Judgment of the Court (First Chamber) of 1 June 2006 − Commission v Italy

(Case C-207/05)

Failure of a Member State to fulfil obligations – State aid – Second subparagraph of Article 88(2) EC – Aid incompatible with the common market – Duty to recover – Non-fulfilment

1. Actions for failure to fulfil obligations – Failure to comply with a decision of the Commission relating to State aid (Arts 88(2), second subpara., EC and 226 EC) (see paras 31, 33, 35)

2. Actions for failure to fulfil obligations – Failure to comply with a decision of the Commission relating to State aid – Grounds of defence (Arts 88(2), second subpara., EC, 226 EC, 227 EC, 230 EC and 232 EC) (see paras 40-43)

3. State aid – Recovery of unlawful aid (Art. 88(2), first subpara., EC) (see para. 44)

4. Actions for failure to fulfil obligation – Failure to comply with a decision of the Commission relating to State aid – Grounds of defence (Arts 10 EC and 88(2), EC) (see paras 45, 47-48, 50)

Re:

Operative part

The Court:

1.Declares that by failing to adopt, within the prescribed period, the necessary measures to recover from the recipients aid declared unlawful and incompatible with the common market by Commission Decision 2003/193/EC of 5 June 2002 on State aid granted by Italy in the form of tax exemptions and subsidised loans to public utilities with a majority public capital holding, the Italian Republic has failed to fulfil its obligations under Articles 3 and 4 of that decision;

2.Orders the Italian Republic to pay the costs.