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Home Page > Archivio delle notizie > Notizia Commission opens investigation proceedings into Italian law on the extraordinary administration of large enterprises in difficulty (Italy)The European Commission has opened new investigation proceedings with regard to Italian law No. 95/1979 on the extraordinary administration of large enterprises in difficulty ('Legge Prodi'). The Commission doubts the law's compatibility with European Union (EU) rules on State aids, which allow rescue and restructuring aid, under certain circumstances, only to small and medium-sized companies (SMEs). The 'Legge Prodi' introduced a scheme that derogates from the normal Italian insolvency proceedings pursuant to a royal decree dating back to 1942. The beneficiaries are large enterprises in difficulty as defined by both the number of employees (300) and their outstanding liabilities vis-à-vis of mainly public creditors. The European Court of Justice (ECJ) ruled on one application of the 'Legge Prodi' in case C-200/97 "Ecotrade-AFS" and confirmed that measures under the law are State aids since the law:- authorises the enterprise in difficulty to pursue its activity in circumstances where such a possibility would be denied in the framework of the normal insolvency proceedings; and - provides for the enterprises to benefit from several aid measures, such as a State guarantee, a reduced tax rate on the purchase of the firm, an exemption from the obligation to pay fines or other pecuniary penalties and the actual forgoing, totally or in part, of the public liabilities of the enterprise. The Commission has reasons to believe that the scheme is not compatible with the EU rules on State aids as it is aimed at large enterprises, whereas the EU guidelines on rescue and restructuring aid may authorise, under certain circumstances, only schemes benefiting SMEs. The opening of the procedure does not prejudge the Commission's final decision. The Italian government will have one month from receiving the decision to submit its comments on the opening of the proceedings. The Commission will also publish a summary of the decision in the Official Journal and invite interested third parties to submit observations within a month before reaching a decision on substance. Background Back in 1994 the Commission had proposed to the Italian government appropriate measures under Article 88(1) of the EC Treaty, namely to notify each individual case of application of the law. Since the Italian government refused the Commission proposal, except for those cases which involved a State guarantee, in 1997 the Commission opened the investigation proceedings under Article 88(2) of the EC Treaty. The investigation was close to a conclusion when the ECJ ruled on case C-295/97 "Rinaldo Piaggio-Ifitalia-Dornier" on 17 June 1999. That judgement had the Commission open a new investigation. The ECJ's ruling on case C-295/97 annulled an initial Commission decision of 1997, which considered the 'Legge Prodi' to be existing aid, as arbitrary and legally unfounded. Given that the scheme must be considered non-notified new aid, the ECJ ordered the Commission to open a new investigation. The fact that the aid scheme was never notified means that its application to individual companies has so far been illegal under EU law.
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