{"id":451917,"date":"2026-05-04T13:00:05","date_gmt":"2026-05-04T11:00:05","guid":{"rendered":"https:\/\/www.eunews.it\/?p=451917"},"modified":"2026-05-04T13:24:59","modified_gmt":"2026-05-04T11:24:59","slug":"price-exceptions-rules-state-aid-eu","status":"publish","type":"post","link":"https:\/\/www.eunews.it\/en\/2026\/05\/04\/price-exceptions-rules-state-aid-eu\/","title":{"rendered":"The Price of Exceptions"},"content":{"rendered":"

Wolfsburg, autumn 1994<\/strong>. In the corridors of the administrative wing of Volkswagen\u2019s headquarters, someone has been circulating the letter from the European Commission. This is no routine note: Karel Van Miert<\/strong>, the Belgian Competition Commissioner<\/strong>, a Flemish socialist with a professor\u2019s face and the obstinacy of a man who owes nothing to anyone, verging on abrasiveness, has opened a formal investigation into the 780 million Deutschmarks that Bonn and the government of Saxony have paid the Wolfsburg manufacturer to open two plants in the former<\/i><\/em>\u00a0East Germany<\/strong>, at Zwickau (the factory where the GDR used to build Trabants) and at Mosel.<\/p>\n

Reunification is still fresh, the L\u00e4nder<\/i><\/em>\u00a0of the East are open building sites. No one in Berlin had imagined that Brussels would have the nerve to challenge what to Helmut Kohl\u2019s government looked like a simple act of industrial policy and national cohesion. They were wrong. 32 years have gone by, but the case has left lessons that have entered the oral tradition and the hereditary factors shaping the training of the Federal Republic\u2019s European diplos<\/i><\/em>.<\/p>\n

\"Volkswagen.<\/a>
Volkswagen. HQ in Wolfsburg. Source: Imagoeconomica<\/figcaption><\/figure>\n

That letter is one of the least narrated turning points in the history of European integration: the moment when the Commission decided that not even Germany, by then already the principal net contributor to the Community budget, the country which had imposed fiscal rigour as the founding dogma of monetary union, was above the discipline on State aid. Van Miert did not back down, not even when Kohl did rather more than merely allow his personal irritation to leak out. Not even when the officials at Bonn\u2019s economics ministry pointed out, with that courteous condescension which Germans have always reserved for supranational institutions in moments of conflict, that without those plants unemployment in post-communist Saxony would have had unforeseeable political consequences. The Commission conceded that part of the aid was compatible with the internal market<\/strong>: roughly 540 million marks, justifiable as regional development by reading what would later become Article 107.3.a of the Treaty. CION, the nickname which shortens European Commission<\/strong>, decided that 241 million exceeded what was necessary and had to be returned<\/strong>. VW returned the money. Without enthusiasm and at length; but it returned it.<\/p>\n

The signal was loud&clear<\/i><\/em>: even the most powerful country in the Union had a limit<\/strong>. I had just been appointed head of external relations of the Fiat group. The mandate was clear: an eye on the carmakers and their strategies, an eye on finance and on Deutsche Bank, then a direct shareholder of the Italian group, and both eyes on what was inevitable: monetary union and Frankfurt as the epicentre of the structural decisions and of the consensus around their delivery. I had a great deal to study.<\/p>\n

It is worth keeping that scene in mind when one looks at how, in those same years and in the decade that followed, the Commission observed the relationship between the Italian State and the FIAT group. Not because the two cases are identical (they are not), but because the comparison reveals a system that works when it wants to and when it can, and which otherwise delegates to the \u201cmorphology of the instruments\u201d the task of not seeing.<\/p>\n

\"Source:<\/a>
Source: Imagoeconomica<\/figcaption><\/figure>\n

Public support for FIAT never appeared, in its principal form, as a direct and contestable transfer of fresh money<\/strong>. Italy, in the choice of instrument, was at least in part deliberate: the Cassa integrazione guadagni<\/i><\/em>, the wage supplementation mechanism which is, formally, a subsidy to the workers and not to the firm. From the standpoint of European State aid law the distinction is not irrelevant<\/strong>: aid which passes through the worker rather than through the company\u2019s books sits in a grey area which the Commission has historically avoided crossing with the same resolve it had shown for the direct transfers of the kind contested in Bonn<\/strong>. Add to this the regional aid for the southern plants: Melfi, Cassino, Pomigliano; frequently approved by the same DG Comp as territorial cohesion measures, and therefore compatible with the Treaties, with the question of excess relative to development need never being raised, the very question that had been central to the Saxon dossier.<\/p>\n

The result is a minor solution, in the literal sense: not a visible capitulation, not a letter doing the rounds of the Wolfsburg offices and ending up in the press, but a diffuse, fragmented assistance which has never produced a single sum to be returned or any single hearing worthy of note. This does not mean that the support given to FIAT was proportionally smaller than that given to Volkswagen: the aggregate, summing wage supplementation, regional aid, scrappage incentives and indirect interventions in the automotive supply chain, is probably comparable or greater in absolute terms. It means that Italy learned<\/strong>, decades before the matter became critical<\/strong>, the art of not offering targets<\/strong>. Commissioner Van Miert could strike Wolfsburg because Saxony had made a wire transfer. Striking Rome over the Cassa integrazione<\/i><\/em>\u00a0would have required elaborating a legal theory which the Commission, with its recurring pragmatism, has always preferred not to develop.<\/p>\n

It is minor in another, less technical and more uncomfortable sense as well: as industrial vision. Volkswagen was forced to build competitive plants<\/strong> without the cushion of an unlimited subsidy and, by the end of the decade, was producing cars the market wanted. FIAT spent twenty years postponing the restructurings that no Cassa integrazione<\/i><\/em>\u00a0could render unnecessary<\/strong>, and found its salvation not in the workshops of Mirafiori, Rivalta and Melfi but in the court of Delaware, buying Chrysler for a symbolic dollar in 2009.<\/p>\n

The story of Italian aviation, by contrast, is more brutal<\/strong>. And it begins<\/strong>, it is worth recalling, not with Alitalia but with an aircraft that fell into the sea off Ustica on the evening of 27 June 1980<\/strong>.<\/p>\n

\"President<\/a>
President of the Republic Sergio Mattarella, accompanied by Daria Bonfietti, President of the Association of Relatives of the Victims of the Ustica Massacre, visits the Ustica Memorial Museum, July 30, 2020. (Source: Imagoeconomica)<\/figcaption><\/figure>\n

The Itavia DC-9, Bologna-Palermo flight, tail number I-TIGI, vanished from the radar at 20:59 with 81 people on board. The carrier, already in financial difficulty, was struck by the immediate suspension of its operating certificate by Italian civil aviation \u2014 an understandable decision in the face of the catastrophe, but one which amounted to an administrative death sentence pending the clarification of responsibilities which the Italian Republic has taken forty years to recognise in part, and which the civil courts have attributed not to a technical fault but to a wartime event (a missile, according to the rulings) for which the State shared responsibility for having failed to protect civil airspace. Itavia never recovered its licence. It closed in 1980 leaving a debt and hundreds of families without an answer<\/strong>. The State compensated it post mortem<\/i><\/em>, after proceedings lasting decades, with rulings which had by then become the constitutional history of Italian institutional inadequacy.<\/p>\n

ATI<\/strong>, the Aero Trasporti Italiani<\/i><\/em><\/strong>, had a longer history and met a quieter end<\/strong>. Founded in 1963 as a domestic offshoot of Alitalia, it had survived for three decades in the orbit of the \u201cflag carrier\u201d, absorbing its structural defects and dependence on public funds, without even developing its prestigious international routes. In 1994 it was simply reabsorbed: the aircraft painted in red and green returned to the belly of the parent company, the staff moved on to other contracts, the routes were consolidated. It was not a restructuring. It was an administrative dissolution that no one heard.<\/p>\n

Air Mediterranea was born in 1995 as an attempt to fill the void which the airlines spawned by European liberalisation should have filled<\/strong>: low cost flights, routes to and from the islands, a model that elsewhere \u2014 easyJet, Ryanair \u2014 was already proving its worth. It survived seven years, with no one in Rome troubling themselves either to help it or to leave it genuinely free to compete in a market which the flag carrier kept doping with the State\u2019s presence as shareholder and implicit guarantor. It closed in 2002, discreetly, without much noise.<\/p>\n

AirOne was something else again<\/strong>. Carlo Toto, an Abruzzese builder enriched through motorways and construction, launched it in 1995 with the idea that the private sector could do what the State had been unable to do: a second Italian airline capable of competing with Alitalia on domestic routes. For about ten years it worked better than the pessimists had predicted, between Boeing 737s in white and blue livery and slots wrenched out of Fiumicino and Linate with the patience known to anyone who has fought the flag carrier. In 2008, when Berlusconi blocked the sale to Air France-KLM and assembled the consortium of the \u201ccourageous captains\u201d, Toto was called to the table and AirOne was folded into CAI: the private entrepreneur found himself a minority shareholder in a reconstructed flag carrier. The brand survived a few more years as the group\u2019s low-cost carrier, then disappeared in 2014. Even the stubborn private sector, in Italy, ended up inside Alitalia\u2019s perimeter.<\/p>\n

\"\"<\/a>
Source: Imagoeconomica<\/figcaption><\/figure>\n

And then there was Alitalia. Always Alitalia<\/strong>.<\/p>\n

In 1994<\/strong>, while Van Miert was contesting the Saxon subsidies to Volkswagen, Iberia was passing through its deepest crisis<\/strong>. The Spanish carrier had built up catastrophic losses between 1992 and 1993. In part because of the recession, in part because of bets gone wrong on stakes in South American carriers: Aerol\u00edneas Argentinas, Ladeco in Chile, Viasa in Venezuela. Madrid proposes a recapitalisation of 87 billion pesetas: today around \u20ac520 million. The Commission authorised the aid, but on conditions which DG Comp officials would later recall with a certain satisfaction<\/strong>: the aid was tied to the principle of one time, last time<\/i><\/em>\u00a0\u2014 once only, and for the last time. Iberia had to sell its South American holdings, cut capacity, reduce staff, present a credible industrial plan.<\/p>\n

The parallel with Alitalia is almost literal, but the comparison between the two epilogues is the most eloquent thing one can say about the difference between the Spanish and the Italian approach to European discipline. Iberia respected the conditions<\/strong>, painfully<\/strong>. It sold Aerol\u00edneas, made redundancies, restructured. It remained standing, not without difficulty, throughout the cycle that followed. In 2011 it merged with British Airways to create IAG, International Airlines Group, today one of the largest aviation groups in the world. The process was not painless. There was a fresh crisis in 2012, more cuts, a long union dispute, but the carrier had survived as a competitive entity, not as an appendage of the State.<\/p>\n

Italy received from Europe the same kind of conditional authorisation in 1997<\/strong>, when the Commission approved the first major recapitalisation of Alitalia with the explicit warning that it was \u201cthe first and the last\u201d.<\/p>\n

\"Prime<\/a>
Prime Minister Silvio Berlusconi’s press conference on August 18, 2008, regarding the Alitalia issue. Source: IPA Agency<\/figcaption><\/figure>\n

One time, last time<\/i><\/em>\u00a0for Alitalia. As for Iberia. DG Comp officials put it on the record. Then came 2001, 2004, 2008, when Silvio Berlusconi blocked the offer from Air France-KLM<\/strong>, which would have taken over the airline on market terms, choosing instead to sell off the good parts to a consortium of Italian investors called CAI, Compagnia Aerea Italiana<\/i><\/em>. The operation lasted just long enough to wind up in 2014, when the stake was passed to Etihad, which held on until 2020. Then COVID, then the definitive special administration, then ITA Airways, born from the ashes with another name and other debts.<\/p>\n

The overall estimate of Alitalia\u2019s cost to the Italian taxpayer<\/strong>, summing recapitalisations, bridging loans, shock absorbers and inherited liabilities, hovers between seven and ten billion euros<\/strong>; it depends on the accounting wizardry<\/i><\/em>, magheggi contabili<\/i><\/em>, as a British remnant in the Commission still puts it. \u201cAnd in any case, an order of magnitude that, without exaggeration, would have financed an entire high speed rail network.\u201d<\/p>\n

In all this, how have DG Concorrenza and the commissioners who succeeded one another worked? With a rigour which has been insufficient on some files, misdirected on others, in some cases structurally impossible to apply uniformly. These are not alternatives: they are ways of describing the same difficulty by looking at it from different angles, and it is the same Commission that has weighed the same factors differently from one case to another, depending on who sat at the Berlaymont and who sat on the other side of the table in Berlin, Paris, Rome or Madrid.<\/p>\n

Van Miert, who held office from 1993 to 1999, was the commissioner who opened the way. The VW case is his most cited credential, but no less significant was his approach to aviation: he imposed conditions on Iberia, he imposed conditions on Alitalia too in 1997, and in both cases he made good on the principle that \u201cState aid is compatible with the market only if it is proportionate, temporary and not repeated<\/strong>\u201d.<\/p>\n

The problem was not Van Miert\u2019s directness. It was the absence of an enforcement mechanism after the fact, an oversight of execution. The Commission can approve aid conditionally, but it has no police force to verify compliant and proper delivery. The follow-up on conformity depends on national governments, on the reports the beneficiaries send in and on a monitoring system which, as the Alitalia case has shown, can be circumvented for years through technical arguments, changes of government and fresh emergencies.<\/p>\n

\"Silvio<\/a>
Silvio Berlusconi and Mario Monti, during the government transition (11\/16\/2011) (Photo: Imagoeconomica)<\/figcaption><\/figure>\n

Mario Monti, who succeeded him in 1999 and remained in office until 2004, is remembered above all for blocking the GE-Honeywell merger in 2001, narrated previously here<\/a>, in open divergence from the United States antitrust authorities. In the management of State aid for aviation he was less incisive than the intellectual profile might have led one to expect. The sector had been shaken by 11 September, many governments had aided their own flag carriers with emergency instruments which the Commission had tacitly tolerated, and Monti preferred to husband his political capital for the antitrust battles<\/strong>. Neelie Kroes<\/strong>, from 2004 to 2010, introduced the so called more economic approach<\/i><\/em><\/strong>, a greater attention to substantive economic analysis as against the formal rules, which, in intention, was meant to make the discipline more efficient, but which in practice opened wider negotiating spaces, with contradictory outcomes.<\/p>\n

The most consistent technical critique of the Commission\u2019s management in those two decades<\/strong>, expressed among others by Pierre Buigues and Alexis Jacquemin in works on competitiveness and competition from the early and middle Nineties, was that the State aid framework was systematically disproportionate or asymmetric<\/strong>: severe with the direct and easily classifiable aid, but blind to the implicit aid, to the labour absorption instruments used as masked industrial subsidies, and to the recapitalisations spread in instalments which, summed over time, far exceeded what would have been authorised in a single tranche. Italy had understood and put to use this asymmetry before the others<\/strong>.<\/p>\n

The political critique came instead from the continental governments, especially the French and the Italian, which saw in the Commission the instrument of an Anglo Saxon vision of the market economy<\/strong>, \u201cat times incompatible with European industrial traditions\u201d, as a Social Democrat of the period now comments. The argument had a force of its own: public or semi public enterprises are not necessarily inefficient, and the market does not always produce optimal solutions for essential infrastructure. It was, however, also an argument that conveniently served to justify any postponement and any expense, and which cracked the moment results were placed alongside one another: the European airlines and industrial groups which had submitted to market discipline, including the German ones, beginning with Volkswagen, had on average posted better results than the net beneficiaries of protections in the long run.<\/p>\n

The subtler political questions remain, and the more relevant ones for understanding what these episodes teach us about the real workings of European power. Were the Commission\u2019s decisions against VW and Iberia tests of strength against national leadership, or carefully calibrated raps on the knuckles for internal use: messages addressed not so much to the direct recipients as to the others, to those who might have been tempted to do the same?<\/p>\n

They were both at once, in doses that depended on the moment and on the interlocutor. The VW case had enormous demonstrative value: in 1994, at a moment when the integration process was being challenged by the German Constitutional Court\u2019s ruling in the Maastricht-Urteil, or Maastricht judgment, of 1993, showing that Brussels could win a battle against Kohl carried a meaning that went well beyond the 241 million marks at issue.<\/p>\n

Van Miert knew it. The internal Commission communication of those years, reconstructed by scholars such as Hussein Kassim and Anand Menon, shows an explicit awareness of the symbolic value of the decisions taken against the large countries: it is not merely a matter of protecting the market, but of proving that Europe exists as an autonomous legal subject<\/strong>, not only as a negotiating arena between national governments.<\/p>\n

\"\"<\/a>
2025 MADRID SPAIN MADRID BARAJAS AIRPORT IBERIA AIRLINES<\/figcaption><\/figure>\n

The Iberia case sent a different message<\/strong>: not so much \u201cnot even you are above the rules\u201d, as: if you respect the rules, Europe really does help you, and only once<\/strong>. It was, in other terms, a pact, harder to honour than a rap on the knuckles, but more useful in the long run. Spain accepted it. Italy, faced with an identical pact for Alitalia in the same period, kept renegotiating it whenever the deadline drew near. And the Commission, although it had every right to declare the subsequent aid incompatible as a violation of the 1997 conditions, never did so with the same resolve with which Van Miert had pursued the German marks in Saxony.<\/p>\n

This says something uncomfortable. The Commission\u2019s directness is real but selective. And its selectivity does not respond to technical criteria alone<\/strong>. It responds to the capacity of national governments to construct credible resistance, and to the skill of their ministries in packaging aid which the letter of the Treaty struggles to grasp<\/strong>, and above all to the calculation the Commission makes each time about how much political capital is worth spending on a file knowing it has another twenty on the table. Germany paid because Van Miert had chosen that moment and that case as a battlefield. Italy did not pay; at least not directly, nor in the form of a formal restitution, because it had never offered such a clean target. And also because the subsequent Commissions had other priorities.<\/p>\n

The future behaviour that emerges for national governments is simple, almost didactic. If you must support your industry, avoid doing so in forms that can be summed up in a single contestable decision<\/strong>. Use taxation, the shock absorbers, horizontal incentives, public procurement \u2014 anything which, taken on its own, lives below a threshold of visibility that DG Comp has no means of aggregating. And if a letter arrives from Brussels, reply on the technical ground, never on the political ground: the first lengthens the procedure, the second turns it into a clash that obliges someone to lose face, and the Commissioners would rather close a file in silence than win a war of attrition against a national government.<\/p>\n

Whether this is a lesson to apply or to correct depends on where one stands. For those who believe that the European internal market should genuinely function as a market with the same rules for all, regardless of the size of the country and the number and brand of aircraft in its fleet, the story of Alitalia is the proof that a tolerated exception generates expectations of further exceptions, and that the final cost of a prolonged agony is always greater than the cost of a swift restructuring<\/strong>. Iberia demonstrates this in the positive; Alitalia, in the negative, with a bill presented to the Italian Republic in instalments spread over thirty years.<\/p>\n

For those who instead read the story of European integration as a continuous negotiation between national economic models and supranational ambitions, and they are many, Italian resistance is not necessarily a fault: it is the exercise of a sovereignty which the Treaty has not entirely suppressed, and which the Commission has implicitly recognised every time it has chosen not to take a case to its ultimate consequences. The problem is not that Italy resisted. The problem is that the resistance prolonged the agony without changing the outcome<\/strong>, and that meanwhile ATI vanished in silence, Itavia sank with its dead and its secrets, Air Mediterranea tried and failed, AirOne was sucked in; and Alitalia ended its run as ITA Airways: a smaller, more fragile carrier, with fewer routes and more competitors than Alitalia had had when all this began.<\/p>\n

\"Margrethe<\/a>
Margrethe Vestager, Vice President of the European Commission for Competition Policy for the 2019-2024 term. Source: EU Commission<\/figcaption><\/figure>\n

There is one last image worth keeping in mind, more recent and more instructive than the archive papers of Van Miert. In 2021, when the Commission finally approved the liquidation of Alitalia and the birth of ITA, Margrethe Vestager, who at DG Comp had devoted nearly a decade to some of the most contested stories of the digital era, said with that Nordic phlegm of hers that \u201cItaly had met the requirements necessary for the new airline not to be considered the economic continuation of the old one\u201d. It was a technical formula which meant: we have formally recognised that ITA is not Alitalia, and therefore does not inherit either the debts or the convictions for illegal aid. It was also, read between the lines, the recognition that Europe had taken thirty years to arrive at that point, and had arrived only because the airline had meanwhile gone definitively under.<\/p>\n

Helmut Kohl did not get what he wanted from the Commission in 1994. He did not get back the 241 million marks which Saxony had paid Volkswagen. And yet Volkswagen is still in Wolfsburg, produces cars sold in 150 countries, and the Zwickau plant is today the group\u2019s most advanced facility for electric vehicles; built, this time round, with no contributions to contest. The bill for the exceptions, in the end, is always paid by someone<\/strong>. Usually by those who asked for them<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

State aid, national champions and the rules<\/p>\n","protected":false},"author":7904,"featured_media":451903,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","jnews-multi-image_gallery":[],"jnews_single_post":{"format":"standard","override":[{"template":"1","parallax":"1","fullscreen":"1","layout":"right-sidebar","sidebar":"default-sidebar","second_sidebar":"default-sidebar","sticky_sidebar":"1","share_position":"top","share_float_style":"share-monocrhome","show_featured":"1","show_post_meta":"1","show_post_author":"1","show_post_author_image":"1","show_post_date":"1","post_date_format":"default","post_date_format_custom":"Y\/m\/d","show_post_category":"1","show_post_reading_time":"0","post_reading_time_wpm":"300","post_calculate_word_method":"str_word_count","show_zoom_button":"0","zoom_button_out_step":"2","zoom_button_in_step":"3","show_post_tag":"1","show_prev_next_post":"1","show_popup_post":"1","show_comment_section":"1","number_popup_post":"1","show_author_box":"0","show_post_related":"1","show_inline_post_related":"0"}],"image_override":[{"single_post_thumbnail_size":"crop-500","single_post_gallery_size":"crop-500"}],"trending_post_position":"meta","trending_post_label":"Trending","sponsored_post_label":"Sponsored by","disable_ad":"0","subtitle":""},"jnews_primary_category":[],"jnews_override_counter":{"view_counter_number":"0","share_counter_number":"0","like_counter_number":"0","dislike_counter_number":"0"},"footnotes":""},"categories":[25705,25716,25711],"tags":[28383,33933,27047,25993,26370],"class_list":["post-451917","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-miscellaneous","category-opinions","tag-alitalia-en-2","tag-commissioner","tag-eu-en","tag-monti-en-2","tag-state-aid-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/451917","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/users\/7904"}],"replies":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/comments?post=451917"}],"version-history":[{"count":4,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/451917\/revisions"}],"predecessor-version":[{"id":451924,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/posts\/451917\/revisions\/451924"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/media\/451903"}],"wp:attachment":[{"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/media?parent=451917"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/categories?post=451917"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.eunews.it\/en\/wp-json\/wp\/v2\/tags?post=451917"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}