European Union: ECJ ruled against Greece in airline case

Greece failed to comply with a European Commission decision that aid to Greek carrier Olympic Airlines was illegal and should be recovered, ECJ ruled on Thursday.A first decision of 11 December 2002 declared incompatible with the common market restructuring aid approved during the course of 1994, 1998 and 2000. Greece was asked to recover part of that aid, amounting to EUR 41 million. Since that decision was not implemented, the Court of Justice of the European Communities declared the action for failure to fulfil obligations to be well founded.By a second decision of 14 September 2005, at issue in the present case, the Commission considered to be State aid, first, the restructuring of Olympic Airways as such, as well as the granting of financial assistance and the receipt, by that company, of other financial support; second, the receipt, by Olympic Airlines, of various forms of subsidies. These included rental payments for the sub-leasing of aircraft (approximately EUR 40 million), overvaluation of assets at the time the new company was created (approximately EUR 91.5 million), payment by the Greek State, instead of Olympic Airways, of certain bank loans and leases (EUR 8 million) and,finally, the continuous forbearance displayed by the Greek State towards Olympic Airways with regard to taxes and social security contributions (EUR 354 million). As set out in the decision, Greece was under an obligation to recover the various aids without delay, to immediately suspend the granting of any additional aid to Olympic Airways and Olympic Airlines and to inform the Commission of measures taken.In the present action, Greece submitted, first, that the Commission had failed to provide a reliable method of calculation to make determination possible of the aid amounts to be recovered. Secondly, Greece challenged the validity of the decision.The Court held, first of all, that Greece had not fulfilled its obligations, either by the end of the time period laid down by the Commission or by the date on which the present action was brought. In addition, Greece has not relied on any absolute impossibility to implement the decision.Source: ECJ press release No 9/08 of 14. Feb. 2008

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