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

By Bartolus

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.

Full post as published by EU Law Blog on July 07, 2009 (boomark / email).