Olympic Airways, State Aid, Infringements and Financial Penalites against Greece: Case C-369/07

The Court of Justice has once again ordered Greece to pay a lump sum and a periodic penalty payment under Article 228 EC for failing to comply with a Court judgment.

This time Greece failed to comply with the judgment of the Court in Case C-415/03 Commission v. Greece [2005] ECR I-3875 that found that Greece had failed to recover unlawful state aid paid to Olympic Airways.

In its judgment in Case C-369/07 Commission v. Greece, the Court of Justice held that Greece had failed to recover the illegal state aid as required by the judgment in Case C-415/03, imposed a periodic penalty payment of €16 000 per day until Greece complies with that judgment and also imposed lump sum of €2 million.

The judgment says nothing new about infringement proceedings and the reasoning set out is similar to that in Case C-109/08 Commission v. Greece and Case C-568/07 Commission v. Greece, both cases noted here.

A point that arose was whether set-off was a valid manner of reclaiming illegal state aid paid to a company. What had happened was that Greece had paid illegal aid to Olympic Airways on the one hand but, on the other hand, following a separate dispute between the Greek government and the airline, the latter was awarded compensation by an arbitration panel. The Greek government then set-off part of the illegal aid owed back to it against the amount of the compensation it had to pay to the airline.

The Court held that a member State is free to choose the means by which unlawful state aid must be recovered (Case C-209/00 Commission v. Germany [2002] ECR I-11659, paragraph 34) and that a set-off operation can constitute an appropriate means.

It is worth noting also that the Commission had proposed to the Court of Justice that it impose a periodic penalty payment of €53 611 but the Court reduced the amount considerably because Greece was able to adduce evidence that part of the illegal aid had in fact been recovered already by the set-off operation.

Comments

[Simon L]

Good to see the Commission pushing ahead with such actions despite the economic downturn. Have to say open skies really hasn't galvanised aviation liberalisation anywhere near what was expected - the last thing the Commission should do is let the uncompetitive, inefficient airlines such as Olympic get away with flagrant breaches of the rules.