State aid: Commission clears public support for several ferry services in Italy; finds other measures to Siremar and SNS to be incompatible aid

(Source: European Commission)

The European Commission has concluded that the public service compensation granted since 2009 to Sicilia Regionale Marittima S.p.A. (‘Siremar’) and Toscana Regionale Marittima S.p.A. (‘Toremar’) for the operation of ferry services in Italy is in line with EU State aid rules. The same applies to the compensation granted to their acquirers, respectively Società Navigazione Siciliana (‘SNS’) since 2016 and Moby S.p.A (‘Moby’), since 2012. However, the Commission found that certain other measures in favour of Siremar, currently in liquidation, and SNS are incompatible with EU State aid rules. Italy must now recover approximately €1.9 million of illegal aid, including interest.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Regular and reliable maritime transport services contribute to the economic and social development of islands and are crucial to meet the mobility needs of the residents, particularly those who live and work in the smaller islands. These decisions enable Italy to continue to provide these services in Sicily and Tuscany on a regular basis throughout the year, and not only during the peak tourist season in the summer”.

Following a series of complaints, the Commission launched in October 2011 an in-depth investigation into several public support measures in favour of companies of the former Tirrenia Group and their respective acquirers. The Commission had concerns that these measures may have given the companies an unfair competitive advantage over their competitors, in breach of EU State aid rules.

Measures since 2009 in favour of Siremar and its acquirer SNS

On the basis of its in-depth assessment, the Commission has concluded the following for the measures concerning Siremar and its acquirer SNS:

  • the public service compensation (approximately €199 million) granted to Siremar for the operation of twenty maritime routes, grouped in five geographical areas, from 1 January 2009 until 1 August 2012, is compatible with the 2011 SGEI Framework for sixteen routes and with the 2005 SGEI Decision for the other four routes. This compensation addressed a real public service need by ensuring connections on a regular basis throughout the year. Furthermore, the aid granted did not result in overcompensation for Siremar;
  • the public service compensation (approximately €668 million) granted to SNS for the operation of the same routes in the period from 11 April 2016 to 11 April 2028, as well as the tender procedure for the sale of the Siremar business branch to SNS, do not qualify as State aid because the criteria laid out in case C-280/00Altmark Trans are met;
  • the possibility to use resources from a national fund to meet the liquidity needs of Siremar does not qualify as State aid, since it is not an additional aid measure, but it merely amounts to an intra-State transfer to finance the public service compensation;
  • the possibility to use certain funds, earmarked to upgrade ships to meet safety requirements, for liquidity purposes, does not qualify as State aid since Siremar ultimately did not avail itself of this option;
  • the illegal prolongation of the rescue aid to Siremar by one year beyond the six months duration foreseen is incompatible with the 2004 Guidelines on State aid for the rescue and restructuring of companies and has to be recovered;
  • the exemptions from certain taxes granted to Siremar and SNS in the context of the privatisation process, reducing the costs that both companies would otherwise have had to bear, constitute aid incompatible with the Treaty on the Functioning of the European Union and has to be recovered by Italy.

The amount to be recovered is approximately €1.7 million from SNS and €0.2 million from Siremar (in both cases, the estimate includes the applicable recovery interest). The Commission also found that there is no economic continuity between Siremar and SNS, meaning that the obligation to repay the €0.2 million will not be transferred to SNS.

Measures since 2009 in favour of Toremar and its acquirer Moby

In a separate decision, on the basis of its in-depth assessment, the Commission also concluded the following for the measures concerning Toremar and its acquirer Moby:

  • the public service compensation (approximately €32 million) granted to Toremar for the operation of five maritime routes, from 1 January 2010 until 1 January 2012, is compatible with the 2011 SGEI Framework. This compensation addressed a real public service need by ensuring connections on a regular basis throughout the year, and the aid granted did not result in overcompensation for Toremar;
  • the public service compensation (approximately €175 million) granted to Toremar and to Moby for the operation of six routes in the period 2 January 2012 to 31 December 2023, as well as the tender procedure for the sale of Toremar to Moby, do not qualify as State aid because the criteria laid out in case C-280/00, Altmark Trans are met;
  • the possibility to use resources from a national fund to meet the liquidity needs of Toremar does not qualify as State aid, since it is not an additional aid measure, but it merely amounts to an intra-State transfer to finance the public service compensation;
  • the possibility to use certain funds, earmarked to upgrade ships to meet safety requirements, for liquidity purposes, does not qualify as State aid since Toremar ultimately did not avail itself of this option;
  • certain fiscal exemptions related to the privatisation process of Toremar do not constitute State aid, because they do not confer an economic advantage to neither Toremar nor Moby.

Background

Siremar and Toremar were part of the formerly State-owned Tirrenia Group, and provided maritime transport services respectively between Sicily and its smaller islands (the Aeolian, Egadi, Pelagie archipelagos as well as Ustica and Pantelleria) and between Tuscany and its islands (Capraia, Elba, Giannutri, Giglio, Gorgona and Pianosa). Since 1992, these services were compensated by Italy on the basis of public service contracts (the ‘Initial Conventions’), which were due to expire at the end of 2008. Because at that time Italy wanted to privatise Siremar and Toremar and conclude new public service contracts (‘the new Convention’) with their acquirers, it prolonged Siremar’s and Toremar’s Initial Conventions until their privatisation was completed.

Following a public procurement procedure, Compagnia delle Isole (‘CdI’) first acquired Siremar and started operating the public service routes in 2012. Following court procedures in Italy and a relaunch of the tender, in 2016 SNS became the new owner of Siremar and started operating the public service routes. The new Convention between the Italian authorities and SNS has a duration of 12 years and will expire in 2028.

Likewise, following its successful offer in the tender procedure, Moby became the new owner of Toremar in 2012. At the same time, the parties (Region of Tuscany, Toremar and Moby) signed the new service contract for the provision of maritime services by Toremar with a duration of 12 years. The new contract will expire in 2024.

In October 2011 the Commission launched an in-depth investigation into public support measures in favour of companies of the former Tirrenia Group, namely Tirrenia, Caremar, Laziomar, Saremar, Siremar and Toremar. The Commission extended the scope of this investigation in November 2012, to take account of additional measures.

In addition to the decisions adopted today, the Commission concluded in January 2014 that certain support measures to Saremar were incompatible with EU State aid rules, and, in March 2020, it concluded its investigation on Tirrenia and its acquirer CIN.

The investigation concerning Caremar, Laziomar, and the remaining support measures for Saremar is still ongoing and will be concluded by means of separate decisions.

EU Member States enjoy a wide margin of discretion in the definition of services of general interest (‘SGEI’). The Commission must, however, ensure that public funding granted for the provision of such services does not unduly distort competition in the EU single market. In 2003, the Court of Justice of the EU ruled on the assessment of public service compensation in the context of EU State aid rules (case C-280/00, Altmark Trans). The ruling set out the four conditions that compensation granted by a Member State to SGEI providers must meet in order not to constitute State aid within the meaning of EU competition law. These criteria are: (i) explicit entrustment of the public service obligation, (ii) objective, transparent and pre-defined conditions for compensation, (iii) no overcompensation and (iv) choice of the least costly provider through an open tender or a level of compensation based on the costs of a typical, well-run company. In December 2011, the Commission adopted new rules specifying how EU State aid rules apply to SGEI.

The non-confidential version of the two decisions will be made available in the State Aid Register under the case numbers SA.32014, SA.32015 and SA.32016 on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

Privacy Preferences
When you visit our website, it may store information through your browser from specific services, usually in form of cookies. Here you can change your privacy preferences. Please note that blocking some types of cookies may impact your experience on our website and the services we offer.