Italy Referred To ECJ Over Failure To Recover State Aid

by Ulrika Lomas, for LawAndTax-News.com, Brussels

25 January 2005

The European Commission announced last week that it has decided to refer Italy to the European Court of Justice (ECJ) over the government's failure to comply with a decision announced in June 2002, which ruled that the aid granted by Italy to undertakings active in the utilities sector was illegal, and must be recovered from the beneficiaries.

In the summer of 2002, the European Commission adopted a negative decision on two Italian aid schemes that had the effect of favouring undertakings controlled by Italian public authorities, mainly in the utilities sector.

Following a formal investigation, the Commission concluded that a three-year income-tax exemption (offered to the firms in question between 1993-1995), and the possibility of obtaining low-interest loans from Cassa Depositi e Prestiti represented state aid incompatible with the EC treaty.

The Commission revealed that despite the fact that more than two years have passed since the decision was adopted, Italy has not taken the necessary measures to recover the aid in question. The EC has therefore decided to apply to the ECJ in order to have its decision enforced.

Speaking with regard to the Commission's stance, Neelie Kroes, Competition Commissioner explained that:

“I intend to take a very strict approach with Member States that fail to comply with Commission decisions on State aid. Taking a firm stand is the only way of ensuring the credibility of our State aid policy.”

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