Background
BdM Banca SpA, formerly Banca Popolare di Bari SpA, acquired and recapitalised Banca Tercas after Italy’s Interbank Deposit Protection Fund agreed to measures covering Tercas’ negative equity and certain risks. In 2015, the European Commission classified those measures as State aid incompatible with the internal market and ordered Italy to recover the aid.
The EU courts later annulled the Commission’s Tercas decision because the Commission had not established that the private fund’s intervention was imputable to the Italian State. BdM Banca then sought compensation under Articles 268 and 340 TFEU for alleged losses including lost customers and deposits, reputational harm, mitigation expenses, staff-reduction costs and legal fees. The General Court dismissed the action as partly time-barred and otherwise unfounded, prompting BdM Banca’s appeal.
The Court’s Holding
The Court of Justice held that the General Court erred in finding that the Commission had not committed a sufficiently serious breach of Article 107(1) TFEU. Whether a measure constitutes State aid is determined by objective criteria over which the Commission has considerably reduced or no discretion. In the Tercas decision, the Commission made conceptual errors concerning the State origin of aid, including confusing imputability with State resources and applying to intervention by a private entity the test used for public undertakings. Those errors amounted to a sufficiently serious breach despite any factual or legal complexity.
The Court nevertheless rejected BdM Banca’s damages claim because it had not proved that the unlawful Commission decision was the determining and sufficiently direct cause of the alleged harm. Other factors could affect not merely the amount of compensation but the existence of causation itself. The Court also upheld the ruling that the staff-reduction claim was time-barred: the damage materialised when the incentive plan was adopted on 30 December 2015, when its maximum cost was known and provided for, rather than arising continuously as payments were made.
Accordingly, the Court partly set aside the General Court’s judgment on the sufficiently-serious-breach issue, dismissed the remainder of the appeal and, giving final judgment, dismissed the compensation action as unfounded. Each party was ordered to bear its own costs at first instance and on appeal.
Key Takeaways
- A Commission error in classifying a measure as State aid can constitute a sufficiently serious breach where the Commission applies an incorrect legal test to the basic criteria governing the State origin of aid.
- EU non-contractual liability still requires proof that the unlawful act was the determining and sufficiently direct cause of the claimed damage; showing that it merely contributed to the harm is insufficient.
- Damage arising from a staff-departure plan is not continuous when the maximum financial exposure was known and provisioned when the plan was adopted, even if payments occurred later.
Why It Matters
The judgment strengthens accountability for fundamental errors in State-aid classification by confirming that factual or legal complexity does not excuse the Commission’s use of an incorrect test concerning imputability and State resources.
At the same time, it underscores the difficulty of obtaining damages from the European Union after an unlawful decision has been annulled. Claimants must independently satisfy every element of non-contractual liability, particularly by proving that the EU institution’s conduct directly and decisively caused the alleged loss.