State aid: Commission takes Italy to Court for failure to recover illegal aid from hotels in Sardinia

The European Commission has decided to refer Italy to the European Court of Justice (ECJ) on the basis of Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) for failing to comply with a Commission decision of July 2008. The 2008 decision ordered Italy to recover state aid unlawfully granted for certain investment projects in the hotel industry. To date, Italy has not recovered the aid from the beneficiaries.

Competition Commissioner Neelie Kroes commented: "The recovery of illegal and incompatible aid is essential to restore a level playing field in the Single Market. The Commission is determined to take all necessary steps to ensure that Member States comply with their recovery obligations."

Facts

On 12 November 1998, the Commission approved an aid measure in favour of the hotel industry in the Region of Sardinia (N 272/98). One of the conditions for approval was that, in order to be eligible for aid under this scheme, companies had to apply for aid before starting to implement the project to be subsidised. This was in order to ensure that the aid was indeed necessary to implement the project.

On 21 February 2003, the Commission received a complaint regarding alleged violations of the above condition, where the work on the project had started prior to the application for aid under the scheme. Following further correspondence with Italy, the Commission opened a formal investigation procedure on these projects on the 3rd of February 2004. On 2 July 2008, the Commission concluded that some of the aid had been granted in violation of the conditions set out in its decision of 12 November 1998 and ordered Italy to recover the illegal aid.

Subsequently, Italy notified recovery orders to the beneficiaries concerned, some of which appealed them before Italian courts, who suspended in many cases the execution of the recovery orders. However, such suspension decisions are clearly contrary to EU law that requires effective, timely and full recovery of incompatible aid from the beneficiaries. This is a persistent problem in the Italian legal system and similar suspension orders have already given rise to a series of Court actions against Italy under Article 108 (2) TFEU, which are currently pending before the ECJ.

As a result, more than one year after the adoption of the Commission's decision, Italy has not recovered any aid from the beneficiaries concerned. The Commission therefore requests the ECJ to confirm that Italy has failed to implement the decision of 2 nd of July 2008.