The European Commission said Thursday it would ask the EU courts to fine Italy for failing to demand companies pay for social security exemptions that EU regulators ruled illegal.
The EU's executive must check that state subsidies to businesses don't give them an unfair advantage over rivals elsewhere. If it sees problems, it can demand that governments claw back unlawful tax breaks.
Italy has only recovered less than a fifth of a 281 million ($394.21 million) subsidy to companies that regulators found illegal in 1999. The regulators said the social security exemptions did not meet the government's aim of creating jobs.
The EU said it would now ask the European Court of Justice to impose both daily fines and a lump sum fine on the Italian government. It did not give a figure but said it should take into account Italy's current financial situation.
Italy's public debt is the highest in Europe and the third-highest in the world after the United States and Japan. The EU forecasts it to grow to 113 percent of its gross domestic product this year and warns that high interest payments are a burden on government spending.
