Case T-53/08

Italian Republic

v

European Commission

(State aid − Compensation for expropriation on grounds of public interest − Temporal extension of a preferential tariff for the supply of electricity − Decision declaring the aid incompatible with the common market − Concept of advantage − Principle of audi alteram partem)

Summary of the Judgment

1.      State aid – Concept – Compensation for expropriation of assets – Not included

(Art. 87(1) EC)

2.      European Union law – Principles – Rights of the defence – Whether applicable to administrative procedures initiated by the Commission – Examination of plans to grant aid – Scope

(Art. 88(2) EC)

3.      State aid – Commission decision to open a formal procedure to investigate a State measure – Subject-matter and scope of the procedure

(Art. 88(2) EC)

1.      Measures which, in various forms, mitigate the burdens normally included in the budget of an undertaking and which, in that way, are similar to subsidies constitute benefits for the purposes of Article 87(1) EC, such as, among others, the supply of goods or services on favourable terms. However, damages which the competent national authorities may be ordered to pay to individuals as compensation for the damage they have caused to those individuals are fundamentally different in their legal nature and do not constitute aid for the purposes of Articles 87 EC and 88 EC.

By contrast, an aid measure consisting in the temporal extension of a measure granting a preferential tariff to an undertaking in respect of the supply of electricity, by way of compensation for expropriation in the context of the nationalisation of the electricity sector, where the preferential tariff was granted by way of compensation for a very specific period, with no possibility of postponing the expiry date, must be categorised as State aid. Moreover, a measure which is only one of a number of preferential tariff conditions, the temporal extension of which is intended to ‘enable the development and restructuring of the production of the undertakings concerned’ cannot be regarded as the statutory continuation of the compensation granted to the undertaking following the nationalisation.

(see paras 49, 52, 55, 63, 65, 75, 77)

2.      As regards the review of State aid, the principle of observance of the rights of the defence requires that the Member State concerned be placed in a position in which it may effectively make known its views on the observations submitted by interested third parties under Article 88(2) EC and on which the Commission proposes to base its decision and that, in so far as the Member State has not been afforded the opportunity to comment on such observations, the Commission may not incorporate them in its decision against that State. However, if such a breach of the right to be heard is to result in an annulment, it must be established that, had it not been for such an irregularity, the outcome of the procedure might have been different.

(see para. 115)

3.      The objective of the formal investigation procedure is to enable interested parties to express their views and the Commission to be fully enlightened with regard to all the information in the case before taking its decision. The scope of the formal investigation procedure cannot be other than as described above and, specifically, the formal investigation procedure cannot accommodate a definitive ruling on certain aspects of the case before the final decision is adopted. There is, moreover, nothing in the legislation on State aid or in the case-law to suggest that the Commission is required to hear the views of the recipient of State resources on the Commission’s legal assessment of the measure in question or to inform the Member State concerned – or, a fortiori, the recipient of the aid – of its position before adopting its decision, where the interested parties and the Member State concerned have been given notice to submit their comments.

(see paras 122-123)