JUDGMENT OF 14. 7. 1983 — CASE 203/82 COMMISSION v ITALY

In Case 203/82

THE COURT composed of: J. Mertens de Wilmars, President, P. Pescatore, A. O'Keeffe, U. Everling, Presidents of Chambers, Lord Mackenzie Stuart, G. Bosco, T. Koopmans, O. Due and K. Bahlmann, Judges, Advocate General: S. Rozès Registrar: P. Heim

gives the following

JUDGMENT

Facts

The facts and the arguments of the parties, elaborated in the course of the written procedure, may be summarized as follows :

I — Facts and written procedure

By Decree Law No 353 of 6 July 1978 (Gazzetta Ufficiale No 192, of 11 July 1978, converted into Law No 502 of 5 August 1978 (Gazzetta Ufficiale No 246, 2 September 1978), the Italian Government introduced a partial taking over by the State of the employers' contributions which industrial undertakings arid certain undertakings in the services sector have to pay on behalf of their employees for sickness insurance; that taking over, initially laid down for a transitional period of six months, was subsequently extended several times and made definitive by Decree Law No 663 of 30 December 1979 (Gazzetta Ufficiale No 355, 31 December 1979).

The first paragraph of Article 22 of the aforementioned decree provides that:

“With effect from the contribution period following the one applying on 31 December 1979, the total levels of contribution for compulsory sickness insurance payable by undertakings... are reduced by four percentage points for male employees and by ten percentage points for female employees.”

That taking over by the State entailed a greater reduction in employers' contributions to the sickness insurance scheme for female employees than for male employees thereby favouring certain Italian industries employing large numbers of female employees, such as, in particular, those in the textile, clothing, footwear and leather-goods sectors.

Considering that such a system constituted an aid incompatible with the common market within the meaning of Article 92 of the EEC Treaty, on 15 September 1980 the Commission took a decision pursuant to the first subparagraph of Article 93 (2) concerning the partial taking over of employers' contributions to the sickness insurance schemes in Italy (Commission Decision 80/932/EEC, Official Journal 1980, L 264 p. 28).

That decision provides in particular:

“Article 1 The Italian Republic shall within six months remove the difference provided for in Article 22 of Decree No 663 of 30 December 1979 in the rate of reduction of employers' sickness insurance contributions as between male and female employees. Article 2 The Italian Republic shall communicate to the Commission the laws, regulations and administrative provisions adopted to comply with this Decision not later than the end of the period laid down in Article 1.”

That decision was notified to the Italian Republic by a letter of 17 September 1980.

In a letter of 18 February 1981 from its Permanent Representative, the Italian Government stated its intention of complying with the Commission decision of 15 September 1980. By a letter of 12 May 1981, the Commission authorized exceptionally the extension until 30 June 1981 of the period within which the Italian Republic had to comply with the aforementioned decision.

The Commission states that since then, although several reminders have been sent, no action has been taken to comply with the aforementioned decision.

By application dated 5 August 1982, lodged at the Court Registry on 8 August 1982, the Commission brought an action before the Court.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral proceedings without any preliminary inquiry.

The procedure followed the normal course, except that the Italian Republic gave notice by telephone that it did not wish to submit a rejoinder.

II — Arguments of the parties

The Commission claims that the Court should:

“1. Declare that, by not complying within the prescribed period with the Commission Decision of 15 September 1980 concerning the partial taking over by the State of employers' contributions to the sickness-insurance scheme in Italy, the Italian Republic has failed to fulfil one of its obligations under the EEC Treaty;. 2. Order the defendant to pay the costs.”

The Italian Republic has not expressly set out its conclusions.

III — Submissions and arguments of the parties

The Commission states in its application that in the proceedings under Article 93 (2) of the EEC Treaty, it observed that the aid in question was incompatible with the common market within the meaning of Article 92. Thereafter it was bound, pursuant to the first subparagraph of Article 93 (2), to decide that the Italian Republic must abolish or amend the measure within such period as the Commission might determine.

The Commission points out that pursuant to Article 189 of the EEC Treaty decisions are binding in their entirety upon those to whom they are addressed and that, pursuant to Article 191, they take effect upon notification. Since the Italian Republic has still not, by the day on which the application has been filed, complied with a decision notified to it by letter of 17 September 1980, it has, beyond all shadow of doubt, failed to fulfil its obligations pursuant to the first subparagraph of Article 93 (2) of the Treaty.

In its defence, the Italian Government draws attention to the fact that when Decree Law No 663 was converted into a law (Law No 33 of 29 February 1980), the aforementioned paragraph 1 of Article 22 was amended so that it now opens in the following terms:

“Pending the complete reorganization of the entire complex of abatements and the taking over by the State of the cost of social security, with effect from the contribution period following that applying on 31 December 1979 and until 31 December 1980...”.

The Italian Government submits that at the expiry of the period allowed, which was extended to 30 June 1981, Italy should be considered, at any event on the formal level, as having complied with the decision of 15 September 1980 at least in pan, given that Law No 782 of 28 November 1980 had made rules for a fixed period (until 30 June 1981) providing for a later reduction of the differential, by reducing the rates by 6.64% for both men and women.

The Italian legislature's intention was certainly not to crystallize a situation that was not perfectly in conformity with the Community legal order, but was and is to make provisional regulation for a problematical sector within the limited room for manœuvre allowed by the difficult economic situation, pending a fundamental reorganization of the entire contributions system as soon as possible, which will make it possible to implement fully both the substantive and the formal result envisaged by Decision 80/932/EEC.

That is confirmed by all subsequent legislation on the subject, which is expressly provisional and valid for a very short term. The Italian Government adds tht the introduction of amending provisions substantively implementing the Commission decision in its entirety, albeit possibly on a provisional basis, should be proposed once again — provided that the necessary conditions are fulfilled — when the latest decree on the subject (Decree Law No 694 of 1 October 1982) is converted into a law.

In its reply, the Commission states that despite the notice contained in its letter of 12 May 1981 authorizing, exceptionally, the extension until 30 June 1981 of the' period within which Italy had to comply with the relevant decision, the Italian authorities extended the aforementioned period until 31 October 1981 by another decree, Decree Law No 395 of 28 July 1981 (converted into Law No 534 of 25 September 1981), and had further extended it until 31 December 1981 by Decree Law No 646 of 16 November 1981 (converted into Law No 3 of 15 January 1982).

By letter of 23 November 1981, the Commission reminded the Italian Government of its obligations under Decision 80/932/EEC. At that stage it hoped that after 31 December 1981 the situation would finally be regularized. However by Decree Law No 91 of 24 March 1982, the Italian Government reintroduced the discriminatory reductions in the level of contributions for the period from 1 February 1982 to 31 March 1982.

By letter of 10 May 1982, the Commission again reminded the Italian Government of its obligations and declared its intention to bring the matter before the Court. When the Decree Law of 24 March 1982 was converted into Law No 267 of 21 May 1982, the discriminatory reductions were confirmed for the months of February and March 1982, and, what is more, extended retroactively and without interruption to the period between 1 January 1982 and 30 June 1982. That time-limit was later extended to 31 December 1982 by Decree Law No 492 of 2 August 1982.

Although the application was already pending before the Court (5 August 1982) and, since Decree Law No 492 had expired without being converted into a law within the period prescribed by the Italian Constitution, the Commission thought that the situation had been regularized retroactively with effect from 1 July 1982, on 1 October 1982 the Italian Government adopted a new Decree Law (No 694) once again extending the discriminatory reductions in contributions in force on 30 June 1982, this time until 30 November, 1982...

The Commission concludes therefrom that Italy's failure to fulfil its obligation under the decision of 15 September 1980 is of a continuing and deliberate nature.

IV — Oral procedure

The parties presented oral argument at the sitting on 11 May 1983.

The Advocate General delivered her opinion at the sitting on 22 June 1983.

Decision

1. By application lodged at the Court Registry on 9 August 1982, the Commission of the European Communities brought an action pursuant to the second subparagraph of Article 93 (2) of the EEC Treaty for a declaration that the Italian Republic had failed to fulfil one of its obligations under the EEC Treaty by not complying within the prescribed period with Commission Decision 80/932/EEC of 15 September 1980 concerning the partial taking over by the State of employers' contributions to sickness insurance schemes in Italy (Official Journal 1980, L 264, p. 28).

2. By Decree Law No 353 of 6 July 1978 (Gazzetta Ufficiale No 192), converted into Law No 502 of 5 August 1978 (Gazzetta Ufficiale No 246), the Italian Government introduced a partial taking over by the State of the employers' contributions which industrial undertakings and certain undertakings in the services sector have to pay on behalf of their employees for sickness insurance. That taking over by the State, which was initially laid down for a transitional period of six months, was subsequently extended several times and made definitive by Decree Law No 663 of 30 December 1979 (Gazzetta Ufficiale No 355).

3. The first paragraph of Article 22 of the aforementioned Decree Law No 663 provides that:

“With effect from the contribution period following the one applying on 31 December 1979, the total levels of contributions for compulsory sickness insurance payable by undertakings... are reduced by four percentage points for male employees and by ten percentage points for female employees.”

4. The Commission considered that such a system constituted an aid incompatible with the common market within the meaning of Article 92 of the EEC Treaty, since that taking over by the State entailed a greater reduction in employers' contributions to the sickness insurance scheme for female employees than for male employees thereby favouring certain Italian industries employing large numbers of female employees, such as, in particular, those in the textile, clothing, footwear and leather-goods sector. Consequently, on 15 September it adopted a decision (notified to the Italian Government on 17 September 1980) which provides in particular:

“Article 1

The Italian Republic shall within six months remove the difference provided for in Article 22 of Decree No 663 of 30 December 1979 in the rate of reduction of employers' sickness insurance contributions as between male and female employees.

Article 2

The Italian Republic shall communicate to the Commission the laws, regulations and administrative provisions adopted to comply with this Decision not later than the end of the period laid down in Article 1.”

5. The Italian Government does not dispute that decision. On the contrary, by a letter of 18 February 1981, it notified the Commission that it had taken cognizance of the decision and intended to comply with it when the provisions governing contributions for medical care were amended.

6. By letter of 12 May 1981, the Commission, exceptionally, authorized the extension until 30 June 1981 of the period for complying with the decision, “on the clear understanding that from that date any differentiation between men and women in the level of the said reduction will be definitively abolished”.

7. By a series of decree laws, later converted into laws, and in the last instance by Decree Law No 17 of 29 January 1983, converted into Law No 79 of 25 March 1983, Italy set back repeatedly the effective expiry date of the disputed measure. According to the Italian Government that extension was necessary because of its intention to reorganize the entire system.

8. The explanations provided by the Italian. Government do not affect in the slightest the fact that the disputed aid has, contrary to the Commission decision, remained in force after 30 June 1981 and even up to the date of the oral procedure before the Court.

9. It must therefore be held that by failing to comply within the prescribed period with Commission Decision 80/932/EEC of 15 September 1980 concerning the partial taking over by the State of employers' contributions to sickness insurance schemes in Italy (Official Journal 1980, L 264, p. 28), the Italian Republic has failed to fulfil its obligations under the EEC Treaty.

Costs

10. Under Articles 69 (2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs. Since the defendant has failed in its submissions, it must be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Declares that by failing to comply within the prescribed period with Commission Decision 80/932/EEC of 15 September 1980 concerning the partial taking over by the State of employers' contributions to sickness insurance schemes in Italy (Official Journal 1980, L 264, p. 28), the Italian Republic has failed to fulfil its obligations under the EEC Treaty.

2 Orders the Italian Republic to pay the costs.