The merchants of Venice or a tale of two cities?

Fiona Wishlade

Research output: Contribution to journalArticle


This case arose from a decision of the Italian authorities to extend an existing regional aid scheme – a social security concession for the south of Italy - to the cities of Chioggia and Venice in the north, which fell outside the designated regional aid areas approved on the basis of Article 107(3)(a). This measure was not notified to the Commission in advance and, following an investigative procedure, the Commission reached a decision requiring the recovery of aid except insofar as it had been paid either to SMEs, to firms located in designated assisted areas, concerned the employment of ‘hard-to-place’ employees or to specified municipal companies.
The recovery decision was contested before the General Court. The Commission claimed that the applicants lacked standing, but this was rejected by the Court which found that belonging to a closed class of actual beneficiaries of an aid scheme affected by the obligation to repay aid was sufficient to differentiate them from all other persons. On substance, the applicants argued, inter alia, that the measures were compensation for additional costs arising from their location in the Venice lagoon (not State aid), that the Commission had failed to account of the situation of undertakings other than selected municipal companies, and that the Commission had infringed Article 107(3)(c) in relation to regional aid. The substantive claims were rejected by the General Court. The applicants also challenged the legality of the recovery order, arguing that the measure was a mere extension in time and territory of a measure dating back to the 1970s. This was not accepted by the General Court which accordingly dismissed the actions.
The applicants appealed the General Court’s judgment before the Court of Justice. For its part, the Commission, by cross appeal, sought the annulment of the General Court’s judgment insofar as it declared the applicants’ actions admissible. The Court of Justice upheld the General Court’s ruling on the standing of the applicants, though it found that the General Court had erred in law in finding that it was not for the national authorities to verify in each individual case whether the conditions for the existence of aid were met. The Court of Justice dismissed the main appeals of the applicants against the judgment of the General Court and confirmed the order for the recovery of the unlawful aid.
Original languageEnglish
Pages (from-to)503-515
Number of pages13
JournalEuropean State Aid Law Quarterly
Issue number2
Publication statusPublished - Jun 2012


  • state aids
  • taxation
  • regional policy


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