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Document 62014TJ0122

Judgment of the General Court (Sixth Chamber) of 9 June 2016.
Italian Republic v European Commission.
Failure to comply with a judgment of the Court of Justice finding that a Member State has failed to fulfil its obligations — Periodic penalty payment — Judgment quantifying the amount of the periodic penalty payment — Method of calculating the interest applicable to the recovery of unlawful aid — Compound interest.
Case T-122/14.

Digital reports (Court Reports - general)

ECLI identifier: ECLI:EU:T:2016:342

JUDGMENT OF THE GENERAL COURT (Sixth Chamber)

9 June 2016 ( *1 )

‛Failure to comply with a judgment of the Court of Justice finding that a Member State has failed to fulfil its obligations — Periodic penalty payment — Judgment quantifying the amount of the periodic penalty payment — Method of calculating the interest applicable to the recovery of unlawful aid — Compound interest’

In Case T‑122/14,

Italian Republic, represented by G. Palmieri, acting as Agent, and by S. Fiorentino, avvocato dello Stato,

applicant,

v

European Commission, represented by V. Di Bucci, G. Conte and B. Stromsky, acting as Agents,

defendant,

APPLICATION under Article 263 TFEU for annulment of Commission Decision C(2013) 8681 final of 6 December 2013, by which, in order to comply with the judgment of 17 November 2011, Commission v Italy (C‑496/09, EU:C:2011:740), the Commission fixed the amount of the periodic penalty owed by the Italian Republic for the six months from 17 May to 17 November 2012,

THE GENERAL COURT (Sixth Chamber),

composed of S. Frimodt Nielsen (Rapporteur), President, F. Dehousse and A.M. Collins, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 27 January 2016,

gives the following

Judgment

Background to the proceedings

Decision relating to unlawful and incompatible aid (recovery decision)

1

By Decision 2000/128/EC of 11 May 1999 concerning aid granted by Italy to promote employment (OJ 2000 L 42, p. 1; the ‘recovery decision’), the European Commission ordered the Italian Republic to recover aid granted to promote employment which was unlawful and incompatible with the internal market. By note SG(99) D/4068 of 4 June 1999 the Commission notified the Italian Republic of the recovery decision.

2

The action brought by the Italian Republic against the recovery decision was dismissed by judgment of 7 March 2002 in Italy v Commission (C‑310/99, EU:C:2002:143).

Action and judgment finding a failure to fulfil obligations

3

By application lodged at the Registry of the Court of Justice on 15 March 2002, the Commission brought an action pursuant to the second subparagraph of Article 88(2) EC for a declaration that, by not adopting, within the period prescribed, all measures necessary for recovery from the recipients of the aid which had, according to the decision at issue, been found to be unlawful and incompatible with the common market, and in any event by not notifying the Commission of the measures taken, the Italian Republic had failed to fulfil its obligations under the recovery decision and under the EC Treaty.

4

By judgment of 1 April 2004 in Commission v Italy (C‑99/02, ‘the judgment finding a failure to fulfil obligations’, EU:C:2004:207), the Court of Justice upheld the Commission’s action and ruled that, by failing to adopt, within the prescribed period, all the measures necessary to ensure recovery from the recipients of the aid which, pursuant to the recovery decision, had been declared unlawful and incompatible with the internal market, the Italian Republic had failed to fulfil its obligations under the recovery decision.

Fresh action and the judgment to be complied with

5

By application lodged at the Registry of the Court of Justice on 30 November 2009, the Commission requested the Court of Justice, first, to declare that, by not adopting all the necessary measures to comply with the judgment finding a failure to fulfil obligations, the Italian Republic had failed to fulfil its obligations under the recovery decision and under Article 228(1) EC and, second, to order the Italian Republic to pay to the Commission a daily penalty payment with the amount initially set at EUR 285696, later reduced to EUR 244800, for the delay in complying with the judgment finding a failure to fulfil obligations, to be calculated from the delivery of the judgment in that new case until compliance with the judgment finding a failure to fulfil obligations.

6

By judgment of 17 November 2011 in Commission v Italy (C‑496/09, the ‘judgment to be complied with’, EU:C:2011:740), the Court of Justice upheld the Commission’s action.

7

In the judgment to be complied with, the Court of Justice held as follows:

‘52.

… [T]he Italian Republic should be ordered to pay a periodic payment calculated by multiplying a basic amount by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, compared to the total amount not yet recovered on the date of delivery of the present judgment …

53.

For calculating the penalty payment …, recovery of the aid may be taken into account only on condition that the Commission has been informed of it and has been able to assess the adequacy of the evidence communicated to it in this respect …

54.

The periodicity of the penalty payment should therefore be fixed by determining it on a half-yearly basis, so as to allow the Commission to assess the state of progress of the recovery operations by reference to the situation prevailing at the end of that period, while allowing the defendant Member State the time needed to compile and transmit to the Commission the evidence capable of establishing, for the period in question, the recovery of the sums wrongly paid.

55.

Consequently, the penalty payment will be quantified on a half-yearly basis and its amount calculated by multiplying a basic amount by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned, compared to the total amount not yet recovered on the date of delivery of the present judgment.

67.

… [T]he Court considers that in the present case it is appropriate to impose a penalty payment of a basic amount of EUR 30 million per half-year.

68.

Consequently, the Italian Republic must be ordered to pay to the Commission, into the “European Union own resources” account, a penalty payment of an amount calculated by multiplying the basic amount of EUR 30 million by the percentage of the unlawful aid that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned, compared to the total amount not yet recovered on the date of delivery of the present judgment, for every six months of delay in implementing the necessary measures to comply with the judgment [finding a failure to fulfil obligations (EU:C:2004:207)], from the present judgment until compliance with the judgment [finding a failure to fulfil obligations (EU:C:2004:207)].

69.

… it is for the Member State concerned to provide the Commission with direct and reliable evidence that [the recovery decision] has been implemented and the unlawful aid actually recovered.

72.

In cases in which the aid has to be recovered from undertakings which are bankrupt or subject to bankruptcy proceedings whose purpose is to realise the assets and clear the liabilities, it is settled case-law that the fact that undertakings are in difficulties or bankrupt does not affect the obligation of recovery …

73.

It is also settled case-law that the restoration of the previous situation and the elimination of the distortion of competition resulting from the unlawfully paid aid may in principle be achieved by registration of the liability relating to the repayment of the aid in question in the schedule of liabilities …

74.

For the purpose of calculating the penalty payment in the present case, the Italian Republic is therefore required to provide the Commission with evidence of the registration of the liabilities in question in the bankruptcy proceedings. If it is not possible to do this, the Italian Republic must report everything capable of showing that it has made every effort to that end. In particular, should the application to register a liability be refused, it must provide proof that it has initiated all procedures under national law capable of challenging that refusal.

75.

Consequently, contrary to the Commission’s claims, the Italian Republic cannot be required, for the purpose of calculating the penalty payment in the present case and where bankrupt undertakings or undertakings involved in bankruptcy proceedings are concerned, to prove not only the registration of the liabilities against them but also the sale of their assets under market conditions. As the Italian Republic rightly submits, the sums which have not yet been recovered from undertakings in bankruptcy, but which that State has made its best efforts to recover, should not be taken into account for the purpose of allowing the Commission’s application relating to the payment of the penalty payments due in accordance with the present judgment. Otherwise that penalty payment would no longer be appropriate and proportionate to the infringement that has been found … in that it would impose on the Italian Republic a financial burden deriving from the very nature of bankruptcy proceedings and from their irreducible length, over which that State has no direct influence’.

8

At the conclusion of its assessment, the Court of Justice, first, declared that, by failing, by the date of expiry of the period laid down in the reasoned opinion issued by the Commission on 1 February 2008 pursuant to Article 228 EC, to take all the measures needed to comply with the judgment finding a failure to fulfil obligations, the Italian Republic had failed to fulfil its obligations under the recovery decision and Article 228(1) EC (judgment to be complied with, paragraph 1 of the operative part).

9

Second, in paragraph 2 of the operative part of the judgment to be complied with, the Court of Justice ordered the Italian Republic to pay to the Commission, into the ‘European Union own resources’ account, a penalty payment of an amount calculated by multiplying the basic amount of EUR 30 million by the percentage of the unlawful aid ‘that [had] not yet been recovered, or [had] not [been] shown to have been recovered, at the end of the period concerned’ (‘the aid amount not yet recovered’), calculated in relation to the ‘total amount not yet recovered on the date of delivery of the [judgment to be complied with (EU:C:2011:740)]’ (‘the aid amount to be recovered as of 17 November 2011’), for every six months of delay in implementing the necessary measures to comply with the judgment [finding a failure to fulfil obligations] from the date of the judgment to be complied with until compliance with the judgment finding a failure to fulfil obligations.

Application for interpretation of the judgment and order concerning interpretation

10

By application lodged at the Registry of the Court of Justice on 14 February 2013, the Italian Republic, pursuant to Article 43 of the Statute of the Court of Justice of the European Union and Article 158 of the Rules of Procedure of the Court of Justice, lodged an application for the interpretation of paragraphs 52, 55 and 68 of the grounds of the judgment to be complied with and of paragraph 2 of the operative part of that judgment.

11

In the application lodged at the Registry of the Court of Justice on 14 February 2013, the Italian Republic accordingly asked the Court of Justice to interpret, first, the expression ‘amount not yet recovered on the date of delivery of the [judgment to be complied with (EU:C:2011:740)]’, which appears in paragraphs 52, 55 and 68 of the grounds of that judgment and paragraph 2 of the operative part of that judgment, in that that expression refers to the amount not yet recovered on the date on which, during the procedure, the collection of evidence stage came to an end, that is, the moment of the procedural crystallisation of the factual situation on the basis of which the Court of Justice settled the dispute, and, second, the expression ‘that has not yet been recovered, or not shown to have been recovered, at the end of the period concerned’ used in paragraphs 52, 55 and 68 of the grounds of that judgment and paragraph 2 of the operative part of the same judgment in that that expression obliges the Commission to take account, for the purposes of the six-monthly evaluation of progress made by the Italian Republic in recovering the aid concerned, not only of the documents relating to that six-month period communicated to the Commission before the expiry thereof, but also of any document relating to the relevant six-month period.

12

By order of 11 July 2013 in Commission v Italy (C‑496/09 INT, the ‘order concerning interpretation’, EU:C:2013:461), the Court of Justice dismissed the Italian Republic’s application for interpretation as inadmissible.

13

The Court of Justice was of the view that ‘it [had to] be noted that the operative part of the judgment [to be complied with (EU:C:2011:740)] which the Court is asked to interpret in accordance with the grounds stated at paragraphs 52, 55 and 68 expressly [referred] to the date on which that judgment was delivered as a date of reference for the determination of the total amount of aid not yet recovered, which should serve as a basis for the calculation of the gradually decreasing penalty payment which that Member State [had] been ordered to pay’ (order concerning interpretation, paragraph 9).

14

In the same way, the Court of Justice expressed the view that ‘it [was] not disputed that a strictly literal reading of the operative part of the judgment [to be complied with was] capable of justifying the taking into account by the Commission, for the purposes of the calculation of the percentage of aid which must be considered as not recovered at the end of a specified six-monthly period, of only the documentary evidence which it [had received] before the expiry of the relevant period’ (order concerning interpretation, paragraph 10).

15

The Court of Justice held that ‘the Italian Republic’s application [sought] to call into question the consequences of such a strict reading of the operative part of the judgment [to be complied with (EU:C:2011:740), since] such a calling into question cannot be reconciled either with Articles 43 of the Statute of the Court and 158(1) of the Rules of Procedure of the Court or with the force of res judicata which attaches to judgments of the Court’ (order concerning interpretation, paragraph 11).

16

Accordingly, ‘[s]ince it is not founded on any difficulty as to the meaning and scope of the judgment [to be complied with (EU:C:2011:740)], the present application [had to be] therefore … deemed inadmissible’ (order concerning interpretation, paragraph 12).

First decision and judgment on the first periodic payment

17

On 11 March 2013, the Italian Republic was notified of Commission Decision C(2013) 1264 final of 7 March 2013, ordering it to pay into the account ‘European Union own resources’ the amount of EUR 16533000 as a penalty for the first six months following the delivery of the judgment to be complied with.

18

On 21 May 2013, the Italian Republic brought an action before the General Court under Article 263 TFEU against that decision (Case T‑268/13).

19

By judgment of 21 October 2014 in Italy v Commission (T‑268/13, ‘judgment on the first penalty’, not published, EU:T:2014:900), the General Court dismissed the action brought by the Italian Republic.

Second decision on the amount of the periodic penalty (contested decision)

20

After giving the Italian authorities the opportunity to submit comments on its preliminary assessment, the Commission adopted Decision C(2013) 8681 final of 6 December 2013, by which, in compliance with the judgment to be complied with, the Commission fixed the amount of the penalty owed by the Italian Republic for the second six-month period following that judgment (‘the contested decision’).

21

In the contested decision, the Commission, inter alia, assessed the progress made by the Italian Republic with regard to the recovery of aid during the period under consideration (from 17 May to 17 November 2012), and established that the remaining aid to be recovered as of 17 November 2012 represented 20.84% of the outstanding aid as on the date of the judgment to be complied with. On that basis, the Commission imposed on the Italian Republic a penalty payment equivalent to 20.84% of the basic amount of EUR 30 million, namely EUR 6252000.

Procedure and forms of order sought

22

The Italian Republic brought the present action by application lodged at the Court Registry on 19 February 2014.

23

By way of measures of organisation of procedure, the Court put to the parties several questions and requested the production of several documents relating to the case.

24

First, the Court asked the Italian Republic to state whether, following the judgment on the first penalty payment, by which it had rejected a plea similar to the first plea in the present case, the Italian Republic maintained that first plea.

25

The Italian Republic informed the Court, within the time allowed, that it was withdrawing the first plea, a matter of which the Court took formal note.

26

Second, the Court asked the parties to clarify how the application of compound interest in the present case could have affected the amount of the penalty payment which is the subject of the contested decision. If it did affect that amount, the Commission was asked to provide further details concerning its argument that the second plea in the present case should be declared inadmissible or ineffective, since the Court did not have to rule on the legality of the taking-into-account of compound interest.

27

The parties submitted their answers to that question to the Court within the time allowed.

28

Third, the Court invited the parties to submit to it their observations on the impact that the judgment of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537) might have on the answer to be given to the second plea.

29

The parties submitted their answers to that question to the Court within the time allowed.

30

Fourth, the Court requested the Commission to transmit to it documents which gave it grounds for its assertion, in essence, that the Italian Republic had agreed to derogate from the rule laid down in Articles 1282 and 1283 of the Codice civile (Italian Civil Code) as regards the application of compound interest to the recovery of the State aid in dispute (see, inter alia, contested decision, paragraphs 29 and 32), for the entire period in question.

31

The Commission sent to the Court, within the time allowed, the documents which had been requested, which were also sent to the Italian Republic. Those documents are:

a letter of 12 June 2013 from the Commission to the Italian Republic, which included a preliminary assessment of the state of progress of the recovery during the second sixth-month period following the judgment to be complied with;

a letter of 31 October 2003 from the Commission to the Italian Republic, which pointed out that ‘in order to calculate the amount to be reimbursed, account had to be taken of the compound interest in accordance with the Commission Communication on the interest rates to be applied when aid granted unlawfully is recovered …’;

a letter of 29 January 2004 from the Commission to the Italian Republic, which also pointed out that compound interest had to be taken into consideration in the calculation of the amount to be reimbursed in accordance with the Commission Communication on the interest rates to be applied when aid granted unlawfully is being recovered (OJ 2003 C 110, p. 21);

a letter of 17 January 2005 from the Italian Republic to the Commission, which included as an annex a note forwarding to the Commission the figures relating to unlawful aid in which it is stated that ‘the interest had been calculated on a compound basis, as indicated by the Commission’s services, based on the reference rate implemented under the conditions set out on the website of the European Union’.

32

The Italian Republic claims that the Court should:

annul the contested decision;

order the Commission to pay the costs.

33

The Commission contends that the Court should:

dismiss the action;

order the Italian Republic to pay the costs.

Law

34

At this point, the Italian Republic relies on a single plea in support of its action (see paragraphs 24 and 25 above). It argues that the contested decision infringes the applicable legislation in that, in order to set the amount of the penalty, the Commission required the inclusion of compound interest on the amount of aid to be recovered. According to case-law, in order for recovery decisions preceding the date of entry into force of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of [108 TFEU] (OJ 2004 L 140, p. 1), as amended (OJ 2004 L 286, p. 3), compound interest could be taken into account only if it reflects the method normally applied under national law. That, the Italian Republic submits, is not be the case here pursuant to the application of Article 1283 of the Italian Civil Code, under which accrued interest does not automatically generate interest.

35

The Commission argues that this plea must be declared inadmissible or ineffective, or, in any event, that it must be rejected as unfounded. First of all, the Commission contends that the calculation of the penalty payment made in the contested decision was not influenced by the request made in paragraph 34 of the contested decision, in an obiter dictum, to take account of compound interest on unlawful aid. That invitation did not change the amount of the penalty determined by the Commission, which took into account only the data previously provided by the Italian authorities. Moreover, the Italian Republic cannot dispute the request for the inclusion of compound interest made at the time of the administrative procedure, since the Court of Justice had referred to data provided by Italy which took into account compound interest when it determined the basic amount of the penalty in the judgment to be complied with (paragraph 64). The taking into account of compound interest is therefore not only lawful under the criteria set out in the EU legislation concerning the recovery of the aid and the agreement between the parties in that regard, but also benefits from the authority of res judicata which applies in respect of the judgment to be complied with.

Preliminary observations

Legal context

– Regulation No 659/1999

36

Article 14 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1), entitled ‘Recovery of aid’, provides in its paragraphs 2 and 3:

‘2.   The aid to be recovered pursuant to a recovery decision shall include interest at an appropriate rate fixed by the Commission. Interest shall be payable from the date on which the unlawful aid was at the disposal of the beneficiary until the date of its recovery.

3.   … recovery shall be effected without delay and in accordance with the procedures under the national law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision. …’

– Commission Communication on the interest rates to be applied when aid granted unlawfully is recovered

37

The Commission Communication on the interest rates to be applied when aid granted unlawfully is being recovered, published in the Official Journal of the European Union of 8 May 2003 (OJ 2003 C 110, p. 21), states:

‘…

As part of the process of loyal collaboration between the Commission and Member States during the execution of certain recovery decisions, the question has arisen whether this interest rate should be applied on a simple basis or on a compound basis … The Commission accordingly considers it necessary to clarify urgently its position on the matter, having regard to the objectives of the recovery of unlawful aid and its place in the system of State aid control laid down by the Treaty.

In market practice, simple interest would normally be calculated where the beneficiary of the funds does not have use of the interest amount before the end of the period, for example where interest is only paid at the end of the period. Compound interest would normally be calculated if each year (or period) the amount of interest can be considered as being paid to the beneficiary and so accruing to the initial capital amount. In this case, the beneficiary would earn interest on the interest paid for each period.

…Thus[,] despite the variety of situations, it appears that the effects of an unlawful aid are to provide funding to the beneficiary on similar conditions to a medium term non-interest bearing loan. Accordingly, the use of compound interest appears necessary to ensure that the financial advantages resulting from this situation are fully neutralised.

Accordingly, the Commission wishes to inform the Member States and interested parties that in any future decisions it may adopt ordering the recovery of aid unlawfully granted, it will apply the reference rate used for calculating the net grant equivalent of regional aids on a compound basis. In accordance with normal market practice, compounding should take place on an annual basis. Likewise, the Commission will expect the Member States to apply compound interest in the execution of pending recovery decisions, unless this would be contrary to a general principle of [EU] law.’

– Regulation No 794/2004

38

Articles 9 and 11 of Regulation No 794/2004, set out in Chapter V thereof, concern the interest rates applicable to the recovery of unlawful aid.

39

Article 9 of that regulation, entitled ‘Method for fixing the interest rate’, provides in its paragraph 1:

‘Unless otherwise provided for in a specific decision the interest rate to be used for recovering State aid granted in breach of Article 88(3) of the Treaty shall be an annual percentage rate fixed for each calendar year.’

40

Article 11 of Regulation No 794/2004, entitled ‘Method for applying interest’, states in its paragraph 2:

‘The interest rate shall be applied on a compound basis until the date of the recovery of the aid. The interest accruing in the previous year shall be subject to interest in each subsequent year.’

41

The first paragraph of Article 13 of Regulation No 794/2004, which appears in Chapter VI, entitled ‘Final Provisions’, provides that that regulation was to enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Since that regulation was published in the Official Journal of the European Union on 30 April 2004, it entered into force on 20 May 2004. Moreover, under the fifth paragraph of Article 13 of that regulation, Article 11 thereof is to apply in relation to any recovery decision notified after the date of entry into force of that regulation.

– Recovery decision

42

On 11 May 1999 the Commission adopted the recovery decision, which was notified to the Italian Republic on 4 June 1999 (see paragraph 1 above). In Articles 1 and 2 of that decision, the Commission found that certain employment measures put in place by the Italian Republic, which did not meet the conditions set out by those articles, were incompatible with the internal market. Under Article 3 of the recovery decision:

‘Italy shall take all necessary measures to recover from the recipients the aid which does not satisfy the conditions of Articles 1 and 2 and has already been unlawfully paid.

Repayment shall be made in accordance with the procedures of Italian law. The amounts to be repaid shall bear interest from the date on which the aid was paid until the date on which it is effectively recovered. The interest shall be calculated on the basis of the reference rate used to calculate the net grant equivalent of regional aid.’

– Italian law

43

Article 1283 of the Italian Civil Code provides:

‘Save where contrary practice applies, the interest which has fallen due may itself generate interest only from the date of the application to the court or as a result of an agreement concluded after the interest maturity date, and always provided that the interest has been owed for at least six months.’

44

Unlike the case which gave rise to the judgment of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537, paragraphs 13 and 14), no other provision of Italian law was invoked by either party as a provision applicable to the present case.

Factors related to the definition of the amount of the penalty payment

45

On 17 November 2011, in the judgment to be complied with, the Court of Justice ordered the Italian Republic to pay a ‘penalty payment … for every six months of delay in implementing the necessary measures to comply with the judgment [finding a failure to fulfil obligations (EU:C:2004:207)]’.

46

According to paragraph 2 of the operative part of the judgment to be complied with, the factors relating to the definition of the amount of the penalty payment are as follows:

for every six months of delay in implementing the necessary measures to comply with the judgment finding a failure to fulfil obligations;

the penalty payment is calculated by multiplying the basic amount of EUR 30 million;

by the percentage of the amount of aid not yet recovered;

calculated in relation to the amount of aid to be recovered on 17 November 2011.

47

On 7 March 2013, in the first decision on the penalty amount (see paragraph 17 above and paragraphs 3 and 4 of the contested decision), the Commission set the amount of the penalty due for the period from 17 November 2011 to 17 May 2012 at EUR 16533000, taking into consideration the following:

the amount of aid to be recovered as of 17 November 2011 was set at EUR 118175296;

the amount of aid not yet recovered as of 17 May 2012 was set at approximately EUR 65130279, or 55.11% of the sum corresponding to the amount of aid to be recovered as of 17 November 2011;

the multiplication of the percentage of the aid not yet recovered as of 17 May 2012 (55.11%) by EUR 30 million made it possible to arrive at the penalty amount owed for the period from 17 November 2011 to 17 May 2012, namely EUR 16533000.

48

On 6 December 2013, in paragraphs 77 to 79 of the contested decision, the Commission set the penalty amount owed for the period from 17 May to 17 November 2012 at EUR 6252000, taking into consideration the following:

the amount of aid to be recovered as of 17 November 2011 was set at EUR 118175296;

the amount of aid not yet recovered as of 17 November 2012 was set at EUR 24627937.21, or 20.84% of the sum corresponding to the amount of aid to be recovered as of 17 November 2011;

the multiplication of the percentage of the aid not yet recovered as of 17 November 2012 (20.84%) by EUR 30 million made it possible to arrive at the penalty amount owed for the period from 17 May 2012 to 17 November 2012, namely EUR 6252000.

49

The parties’ arguments must be assessed in the light of those preliminary observations on the legal framework and the factors relating to the definition of the penalty amount.

Findings of the Court

50

In essence, under this plea, the Italian Republic argues that the contested decision must be annulled in that, for the purpose of setting the penalty amount owed for the six-month period from 17 May to 17 November 2012, the Commission unlawfully took into consideration sums which included compound interest.

51

In that regard, first, it is clear that, for the purpose of determining the amount of aid to be recovered as of 17 November 2011, the date of delivery of the judgment to be complied with, the data taken into account by the Commission did indeed include compound interest.

52

Thus, in paragraph 25 of the contested decision, the Commission noted that ‘all the figures given by the Italian authorities [corresponded to] the amounts of existing aid measures in 2007, at the date on which the formal recovery orders [had been] issued’. In paragraph 32 of the contested decision, it is stated in that regard that, ‘until 2007, the Italian authorities applied compound interest to the amounts of existing aid, as agreed with the Commission’s services’.

53

Similarly, in response to the second measure of organisation of procedure (see paragraph 26 above), the Commission indicated that ‘the figures that correspond[ed] to the amounts of aid in force in 2007 had been calculated by the Italian authorities by applying compound interest to the unlawful aid’.

54

In that reply, the Commission pointed out what follows from paragraphs 29 to 33 of the contested decision, namely that on 21 March 2013 the Italian authorities had informed the Commission that, contrary to what had been previously agreed, they had stopped, from 2007, calculating interest, whether simple or compound, and applying that interest to the unlawful aid to be recovered. The Commission also stated that ‘the amounts due in 2007 have never been updated to reflect the applicable interest’ and that, for that reason, it requested the Italian authorities, in paragraph 34 of the contested decision, to calculate compound interest on the unlawful aid as from 2007.

55

At the hearing, the parties also agreed that the amount of aid to be recovered as of 17 November 2011, which was taken into account in the contested decision, reflects the situation expressed in value terms as of 2007 when the Court of Justice delivered its judgment. The data taken into account at that time were therefore defined as of 17 November 2011 on the basis of the data provided by the Italian Republic when it sent formal recovery orders in 2007. It is not disputed that those data included, at least until 2007, compound interest.

56

Given that the amount of aid to be recovered as of 17 November 2011 included compound interest, the view must be taken that the penalty amount due for the six-month period from 17 May to 17 November 2012, calculated pursuant to the formula set out in paragraphs 46 and 48 above, also took into account data which included compound interest. The contested decision brings to a close, as such, the procedure for the quantification of penalty payments due for the six-month period from17 May to 17 November 2012 and adversely affects the Italian Republic, which is thus entitled to contest the legality of that procedure and to invoke, to that end, all the pleas of fact and law under the conditions provided by the Court’s Rules of Procedure.

57

Second, the Court must therefore determine whether there is a legal basis for allowing the application of compound interest in the present case, a contention which the Italian Republic disputes in the application.

58

Under Article 14(1) of Regulation No 659/1999, where negative decisions are taken in a case of unlawful aid, the Commission has to decide that the Member State concerned must take all necessary measures to recover the aid from its beneficiary. The aid to be recovered pursuant to a recovery decision is to include interest, in accordance with Article 14(2) of that regulation. However, the latter provision does not state whether that interest is to be applied on a simple or on a compound basis (judgment of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 26).

59

In that regard, it should be noted, in the first place, that, although Article 11(2) of Regulation No 794/2004 states that the interest rate is to be applied on a compound basis until the date of the recovery of the aid and that the interest accruing in the previous year is to be subject to interest in each subsequent year, it is nevertheless necessary to note that that provision is, in accordance with the fifth paragraph of Article 13 of that regulation, applicable only to recovery decisions notified after the date on which that regulation entered into force, namely after 20 May 2004 (judgment of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 27).

60

Consequently, given that the recovery decision, declaring that the aid subject to recovery in the present case is incompatible with the internal market, was notified to the Italian Republic on 4 June 1999, that is to say, before Regulation No 794/2004 entered into force, Article 11(2) of that regulation is not, as such, applicable ratione temporis in the present case (see, by analogy, judgment of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 28).

61

With regard, in the second place, to the question as to which legislation was applicable before the entry into force of Regulation No 794/2004 to determine whether interest has to be simple or compound, it should be recalled that, in the judgment of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707, paragraph 46) the Court of Justice held that, at the time at which the decision at issue in the case giving rise to that judgment was adopted, namely on 12 July 2000, neither EU law nor the case-law of the Court of Justice or of the General Court specified whether the necessary interest on aid to be recovered was to be calculated on a simple or on a compound basis. In the absence of an EU-law provision on that subject, the Court of Justice took the view that the Commission’s practice, set out inter alia in its letter SG(91) D/4577 to the Member States of 4 March 1991, linked the question of charging interest to the procedural rules for recovery and referred, in that regard, to national law (judgments of 11 December 2008 in Commission v Département du Loiret, C‑295/07 P, EU:C:2008:707, paragraphs 82 to 84, and of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 29).

62

It was not until its Communication on the interest rates to be applied when aid granted unlawfully is being recovered, published on 8 May 2003, that the Commission expressly stated that it would apply a compound interest rate in any decision ordering the recovery of unlawful aid that it might adopt in the future and that it expected the Member States to apply compound interest during the execution of all recovery decisions (judgments of 11 December 2008 in Commission v Département du Loiret, C‑295/07 P, EU:C:2008:707, paragraph 46, and of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 30).

63

Article 3(2) of the recovery decision requires that recovery be effected in accordance with the procedures of national law, that the amounts to be recovered accrue interest from the date on which those amounts were placed at the disposal of the beneficiaries until their actual recovery, and that interest is to be calculated on the basis of the reference rate used for calculating the grant-equivalent of regional aid, without, however, providing further information as to whether that interest must be applied on a simple or on a compound basis (see, by analogy, judgment of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 31).

64

Since that decision was notified to the Italian Republic on 4 June 1999, that is to say, before the change in the Commission’s practice announced in its Communication on the interest rates to be applied when aid granted unlawfully is being recovered, the necessary conclusion, on the basis of the case-law developed in the judgment of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707), is that it was for national law to determine whether, in this case, the interest rate had to be applied on a simple or on a compound basis (see, by analogy, judgment of 3 September 2015 in A2A, C‑89/14, EU:C:2015:537, paragraph 32).

65

On that point, as the Italian Republic argues, it follows clearly from the line of case-law initiated by the judgments of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707) and of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537) that, for recovery decisions preceding the entry into force of Regulation No 794/2004, compound interest can be taken into account only if that is the method normally applied under national law.

66

Consequently, in the absence of any other provision of national law invoked in the present case, the Court must take the view that the rules applicable in the present case are those set out in Article 1283 of the Italian Civil Code, under which, according to the submissions of the Italian Republic, which have not been challenged by the Commission, accrued interest does not automatically bear interest.

67

It follows that, by taking into account, for the purpose of determining the penalty amount due for the six-month period from 17 May to 17 November 2012, sums relating to the aid amount to be recovered which included compound interest, the Commission therefore erred in law.

68

None of the arguments relied on by the Commission in this regard is capable of calling that conclusion into question.

69

First, the Commission invokes the existence of an agreement between the parties that compound interest is to be taken into account. Paragraph 32 of the contested decision refers to an agreement on this point according to which it had been agreed ‘in 2003 and … in 2004, on the basis of Regulation No 794/2004 (see the letters from the Commission’s services of 31 October 2003 and 29 January 2004, followed by the letter from the Italian authorities of 17 January 2005)’.

70

However, from a reading of the documents cited in the contested decision which were produced in response to the fourth measure of organisation of procedure (see paragraph 31 above) the unavoidable conclusion is that, although the Italian Republic took compound interest into account, this was at the express demand of the Commission, set out in a letter of 31 October 2003 which cited as its legal basis provisions of EU law. In those circumstances, that which has been described as an agreement between the parties by the Commission amounts rather to a simple measure of adherence by the recipient of the Commission’s letter in consideration of provisions which have been shown not to have been applicable. The request set out by the Commission predates the delivery of the judgments of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707) and of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537), from which it follows that the law applicable to the recovery decision at issue here as regards the determination of the method for applying interest is national law and not EU law.

71

In such circumstances, since the Italian Republic was notified of the recovery decision on 4 June 1999, the request made by the Commission with respect to EU law cannot have had the effect of calling into question the scope of the applicable national legislation. To accept that this was the case would amount to an infringement of the principle of the protection of legitimate expectations and would be at variance with the solutions adopted by the Court of Justice in the judgments of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707) and of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537).

72

Second, in its written pleadings and its responses to the measures of organisation of procedure, the Commission refers to paragraph 64 of the judgment to be complied with as support for its argument that the Court of Justice expressly relied on data which included compound interest provided by the Italian authorities and which were compiled in agreement with the Commission.

73

In that regard, it must be stated that, in that paragraph, the Court of Justice indicated, first, that ‘as became apparent at the hearing [of 12 May 2011], the Italian Republic and the Commission [agreed] on the total amount of aid distributed, EUR 251271032.37’ and that, second, ‘[t]he Commission also [accepted] that aid of a total amount of EUR 63062555 [had to] be regarded as having been recovered’ (judgment to be complied with, paragraph 64).

74

On the basis of those observations, the Court of Justice was able to take note of the evolution, during the hearing, of the parties’ arguments. Initially, ‘the Commission [submitted] that, on the expiry of the period prescribed in the reasoned opinion, the Italian Republic had not recovered the entire amount of the aid unlawfully paid, namely EUR 519958761.97 …’ whereas ‘[t]he Italian Republic [contested] the total amount of the sums to be recovered, fixing it at EUR 251271032.37, while conceding that by July 2010 it had obtained repayment of only EUR 63062555.46, to which…, however, EUR 73353387.28 [should be added] on various bases …’ (judgment to be complied with, paragraphs 21, 23 and 24).

75

Paragraph 64 of the judgment to be complied with also follows on from paragraph 63 thereof, in which the Court of Justice stated that it ‘[was] common ground that a substantial part of the aid [had] not yet been recovered, or that proof of recovery [had] not been provided to the Commission’. The figures set out in paragraph 64 regarding the total amount of aid distributed and the amount of aid that can be regarded as having been recovered as of July 2010 accordingly allow the Court of Justice to frame the debate on the amount of the sums to be recovered. However, contrary to what the Commission contends, at no point does the judgment to be complied with address the question of compound interest. No reference is made to the factors to be taken into account when determining the amounts to be recovered. In those circumstances it cannot be inferred from the judgment to be complied with that there was the intention, in respect of the determination of the method for applying interest, to depart from the principles mentioned above in the earlier judgment of 11 December 2008 in Commission v Département du Loiret (C‑295/07 P, EU:C:2008:707), confirmed in the later judgment of 3 September 2015 in A2A (C‑89/14, EU:C:2015:537). It therefore follows that, in the judgment to be complied with, the Court of Justice did not give a ruling, either in the operative part or in the grounds of the judgment, on the question of compound interest.

76

Third, the Court cannot accept the Commission’s position when it argues at the outset that the Italian Republic, in its plea, is in fact challenging only an obiter dictum, namely paragraph 34 of the contested decision, in which the Italian Republic is invited to ‘calculate and apply interest, in respect of the recovery [of aid] for the period (or as of 2007), to all amounts of existing aid, that is to say, the amounts corresponding to all recipients, including those which have repaid the aid partially or completely, in order to meet their obligations’. It is clear from the foregoing that, at the request of the Commission, the interest rate was applied on a compound basis to all aid amounts which were the subject matter of the data taken into account when calculating the factors relating to the definition of the penalty amount, at least until 2007, and that the penalty payment set out in the contested decision was calculated by taking into account data which included compound interest. In addition, it appears from the application that the Italian Republic does indeed contest that taking into account of the compound interest and the impact that the latter had on the determination of the penalty amount. The Commission therefore errs in claiming that this plea is ineffective.

77

Consequently, the contested decision must be annulled in so far as the Commission, for the purpose of determining the amount of the penalty payable by the Italian Republic for the six-month period from 17 May to 17 November 2012, took into account sums relating to amounts of aid to be recovered which included compound interest, contrary to what was laid down by the applicable national law.

Costs

78

Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has been unsuccessful, it must be ordered to bear its own costs and to pay those of the Italian Republic, in accordance with the form of order sought by the Italian Republic.

 

On those grounds,

THE GENERAL COURT (Sixth Chamber)

hereby:

 

1.

Annuls Commission Decision C(2013) 8681 final of 6 December 2013;

 

2.

Orders the European Commission to pay the costs.

 

Frimodt Nielsen

Dehousse

Collins

Delivered in open court in Luxembourg on 9 June 2016.

[Signatures]


( *1 ) Language of the case: Italian.

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