State aid: Commission clears Italian public support for Laziomar ferry service; closes investigation concerning support to Saremar

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The European Commission has concluded that the public service compensation granted since 2011 to Laziomar S.p.A. (‘Laziomar’) for the operation of ferry services in Italy is in line with EU State aid rules. The same applies to the compensation granted to Laziomar after it has been acquired by Compagnia Laziale di Navigazione S.r.l. (‘CLN’). The Commission also closed its in-depth investigation into certain measures in favour of Sardegna Regionale Maritima S.p.A. (‘Saremar’), which has been in liquidation since 2016.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “As the two decisions concerning the former Tirrenia Group that we adopted earlier this year, today’s decisions will contribute to the economic and social development of islands, while providing legal certainty to operators. We need to ensure that small islands, such as those of the Lazio Region, and their residents are connected to the mainland through regular and reliable maritime transport services throughout the year”.

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 2011 in favour of Laziomar and its acquirer CLN

On the basis of its in-depth assessment, the Commission concluded that the following measures in favour of Laziomar and its acquirer CLN are in line with EU State aid rules. In particular:

• the public service compensation (approximately €35 million) granted to Laziomar for the operation of five maritime routes, from 1 June 2011 until 14 January 2014, 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 Laziomar;
• the public service compensation (approximately €128 million) granted to Laziomar after its acquisition by CLN for the operation of six routes in the period 15 January 2014 to 14 January 2024, as well as the tender procedure for the sale of Laziomar to CLN, 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 Laziomar 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 Laziomar ultimately did not avail itself of this option;
• certain fiscal exemptions granted to Laziomar in the context of its privatisation process do not constitute State aid, because they do not confer an economic advantage neither to Laziomar nor to CLN.

Closure of investigation into measures in favour of Saremar

In a separate decision, the Commission has today also decided to close its investigation into certain measures in favour of Saremar.

In 2014, following an in-depth investigation, the Commission found that certain support measures granted by Sardinia to Saremar in 2011 and 2012 constituted incompatible State aid and ordered the recovery of €10.8 million from the company. Following the decision, Saremar was put in liquidation and the public services routes that it was operating were entrusted to another operator, Delcomar, as a result of a public tender.

In its 2014 decision, the Commission had not reached a conclusion on all measures under investigation. However, since Saremar has ceased all operations, its assets have been sold, and it will be erased from the company register once the liquidation procedure has been finalised, the Commission considers that the investigation into these measures has become without object and has therefore decided to close it.

By closing the procedure without further scrutiny of the measures in question, the Commission also acts proportionately, saving time and resources – including those of the Sardinia Region – and ensuring legal certainty to all stakeholders involved.

Background

Between 1992 and 2008, the maritime transport services between the Lazio Region and its smaller islands in the Pontino archipelago (Ponza and Ventotene) were provided by Campania Regionale Maritima S.p.A. (‘Caremar’), which, as Laziomar, was part of the formerly State-owned Tirrenia Group. Likewise, the maritime transport services between Sardinia and the islands to its north-east and south-west, as well as Corsica, were provided by Saremar, also part of the former Tirrenia Group. These services were compensated by Italy on the basis of public service contracts (the ‘Initial Conventions’).

In order to privatise the Tirrenia group, including Caremar and Saremar, and conclude new public service contracts with their acquirers, Italy prolonged Caremar’s (and subsequently Laziomar’s) and Saremar’s Initial Conventions until their privatisation was completed. Italy also reorganised these services: Saremar was transferred to the Region of Sardinia in 2009, and Caremar sold its branch operating the routes in the Pontino archipelago to a newly established company under the name Laziomar, which started performing the public service in 2011.

In 2013, following a public procurement procedure, CLN acquired Laziomar and the latter continued to operate the public service routes. The new public service contract between the Italian authorities and Laziomar has a duration of 10 years and will expire in 2024.

In 2016, Saremar was put in liquidation, its assets were sold and its staff were laid off. A new operator, Delcomar, currently operates the public services under a separate contract.

In October 2011, the Commission opened 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 include additional measures.

In addition to the decisions adopted today, in January 2014, the Commission concluded its investigation into certain support measures in favour of Saremar;  in March 2020, it concluded its investigation into support measures in favour of Tirrenia and its acquirer CIN; and, in June 2021, it concluded its investigation into support measures in favour of Toremar and Siremar and its acquirers Moby and SNS.

The investigation concerning Caremar is still ongoing and will be concluded by means of a separate decision.

EU Member States enjoy a wide margin of discretion in the definition of services of general economic 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.