Court of Justice of the European Communities (including Court of First Instance Decisions)

(State aid Scheme of aid granted by the Italian authorities to certain public utilities in the form of tax exemptions and loans at preferential rates Decision declaring the aid incompatible with the common market Actions for annulment Individual concern Admissibility Article 87(3)(c) Article 86(2) EC)

In Case T-89/03,

ASM Brescia SpA, established in Brescia (Italy), represented by F. Capelli, F. Vitale and M. Valcada, lawyers,

applicant,

Commission of the European Communities, represented by V. Di Bucci, acting as Agent,

defendant,

APPLICATION for annulment of Articles 2 and 3 of 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 (OJ 2003 L 77, p. 21),

composed of E. Martins Ribeiro, President, D. Šváby, S. Papasavvas, N. Wahl (Rapporteur) and A. Dittrich, Judges,

Registrar: J. Palacio González, Principal Administrator,

having regard to the written procedure and further to the hearing on 16 April 2008,

gives the following

Background to the dispute

1. The applicant, ASM Brescia, is a limited company with a majority public capital holding which was established in 1998 following the restructuring of the special undertaking bearing that name which was founded in 1908. The applicant is 99% owned by the municipality of Brescia (Italy) and operates in the production, distribution and sales of electricity, natural gas and heating sectors. It also operates in the abstraction, treatment and distribution of drinking water sector and the waste water treatment sector. Moreover, it is active in the waste treatment sector and is engaged in particular in waste collection and disposal. Lastly, it provides urban public transport services and manages the related infrastructure and resources. It carries out these activities in the municipality of Brescia and in some neighbouring municipalities.

National legal context

2. Legge No 142 ordinamento delle autonomie locali (Law No 142 on the organisation of local authorities of 8 June 1990, GURI No 135 of 12 June 1990) ('Law No 142/90') brought about a reform in Italy of the legal arrangements available to municipalities for the management of public services, in particular in the water, gas and electricity distribution sectors and in the transport sector. Under Article 22 of that law, as amended, municipalities can set up companies in a variety of legal forms to provide public services. Those include joint stock companies and limited liability companies with a majority public shareholding ('companies set up under Law No 142/90').
3. In that context, under Article 9a of Legge No 488 di conversione in legge, con modificazioni, del decreto-legge 1° luglio 1986, n° 318, recante provvedimenti urgenti per la finanza locale (Law No 488 of 9 August 1986 converting and amending Decree'Law No 318 of 1 July 1986 and introducing urgent provisions for financing local authorities, GURI No 190 of 18 August 1986), loans were granted between 1994 and 1998 at a preferential rate of interest by the Cassa Depositi e Prestiti ('the CDDPP') to companies set up under Law No 142/90 providing public services ('the CDDPP loans').
4. Moreover, under Article 3(69) and (70) of Legge No 549 (su) misure di razionalizzazione della finanza pubblica (Law No 549 on measures to rationalise public finances of 28 December 1995, Ordinary Supplement to GURI No 302 of 29 December 1995) ('Law No 549/95'), in conjunction with Decreto-Legge No 331 (su) armonizzazione delle disposizioni in materia di imposte sugli oli minerali, sull'alcole, sulle bevande alcoliche, sui tabacchi lavorati e in materia di IVA con quelle recate da direttive CEE e modificazioni conseguenti a detta armonizzazione, nonché disposizioni concernenti la disciplina dei centri autorizzati di assistenza fiscale, le procedure dei rimborsi di imposta, l'esclusione dall'ILOR dei redditi di impresa fino all'ammontare corrispondente al contributo diretto lavorativo, l'istituzione per il 1993 di un'imposta erariale straordinaria su taluni beni ed altre disposizioni tributarie (Decree'Law No 331 harmonising tax provisions in various fields of 30 August 1993, GURI No 203 of 30 August 1993) ('Decree'Law No 331/93), the following measures were introduced for the benefit of companies set up under Law No 142/90:

exemption from all transfer taxes in connection with the conversion of special and municipal undertakings into companies set up under Law No 142/90 ('the transfer tax exemption)';

a three-year income tax exemption, namely in respect of the tax on the incomes of legal persons and local income tax, up to the tax year 1999 ('the three-year income tax exemption').

Adminstrative procedure

5. After receiving a complaint concerning those measures, the Commission asked the Italian authorities for information in that regard by letters of 12 May, 16 June and 21 November 1997.
6. By letter of 17 December 1997, the Italian authorities provided some of the information requested. A meeting was then held at the request of the Italian authorities on 19 January 1998.
7. By letter of 17 May 1999, the Commission informed the Italian authorities that it had decided to initiate the procedure laid down in Article 88(2) EC. That decision was published in the Official Journal of the European Communities (OJ 1999 C 220, p. 14).
8. After receiving comments from interested parties and the Italian authorities, the Commission asked the latter for additional information on a number of occasions. Meetings were also held between the Commission and, respectively, the Italian authorities and the interested parties involved.
9. Certain companies set up under Law No 142/90, including ACEA SpA, AEM SpA and Azienda Mediterranea Gas e Acqua SpA (AMGA), which also instigated proceedings for the annulment of the decision at issue in this case (Cases T-97/02, T-01/02 and T-00/02 respectively), argued in particular that the three types of measure in question did not constitute State aid.
10. The Italian authorities and the Confederazione Nazionale dei Servizi (Confservizi), a confederation of, inter alia, companies set up under Law No 142/90 and special municipal undertakings in Italy, essentially supported that position.
11. On the other hand, the Bundesverband der deutschen Industrie eV (BDI), a German association for industry and suppliers of related services, was of the view that the measures in question could bring about distortions of competition not only in Italy but also in Germany.
12. Similarly, Gas'it, an Italian association of private operators in the gas distribution sector, stated that the measures in question, in particular the three-year income tax exemption, constituted State aid.
13. On 5 June 2002, the Commission adopted Decision 2003/193/EC on State aid granted by Italy in the form of tax exemptions and subsidised loans to companies set up under Law No 142/90 (OJ 2003 L 77, p. 21) ('the contested decision').

The contested decision

14. The Commission points out, first of all, that its analysis concerns only the aid schemes of general application introduced by the contested measures and not individual grants of aid to particular undertakings and its analysis in the contested decision is therefore general and abstract. It states that the Italian Republic 'did not grant the tax advantages on an individual basis or notify any individual cases to [it], together with all the information necessary for the Commission to assess it'. The Commission states that it therefore considered itself bound to carry out a general and abstract examination of the schemes in question in order to determine both whether they constituted State aid and whether such aid was compatible with the common market (recitals 42 to 45 of the preamble to the contested decision).
15. According to the Commission, the CDDPP loans and the three'year income tax exemption (together, 'the contested measures') are State aid. The effect of such advantages being conferred through State resources on companies set up under Law No 142/90 is to strengthen their competitive position by comparison with that of all other undertakings wishing to supply the same services (recitals 48 to 75 of the preamble to the contested decision). The contested measures are incompatible with the common market because they meet the requirements of neither Article 87(2) and (3) EC nor Article 86(2) EC and, furthermore, infringe Article 43 EC (recitals 94 to 122 of the preamble to the contested decision).
16. On the other hand, according to the Commission, the transfer tax exemption does not constitute State aid within the meaning of Article 87(1) EC, since such taxes are payable on the creation of a new economic entity or the transfer of assets between different economic entities. Municipal undertakings and the companies set up under Law No 142/90 are, substantially, the same economic entities. Exemption from those taxes for such companies is therefore justified by the nature or general scheme of the system (recitals 76 to 81 of the preamble to the contested decision).
17. The enacting terms of the contested decision are worded as follows:
'Article 1

The exemption from transfer tax ... does not constitute aid within the meaning of Article 87(1) [EC].

Article 2

The three-year exemption from income tax ... and the advantages resulting from [CDDPP] loans constitute State aid within the meaning of Article 87(1) [EC].

Such aid is incompatible with the common market.

Article 3

Italy shall take all necessary measures to recover from the beneficiaries the aid granted under the schemes referred to in Article 2 and unlawfully made available to the beneficiaries.

Recovery shall be effected without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of the [contested] decision.

The aid to be recovered shall include interest from the date on which it was at the disposal of the beneficiaries until the date of its recovery. Interest shall be calculated on the basis of the reference rate used for calculating the grant equivalent of regional aid.

...'

Procedure and forms of order sought by the parties

18. By application lodged at the Registry of the Court of First Instance on 2 June 2003, the applicant brought the present action.
19. By separate document, lodged at the Court Registry on 5 August 2003, the Commission raised a plea of inadmissibility under Article 114(1) of the Rules of Procedure of the Court of First Instance.
20. On 9 October 2003, the applicant submitted its observations on the plea of inadmissibility.
21. On 8 August 2002, the Italian Republic also brought an action for annulment on the contested decision before the Court of Justice (Case C-90/02). The Court of Justice considered that that action and those in Cases T-92/02, T-97/02, T-00/02, T-01/02 and T-09/02 concerned the same subject matter, namely the annulment of the contested decision, and were connected, since the pleas put forward in each of the cases overlapped to a very large extent. By order of 10 June 2003, the Court of Justice stayed the proceedings in Case C-90/02 in accordance with the third paragraph of Article 54 of its Statute pending the final decision of the Court of First Instance in Cases T-92/02, T-97/02, T-00/02, T-01/02 and T-09/02.
22. By order of 8 June 2004, the Court of Justice decided to refer Case C-90/02 to the Court of First Instance, upon which jurisdiction has been conferred to adjudicate on actions brought by Member States against the Commission, in accordance with Article 2 of Council Decision 2004/407/EC, Euratom of 26 April 2004 amending Articles 51 and 54 of the Protocol on the Statute of the Court of Justice (OJ 2004 L 132, p. 5). That case was registered at the Registry of the Court of First Instance under reference T-22/04.
23. By order of 5 August 2004, the Court of First Instance decided to reserve its decision on the plea of admissibility raised by the Commission until the judgment in the main proceedings.
24. Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Eighth Chamber, Extended Composition) decided to open the oral procedure and, by way of measures of organisation of procedure provided for in Article 64 of the Rules of Procedure, put written questions to the parties, to which they replied within the prescribed period.
25. By order of the President of the Eighth Chamber, Extended Composition, of the Court of First Instance of 13 March 2008, Cases T-92/02, T-97/02, T-00/02, T-01/02, T-09/02, T-89/03 and T-22/04 were joined for the purposes of the oral procedure, in accordance with Article 50 of the Rules of Procedure.
26. The parties presented oral argument and replied to the questions put by the Court at the hearing which took place on 16 April 2008.
27. The applicant claims that the Court should:

declare the action admissible;

annul Article 2 of the contested decision or, in the alternative, annul Article 3 of the contested decision as regards the three'year income tax exemption;

order the Commission to pay the costs.

28. The Commission contends that the Court should:

dismiss the action as inadmissible;

in the alternative, dismiss the action as unfounded;

order the applicant to pay the costs.

Admissibility

Arguments of the parties

29. The Commission denies that the applicant has locus standi on the ground that the contested decision is not of individual concern to it within the meaning of the fourth paragraph of Article 230 EC.
30. The Commission submits, in essence, that the contested decision is to be regarded as a measure of general application since it concerns an aid scheme and, therefore, an indeterminate and indeterminable number of undertakings defined by reference to a general criterion, such as the fact that they belong to a particular category of undertakings. In its view, the general applicability, and thus the legislative nature, of a measure are not called into question by the fact that it is possible to determine more or less exactly the number or even the identity of the persons to whom it applies at any given time, as long as it applies to them by virtue of an objective legal or factual situation defined by the measure in question in relation to its purpose.
31. According to the Commission, in order for a person to be individually affected by a measure of general application, that measure must adversely affect that person's specific rights or the institution which adopted the measure must be under an obligation to take account of the effects of the measure on that person's situation. However, the Commission is of the view that that is not the case here. The contested decision has had an impact on the situation of all the undertakings which benefited from the measure in question. Consequently, the decision has not infringed rights which are specific to certain undertakings that can be distinguished from any other undertaking which benefited from the measure in question. Moreover, in adopting the contested decision, the Commission neither should nor could have taken account of the effects of its decision on the situation of a particular undertaking. Neither the declaration of incompatibility nor the order for recovery in the contested decision referred to the situation of individual beneficiaries.
32. According to the Commission, its analysis is confirmed by the existing case'law on State aid, which establishes that the fact an undertaking has received State aid that has been declared incompatible with the common market is not sufficient to demonstrate that the undertaking is individually concerned for the purpose of the fourth paragraph of Article 230 EC.
33. A number of more recent cases do not call into question the established case'law. According to the Commission, the approach adopted in Joined Cases C-5/98 and C-05/99 Italy and Sardegna Lines v Commission [2000] ECR I-8855 ('the judgment in Sardegna Lines') cannot be applied to all actions brought by recipients of an aid scheme that has been declared unlawful and incompatible and in respect of which an order for recovery has been made. That is the inevitable conclusion in particular where, as in the present case, the aid scheme in question has been analysed in an abstract manner. Furthermore, in the case which gave rise to the judgment in Sardegna Lines, the applicant was an actual beneficiary of individual aid since an advantage was conferred on it by virtue of a measure adopted on the basis of a regional law which allowed for a wide margin of discretion. Moreover, that situation was closely scrutinised in the course of the formal investigation procedure.
34. The facts of the case also differ from those which gave rise to the judgment in Case C-98/00 P Italy v Commission [2004] ECR I-4087 ('the judgment in Alzetta') in so far as, in the present case, the Commission was unaware of either the exact number or the identity of the beneficiaries of the aid in question, did not have available to it all the relevant information and was unaware of the amount of aid granted in each case. Moreover, in this case, the three'year income tax exemption applied automatically, whereas the aid in question in the case which gave rise to the judgment in Alzetta was granted under a later measure.
35. Contrary to the applicant's submissions, what matters for the purpose of examining admissibility is not knowledge of the identity of an undertaking but the fact that the Commission's attention has been drawn to specific features of the case which justify individual scrutiny. The Commission stated in the contested decision that it had not been provided with any information to demonstrate that, as regards the applicant, the measure at issue did not constitute aid or constituted existing aid or aid compatible with the common market.
36. In any event, neither the fact that it participated in the formal procedure laid down in Article 88(2) EC nor the order for recovery in the contested decision is sufficient, in the Commission's view, to distinguish the applicant individually. Given that actions brought by potential beneficiaries of a notified aid scheme are inadmissible for the purpose of Article 230 EC, the same should apply to actions brought by beneficiaries of an unnotified aid scheme.
37. Lastly, the Commission maintains that if the action brought by the applicant in the present case were to be declared inadmissible, that would not infringe the principle of effective judicial protection, since the remedies provided for in Articles 241 EC and 234 EC would be sufficient (Case C-0/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677).
38. The applicant is of the view that the contested decision is of direct and individual concern to it in so far as it is a company set up under Law No 142/90 and is therefore an undertaking covered by the aid scheme that is the subject of the contested decision and benefited from the three'year income tax exemption in respect of which an order for recovery was made.

Findings of the Court

39. According to the fourth paragraph of Article 230 EC, a natural or legal person may institute proceedings against a decision addressed to another person only if that decision is of direct and individual concern to him.
40. According to established case'law, natural or legal persons other than the addressees may claim that a decision is of individual concern to them only if that decision affects them by reason of certain attributes which are peculiar to them, or by reason of factual circumstances which differentiate them from all other persons and thereby distinguish them individually in the same way as the person addressed (Case 25/62 Plaumann v Commission [1963] ECR 95, at 107, and Case C-21/95 P Greenpeace Council and Others v Commission [1998] ECR I-1651, paragraphs 7 and 28).
41. Accordingly, the Court of Justice has held that an undertaking cannot, as a general rule, bring an action for the annulment of a Commission decision prohibiting a sectoral aid scheme if it is concerned by that decision solely by virtue of the fact that it belongs to the sector in question and is a potential beneficiary of the scheme. Such a decision is, vis-à -vis the applicant undertaking, a measure of general application covering situations which are determined objectively and entails legal effects for a class of persons envisaged in a general and abstract manner (see Joined Cases 67/85, 68/85 and 70/85 Van der Kooy and Others v Commission [1988] ECR 219, paragraph 15, and the judgment in Alzetta, paragraph 37 and the case'law cited).
42. However, the Court of Justice also held, at paragraphs 34 and 35 of the judgment in Sardegna Lines, that since the undertaking Sardegna Lines was concerned by the decision at issue in that case not only as an undertaking in the shipping sector in Sardinia and a potential beneficiary of the aid scheme for Sardinian shipowners but also as an actual recipient of individual aid granted under that scheme, recovery of which had been ordered by the Commission, it was individually concerned by the decision and the action which it brought against it was admissible (see also, to that effect, the judgment in Alzetta, paragraph 39).
43. Accordingly, it is appropriate to determine whether the applicant is an actual recipient of individual aid granted under a sectoral aid scheme, recovery of which has been ordered by the Commission (see, to that effect, Case T-36/05 Salvat père et fils and Others v Commission [2007] ECR II-4063, paragraph 70).
44. It should be pointed out, first, that it is apparent from the applicant's answer to the written questions put by the Court on this subject that it is an actual recipient of aid granted under the aid scheme in question. In fact, the applicant confirms that, during the period concerned, it obtained the three'year income tax exemption. The Italian Republic has not contradicted that statement.
45. Second, it is apparent from Article 3 of the contested decision that the Commission ordered the recovery of the aid in question.
46. It follows that the applicant is individually concerned by the contested decision.
47. As to whether the applicant is directly affected, since Article 3 of the contested decision requires the Italian Republic to take all necessary measures to recover from the beneficiaries the aid referred to in Article 2 of the decision and unlawfully made available to them and the applicant received aid and is obliged to reimburse it, it must be regarded as being directly concerned by the decision (see, to that effect, Salvat père et fils and Others v Commission, paragraph 75).
48. It follows from all the foregoing considerations that the present action is admissible in so far as concerns the part of the contested decision which has regard to the three'year income tax exemption.

Substance

49. In support of its action, the applicant puts forward five pleas in law, alleging, respectively:

infringement of Article 87(1) EC and the obligation to state reasons, the principles of sound administration, legal certainty, the protection of legitimate expectationss and fundamental rights;

infringement of Article 88(1) EC, Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [88 EC] (OJ 1999 L 83, p. 1) and failure to state reasons;

infringement of Article 87(3)(c) EC ;

infringement of Article 86(2) EC, the principles of the protection of legitimate expectations and legal certainty and failure to state reasons;

infringement of Article 43 EC and failure to state reasons.

The first plea, alleging infringement of Article 87(1) EC and the obligation to state reasons, the principles of sound administration, legal certainty, the protection of legitimate expectations and fundamental rights

Arguments of the parties

50. In essence, the applicant submits that the three'year income tax exemption does not constitute State aid within the meaning of Article 87(1) EC and that the Commission infringed the obligation to state reasons in that connection, the principles of sound administration, legal certainty, the protection of legitimate expecations and fundamental rights, by failing to conduct a more detailed examination.
51. The applicant argues that, in the circumstances, intra'Community competition and trade were not affected. In its view, when the three'year income tax exemption was applied, and even subsequently, the sectors in which it operated were not open to competition.
52. The applicant is of the view that the Commission omitted to conduct an analysis of the legal regime governing public services in Italy and the issue of whether the markets in question were open to competition. Moreover, in its view, it is precisely because there was no competition on the markets in question that it was possible for the three'year income tax exemption to be applied.
53. The applicant also submits that the Commission's investigation was confined to local public services and the Commission was therefore unable to evaluate the impact of the three'year income tax exemption on other markets. That exemption cannot, according to the applicant, be regarded as Stated aid simply on the basis of the fact that the companies set up under Law No 142/90 could have operated, in general, on markets other than local public services markets. Consequently, the Commission was not in a position either to ascertain the impact of the three'year income tax exemption on other markets or to use that factor as an argument in order to declare that the exemption was incompatible with the common market.
54. The applicant observes that, in concluding that intra'Community competition and trade were affected as a result of the damage suffered by foreign underakings, the Commission makes the assumption that such undertakings were in competition with the companies set up under Law No 142/90. That, however, is an unsupported hypothesis.
55. Moreover, according to the applicant, the fact that the activities were, in objective terms, purused at local level means that intra'Community trade could not have been affected. The Commission failed, however, to ascertain whether the activities in question were of a local nature.
56. According to the applicant, the municipalities did not put contracts up for competition between the various undertakings when awarding public services concessions. Moreover, it was not obliged to do so (see Case C-07/98 Teckal [1999] ECR I-8121, and the Commission interpretative communication on concessions under Community law (OJ 2000 C 121, p. 2)).
57. The applicant adds that, even if that were contrary to the Community rules on public procurement, the fact that public service concessions are awarded directly to undertakings means that there can be no effect on intra'Community competition and, therefore, no infringement of Article 87 EC.
58. Moreover, according to the applicant, the Commission failed to make a distinction between the direct management of services entrusted by the municipalities to the companies set up under Law No 142/90 and the public procurement procedures in which those companies participated. The Commission failed to ascertain whether the companies set up under Law No 142/90, in particular the applicant, took part in public procurement procedures in geographical areas other than that in which they normally operate. The applicant states that, as a general rule, companies set up under Law No 142/90 were prohbited from engaging in extra'territorial activities and could not therefore take part in invitations to tender outside the municipality in which they normally operated. The applicant also relies on Article 16 EC, as amended by Article III'122 of the Treaty establishing a Constitution for Europe (OJ 2004 C 310, p. 1).
59. In its reply, the applicant argues that the Commission should, at the very least, have drawn a distinction in its anaylsis between the various legal forms of undertaking in the scheme referred to in the contested decision.
60. In its reply, the applicant also rejects the Commission's argument that there is no need for the Court to ascertain the scope of its activities. That argument would have the following unreasonable consequences: given the general and abstract nature of the analysis set out in the contested decision, the Court would have to confine itself to making a general pronouncement on the three'year income tax exemption, even if the applicant were to demonstrate that the exemption did not apply to its particular situation. Such an outcome would be unjust and deprive the applicant of effective legal protection.
61. Lastly, the applicant claims that the recovery order addressed to the Italian Republic in Article 3 of the contested decision is unlawful. In its view, the beneficiaries of the three'year income tax exemption are required, under the recovery order, to repay the benefit received even if they operated only in sectors that are closed to competition. First, the Commission failed to state in the contested decision the factors and criteria which would enable the Italian authorities to distinguish existing aid or aid that is compatible from the aid at which the recovery order was directed. Second, under the EC Treaty, Member States cannot themselves determine whether aid is compatible with the common market. It follows, according to the applicant, that the Commission demanded the recovery of all the advantages received by way of the three'year income tax exemption. The applicant submits that that will give rise to a large number of claims before the national courts, which will make a reference under Article 234 EC to the Court of Justice for a preliminary ruling on the validity of the contested decision. It maintains that it will therefore fall to the Court of Justice to carry out a great number of analyses of the beneficiaries' situations. Such a situation would not have arisen if the Commission had conducted a thorough examination of the legal aspects involved and the legislation applicable in the sectors in question.
62. According to the applicant, it also follows from the considerations set out above that the Commission infringed the obligation to state reasons.
63. The Commission disputes the applicant's arguments and considers that sufficient reasons were given in the contested decision.

Findings of the Court

64. As a preliminary point, it should be noted that classification as aid within the meaning of Article 87(1) EC requires all the conditions set out in that provision to be fulfilled. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Third, it must confer a selective advantage on the recipient. Fourth, it must distort or threaten to distort competition (Case C-80/00 Altmark Trans and Regierungspräsidium Magdeburg [2003] ECR I-7747 ('the judgment in Altmark'), paragraphs 74 and 75, and Case C-72/03 Heiser [2005] ECR I-1627, paragraph 27).
65. In the circumstances, it is clear, according to the applicant, that two of the four conditions that must be satisfied for a measure to be classified as State aid within the meaning of Article 87(1) EC, namely those relating to the effect on intra'Community trade and the effect on competition, are not met in the present case.
66. According to established case'law, in its assessment of those two conditions, the Commission is required, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (see Case C-48/04 Unicredito Italiano [2005] ECR I-11137, paragraph 54 and the case'law cited).
67. It should also be noted that, in the case of an aid scheme, the Commission may confine itself to examining the characteristics of the programme in question in order to determine, in the grounds of its decision, whether, by reason of the terms of the scheme, it is likely to benefit in particular undertakings engaged in trade between Member States (Case C-10/99 Italy v Commission [2002] ECR I-2289).
68. A further point to be made is that any grant of aid to an undertaking pursuing its activities in the Community market is liable to cause distortion of competition and affect trade between Member States (see Joined Cases T-2/00 and T-03/92 Diputación Foral de Álava v Commission [2002] ECR II-1385, paragraph 72 and the case'law cited).
69. Moreover, there is no threshold or percentage below which trade between Member States can be said not to be affected. The relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected (Case C-42/87 'Tubemeuse' [1990] ECR I-959, paragraph 43; Joined Cases C-78/92 to C-80/92 Spain v Commission [1994] ECR I-4103, paragraph 42; and Altmark, paragraph 81).
70. Furthermore, the Court of Justice stated that it was not impossible that a public subsidy granted to an undertaking which provides only local or regional transport services and does not provide any transport services outside its State of origin may none the less have an effect on trade between Member States within the meaning of Article 87(1) EC. Where a Member State grants a public subsidy to an undertaking, the supply of transport services by that undertaking may for that reason be maintained or increased with the result that undertakings established in other Member States have less chance of providing their transport services in the market in that Member State (Altmark, paragraphs 77 and 78).
71. In the present case, it should be stated, first, that the aid scheme in question covers a specific category of undertakings, namely companies set up under Law No 142/90. The only requirement to be met in order to be able to benefit from that scheme was to be such a company.
72. Next, the scheme providing for the three'year income tax exemption was not confined to particular services and the activities of the undertakings covered by that scheme were not limited to the public services sector.
73. It follows that, in the circumstances of the case, the Commission was not required to take account of each kind of activity or market in its assessment of the effects of the three'year income tax exemption.
74. Moreover, it must be pointed out that, while it is true that the applicant maintains that the companies set up under Law No 142/90 did not operate in competitive markets, with referece in particular to the sectors in which it itself operated, it has failed to adduce any valid evidence to support its claim that the economic sectors of the public services concerned were not open to competition during the period in question. It must be borne in mind that what is at issue in the present case is an aid scheme encompassing a whole range of sectors and not a number of aid schemes each of which relates to a specific sector.
75. Furthermore, as the Commission stated at recitals 73 and 84 of the preamble to the contested decision, there was a certain amount of competition in some of the sectors concerned, such as the pharmaceutical products, waste, gas, electricity and water sectors, when the contested measures were put into effect.
76. Moreover, in the sectors in which the companies set up under Law No 142/90 operate, undertakings compete for the award of concessions to provide local public services in the various municipalities and the market for those concessions is open to competition (recitals 67 and 68 of the preamble to the contested decision). It is of no consequence whether the applicant took part in tendering procedures for the award of local public services contracts in other geographical areas during the period in which the three'year income tax exemption applied.
77. The argument based on the claim that there is no competition and therefore no effect on inter'State trade because contracts for the services in question are in fact directly awarded to the companies set up under Law No 142/90 must be rejcted. First, the fact that contracts are awarded directly does not affect the finding made in the preceding paragraphs that there was, at the very least, a certain amount of competition on the market in question. Second, that argument serves, rather, to demonstrate the restrictive effects of the measure in question on competition and not the absence of competition on that market. As the Commission stated at recital 71 of the preamble to the contested decision, it cannot be ruled out that the very existence of the aid for companies set up under Law No 142/90 encouraged the municipalities to entrust them directly with the services instead of granting licences by open tender procedure.
78. With regard, in particular, to whether the measure in question distorted or threatened to distort the level of competition on the market, it must be noted that that measure strengthened the competitive position of the companies set up under Law No 142/90 by comparison with that of any other Italian or foreign undertaking operating on that market. As the Commission correctly pointed out at recital 62 of the preamble to the contested decision, undertakings that are not joint stock companies and a majority of whose shares are not held by local authorities find themselves in a disadvantaged position if they intend to compete for the granting of a licence to provide a particular service in a given territory.
79. Moreover, the activities of companies set up under Law No 142/90 are not confined to the local public services sector. The measure in question can therefore facilitate the expansion of those companies in other markets which are open to competition and thus distort competition even in sectors other than local public services sectors. It is apparent from Law No 142/90, as interpreted by the Corte suprema di cassazione (Supereme Court of Cassation, Italy) in Judgment No 4989 of 6 May 1995 and by the Consiglio di Stato (Council of State, Italy) in Judgment No 4586 of 3 September 2001, that it is permissible for companies set up under Law No 142/90 to operate in other geographical areas both within Italy and abroad and in fields other than that of public utilities stipulated in their articles of association, unless that deprives them to a significant extent of resources and means and is liable adversely to affect the controlling local authorities. Furthermore, it is apparent from newspaper articles annexed to the defence that at least some of the companies set up under Law No 142/90 have engaged in activities other than the provision of public services stipulated in their articles of association and have done so in areas outside their controlling municipality.
80. As regards the condition relating to the effect on inter'State trade, it should be pointed out, first of all, that the fact that companies set up under Law No 142/90 operate only on their national market or in their territory of origin is not decisive. Inter'State trade is affected by the measure in question when undertakings established in other Member States have less chance of providing their services in the Italian market (see paragraph 70 above).
81. Accordingly, the Commission was correct in stating at recital 70 of the preamble to the contested decision that the measure in question could create an obstacle for foreign firms wishing to establish themselves or sell their services in Italy and therefore affected trade between Member States within the meaning of Article 87(1) EC.
82. First, the contested measure adversely affects foreign companies bidding for local public services concession in Italy, since the public undertakings benefiting from the scheme in question can bid at more competitive prices than national or Community competitors not benefiting from it. Second, the measure in question makes it less attractive for companies from other Member States to invest in the utilities sector in Italy (for example, by acquiring majority holdings), since any companies acquired would not be entitled to (or may lose) the benefit of the measure because of the nature of their new shareholders (see recital 69 of the preamble to the contested decision).
83. It follows from the foregoing that the Commission did not err in taking the view that the conditions relating to the effect on trade between Member States and the distortion of competition were met in the present case.
84. As regards the allegation that sufficient reasons are not given in the contested decision regarding those two conditions, the Commission adequately explained, at recitals 62 to 64, 69, 73 and 74 respectively of the preamble, the reasons for which it considered that the aid at issue was likely to distort competition and affect trade between Member States. Moreover, as has already been stated, the Commission is not required to demonstrate the real effect of aid which had already been granted (Case C-01/87 France v Commission [1990] ECR I-307, paragraph 33).
85. With regard to the recovery order, according to established case'law, abolishing unlawful aid by means of recovery together, where necessary, with appropriate interest, is the logical consequence of a finding that it is incompatible with the common market (Tubemeuse, paragraph 66; Case C-69/95 Spain v Commission [1997] ECR I-135, paragraph 47; and Case C-10/02 Commission v Council [2004] ECR I-6333, paragraph 41).
86. It must also be stated that that case'law is applicable to both individual aid and aid paid under an aid scheme.
87. However, where an aid scheme has been analysed in a general and abstract manner, the possibility camnot be ruled out that, in an individual case, the amount granted under the scheme escapes the prohibition laid down in Article 87(1) EC, for example, because the grant of individual aid is covered by the de minimis rules. That explains the reservations expressed at recitals 72, 85 and 126 of the preamble to the contested decision.
88. Undoubtedly, where the Commission takes a decision declaring aid incompatible with the common market, the role of the national authorities is confined to implementing that decision and they do not enjoy any discretion in that regard (Case 78/76 Steinicke & Weinlig [1977] ECR 595, paragraph 10). That does not, however, prevent the national authorities, when implementing that decision, from taking such reservations into account. Therefore, contrary to applicant's submissions, the Commission is simply required to order recovery of aid within the meaning of Article 87 EC and not of amounts which, while paid under the scheme in question, do not constitute aid or constitute aid that is existing or compatible with the common market under a block exemption regulation, the de minimis rules or another Commission decision. The national court has jurisdiction to interpret the concepts of aid and existing aid and can adjudicate on any particular circumstances in which they may apply, where necessary by referring a question to the Court of Justice for a preliminary ruling.
89. Moreover, to accept the applicant's argument that an abstract assessment of an aid scheme which does not entail a detailed examination of the individual instances of application cannot give rise to a recovery order would amount to automatically excluding the possibility of recovering unlawfully paid aid and thus depriving Articles 87 EC and 88 EC of any meaning. In such a case, it would be impossible for the Commission, which alone has competence to determine whether aid is compatible with the common market, to examine the numerous cases in which aid schemes apply.
90. It follows from the foregoing that the first plea must be rejected.

The second plea, alleging infringement of Article 88(1) EC and Regulation No 659/1999 and failure to state reasons

Arguments of the parties

91. In this plea, the applicant sumbits that, even if the three'year income tax exemption must be regarded as State aid, it is existing aid and, therefore, by the contested decision, the Commission infringed Article 88 EC and Article 1(b)(i) and (v) of Regulation No 659/1999. It also maintains that no adequate reasons were stated in that connection.
92. First, the applicant takes the view that if it were regarded as State aid, the three'year income tax exemption would constitute existing aid within the meaning of Article 1(b) (v) of Regulation No 659/1999 since the markets in question were closed to competition during the reference period. The Commission failed to verify whether the sectors concerned were closed to competition and to state reasons on that point in the contested decision.
93. Secondly, the applicant states that the provision under a monopoly arrangement of services in the public interest by municipalities and municipal undertakings has been exempt from tax since the beginning of the last century. The applicant refers in particular to Decreto Presidenziale No 917 (sulla) approvazione del testo unico delle imposte sui redditi (Presidential Decree No 917 approving the consolidated text of the law on income tax of 22 December 1986, Ordinary Supplement to GURI No 302 of 31 Decmeber 1986). It draws attention to the fact that the Commission had never previously contested that exemption. According to the applicant, there was continuity between, on the one hand, the tax system from which municipalities and municipal undertakings benefited in terms of operating public utilities and, on the other, the three'year income tax exemption enjoyed by companies set up under Law No 142/90. In fact, municipal undertakings and companies set up under Law No 142/90 embody, in essence, the same entity in different legal forms. The companies set up under Law No 142/90 assumed the rights and obligations of the municipal undertakings. The rationale for the three'year income tax exemption is to be found in the absence of competition, which was a feature of the markets in question both prior to the entry into force of the EC Treaty and during the period from 1997 to 1999. The legal form of the undertaking responsible for performing public services is therefore of no importance. Moreover, the reforms carried out by the Italian legislature in the 1990s changed nothing apart from the legal form and treatment of the operators in question. It is a normal legal instrument suitable for the purpose of facilitating the change'over to the competitive system in the sectors in question. However, the Commission has failed to explain in the contested decision the reason for which the principle of continuity applied at recital 78 of the preamble to that decision is not applicable for the purpose of classifying the three'year income tax exemption as existing aid.
94. The conditions imposed by the Court of Justice in Case C-4/93 Naumr'Les assurances du credit [1994] ECR I-3829 paragraph 33 ('the judgment in Namur') in order for aid to be regarded as existing aid are met in the present case. The sphere of activities and the advantage in question remain the same. Moreover, the companies set up under Law No 142/90 are not free to operate on the market in search of better trading opportunities, their objective is the provision of public services and they are closely connected to the controlling municipality in the sense that they are forbidden to operate outside the municipality (Judgment No 243 of the Consiglio di Stato of 10 March 1997 and Judgment No 4989 of the Corte suprema di cassazione of 6 May 1995).
95. Even if the conditions imposed in the judgment in Namur were not satisfied, the contested decision would be vitiated by an error as regards the classification of the three'year income tax exemption as new aid. In fact, the criteria laid down in the judgment in Namur should be applied in the present case in the light of the different legal framework that is applicable and the non-competitive nature of the specific sectors in question.
96. The Commission considers that the plea under consideration must be rejected and refers to recitals 86 to 91 of the preamble to the contested decision in that connection.

Findings of the Court

97. The Court of Justice held in Namur (at paragraph 13) that it is clear from both the terms and purposes of Article 88 EC that aid which existed before the entry into force of the EC Treaty and aid which could be properly put into effect in accordance with the conditions laid down in Article 88(3), including those arising from the interpretation of that article given by the Court in its judgment in Case 120/73 Lorenz [1973] ECR 1471, paragraphs 4 to 6, is to be regarded as existing aid within the meaning of Article 88(1) EC, while, on the other hand, measures to grant or alter aid, where the alterations may relate to existing aid or initial plans notified to the Commission, must be regarded as new aid subject to the obligation of notification laid down by Article 88(3) EC.
98. As regards existing aid, Article 1(b) of Regulation No 659/1999 reproduced and affirmed the rules established in the case'law.
99. According to that provision, existing aid means:

(i) all aid which existed prior to the entry into force of the EC Treaty in the respective Member States;

(ii) all authorised aid, that is to say, aid schemes and individual aid which have been authorised by the Commission or by the Council;

(iii) all aid deemed to have been authorised without the Commission adopting a decision within a period of two months, in principle beginning on the day following the receipt of a complete notification of that aid, being the time available to the Commission for the purposes of carrying out a preliminary examination;

(iv) all aid in respect of which the ten'year limitation period for recovery has expired;

(v) all aid deemed to be existing aid because it can be established that, although it did not constitute aid at the time it was put into effect, it subsequently without being altered by the Member State became aid owing to the evolution of the common market. Where certain measures become aid following the liberalisation of an activity by Community law, such measures are not to be considered as existing aid after the date fixed for liberalisation.

100. Next, under Article 1(c) of that regulation, any existing aid that is altered is to be regarded as new aid.
101. Essentially, measures intended to grant aid or alter existing aid constitute new aid. In particular, where the alteration affects the actual substance of the original scheme, the latter is transformed into a new aid scheme. However, there can be no question of such a substantive alteration where the new element is clearly severable from the original scheme (Joined Cases T-95/01 and T-07/01 Government of Gibraltar v Commission [2002] ECR II-2309, paragraphs 109 to 111).
102. In the present case, it is accepted that the exemption does not fall within the second, third or fourth situations set out in Article 1(b) of Regulation No 659/1999, under which an aid measure may be regarded as existing aid. Furthermore, the applicant has not claimed that those situations are applicable.
103. As regards the first of the situations referred to in Article 1(b) of Regulation No 659/1999, it should be noted first of all that the three'year income tax exemption was introduced by Decree Law No 331/93 and Law No 549/95. In 1990, when Law No 142/90 reformed the legal arrangements available to municipalities for the purpose of managing local public utilies, which included the possibility of setting up limited liability companies with a majority public shareholding, no exemption from income tax was envisaged for such companies.
104. In fact, all companies set up under Law No 142/90 which were created between 1990 and the entry into force on 30 August 1993 of Article 66 of Decreee Law No 331/93 were liable to income tax.
105. Therefore, as the Commission correctly stated at recital 91 of the preamble to the contested decision, in order to extend to companies set up under Law No 142/90 the same tax treatment as that for local authorities, the Italian legislature had to enact new legislation several decades after the entry into force of the EC Treaty.
106. Moreover, even if it is accepted that the income tax exemption for municipal undertakings was introduced before the entry into force of the EC Treaty and remained in force until 1995, the fact remains that the companies set up under Law No 142/90 are substantially different from municipal undertakings. The extension of existing tax advantages enjoyed by municipal and special undertakings to a new class of beneficiaries, such as companies set up under Law No 142/90, constitutes an alteration that is severable from the initial scheme. As stated in Judgment No 4586 of the Consiglio di Stato of 3 September 2001, there are statutory differences between companies set up under Law No 142/90 and municipal undertakings on account of the fact, in particular, that the former are not subject to the strict limitations as to geographical area imposed on the latter and the former's sphere of activity is much wider. Accordingly, as already stated at paragraph 79 above, companies set up under Law No 142/90 can operate outside their reference territory, both in Italy and abroad, and in fields other than that of public utilities stipulated in their articles of association, unless that deprives them to a significant extent of resources and means and is liable adversely to affect the controlling local authorities.
107. Consequently, as the Commission explained at recital 92 of the preamble to the contested decision, even though companies set up under Law No 142/90 assumed the rights and obligations of municipal undertakings, the legislation which defined their substantive sphere of activity and the geographical area in which they could operate changed substantially.
108. It must therefore be concluded that the three'year income tax exemption introduced by Article 3(70) of Law No 549/95 in conjunction with Article 66(14) of Decree Law No 331/93 does not fall within Article 1(b)(i) of Regulation No 659/1999.
109. As regards the applicant's other argument, based on Article 1(b)(v) of Regulation No 659/1999, which provides that a measure that did not constitute aid at the time it was put into effect but subsequently became aid due to the evolution of the common market, without having been altered by the Member State, constitutes existing aid, it is sufficient to state, as explained by the Commission at recitals 83 to 86 of the preamble to the contested decision, that the aid was introduced at a time when the markets were in any event, albeit almost certainly to differing degrees, open to competition. The three'year income tax exemption cannot therefore be regarded as falling within Article 1(b)(v) of Regulation No 659/1999.
110. Accordingly, it is not possible to conclude that there is a failure to state reasons. The Commission rejected the argument that the measure in question was to be regarded as existing aid because there was a degree of competition in the sectors in which the companies set up under Law No 142/90 operate (recitals 82 to 85 of the preamble to the contested decision).
111. It follows that the second plea must be rejcted.

The third plea, alleging infringement of Article 87(3)(c) EC

Arguments of the parties

112. The applicant submits that the Commission erred in stating that the three'year income tax exemption was not State aid that is compatible with the common market under Article 87(3)(c) EC.
113. According to the applicant, the three'year income tax exemption was compatible with the common market on the basis of that provision since it made possible the conversion of municipal undertakings and the change'over to a competitive market, enabling those companies gradually to familiarise themselves with the mechanisms governing private law. The Commission failed to take account of those factors.
114. Referring to recitals 97 et seq of the preamble to the contested decision, the Commission disputes the validity of the applicant's arguments.

Findings of the Court

115. First of all, the Commission enjoys wide discretion as regards Article 87(3) EC (Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 18). Any review by the Community judicature is therefore necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or misuse of powers.
116. Next, according to established case'law, in order to be declared compatible with the common market under Article 87(3)(c) EC, aid to undertakings in difficulty must be linked to a comprehensive restructuring programme, which must be submitted in all relevant detail to the Commission (Case C-7/99 France v Commission [2001] ECR I-2481, paragraph 45).
117. In the present case, it is clear from the documents before the Court that the conditions under which the three'year income tax exemption may be eligible for the derogation provided for in Article 87(3)(c) EC were not satisfied. The three'year income tax exemption was not intended to restore the beneficiaries to viability and was not restricted to undertakings in difficulty. Moreover, no restructuring plan was submitted, nor any measures designed to offset the distortions of competition that may have arisen as a result of the grant of the aid in question (recitals 97 et seq of the preamble to the contested decision).
118. As regards the argument that the measure in question facilitated the transition from a monopolistic market structure to a competitive one, it is sufficient to state, as the Commission correctly observes, that the three'year income tax exemption cannot have assisted the introduction of competition to the markets concerned, given that there was already some competition in most cases at the stage at which the service provider was selected, but also because the exemption distorted competiton by strengthening the position of certain operators.
119. The third pleas must therefore be rejected.

The fourth plea, alleging infringement of Article 86(2) EC, the principles of the protection of legitimate expectations and legal certainty and failure to state reasons

Arguments of the parties

120. In this plea, the applicant essentially submits that the Commission erred in the contested decision in that it failed to take sufficient account of Article 16 EC, introduced by the Treaty of Amsterdam, in ascertaining whether Article 86(2) EC was applicable in the present case. Article 86(2) EC should also be interpreted in the light of Article III'122 of the Treaty establishing a Constitution for Europe. Since a specific field of activity was involved, the Commission could not apply general rules and criteria. Moreover, when the contested decision was adopted, it was not clear, according to the applicant, that the rules governing services of general economic interest (OJ 2001 C 17, p. 4) were applicable to the public utilities sector. The Commission was unaware of that fact. Furthermore, the principles of the protection of legitimate expectations and legal certainty were infringed as a result of that legal uncertainty. The applicant also submits that no adequate reasons were given in that regard.
121. The Commission observes that, under Article 86(2) EC, the payment of aid may escape the prohibition laid down in Article 87 EC provided, in particular, that the aid in question enables a defined mission entrusted by an act of the public authority to be performed and that the advantage conferred strictly compensates for any extra costs incurred by the mission in the general economic interest. The applicant has failed to demonstrate that that was the case as regards the measure in question.

Findings of the Court

122. It must be pointed out first of all that what is at issue in this case is an aid scheme. Accordingly, it is necessary to show that the scheme satisfies all the conditions necessary either to escape classification as State aid within the meaning of Article 87(1) EC or to qualify for the derogation laid down in Article 86(2) EC.
123. A State measure which constitutes compensation for the services provided by the recipient undertakings in order to discharge public service obligations, so that those undertakings do not enjoy a real financial advantage and the measure does not therefore have the effect of putting them in a more favourable competitive position than the undertakings competing with them, does not, as a general rule, constitute State aid within the meaning of Article 87(1) EC (see, to that effect, the judgment in Altmark, paragraph 87).
124. However, for such compensation to escape classification as State aid, a number of cumulative conditions must be satisfied. Among these is the condition that the recipient undertaking must actually have public service obligations to discharge and the obligations must be clearly defined (Altmark, paragraph 89), as well as the condition that the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of the public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations (Altmark, paragraph 92).
125. The contested decision was adopted before the judgment in Altmark was delivered. However, the criteria set out in that judgment, which are based on an interpretation of Article 87(1) EC, are fully applicable to the factual and legal situation of the present case as presented to the Commission when it adopted the contested decision (see, to that effect, Case T-89/03 BUPA and Others v Commission [2008] ECR II-0000, paragraph 158).
126. The first condition laid down in the judgment in Altmark, under which the recipient undertaking must actually have public service obligations to discharge, also applies in a case in which the derogation laid down in Article 86(2) EC has been invoked.
127. In both cases, a measure must, in any event, comply with the principles governing the definition and award of public services and the principle of proportionality (see, to that effect, BUPA and Others v Commission, paragraph 160).
128. The applicant has failed to provide any details concerning the conditions for the application of Article 86(2) EC. It should be pointed out that the contested decision explains in considerable detail, at recitals 108 to 120 of the preamble thereto, why the aid in question did not satisfy the conditions for the application of that article. In fact, the applicant has not taken the trouble to attempt to contest that finding. It is irrelevant to rely on Article 16 EC and Article III'122 of the Treaty establishing a Constitution for Europe for that purpose, since the latter was signed after the contested decision was adopted, has not entered into force and, moreover, was replaced by the Treaty on European Union and and the Treaty on the Functioning of the European Union (OJ 2008 C 115, p. 1). Furthermore, it cannot be in any way inferred that Article 16 EC gives 'carte blanche' for the grant of any kind of aid to a public service undertaking. The Communication from the Commission concerning services of general interest in Europe (OJ 2001 C 17. p. 4) must be regarded as being interpretative in nature and not in itself a leglislative provision and the criteria applied by the Commission are those which can be inferred from the Treaty and the case'law, so that the arguments alleging infringement of the principles of legitimate expectation and legal certainty must be rejected.
129. In any event, in the light of the structure of the aid scheme in quesiton, Law No 142/90 cannot be characterised as an act of a public authority creating and defining a specific measure for the provision of local public services which complies with specified obligations. Furthermore, that law does not define clearly and precisely the public service obligations involved.
130. It must therefore be concluded that the condition relating to the principles governing the definition and award of public service missions is not satisfied.
131. Consequently, the fouth plea cannot be accepted.

The fifth plea, alleging infringement of Article 43 EC and failure to state reasons

Arguments of the parties

132. The applicant is of the view that the Commission erred in law by stating, at recitals 121 and 122 of the preamble to the contested decision, that the three'year income tax exemption infringed Article 43 EC. First, that measure has no effect on the right of establishment, guaranteed by that provision. Second, it does not discriminate on grounds of nationality. The applicant also maintains that no adequate reasons were given in that connection.
133. The Commission disputes the validity of the applicant's arguments.

Findings of the Court

134. It should be pointed out, first, that the first and third pleas were rejected on the basis that the three'year income tax exemption constitutes aid and the conditions necessary to qualify for the derogation laid down in Article 87(3) EC are not satisfied. Accordingly, the declaration that the three'year income tax exemption is incompatible with the common market on the basis that it infringes other provision of the EC Treaty is based on secondary reasoning in the contested decision. The fifth plea is therefore ineffective.
135. It follows from all the foregoing that the fifth plea must be rejected.
136. In the light of all the above considerations, the action must be rejected.

Costs

137. In accordance with Article 87(2) 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. Sine the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Commission.

On those grounds,

THE COURT OF FIRST INSTANCE (Eighth Chamber,Extended Composition)

hereby:

1. Dismisses the action.

2. Orders ASM Brescia SpA to bear its own costs as well as those incurred by the Commission.

Martins Ribeiro

Šváby

Papasavvas

Wahl

Dittrich

Delivered in open court in Luxembourg on 11 June 2009.

[Signatures]

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* Language of the case: Italian.