The Italian authorities decided to subsidize the so called “television digital switch over” by granting a fixed sum to consumers (at first place 150 Euros which was later reduced to 70 Euros). The beneficiaries of that State initiative would be only the digital terrestrial broadcasters by virtue of the accrued profits from selling decoders to consumers. The scheme for digital terrestrial broadcasters offering pay-TV services and cable pay-TV operators was regarded by the Court as unlawfully implemented by the Italian government and as such it constituted State aid which was incompatible with the common market and subject to recovery. The Commission, in its recovery decision, did not specify neither the exact amount of aid to be recovered or the exact mechanism of recovery to be implemented and the identity of the beneficiaries. This obligation was left upon the Italian authorities, as is usually the case in recovery proceedings. The Italian authorities participated in a lengthy round of exchanging correspondence with Commission in order to ensure the latter’s approval on the method for the definition of the beneficiaries and the amount subject to repayment by each of them. Ultimately, they concluded that the most suitable method to estimate the aid to be recovered was a consumer survey able to point which market operators and to what extent they had benefited by the subsidized purchases of decoders. Mediaset, a company designated as one of the beneficiaries of the State aid scheme, paid the enunciated amount of aid (approximately 6 million Euros) and then turned to national courts seeking to challenge the level of recovered aid and annul the order of payment, in particular on account of an alleged misapplication of the quantification criteria. In the context of the national court proceedings, the national judge referred a number of questions to the CJEU for a preliminary ruling. The central issue to be cleared out by the CJEU could be epitomized in whether the national judge is bound by statements of the Commission, made subsequent to the decision, concerning the precise amount to be recovered from a specified beneficiary. Moreover the national court asked whether it could be competent to find that the recovery amount was zero or the aid should be always a positive sum. The answer of the CJEU was unambiguous. With respect to the first leg of the preliminary reference, it held that the national court is bound by the recovery decision, it is not, however, bound by the positions adopted by the Commission in the execution of that decision. Nevertheless, under the principle of cooperation in good faith laid down in Article 4(3) TEU, the national court must take the statements of position into account as a factor in the assessment of the dispute before it. In relation to the second part of the interlocutory question, it responded that the national court may conclude, without calling into question the validity of the European Commission’s decision or the obligation to repay the aid in question, that the amount of aid to be repaid is equal to zero where that follows from the calculations made on the basis of all the relevant information of which it has been made aware.
Reading between the lines
While the final holdings of the CJEU are free of interpretative predicaments, it omitted to address a significant aspect of the preliminary questions. The referring court, in its attempt to disambiguate its competences in the context of the recovery as outlined above, appears to commit a serious misinterpretation regarding the conditions under which State aid rules are or, more accurately, remain applicable. In particular, it asks whether the national court is bound regarding both the existence of State aid and its amount, as decided by the Commission in its recovery decision (1st preliminary question) and whether the national court has the power to assess the claim for the recovery of the State aid both in terms of the existence of State aid and in terms of fixing a zero amount of aid to be recovered. Those preliminary rulings are formulated on a wrong basis. The national court preempts the fact that a finding of an aid to be recovered which happens to be zero may confer the right to itself to pronounce on the (non) existence of State aid. However, this would mean that the economic advantage that was found by the ex ante assessment of the State aid measure conducted by the Commission is also obliterated with the effect that the whole scrutiny of the Commission is faulty.
Are the amount of recovery and the existence of economic advantage a pair of directly linked concepts?
It is undeniable that we are before a very interesting decision whose main legal gist revolves around the issue of recovery of incompatible and illegal state aid. More precisely, one of the main questions at hand is whether a national court, when executing a Commission decision which declares an aid scheme illegal and incompatible with the internal market, is bound by the institution’s later statements of position, or it only has an obligation to take them into consideration by virtue of the principle of sincere cooperation. The CJEU took the view that any member state is, in principle, bound by the recovery decision; it is not, however, bound by the positions adopted by that institution in the execution of that decision. The Court also concluded, in short, that the calculations made by the national court to quantify the amounts to be repaid may, on the basis of all the factors of which it has been made aware, result in an amount equal to zero. This is an overwhelmingly welcome guidance rendered by the CJEU, especially in view of the silence of the relevant Commission Notice. The Mediaset judgment offers a valuable interpretation on the non-binding nature of later communications between the Commission and any member state in the context of the enforcement of a recovery decision, but, at the same time, provides food for thought with respect to another issue. Could the fact that a national court calculates the recoverable amount of aid from a beneficiary to be null be relied on in order to support that the economic advantage granted to the beneficiary is non-existent and therefore State aid rules were mistakenly applied at first place?
The question touched upon consists, essentially, in whether the Italian court’s finding of a zero recovery obligation of the beneficiaries can invalidate the economic advantage conferred on them and thereby invalidate the existence of state aid. On a preliminary footing, we should consider the general rule, as shaped by previous EU case law, that aid can be banned as incompatible according to its actual or potential effects (emphasis laid on the word potential). Considering the above principle, we should admit that the fact of having zero sum of recovery could not invalidate in any reasonable way the existence of the economic advantage for the following reason. The potentiality of distorting competition, by providing a subsidy to consumers so that they could buy decoders, was a realistic and viable contingence at the moment the aid was granted, since the increase of public demand for decoders was normally anticipated. The fact that the notion of economic advantage is one of the basic requirements to establish the existence of State aid and its absence renders state aid rules inapplicable is directly connected with the speculation that a zero recovery obligation may lead to an, initially, erroneous compatibility assessment of the state measure concerned. Specifically, the pitfall in the later rationale lies in that the amount of the recoverable aid could be deemed to be an alternative expression and equivalent value to the economic advantage granted to the beneficiary, which further leads to the shallow assumption that a recovery equal to zero must mean a complete lack of economic advantage at first place. If we pay a heedful look both to the case facts and their legal context, we can make a couple of remarks that would be decisive in spelling out the relation between zero recovery and the presence or not of the economic advantage thereof.
First, the case relates to subsidies given not to the real beneficiaries (terrestrial broadcasters) but to consumers which were expected to boost demand for decoders and increase the revenue of the sellers-terrestrial broadcasters. Taking into account that parameter of the state aid measure, we end up drawing a distinction between two different kinds of beneficiaries. On one hand, there is the alleged by the Italian government beneficiary, that being the consumers receiving the amount of 150 EUR, and, on the other hand, the beneficiary designated by the Court, namely the terrestrial broadcasters which would benefit by the overall spending of the amounts of subsidies on their products. Those divergent views on who is the definitive beneficiary, and, especially, the choice of the Court to characterize as real beneficiaries of the aid the terrestrial broadcasters bears a logical gap. It could not be maintained that all terrestrial providers would avail themselves on the increased supply of decoders, since consumers had the right to choose freely among all providers of decoders in the Italian market. From that point of view, the separation of the actual recipient of the aid and the ‘legal’ beneficiary designated by the Court underlines why the amount of recovery in some cases might be even zero. As a result of that dichotomy, it is conceivable that recovery obligations can be null, only when the actual recipients and legal beneficiaries are distinct. In any other event, the recoverable sums cannot be eliminated to zero because the actual recipient and legal beneficiary capacity concentrates in a single person who cannot claim that his obligation to pay back the aid falls short of the amount it actually received. Consequently, the investigation of whether the existence of the economic advantage can be allegedly dependent on the fact that recovery obligation is not zero is thinkable and of legal interest, only when the actual recipient of the aid varies from the legal beneficiary of the aid that has the obligation to return the aid in full. Therefore, the duality of recipient - beneficiary is an indispensable element of any case which is capable to raise similar questions, as to whether the existence of an economic advantage hinges on a positive recovery amount of aid.
Secondly, the stage of recovery and the phase of assessing the existence of the economic advantage are admittedly constituent parts of the broad State aid control. However, to assert that the finding of zero recovery rules out the existence of the economic advantage almost leads to the arbitrary equation of the negative decision and the recovery decision of the Commission. Instead, they constitute two separate decisions whose objectives, results and systematic place in the State aid control are different. The first one is adopted by the Commission where it finds that the notified aid is not compatible with the common market with the purpose of preventing that aid to be put into effect. The second one is adopted either by the Commission or by competent national courts in order to re-establish the situation that existed on the market prior to the granting of the aid. In the Mediaset case, the Court says: “and without calling into question the validity of the Commission’s [recovery] decision or the obligation to repay the aid declared unlawful and incompatible with the internal market, the national court may fix an amount of aid equal to zero to the extent that the determination follows directly from the quantification of the sums to be recovered”. It emanates from that statement that the Court itself accepts the finding of zero recoverable aid in some instances, without compromising either the raison d'etre of the Commission’s recovery decision or the rationale of the recovery obligation. Thereby, the Court pleads in favor of the opinion that recovery of zero sums could not support the argument that economic advantage was absent from the beginning and therefore State aid rules were misapplied. In the Mediaset case, two real beneficiaries of the aid proved not to have availed themselves on the subsidies as shown by the consumer survey which was used to determine the additional profits during the period in which the aid in question was granted. As a matter of fact, there was no disturbance of the previous competitive balance to be restituted through the order to repay aid and therefore, recovery as a procedure for those two beneficiaries was of no relevance.
As a result of the above analysis, it would be wrong and inconsistent to assess from the hindsight the existence of an economic advantage and deny any granting of a competitive advantage solely on grounds that recovery amounts resulted to zero. The designation of the economic advantage and the amount to be recovered are not interdependent variables. Their verification should be the object of two self-contained assessments, with the result of one having no influence over the other or, even worse, no mutual preemption effects. This would mean that the amount of aid to be recovered mirrors with accuracy the economic advantage in monetary terms which is not always the case as shown above when recipient and real-‘legal’ beneficiary are two different entities. The Court clearly stated that the obligation to recover and the validity of the recovery decision remain unaffected by the eventuality of fixing an amount of aid equal to zero. To put it on a more schematic way, the Court ruled that a recovery sum equal to zero does not doubt the legitimacy of the State aid enforcement mechanism’s (recovery decision), so, by deduction, imagine how untenable would be to admit a possible invalidation of the ex ante assessment of a State aid measure (existence of economic advantage) only by reason of the level of the recoverable aid.
 C-69/13, Mediaset SpA v Ministerio dello Sviluppo Economico, not published yet
 Press release No 18/14 of the CJEU, C-69/13
 Commission Notice – Towards an effective implementation of Commission decisions ordering Member States to recover unlawful and incompatible State aid (OJ C 272, 15 November 2007, p.4)
 Case C-173/73, Italy v Commission, ECR 1974, I-709, also see Phedon Nicolaides, Essays on Law and Economics of State Aid, p. 37
 Council Regulation (EC) 659/1999, 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty, (OJ L 83, 27 March 1999, p.1), article 7 par. 5
 Ibid, article 14 par. 1. Also see supra note 4, article 13
 See supra note 1, par. 41