Commission goes on to argue that capacity as growers established in the it was not possible to conclude generally Netherlands and qualifying for the prefer- from the judgment in Sardegna Lines 41 ential gas tariff on the same footing as any that actions brought by aid recipients for other grower in the same circumstances. the annulment of a decision concerning an With regard to them, therefore, the decision aid scheme in which recovery of the aid is is a measure of general application covering also ordered are admissible. In the decision situations which are determined objectively, at issue on that occasion, the Commission and entails legal effects for categories of had objected to a law of the Region of persons envisaged in a general and abstract Sardinia under which shipping and other manner.' 39 undertakings were able to obtain loans at concessionary interest rates for the acquisi- tion, conversion and repair of merchant vessels registered in Sardinia.

66. In the decision which is the subject of the judgment in Van der Kooy, the Com- mission did, however, only order that the aid scheme be cancelled ex nunc. It did not call for recovery of benefits already granted, 68. The Court found as follows in its any more than it did in the other judgments judgment in Sardegna Lines: cited by the Commission. 40 It does not, therefore, follow from the judgments that a decision comprising not only a declaration that an aid scheme is incompatible with the common market but also an order for the

71. A second point is that the contested 69. The Commission regards the case of decision 4 3in the case of Sardegna Lines Sardegna Lines as a special one in that the does not offer any indication that the applicant was, through the exercise of wide Commission had, in reaching that decision, discretion, granted aid by means of a examined the applicant's situation or other- measure taken after adoption of the aid wise taken account thereof. In the above- scheme. The overall amount of the aid was, cited passage from the judgment, the Court moreover, distributed among a small num- likewise relies only on the fact that the ber of recipients, by far the largest share of applicant, Sardegna Lines, is affected as that aid going to the applicant. The recipient of aid whose recovery the Com- beneficiaries were known to the Commis- mission had ordered. It makes no reference sion and account was taken of the indivi- to other circumstances which set the appli- dual cases in the formal procedure. cant apart as an individual, for example consideration of its case in the adminis- trative procedure.

70. A first point to be made here is that the Regional Laws in the present case were also implemented through individual measures, by virtue of which the applicants were granted actual aid. In deciding whether to grant aid and in determining the amount 72. The present case may differ from that thereof, the authorities of the Friuli-Venezia of Sardegna Lines to the extent that the Giulia Region seem also to have enjoyed economic support legislation of the Friuli- discretion. The aid scheme in the present

74. What would seem essential rather is for the group of persons affected by the measure to be a closed one. This becomes particularly clear if one recalls the Court's judgments concerning the granting of 76. Transposing these considerations to the import licences. 46 The Court held in these present case, it is clear that the group of cases that a decision is of individual potential future aid recipients which, fol- concern to applicants for import licences lowing adoption of the decision, can no where the Commission, in that decision, longer receive aid, is theoretically unre- establishes retroactively how many of the stricted. Those undertakings, on the other applications submitted in a specified period hand, which have already received aid and of time are to be granted. In the Court's are now required to pay it back constitute a closed group. This group could not be further extended by persons to whom the decision was of concern once the Region 44 — The Commission mentions in the contested decision that a had discontinued application of the aid total of some 2 200 aid applications were accepted. However, very many of these cases did not involve aid to scheme on 1 January 1996, before the be recovered. It would seem appropriate rather to isolate contested decision was adopted. those cases in which, as the market had not been liberalised, there was no inhibition of competition and those in which, by virtue of the exception in favour of investment in combined transport, an exemption from the aid prohibition was applicable. 45 — See, in this connection, footnote 18. 47 — Order in Case C-351/99 P Eridania and Others v Council 46 —Judgments in Joined Cases 106/63 and 107/63 Töpfer and [2001] ECR I-5007, paragraph 54. Others v Commission [1965] ECR 547, in Joined Cases 48 — See also, in this connection, the judgments in Case 41/70, 42/70, 43/70 and 44/70 International Fruit Com- C-152/88 Sofrimport v Commission [1990] ECR I-2477, pany and Others v Commission [1971] ECR 411, and in paragraph 11, and Case 11/82 Piraiki-Patraiki v Commis- Case C-354/87 Weddel v Commission [1990] ECR I-3847. sion [1985] ECR 207, paragraphs 19 and 31.

79. The case-law deals variously with the 82. Apart from the fact that in the present question of whether individuals are to be case the Commission would likewise have regarded as individually concerned only been in a position to obtain information where their cases were known to the from the Italian authorities about the Commission at the time it adopted its undertakings concerned by recovery of the decision. In the cited judgments concerning aid, a weighty argument can be advanced the granting of import licences, the applica- against making individual concern depen- tions were to be made not to the Commis- sion but to the national authorities, which were then required to inform the Commis- sion only of the total import volumes for 49 — Judgment in Weddel, cited m footnote 46, paragraph 22; sec also the judgment in International Fruit Company, cited which application had been made. The in footnote 46. paragraphs 16 and 22. Court stated in this connection that 'even 50 — Cited in footnote 48, paragraphs 30 and 31.

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87. In its judgment in TWD Textilwerke Deggendorf the Court stated: 52

84. It should, moreover, be remembered once again that the Court did not specify 51 — Cited in footnote 16. See also the judgments in Case any such requirement in its judgment in C-178/95 Wiljo [1997] ECR I-585, paragraph 21, and Sardegna Lines, which specifically con- Case C-239/99 Nachi Europe [2001] ECR I-1197, para- graph 30. cerned the recovery of aid. 52 — Cited in footnote 16, paragraph 26.

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90. It can thus be concluded that the 88. The Court explicitly emphasised in that applicants are individually concerned and judgment that the question submitted was that the action brought before the Court of to be answered 'in the light of those First Instance was therefore admissible. For circumstances', meaning the circumstances they belong to a closed group of concerned of the particular case, in which the national persons, who, through individual measures authorities had sent a copy of the Commis- taken on the basis of the rules at issue, were sion's decision to the person to whom it granted aid whose recovery the Commis- was of concern and had advised him that he sion ordered in the contested decision. This could bring an action against that decision fact differentiates them sufficiently from all before the Court. 53 The case-law shows, other haulage undertakings, which are only therefore, that the particular circumstances affected in a general manner as potential of the case in point determine when an recipients of aid. application to a national court to have a decision annulled is in fact ruled out.

89. It is, moreover, as Advocate General 91. The cross-appeal lodged by the Com- Jacobs has argued in his Opinion in mission must therefore be dismissed. Pequeños Agricultores, highly doubtful

54 — Opinion of 21 March 2002 in Case C-50/00 P Unión de 53 — Judgment in TWD Textilwerke Deggendorf, cited in Pequeños Agricultores v Council [2002] ECR I - 6 6 7 7 , footnote 16. paragraph 11. I-6681. point 36 et seq.

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ITALY v COMMISSION

98. The Commission contends that the 101. As the Court of First Instance cor- Court of First Instance was right in holding, rectly ruled in paragraphs 92 and 94 of the in paragraph 145 of the contested judg- contested judgment, an effective competi- ment, that intra-Community competition in tive situation did exist within the limit of cross-border transport activity existed in the quotas laid down. The aid recipients 1981 and 1985, at least in the framework operating from the Friuli-Venezia Giulia of quota arrangements. It contends further Region that were in possession of a licence that the aid was such as to inhibit that were in competition with undertakings competition. Article 92 of the EC Treaty from other parts of Italy and with under- does not, on the other hand, require takings from other Member States. The prejudice to particular undertakings to be Italian Government's contention that com- proved. petition existed in the international road haulage sector only from the date of full liberalisation of the markets must therefore be rejected. As competition already existed at the time the aid in question was introduced (in 1981 and 1985). it was rightly characterised as new aid.

99. The fact that the aid was not very large is immaterial, as the Court has consistently held. In a highly fragmented market in particular, even the most limited aid could affect intra-Community trade. 102. The Italian Government complains further that the Court of First Instance failed to take proper account of the fact that the Commission did not bring forward any proof of actual distortion of competition and adverse effect on trade. At all events, the decision failed to state sufficient grounds in that respect.

106. The Court of First Instance argues in paragraphs 84 to 87, with reference to its own case-law 58 and that of the Court, 59 that even aid of a small amount is liable to distort competition and affect trade. It 104. The Commission was not obliged to observes further that precisely with a demonstrate the actual effect of aid already market structure such as that characterising granted and in particular the disadvantages the transport sector, relatively modest aid suffered by competitors that were not granted to small undertakings is liable to beneficiaries of such aid. If it were required affect competition. to do so, that would favour those Member States which grant aid in breach of the duty to notify laid down in Article 93(3) of the Treaty, to the detriment of those which do notify aid at the planning stage. 57 It follows that the corresponding findings of the Court of First Instance in paragraphs 76 to 82 of the contested judgment are unobjectionable. 107. The Court has, in a recently delivered judgment, confirmed the case-law cited by the Court of First Instance and has stated further that '[ojther factors may be decisive when assessing the effect of aid on trade, such as [...] whether the undertakings that 105. The Italian Government complains receive it are operating in a sector that is further, in support of this plea, that the particularly exposed to competition'. 60 Court of First Instance failed to take sufficient account of the small size of the 58 — The Court of First Instance cites in particular its judgment in Case T-214/95 Vlaams Gewest [1998] ECR II-717, paragraphs 46, 49 and 50. 56 —Judgments in Case 248/84 Germany v Commission [1987] 59 — Judgments in Case C-142/87 Belgium v Commission ECR 4013, paragraph 18, Case C-113/00 Spain v [1990] ECR I-959, paragraph 43 — Tubemeuse, Case Commission [2002] ECR I-7601, paragraph 54, and Case C-303/88 haly v Commission [1991] ECR I-1433, para- C-351/98 Spain v Commission [2002] ECR I-8031, graph 27, and in Joined Cases C-278/92 to C-280/92 Spain paragraph 58. v Commission [1994] ECR I-4103, paragraph 42. 57 — Judgments in Case C-301/87 France v Commission [1990] 60 — Judgments in Case C-113/00 Spain v Commission, cited in ECR I-307, paragraph 33, and Case C-113/00 Spain v footnote 56, paragraph 30, and Case C-351/98 Spain v Commission, cited in footnote 56, paragraph 54. Commission, cited in footnote 56, paragraph 51.

114. Concerning the argument put forward by the other parties that the aid served in 111. The point must however be made that the final instance only to compensate for the Commission did not, in setting out the disadvantages suffered by the recipient reasons for the contested decision, expressly undertakings in relation to undertakings from the neighbouring countries as a result of the poor borrowing terms available in 61 — Cited in footnote 56, paragraph 5 1 . . Italy, it has to be concluded that the Court 62 — Paragraphs 63 t o 6 5 . of First Instance correctly rejected this

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(a) Arguments of the parties

116. According to the Italian Government, 119. The region and the undertakings Article 4 of the contested decision is to be concerned did, moreover, trust in the law- understood as applying, temporally, to aid fulness of the aid. Recovery thereof would granted from 1 July 1990 onwards to have disastrous consequences for what are for the most part very small undertakings.

63 — See, in particular, paragraph 100 of the contested judgment. 64 —Judgments in Cases 6/69 and 11/69 Commission v France 65 — Council Regulation (EC) No 659/1999 of 22 March 1999 [1969] ECR 523, paragraph 21, and Case C-6/97 Italy v laying down detailed rules for the application of Article 93 Commission [1999] ECR I-2981, paragraph 21. of the EC Treaty (OJ 1999 L 83, p. 1).

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120. The other parties likewise take the the Italian Government has not put forward view that recovery of the aid would be in any arguments that could call the findings breach of the principles of the protection of of the Court of First Instance in para- legitimate expectations, reasonableness and graphs 171 to 174 into question. proportionality recognised in Article F(2) of the EU Treaty (now Article 6(2) EU). According to the case-law, the recipients of unlawful aid are not barred from invoking exceptional circumstances that might warrant a legitimate expectation. In the present case, the aid's insignificant effect (b) Assessment on competition is pertinent in this connec- tion.

122. Concerning the principle of the pro- 124. The date specified in Article 4 of the tection of legitimate expectations, the decision ties in with the ruling in Article 1, Commissions refers to the case-law, accord- where the Commission states that subsidies ing to which limitation periods must be granted up to 1 July 1990 to undertakings fixed in advance. 66 As Regulation engaged in transport operations at local, No 659/1999 is not applicable from the regional or national level do not constitute point of view of time, a limitation period State aid. This statement, which relates only fixed by the legislator is lacking in the to internal transport operations, has to be present case. It maintains, furthermore, that taken into account for the time-limit specified in Article 4 to have any meaning. Where international road haulage was 66 — The Commission refers, in this connection, to the judgments in Case 41/69 ACF Chemiepharma v Commis- sion [1970] ECR 661, paragraph 19, and Case 52/69 Geixy v Commission [1972] ECR 787, paragraph 21. 6 7 — See point 14 above.

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129. The Court has, however, also found (iii) The principle of reasonableness or that the fundamental requirement of legal proportionality certainty has the effect of preventing the Commission from indefinitely delaying the exercise of its powers.70In the case of aid that has not been notified, the extent to which the Commission is late in taking 132. Finally, the Italian Government action can nevertheless be calculated only claims a breach of the principle of reason- from the date on which it learnt of the ableness. It is clear from its arguments that measures concerned. In the present it finds it above all disproportionate that instance, the Commission did not learn of the recovery of aid should be ordered when, the aid scheme at issue until September on the one hand, its adverse effect on 1995. The Italian Government has not competition was only small and, on the raised the matter of the Commission delay- other hand, the obligation to reimburse ing the procedure until the adoption of the would have severe consequences for the contested decision on 30 July 1997. undertakings concerned.

133. The Court has consistently held that 'recovery of unlawful aid is the logical 130. It should be noted further that the consequence of the finding that it is supposedly minor impact on competition of unlawful. Consequently, the recovery of the aid in question is not a fact that could State aid unlawfully granted for the purpose cause the recipients to entertain a legitimate of re-establishing the previously existing expectation as to the lawfulness of that aid. situation cannot in principle be regarded as disproportionate to the objectives of the Treaty in regard to State aids'. 72

135. The Italian Government has not, VI — Costs however, put forward any persuasive argu- ments in favour of refraining from recovery of the aid. It has simply referred, without giving details, to serious consequences for the recipients of the aid and to the implica- tions for the employment market. The Commission cannot therefore be regarded as having failed to exercise proper discre- tion in ordering recovery of the aid and 137. The first paragraph of Article 122 of thereby giving precedence to the restoration the Rules of Procedure of the Court of of competitive conditions over the interests Justice provides that where the appeal is of the recipients of the aid. unfounded the Court shall make a decision as to costs. Article 69(3) of those Rules provides that where each party succeeds on some and fails on other heads, the Court may order that the costs be shared or that 136. As the complaint of infringement of the parties bear their own costs. As both the the principle of proportionality is also appeal and the cross-appeal are dismissed, unsuccessful, the appeal must be dismissed it seems appropriate to order the parties to in its entirety. bear their own costs.

VII— Conclusion

138. In the light of the foregoing I propose that the Court:

(1) dismiss the appeal by the Italian Republic;

(2) dismiss the cross-appeal by the Commission;

(3) order the parties to bear their own costs.