In a judgment delivered on Thursday 12 March (case C-576/18), the Court of Justice of the European Union ordered Italy to pay financial penalties - a lump sum of €7.5 million and a daily penalty payment of €80,000 - for failing to recover aid illegally given to the hotel sector in Sardinia.
In 2008, the Commission determined that public aid worth €13.7 million given by Italy to hotel companies in Sardinia was incompatible with EU law and had to be recovered from the beneficiaries. In 2012, the Court found that Italy had not taken all the necessary measures to recover the aid in question (case C-243/10). In 2018, the European Commission brought a second action for Italy’s failure to fulfil its obligations (see EUROPE 11305/11).
In its judgment, the EU Court found that Italy failed to fulfil its obligation to comply with the 2012 judgment by failing to take the measures required to recover in full the aid before the deadline set by the Commission, i.e. September 2014.
The Court’s judgment states that Italy did not show that recovery of all of the aid is impossible. And it cannot argue on the basis of the legitimate expectations of beneficiaries of unlawful aid, as this argument was rejected by the Court in its 2012 judgment.
By 2019, 89% of the total amount of unlawful aid had been recovered, i.e. 83% of the total amount, plus interest.
While acknowledging the efforts made to recover the aid, the EU judge nevertheless believed it appropriate to impose financial penalties on Italy. With regard to the daily penalty payment, the Court took into account the seriousness of the infringement, which led to competition being distorted, and the considerable length of time taken (more than seven years since the initial judgment). The Court assessed Italy's ability to pay, as the economy was in recession in 2008, 2009, 2012 and 2013.
Finally, the Court stated that the circumstances of the case justified use of a deterrent, such as requiring payment of a lump sum, in order to avoid any future repetition of similar infringements of European Union law.
Consequently, it ordered Italy to pay into the EU budget a lump sum of €7.5 million and, starting on the date the judgment was delivered, a penalty payment of €80,000 for each day’s delay before the measures required to comply with the 2012 judgment are implemented in full.
To read the judgment (in French or Italian only), go to: http://bit.ly/2THmTvb (Original version in French by Mathieu Bion)