Appeal brought on 28 April 2011 by the Italian Republic against the judgment delivered by the General Court (Eighth Chamber) on 3 February 2011 in Case T-3/09 Italian Republic v European Commission

(Case C-200/11 P)

2011/C 204/29

Language of the case: Italian

Parties

Appellant: Italian Republic (represented by: P. Gentili, avvocato de lo Stato)

Other party to the proceedings: European Commission

Form of order sought

Set aside the judgment of the General Court in Case T-3/09 and, ruling on the substance, annul the Commission’s Decision of 21 October 2008 on State aid C 20/08 (ex N 62/08) which Italy is planning to implement through a modification of scheme N 59/2004 concerning a temporary defensive mechanism for shipbuilding, registered as number C(2008) 6015 final.

Pleas in law and main arguments

The Italian Republic has lodged an appeal before the Court of Justice against the judgment delivered on 3 February 2011 in Case T-3/09, in which the General Court of the European Union dismissed Italy's action against the Commission's decision of 21 October 2008 on State aid C 20/2008 (ex N 62/2008) which Italy is planning to implement through a modification of scheme N 59/2004 concerning a temporary defensive mechanism for shipbuilding, registered as number C(2008) 6015 final, notified to the Italian Republic on 22 October 2008 by note of 22 October 2008 No SG-Greffe (2008) D/206436.

In support of its appeal, the Italian Republic relies on the following grounds.

First ground: error as to the facts and breach of Articles 87(1) and 88(3) EC and Article 1(c) of Regulation (EC) No 659/1999 (1) and Article 4 of Regulation (EC) No 794/2004. (2)

By the 2008 Finance Law, Italy intended simply to allocate additional funds for the aid to support shipbuilding provided for in the 2004 Finance Law and the Ministerial Decree of 2 February 2004, which had already been authorised by the Commission on the basis of Regulation (EC) No 1177/2002 (3) (‘the TDM Regulation’), without changing the conditions on which the aid itself was granted or the undertakings and types of contract which could benefit from it. In fact, the funds were exhausted because more applications for aid were submitted than was anticipated. Due to its intrinsic structure, it is not possible to predetermine the total amount of such aid; therefore, if additional funds are granted for such aid, that cannot entail a substantial amendment of the aid that has already been authorised, that is, it cannot constitute new aid. The General Court erred in failing to take account of those matters.

Second ground: breach of Articles 2, 3, 4 and 5 of Regulation (EC) No 1177/2002.

The Commission was of the view that the 2008 Finance Law constituted new aid because the scheme provided for in the TDM Regulation expired on 31 March 2005 and was no longer applicable after that date. That is not correct, because that date simply referred to the deadline for the signature of shipbuilding contracts which could be subsidised; however, the regulation went on to provide that the aid was to be granted to undertakings which delivered the ships in question within three years from the date of signing the final contract (which could be extended for no more than three years). The regulation could therefore be applied to such contracts at least until 31 March 2008. The 2008 Finance Law, which was approved on 24 December 2007, is in fact a measure which gives effect to the regulation and is designed to enable aid to be paid in respect of all contracts signed before 31 March 2005. Accordingly, the legal basis for the 2008 Finance Law is the TDM Regulation, which the Commission should have applied to authorise it. The General Court erred in finding that, after 31 March 2005, the Commission ceased to have any power to assess measures relating to shipbuilding on the basis of the TDM Regulation, even if those measures related to contracts signed before 31 March 2005.

Third ground: breach of Articles 87(2) and (3) and 88(3) EC and breach of essential procedural requirements on the ground of failure to state adequate reasons (Article 253 EC)

The Commission was of the view that there is no provision in the Treaty or any other source on the basis of which the aid referred to in the 2008 Finance Law can be regarded as compatible with the common market. That is incorrect, because what was at issue was the protection of the Community shipbuilding industry from Korean dumping, so that Article 87(3)(b) (important projects of Community interest) or Article 87(3) (c) (aid to promote the development of a given economic sector) and, in any event, the principle of proportionality may have been applicable: to provide financial assistance in respect of some contracts but not others because the relevant funds were exhausted would have constituted a disproportionate means of protecting public finances since it would have brought about a serious distortion of competition between the undertakings concerned. The Commission failed to consider any of those potential grounds for derogation from the prohibition of State aid. The General Court erred in finding that Italy had not put forward any ground justifying derogation from the prohibition of State aid, in particular on the basis of unequal treatment and the distortion of competition that would have occurred if aid had been denied to some undertakings and granted to others in the same situation. Instead, that court erred in finding that adequate reasons were given for the Commission’s decision.

Fourth ground: breach of the principle of the protection of legitimate expectations and equal treatment (non-discrimination).

However, after the Commission approved the scheme provided for in the Ministerial Decree of 2 February 2004, there was a legitimate expectation that a law would also be approved the purpose of which was simply to grant additional funds for the financing of that scheme. The principle of equal treatment or non-discrimination also requires such an approach because, as the funds were exhausted, only some of the operators had received aid but not others who were in the same situation. The General Court erred in finding that it was clear to Italy and the persons concerned that the 2004 approval decision imposed a ceiling on the aid that could be granted of EUR 10 million. On the contrary, there was a legitimate expectation that all those entitled to aid would be able to receive it.

(1)  OJ 1999 L 83, p. 1.

(2)  OJ 2004 L 140, p. 1.

(3)  OJ 2002 L 172, p. 1.