LUXEMBOURG (CN) — Just over 48 hours into a nationwide lockdown to contain a coronavirus spread, Italy was slapped with an $8.5 million fine Thursday over tourism-boosting grants that the EU’s top court ruled illegal.
The dispute dates back to 1998 when Sardinia, an island off Italy’s southern coast, was seeing a drop-off in the number of domestic visitors as flights to other European destinations had become cheaper.
Though the European Commission signed off on an aid scheme in which the Italian government would subsidize hotel-building costs, it made it a condition that companies would have to apply for the financial support before they ground broke, to ensure the aid was actually needed for the project.
Five years later, the commission received a complaint that work had started on projects before companies had submitted their applications.
The commission investigated for another five years, concluding in 2008 that Italy had violated European Union state aid regulations and would have to recover any unlawfully granted funds. Italy refused to do so, leading the European Commission to file a complaint at the European Court of Justice.
"The recovery of illegal and incompatible aid is essential to restore a level playing field in the single market,” Neelie Kroes, that era’s competition commissioner, said at the time.
In 2012, the Luxembourg-based court ruled that the scheme had violated rules against state aid in the 27-member-state political and economic union.
The court told Italy to recover some $15.4 million in unlawfully granted aid.
On Thursday, it cracked the whip again.
“Italy failed to fulfill its obligation to implement the judgment of 2012,” the European Court of Justice said today, issuing a statement on a decision available only in French and Italian.
Thursday’s ruling, which is final and cannot be appealed, requires Italy to pay $90,000 per day for every day it delays in paying the fine.
The court did assess Italy’s ability to pay the fine and noted that the country’s GDP has been rising since 2015, as its economy recovered from the 2008 financial crisis. The ruling makes no mention of the ongoing coronavirus pandemic.
Italy has closed nearly all stores and is requiring people to stay in their homes as nearly 1,000 people have died from the outbreak, which the World Health Organization declared a pandemic on Wednesday.
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