# Commission Decision (EU) 2015/1075Show full title

Commission Decision (EU) 2015/1075 of 19 January 2015 on State aid SA.35843 (2014/C) (ex 2012/NN) implemented by Italy — Additional            public service compensation for Buonotourist (notified under document C(2015) 75) (Only the Italian text is authentic) (Text            with EEA relevance)         

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# Commission Decision (EU) 2015/1075                     

# of 19 January 2015

# on State aid SA.35843 (2014/C) (ex 2012/NN)

# implemented by Italy — Additional public service compensation for Buonotourist

# (notified under document C(2015) 75)

# (Only the Italian text is authentic)

# (Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2)                           thereof,                        

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to the provision(s) cited above and having regard to                           their comments,                        

Whereas:

1.**PROCEDURE**(1)By electronic notification of 5 December 2012, the Italian authorities notified, in accordance with Article 108(3) of the                                 Treaty, the additional compensation awarded pursuant to a judgment by the *Consiglio di Stato* (Italy’s highest administrative court) to Buonotourist S.r.l. (‘Buonotourist’), for the provision of passenger transport                                 services by bus based on concessions granted by the Italian Region of Campania (‘the Region’) during the period 1996-2002                                 (‘the period under review’).(2)The notification was registered under case number SA.35843 and from 13 December 2012 treated as a non-notified measure since,                                 according to the information available to the Commission, the Region was not obliged to pay the additional compensation due                                 to Buonotourist until 7 December 2012, that is, after the Italian government had notified the measure to the Commission, but                                 before a Commission decision had been adopted.(3)By letter dated 20 February 2014, the Commission informed Italy that it had decided to initiate the procedure laid down in                                 Article 108(2) of the Treaty in respect of the aid (‘the opening decision’).(4)The opening decision was published in the *Official Journal of the European Union* (1). The Commission invited interested parties to submit their comments on the measure.(5)The Italian authorities submitted their observations on the opening decision by letters dated 21 and 24 March 2014.(6)The only third party to submit observations in reply to the opening decision was Buonotourist, the beneficiary of the measure.                                 Its comments were received on 25 March 2014.(7)On 11 July 2014, the Italian authorities provided comments on the third party submissions and additional information in response                                 to a request for information dated 11 June 2014.(8)After acceptance of a deadline extension by the Commission, the Italian authorities completed the provision of additional                                 information by letter of 15 September 2014.

2.**DESCRIPTION OF THE MEASURE**2.1.THE COMPANY(9)Buonotourist is a private company providing local public transport services based on regional and municipal concessions. More                                 specifically, according to the Italian authorities, Buonotourist operated a network of bus routes as concessionaire of the                                 Region throughout the period under review covering approximately 1,8 million km per year.(10)From the information provided by the Italian authorities, the Region has already paid EUR 19 507 121.54 to Buonotourist for                                 the above-mentioned service during the period under review, of which EUR 17 036 021.13 for the operation and management of                                 the service and EUR 2 471 100.41 for investments. Since it appears that this compensation was awarded to Buonotourist more                                 than 10 years before the Commission sent its first request for information to the Italian State, that compensation will not                                 be subject to an assessment in the current proceedings(2).(11)In addition to the above-mentioned sums already received, Buonotourist requested from the Region additional compensation of                                 EUR 5 567 582.57 on the basis of Council Regulation (EEC) No 1191/69(3) for the economic disadvantages it allegedly suffered as a result of public service obligations (‘PSOs’) allegedly being imposed                                 upon it. According to the Region, the request was made in January 2007 when Buonotourist started proceedings before the Italian                                 administrative courts.(12)In 2008, the Regional Administrative Court in Salerno rejected Buonotourist’s claim for additional compensation on the basis                                 of Regulation (EEC) No 1191/69. That court held that, in accordance with Article 4 of Regulation (EEC) No 1191/69(4), Buonotourist could not request compensation for economic disadvantages resulting from the imposition of PSOs without having                                 previously requested the termination of those PSOs.2.2.THE JUDGMENTS OF THE CONSIGLIO DI STATO(13)By judgment of 27 July 2009 (*Sentenza* No 4683/09), the Consiglio di Stato upheld the appeal by Buonotourist against the judgment of the Regional Administrative                                 Court in Salerno and concluded that Buonotourist was entitled to receive additional compensation for the public service it                                 had carried out in accordance with Articles 6, 10 and 11 of Regulation (EEC) No 1191/69. That judgment does not precisely                                 define from which legal act and in what form the PSOs were imposed, but stresses that an undertaking operating a public service                                 cannot be denied its claim for repayment of the costs effectively incurred in performing that service. The Consiglio di Stato                                 further considered that Buonotourist was entitled to receive public service compensation even in the absence of a prior request                                 for the elimination of the PSOs.(14)According to the Consiglio di Stato, the precise amount of the additional compensation owed to Buonotourist had to be determined                                 by the Region on the basis of reliable data taken from the accounts of the company, showing the difference between the costs                                 attributable to the portion of Buonotourist’s activities associated with the PSO and the corresponding revenues. However,                                 the Region claimed that it was unable to do so, due to a lack of clear and reliable data.(15)By order (*ordinanza*) No 8737/2010 of 13 December 2010, the Consiglio di Stato appointed an expert to undertake that task. According to the Italian                                 authorities, that expert was also unable to determine the amount to be compensated. By order (*ordinanza*) No 5880/2011 of 7 November 2011, the Consiglio di Stato appointed a second expert (‘the second expert’). It appears from                                 paragraph 9 of the judgment of the Consiglio di Stato (*giudizio per l’ottemperanza*) No 5650/2012 of 7 November 2012 that both experts excluded the existence of a right to compensation pursuant to Article 10                                 of Regulation (EEC) No 1191/69 (i.e. obligation to operate or carry), but both concluded that Buonotourist was undercompensated                                 for 1998, 1999 and 2000 as a result of the application of the formula provided in Article 11 of Regulation (EEC) No 1191/69                                 (tariff-related obligation). Implicitly, the experts thus assumed that a tariff obligation had been imposed on Buonotourist                                 by the Region.(16)However, while the first expert concluded that it would have been inappropriate to use an ‘inductive method’ to calculate                                 the additional costs borne by the undertaking due to tariff costs and recommended calculating the additional compensation                                 by means of equity appreciation (*in via equitativa*), the second expert calculated the sum to be compensated by the Region to the company through the use of such an ‘inductive                                 method’, observing that the Consiglio di Stato held that the choice of the ‘inductive method’ was to be considered definitive,                                 having been used in various judgments without being challenged.(17)The second expert was nevertheless unable to calculate the compensation pursuant to Article 11 of Regulation (EEC) No 1191/69                                 due to a lack of essential data on both the anticipated and the actual number of units of measure of transport. The second                                 expert therefore calculated the possible amount of undercompensation as the difference between the potential revenues that                                 the company could have obtained by operating the service on a commercial basis (estimate) and the sum of the actual revenues                                 and the public contributions received. For Buonotourist, those calculations result in an undercompensation for 1998, 1999                                 and 2000 only, totalling EUR 1 111 572 including interest. The expert concluded that this amount could be taken as the amount                                 of undercompensation.(18)Accordingly, the Consiglio di Stato issued judgment No 5650/2012 of 7 November 2012, quantifying the additional compensation                                 the Region was obliged to pay to Buonotourist at EUR 1 111 572 and ordered payment of that sum to take place by 7 December                                 2012(5). Payment of this sum was made by the Region to Buonotourist on 21 December 2012.(19)It is the payment of that additional compensation by the Region to Buonotourist as a consequence of judgment No 5650/2012                                 that constitutes the non-notified measure and the subject matter of this Decision.2.3.ADDITIONAL INFORMATION/OBSERVATIONS PROVIDED BY THE ITALIAN AUTHORITIES(20)According to the Italian authorities, Buonotourist, like other providers of regional scheduled bus transport services, operated                                 on the basis of provisional licences (concessions) which had to be renewed annually upon the request of the company. Those                                 concessions provided the company with the exclusive right to provide the relevant services.(21)The Italian authorities further maintain that Buonotourist requested concessions to provide services on the relevant routes                                 from the Region in each year of the period under review and that those concessions always stipulated that the services were                                 carried out entirely at the risk of the undertakings in question and, specifically, ‘without the performance of the service                                 constituting a right to a subsidy or compensation of any kind’. The Italian authorities provided a copy of a sample concession                                 contract concerning another undertaking (‘the sample concession contract’) from 1972/73 attesting that it was the same as                                 the one used with Buonotourist for the period under review. However, the Italian authorities did not provide any concession                                 contracts actually concluded with Buonotourist during the period under review.(22)The Italian authorities maintain that under those concessions Buonotourist was free to propose the substitution of the forms                                 of transport to be used by it or to apply for the termination in whole or in part of its PSOs where such obligations entailed                                 an economic disadvantage to it, but that the company never exercised that right. The Italian authorities further allege that                                 the company never informed the Region that it was suffering economic disadvantages or that it was carrying out obligations                                 that it would not have performed if not obliged to do so under a PSO. Finally, according to the Italian authorities, Buonotourist                                 never requested the termination of the PSO as required by Article 4(1) of Regulation (EEC) No 1191/69.(23)According to the Italian authorities, the public contributions granted to Buonotourist in the past were based on standard                                 cost methodology, calculated on the basis of certain parameters established in Regional Law No 16/1983(6), such as the number of kilometres awarded vis-à-vis the kilometres travelled, the number of employees and buses, which vary                                 depending on the type of service performed (urban, mountain, hill services), the legal and economic treatment of employees,                                 the size of the undertaking, and the costs of the buses.(24)The Italian authorities also doubt whether Buonotourist has demonstrated that it had efficiently and correctly operated the                                 PSOs in accordance with Regulation (EEC) No 1191/69 and submit that Buonotourist did not have an account separation system                                 as required by Article 1(5) of that Regulation.2.4.AMOUNT OF COMPENSATION(25)As explained in recital 15, the Consiglio di Stato appointed two experts to determine the additional compensation owed to                                 Buonotourist by the Region on the basis of Articles 6, 10 and 11 of Regulation (EEC) No 1191/69. On 27 September 2012, the                                 two experts each issued their respective reports, but only the second expert was able to calculate the additional compensation                                 due to Buonotourist by the Region (‘the report’).(26)In the report, the second expert frequently reiterates that the parties submitted data that did not match or that were not                                 precise enough, constituting only an approximation. In particular, the second expert observes that the parties have provided                                 contradictory documentary evidence regarding the compensation paid in the past. In contrast to the claim made by the Italian                                 authorities, the second expert notes that Buonotourist kept separate accounts for its public and private transport activities,                                 but explains that no verification could be made of the correct imputation of some costs to the one or the other sector of                                 activity. The second expert further explains that it was not possible to acquire reliable data on the costs that would not                                 have been incurred in case of termination of the PSO — even using the ‘inductive method’ prescribed by the Consiglio di Stato.(27)Accordingly, the second expert concluded that no additional compensation for the obligation to operate or carry, calculated                                 on the basis of Article 10 of Regulation (EEC) No 1191/69 could be determined.(28)As regards additional compensation in relation to tariff obligations — Article 11 of Regulation (EEC) No 1191/69 — the second                                 expert acknowledges that it could not be calculated on the basis of paragraph 1 of that provision, because of missing and/or                                 unreliable data. Therefore, the ‘inductive method’ prescribed by the Consiglio di Stato was applied.(29)Article 11 of Regulation (EEC) No 1191/69 provides, inter alia, that the amount of the compensation must, in the case of a                                 tariff obligation, be equal to the difference between the following two amounts.-  The first amount is equal to the difference between, on the one hand, the product of the anticipated number of units of measure                                    of transport and:                                     -  either the most favourable existing rate which might be claimed by users if the obligation in question did not exist, 
  -  or where there is no such rate, the rate which the undertaking, operating on a commercial basis and taking into account both                                          the costs of the operation in question and the state of the market, would have applied,  and, on the other hand, the product of the actual number of units of measure of transport and the rate imposed for the period                                    under consideration.                                  
-  The second amount is equal to the difference between the costs which would be incurred applying either the most favourable                                    existing rate or the rate which the undertaking would have applied if operating on a commercial basis and the costs actually                                    incurred under the obligatory rate.                                  
(30)In the absence of the data required to determine those amounts, the second expert calculated the amount of compensation due                                 as the difference between the two amounts as interpreted below.-  In the absence of the anticipated and the actual number of units of measure of transport, the first amount is equal to the                                    amount necessary to cover the real costs (or the ‘standard costs’ if lower)(7), minus the revenues obtained from the traffic carried(8).                                  
-  As regards the second amount, the expert considered that it should be equal to the real costs (or the ‘standard costs’ if                                    lower)(9) minus the difference between the real costs (or the ‘standard costs’ if lower) and the amount of compensation already received(10).                                  
(31)According to the second expert, it follows from those calculations that during the period under review Buonotourist could                                 only claim to have been undercompensated in 1998, 1999, and 2000 as a result of alleged tariff obligations being imposed upon                                 it. The amount of undercompensation for those three years was calculated by the second expert to amount to EUR 838 593.21,                                 to which legal interest of EUR 272 979.13 was added, resulting in additional compensation of EUR 1 111 572. It was this amount                                 which the Consiglio di Stato ordered the Region to pay to Buonotourist, which it actually paid on 21 December 2012.2.5.GROUNDS FOR INITIATING THE PROCEDURE(32)As explained in the opening decision, the Commission had several doubts regarding the compatibility of the measure with the                                 internal market.(33)First, the Commission questioned whether the four conditions laid down by the Court of Justice of the European Union (‘the                                 CJEU’) in its *Altmark* case-law(11) had been fulfilled.(34)Second, the Commission had doubts regarding the exemption from the notification obligation under Regulation (EEC) No 1191/69.                                 The question of whether Article 17(2) of Regulation (EEC) No 1191/69 indeed exempted the Italian authorities from prior notification                                 in the present case thus depends, first, on whether a PSO was in fact unilaterally imposed on Buonotourist by the Region and,                                 second, on whether the compensation paid pursuant to that obligation complies with the requirements of Regulation (EEC) No 1191/69.                                 The Commission could not conclude whether the compensation awarded to Buonotourist fulfilled those conditions.(35)Third, the Commission had doubts regarding the possible compatibility of the measure under Regulation (EC) No 1370/2007 of                                 the European Parliament and of the Council(12). If it was confirmed that at least one of the conditions for exemption from notification pursuant to Regulation (EEC) No 1191/69                                 was not met and an assessment under Regulation (EC) No 1370/2007 had to be conducted, the Commission had doubts whether the                                 conditions of that Regulation were complied with in the present case.

3.**COMMENTS BY ITALY**(36)The Italian authorities at the national level did not provide any comments on the opening decision. Only the Campania Region                                 did.(37)First, the Region submitted documentation meant to show that Buonotourist performed ‘authorised services’ at its own risk,                                 in addition to the services under concession in the period concerned. For example, Buonotourist appears to have provided international                                 and interregional bus transport services in the period under review. In addition, the Region explained that Buonotourist only                                 had accounting separation between rental services and bus transport services, without further distinguishing the ‘authorised                                 services’ that the company performed at its own risk.(38)Second, the Region reiterated that no unilateral imposition of PSOs took place during the period under review. The Region                                 noted that the company, under the rules then in force, requested yearly renewal of the concession services and that none of                                 the concession acts entailed the unilateral imposition of PSOs. Moreover, following the judgment of the Consiglio di Stato                                 in 2009, the Region repeatedly asked Buonotourist to provide the acts or contracts imposing PSOs on it in order to comply                                 with the judgment. According to the Region, the company never replied to these requests. Regarding the cap on tariffs, the                                 Region noted that the tariffs indicated by the concession contracts derived from general measures of price policy applied                                 by all companies operating in the same sector.

4.**COMMENTS BY INTERESTED PARTIES**(39)The only third party to submit observations in response to the opening decision was Buonotourist, the beneficiary of the measure.                                 In its submissions, Buonotourist disagreed with the preliminary positions taken by the Commission in the opening decision.(40)To substantiate its claim that obligations were imposed on it, Buonotourist argued that the PSOs were not set out in the document                                 awarding the concession, which did not exist, but derived solely from internal acts of the Region which predetermined the                                 organisation of the undertaking and the compensation through the ‘standard cost’ mechanism. Buonotourist explained that Italy                                 had regulated the PSOs by means of Law No 151/81, Regional Law No 16/83, Article 4 of Law No 59/97 and Legislative Decree                                 No 422/97. The public service was entrusted to Buonotourist by the Region by means of a concession act in 1972/73 and renewed                                 every year until 2003. That PSOs were imposed on Buonotourist for the years 1996-2002, such as tariff obligations, routes,                                 times and stops, can be allegedly inferred from the following documents:-  the ‘bridging service contract’ signed by Buonotourist and the Region for the year 2003 in compliance with Article 46 of Regional                                    Law No 3/02, recalling and replacing the existing concessions,                                  
-  decision of the Regional Government (*delibera della Giunta Regionale*) No 8726 of 30 December 1999, authorising Buonotourist to modify some routes following requests from both the company and                                    other petitioners,                                  
-  decision of the Regional Government No 323 of 4 May 2000, which extended the duration of the suspension of the increase in                                    costs for season tickets for bus transport services in the Region,                                  
-  note 4770/2000 communicating the distinction between how to calculate the tariff for ordinary season tickets and season tickets                                    for ‘work lines’ (*linee operaie*),                                  
-  decree of the Region’s *Assessore di Trasporti* No 1609/2001 concerning the change from lira to euros, reminding the service providers that any irregular increase in tariffs                                    was forbidden and that prohibition constituted a ‘concession/contractual obligation’.                                  
(41)Moreover, Buonotourist argued that since the Region repeatedly reduced the amount of the standard cost and applied that cost                                 unevenly across the different routes and concessions, some operators decided to close certain bus routes consistently operated                                 at a loss. The Region allegedly replied that the operators were duty bound to operate the routes under the PSOs and that legal                                 action would be taken against them for interrupting a public service if indeed they did stop providing their activity. According                                 to Buonotourist, this showed that PSOs were imposed upon it. However, Buonotourist did not provide evidence to support this                                 claim.(42)Buonotourist also claimed that it mainly operated as a local public transport service provider (80 % of its activity). For                                 the remaining diversified economic activity, it maintained separate accounts.(43)After having recalled the final national ruling by the Consiglio di Stato, Buonotourist challenged the following arguments                                 put forward by the Region:-  the calculation was not supported by separate management accounts by cost centres such as to distinguish the activities subject                                    to PSOs,                                  
-  given the absence of accounting data allowing the identification of the specific elements to be calculated pursuant to Articles 10                                    and 11 of Regulation (EEC) No 1191/69, the calculation had been performed inductively, with a method the Region termed as                                    ‘abstruse and aberrant’.                                  
(44)Buonotourist explained that the applicable rules simply required the accounting data relating to the public transport service                                 operated under a PSO to be supplied separately from those of any other business activities, but did not require any further                                 accounting breakdown showing separately the costs and revenue for each route covered. Buonotourist claimed to keep separate                                 accounts for the accounting data concerning public service activities and those concerning the business activities, and it                                 added that the reliability of such accounting data was never questioned by the Region, which on the contrary used them correctly                                 as the basis for calculating and paying out the annual contributions.(45)Buonotourist further disputed that the accounting documents supplied were insufficient to support the compensation claim merely                                 because they consisted of annual financial statements and ‘E forms’(13) and were not accompanied by full copies of the underlying accounting and administrative entries (accounting register, ledgers,                                 invoices issued and received, ticket receipts, etc.). According to Buonotourist, this argument could be easily countered by                                 noting that the Region had accepted the same data during the period under review, considering them reliable at the time. Furthermore,                                 the requirement to keep full accounting and administrative documentation for the period under review has now expired and it                                 is, therefore, objectively difficult to demand copies at present. It is therefore appropriate to reconstruct the amount of                                 compensation due via an inductive approach, as prescribed by the Consiglio di Stato. Finally, the financial statements had                                 been duly certified and their correctness and truthfulness had never been called into question. In conclusion, the accounts                                 submitted by Buonotourist are clearly sufficient for calculating the compensation in full compliance with the requirements                                 of Regulation (EEC) No 1191/69.(46)Concerning the correctness of the calculation method and its consistency with Union law, Buonotourist considered that the                                 company had to be compensated for the disadvantage incurred in terms of the difference between lower revenue and greater costs                                 as a consequence of its PSOs. To establish the value of lower revenue on the basis of reliable data, Buonotourist, first,                                 considered the actual annual operating revenue, which was the product of the actual number of units of measure of transport                                 and the tariff imposed. It then identified the amount to be subtracted in accordance with Union rules, considering the revenue                                 necessary to cover the actual costs as recorded in the annual accounts. The amount of the annual operating revenue coincides                                 with the actual revenue obtained by the company in the activity provided under a tariff obligation which was separately indicated                                 in the annual financial statements of Buonotourist and in the E forms sent each year to the Region, which never questioned                                 their reliability. There is, therefore, no need to break down those amounts into their component parts, even though they include                                 revenues for routes that were not subject to concessions and are therefore overstated. As for the amount to be subtracted,                                 Buonotourist claimed that it used a criterion that fully complied with the instructions contained in Regulation (EEC) No 1191/69,                                 which allowed the use of the tariff that the company would have applied had it operated on a commercial basis, which had to                                 cover the actual costs incurred. As far as the difference between the costs which the undertaking would have incurred by applying                                 the most favourable existing rate or operating on a commercial basis and the costs actually incurred were concerned, Buonotourist                                 considered that its calculation is fully consistent with Article 11 of that Regulation, as it captured the lower cost incurred                                 by the undertaking as a consequence of the PSO on account of the contributions received from the Region to cover operating                                 costs. Moreover, Buonotourist is of the opinion that it would be impossible to estimate the passenger traffic in a free market                                 scenario. Therefore the ‘inductive method’ prescribed by the Consiglio di Stato is legitimate. Finally, Buonotourist recalled                                 that both Articles 10 and 11 established the right of public transport companies subject to PSOs to be compensated for all                                 negative financial impacts resulting from their obligations.(47)Concerning the notion of State aid, Buonotourist argued that the market for public transport in Italy in the period in question                                 was not open to competition from undertakings established in other Member States. Buonotourist therefore concluded that there                                 was no effect on trade. Likewise, in view of the current organisation of the local public transport service based on the unilateral,                                 exclusive concession of certain routes, the compensation was not likely to distort competition. Furthermore, the standard                                 cost/km was imposed by the Region and accepted by the concessionaire together with all the other PSOs, therefore there would                                 be no advantage. Buonotourist thus considered that at least three of the conditions laid down by the CJEU for identifying                                 State aid were not met in the case at issue.(48)Buonotourist is of the opinion that the compatibility of the compensation had to be assessed with reference to Regulation                                 (EEC) No 1191/69. Concerning the exemption from the requirement to notify under Regulation (EEC) No 1191/69, Buonotourist                                 considered that since the Region imposed the tariff obligation unilaterally and the amounts do not constitute PSOs under a                                 service contract but stem from the correct application of the calculation under Article 11 of that Regulation in the framework                                 of a concession, the payment awarded as compensation was exempted from the notification requirement of Article 17(2) of the                                 same Regulation.

5.**COMMENTS BY ITALY ON THE COMMENTS BY INTERESTED PARTIES**(49)The Italian authorities at the national level did not submit any comments on Buonotourist’s comments. Only the Campania Region                                 did, on 11 July 2014.(50)In the submission, the Region explained that the separate accounting kept by Buonotourist only concerned the rental services                                 (*noleggio* or *fuorilinea*) vis-à-vis the bus services in general. The bus services provided by Buonotourist, however, included interregional and international                                 routes (so-called ‘authorised’ transport services) that were performed at the company’s own risk. The Region provided evidence                                 of the provision by Buonotourist of such authorised services during the period under review. In particular, the Region provided                                 Decision of the Regional Government No 8734/1999 authorising services between two regions and note No 4765/2011 of the Ministry                                 of Infrastructure and Transport certifying the provision of three interregional routes. Moreover, the notes to the accounts                                 of the company for 1998 and 2000 clearly mention the international and interregional activities, as does judgment No 2157/2004                                 of the Lazio Regional Administrative Court (*Tribunal Amministrativo Regionale*).(51)The provision of ‘authorised’ interregional and international transport services was not separately indicated in the accounts                                 of Buonotourist. Finally, the account separation for those services cannot be inferred from the E forms submitted by Buonotourist                                 to the Region every year, where the actual costs and revenues for the provision of bus services are indicated separately under                                 ‘Local Public Transport Campania Region’ and the rental services are indicated under ‘Rental’ (*noleggio* or *fuorilinea*). According to the Region, the column ‘Local Public Transport Campania Region’ shows all the costs and revenues indicated                                 in the ‘Bus Services Income Statement’, which represented all bus services in general, including authorised interregional                                 and international transport services.

6.**ASSESSMENT OF THE AID**6.1.EXISTENCE OF AID(52)Pursuant to Article 107(1) TFEU, ‘any aid granted by a Member State or through State resources in any form whatsoever which                                 distorts or threatens to distort competition by favouring certain undertakings or the provision of certain goods shall, in                                 so far as it affects trade between Member States, be incompatible with the internal market’.(53)Accordingly, for a support measure to be considered State aid within the meaning of Article 107(1) TFEU, it must cumulatively                                 fulfil all of the following conditions:-  it must be granted by the State or through state resources, 
-  it must confer a selective advantage by favouring certain undertakings or the production of certain goods, 
-  it must distort or threaten to distort competition, and 
-  it must affect trade between Member States. 
6.1.1.**State resources and imputability**(54)The Commission notes that the judgment of the Consiglio di Stato requires the Region to pay additional compensation to Buonotourist                                 with respect to the provision of scheduled bus services during the period under review on routes under the remit of the Region.                                 The second court-appointed expert calculated that Buonotourist suffered an economic disadvantage in the form of undercompensation                                 only for 1998, 1999, and 2000 in the amount of EUR 1 111 572 as a result of alleged tariff obligations being imposed on it.                                 On 21 December 2012, the Region paid this sum to Buonotourist in order to comply with that judgment.(55)The fact that the Region was obliged by a national court to pay compensation to an undertaking does not meant that the aid                                 cannot be imputed to the Region complying with that judgment, since the domestic courts of that State are to be considered                                 organs of that State and are thus bound by their duty of sincere cooperation(14).(56)The measure is thus imputable to the State and the resources from which that compensation has been paid are state resources.6.1.2.**Selective economic advantage**(57)The Commission notes at the outset that Buonotourist is engaged in an economic activity, namely passenger transport for remuneration.                                 Therefore, Buonotourist should be considered an ‘undertaking’ within the meaning of Article 107(1) of the Treaty.(58)The granting of the measure should also be considered selective, since it will benefit only Buonotourist.(59)As regards the granting of a selective economic advantage, it follows from the *Altmark* judgment that compensation granted by the State or through state resources to undertakings as consideration for PSOs imposed                                 on them does not confer such an advantage on the undertakings concerned, and hence does not constitute State aid within the                                 meaning of Article 107(1) of the Treaty, provided that four cumulative conditions are satisfied(15).-  First, the recipient undertaking is actually required to discharge PSOs and those obligations have been clearly defined. 
-  Second, the parameters on the basis of which the compensation is calculated have been established beforehand in an objective                                    and transparent manner.                                  
-  Third, the compensation does not exceed what is necessary to cover all or part of the costs incurred in discharging the public                                    service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations.                                  
-  Fourth, where the undertaking which is to discharge public service obligations is not chosen in a public procurement procedure,                                    the level of compensation needed has been determined on the basis of an analysis of the costs which a typical undertaking,                                    well run and adequately provided with means of transport so as to be able to meet the necessary public service requirements,                                    would have incurred in discharging those obligations, taking into account the relevant receipts and a reasonable profit for                                    discharging the obligations.                                  
(60)The *Altmark* judgment requires all four conditions to be cumulatively satisfied to exclude the presence of an economic advantage where                                 compensation is granted to undertakings as consideration for public service obligations imposed on them.(61)The Commission notes first that neither the Italian authorities nor Buonotourist were able to provide it with any entrustment                                 act related to the period under review and that Buonotourist has not been able to identify clearly obligations that it was                                 required to discharge that could qualify as PSOs, as explained in more detail below in 6.2, subsection (i).(62)Second, the Commission observes that the compensation awarded by the judgment of the Consiglio di Stato is based solely on                                 an *ex post* calculation using an ‘inductive method’ in the absence of necessary and reliable data. The Commission therefore concludes                                 that the parameters on the basis of which the alleged undercompensation was calculated by the court-appointed experts were                                 not established in advance and that therefore the second *Altmark* condition does not appear to have been complied with in relation to the non-notified measure.(63)Considering the cumulative nature of the *Altmark* conditions, there is no need for the Commission to examine whether the other two *Altmark* conditions have been met in the present case. Accordingly, the payment of additional compensation to Buonotourist for services                                 performed during the period under review confers on that company a selective economic advantage within the meaning of Article 107(1)                                 of the Treaty.6.1.3.**Distortion of competition and effect on trade between Member States**(64)In its observations, Buonotourist argued that the market for public transport in Italy was not open to competition from undertakings                                 established in other Member States during the period under review, so there could be no effect on trade or distortion of competition                                 as regards the disputed measure.(65)The Commission recalls, in the first place, that the disputed measure was implemented on 21 December 2012, long after the                                 market for public passenger transport was opened to competition in Italy. Since it is at that point in time that the measure                                 under review produces its effects on the market, it is also at that point in time that it must be assessed whether the measure                                 is liable to distort competition or affect trade between Member States.(66)In any event, the Commission further notes that, as the CJEU remarked in its *Altmark* judgment, since 1995 several Member States had started to open certain transport markets to competition from undertakings                                 established in other Member States, so a number of undertakings were already offering their urban, suburban or regional transport                                 services in Member States other than their State of origin by that point in time.(67)Therefore, any compensation granted to Buonotourist should be considered likely to distort competition for the provision of                                 passenger transport services by bus and likely to affect trade between Member States to the extent that it impairs the ability                                 of transport undertakings established in other Member States to offer their services in Italy and strengthens the market position                                 of Buonotourist by releasing it from costs which it would normally have had to bear in its day-to-day management or normal                                 activities(16).(68)The Commission also notes that Buonotourist is active on other markets, i.e. rental services, and thus competes with other                                 companies within the Union on those markets. Any compensation granted to Buonotourist might also threaten to distort competition                                 and affect trade between Member States on those markets as well.(69)Accordingly, the Commission concludes that the measure distorts competition and affects trade between Member States.6.1.4.**Conclusion**(70)In the light of the above, the Commission concludes that the measure constitutes aid within the meaning of Article 107(1)                                 of the Treaty.6.2.EXEMPTION FROM THE NOTIFICATION OBLIGATION UNDER REGULATION (EEC) NO 1191/69(71)According to the reasoning of the Consiglio di Stato, Buonotourist acquired the right to obtain additional compensation for                                 the provision of the transport services in question at the time at which it carried out those services. For this reasoning                                 to hold, the compensation payments must have been exempted from the compulsory notification procedure pursuant to Article 17(2)                                 of Regulation (EEC) No 1191/69. Otherwise, to the extent the compensation constitutes State aid within the meaning of Article 107(1)                                 TFEU, failure to notify that compensation would render that compensation unlawful in accordance with Article 108 of the Treaty.(72)This is because, in accordance with Article 17(2) of Regulation (EEC) No 1191/69, compensation paid pursuant to that Regulation                                 is exempted from the preliminary information procedure laid down in Article 108(3) of the Treaty and thus from notification.(73)However, it follows from the *Combus* judgment that the concept of ‘public service compensation’ within the meaning of that provision must be interpreted in a                                 very restrictive manner(17). The exemption from notification provided by Article 17(2) of Regulation (EEC) No 1191/69 covers only compensation for PSOs                                 imposed unilaterally on an undertaking pursuant to Article 2 of that Regulation that is calculated using the method described                                 in Articles 10 to 13 of the same Regulation (the common compensation procedure), and not public service contracts as defined                                 by Article 14 of the Regulation. Compensation paid pursuant to a public service contract as defined by Article 14 of Regulation                                 (EEC) No 1191/69 which entails State aid must be notified to the Commission before it is put into effect. Failure to do so                                 will result in that compensation being deemed to be unlawfully implemented aid in accordance with Article 108 of the Treaty.(74)The question of whether Article 17(2) of Regulation (EEC) No 1191/69 indeed released the Italian authorities from prior notification                                 in the present case thus depends, first, on whether a PSO was in fact unilaterally imposed on Buonotourist by the Region and,                                 second, on whether the compensation paid pursuant to that obligation complies with the requirements of Regulation (EEC) No 1191/69.                                 The Commission will examine both questions in turn.(i)*PSO unilaterally imposed*(75)The Commission notes that neither the Italian authorities nor Buonotourist were able to provide it with any entrustment act                                 related to the period under review. Buonotourist only provided the Commission with contracts which were implemented as from                                 2003.(76)The Italian authorities claim that the sample concession contract provided by them — which concerned another undertaking —                                 was the standard one in use in the Region during the period under review. However, the sample concession contract was only                                 valid from April 1972 to December 1973, which is more than 20 years before the period under review, and before the entry into                                 force of Law No 151/1981, as enacted by Regional Law No 16/1983, on which basis Buonotourist was compensated in the first                                 instance. Although the sample concession contract would seem to provide for some obligations that could qualify as PSOs (e.g.                                 at points 2, 9 and 10), including the duty to apply discounts for students, workers, teachers, and private and public employees                                 and the duty to transport certain categories of passengers for free, the Commission has no evidence that the same obligations                                 were actually applicable to Buonotourist during the period under review because of the absence of an entrustment act. Rather,                                 considering that the services provided were regular scheduled services, it was necessary for the concession regulations, which                                 granted Buonotourist an exclusive right to provide those services, to specify in advance the arrangements for the services                                 to be provided. Buonotourist has not provided evidence to show that those arrangements were unilaterally imposed by the Region,                                 instead of being proposed by the operator, in return for the right to provide services on an exclusive basis, and subsequently                                 authorised by the Region. In any case, the methodology used by the court-appointed expert to calculate the alleged undercompensation                                 does not refer to those obligations.(77)The Commission has also assessed whether a PSO could be inferred from Regional Law No 16/1983, it being the legal basis identified                                 by both the Region and Buonotourist for the compensation granted to the company in the period under review (see recitals 23                                 and 40). In this respect, it must be noted that that Regional Law only provides that entities and public or private undertakings                                 providing public local transport services under a concession regime could receive public contributions. Article 2 of the Regional                                 Law clearly states that: ‘any possible loss or deficit not covered by the regional contributions as determined above [in Article 2]                                 remains chargeable to the individual undertakings’.(78)The Commission further notes that the Regional acts provided by Buonotourist (see recital 40) mentioned some contractual obligations                                 in place between Buonotourist and the Region during the period under review. However, those acts do not clearly identify obligations                                 that could qualify as PSOs, despite being an indicator of their possible existence. Moreover, the existence of contractual                                 obligations excludes a PSO being unilaterally imposed on Buonotourist. In any case, the methodology used by the court-appointed                                 expert to calculate the alleged undercompensation does not refer to those obligations.(79)On the possible existence of a tariff obligation, although the calculation of additional compensation by the court-appointed                                 expert was made on the basis of Article 11 of Regulation (EEC) No 1191/69, the Commission has no evidence that such obligations                                 were in fact unilaterally imposed on Buonotourist. According to Article 2(5) of Regulation (EEC) No 1191/69, tariff obligations                                 are ‘obligation[s] imposed on transport undertakings to apply, in particular for certain categories of passenger, for certain                                 categories of goods, or on certain routes, rates fixed or approved by any public authority which are contrary to the commercial                                 interests of the undertaking and which result from the imposition of, or refusal to modify, special tariff provisions’. By                                 contrast, the definition of tariff obligations ‘shall not apply to obligations arising from general measures of price policy                                 applying to the economy as a whole or to measures taken with respect to transport rates and conditions in general with a view                                 to the organisation of the transport market or of part thereof’. The Commission acknowledges that Point 27 of the sample concession                                 contract from 1972/73 lays down applicable tariffs for the operator it covers, but recalls that it has received no similar                                 concession or entrustment act concerning Buonotourist for the period under review from which it could establish the imposition                                 of such obligations on the undertaking. In any event, the Commission notes that, under Article 2 of Regional Law No 16/1983,                                 the annual compensation to undertakings providing public transport services was calculated *ex ante* as the difference between the revenues deriving from the application of minimum tariffs and the so-called ‘standard cost’                                 (see recital 23). The Commission therefore concludes that the Regional Law provided for minimum tariffs, which also excludes                                 the existence of a general tariff obligation.(80)In any event, it does not appear that any PSO Buonotourist might have been required to carry out was unilaterally imposed                                 on it. The Commission notes in this respect that Buonotourist took the initiative in requesting the renewal of concessions                                 for all seven years during the period under review.(81)Buonotourist’s argument that the operators were duty bound to operate the routes under PSOs, even if the Region repeatedly                                 reduced the amount of the standard cost, and that legal action would have been taken against them for interrupting a public                                 service if they did indeed stop their activities, has not been backed up by any evidence, so it cannot be used to support                                 the finding of unilaterally imposed PSOs in the present case.(ii)*Compliance of the compensation with the common compensation procedure*(82)Even if the PSOs were shown to have been unilaterally imposed on Buonotourist in this instance, which is not the case, the                                 compensation for those services would still need to comply with the common compensation procedure (Section IV) of Regulation                                 (EEC) No 1191/69 to be exempted from prior notification under Article 17(2) of that Regulation. The Commission does not consider                                 this to be the case.(83)First, the Commission notes that the common compensation procedure under Regulation (EEC) No 1191/69 sets out a method for                                 calculating the amount of compensation to be granted in respect of the financial burdens resulting from the imposition of                                 a public service obligation. With effect from 1 July 1992, Regulation (EEC) No 1191/69, by virtue of Article 1(5)(a) thereof,                                 required transport undertakings, which operate not only services subject to PSOs but also engage in other activities, to operate                                 the public services as separate divisions whereby: (i) the operating accounts corresponding to each of those activities are                                 separate and the proportion of the assets pertaining to each is used in accordance with the accounting rules in force, and                                 (ii) expenditure is balanced by operating revenue and payments from public authorities, without any possibility of transfer                                 from or to another sector of the undertaking’s activity.(84)The Commission further notes that, according to the Court of Justice in the *Antrop* judgment, the requirements set out by that procedure are not fulfilled where it is not possible to ascertain on the basis                                 of reliable data from the relevant accounts the difference between the costs imputable to the part of its activities in the                                 area covered by the concession and the corresponding income and, consequently, where it is not possible to calculate the additional                                 cost deriving from the performance of public service obligations by that undertaking(18).(85)The Commission considers that the compensation awarded to Buonotourist does not comply with these requirements. Buonotourist                                 confirmed that, in addition to its alleged PSO activities, it also engaged in rental services activities. In addition, the                                 Region alleges that Buonotourist also engaged in other activities — in interregional and international bus services (see recitals                                 50 to 52). However, neither the Italian authorities nor Buonotourist demonstrated that proper separate accounts were kept                                 for these activities. This seems to be implicitly confirmed by Buonotourist when it asserts that the amounts indicated in                                 the ‘E forms’ sent each year to the Region also included revenues for routes that were not subject to concessions (see recital                                 45).(86)The Commission considers that the argument put forward by Buonotourist that the legal requirement to keep full accounting                                 and administrative documentation for the period under review has now expired is not relevant to justify *ex post* an additional amount of compensation via an inductive approach. In any event, such a requirement deriving from national law,                                 were it to be shown to exist, cannot undermine an obligation deriving from the case-law of the CJEU or Regulation (EEC) No 1191/69,                                 which must be shown to have been fulfilled before public service compensation can be paid to a transport operator.(87)Second, the Commission notes that Article 13 of Regulation (EEC) No 1191/69 requires the administration to fix the amount                                 of the compensation in advance. The calculation of the additional compensation on the basis of an *ex post* assessment, as prescribed by the Consiglio di Stato, is at odds with that provision, as already explained in recitals 62                                 and 63.(88)In the light of these observations, the Commission concludes that the additional compensation the Consiglio di Stato considers                                 due to Buonotourist was not exempted from compulsory prior notification pursuant to Article 17(2) of Regulation (EEC) No 1191/69.6.3.COMPATIBILITY OF THE AID(89)Since it has not been shown that the measure under review was exempt from prior notification pursuant to Article 17(2) of                                 Regulation (EEC) No 1191/69, the compatibility of the payment with the internal market will have to be examined, as they are                                 considered to constitute State aid within the meaning of Article 107(1) of the Treaty, as explained in section 6.1.(90)Article 93 of the Treaty contains rules for the compatibility of State aid in the area of coordination of transport and PSOs                                 in the field of transport and constitutes a *lex specialis* with respect to Article 107(3), as well as Article 106(2), as it contains special rules for the compatibility of State aid.                                 The CJEU has ruled that that Article ‘acknowledges that aid to transport is compatible with the internal market only in well-defined                                 cases which do not jeopardise the general interests of the [Union]’(19).(91)On 3 December 2009, Regulation (EC) No 1370/2007 entered into force and repealed Regulation (EEC) No 1191/69 and Regulation                                 (EEC) No 1107/70 of the Council(20). Regulation (EC) No 1370/2007 applies to the compensation of PSOs concerning public passenger transport services by rail                                 and by road.(92)The Commission considers that the examination of the compatibility of the non-notified measure should be conducted under Regulation                                 (EC) No 1370/2007, since that was the legislation in force at the time that this Decision was adopted(21). It further notes that the additional compensation awarded to Buonotourist by the Consiglio di Stato was paid on 21 December                                 2012, so Regulation (EC) No 1370/2007 had already been in effect for more than three years on the date on which the effects                                 of the disbursed aid occurred(22).(93)Article 9(1) of Regulation (EC) No 1370/2007 states that ‘Public service compensation for the operation of public passenger                                 transport services or for complying with tariff obligations established through general rules paid in accordance with this                                 Regulation shall be compatible with the [internal] market. Such compensation shall be exempt from the prior notification requirement                                 laid down in Article [108(3)] of the Treaty’.(94)For the reasons set out below, the Commission considers that the notified compensation does not comply with Regulation (EC)                                 No 1370/2007, so it cannot be declared compatible with the internal market under Article 9(1) of that Regulation.(95)First, pursuant to Article 3 of Regulation (EC) No 1370/2007, where a competent authority decides to grant the operator of                                 its choice an exclusive right and/or compensation in return for the discharge of PSOs, it must do so within the framework                                 of a public service contract, unless the public service obligation aims to establish maximum tariffs and is imposed through                                 a measure applicable without discrimination to all public passenger transport services of the same type in a given geographical                                 area (general rules).(96)In the present case, the Commission considers that no evidence has been put forward that a contractual scheme existed between                                 Buonotourist and the Region or that general rules establishing maximum tariffs for all passengers or certain categories of                                 passengers were put in place. The Commission has received only one sample concession contract for the year 1972/73 concerning                                 another company, from which it is not possible to extract reliable information on the relationship between Buonotourist and                                 the Region in the period under review (1996-2002). Moreover, the Commission notes that, in accordance with Article 2 of Regional                                 Law No 16/1983 — the legal basis identified by both the Region and Buonotourist for the period under review (see recitals                                 21 and 39) — the revenues of public transport providers derive from the application of minimum tariffs established by the                                 Region. No reference is made to maximum tariffs.(97)The Commission therefore concludes that Article 3 of Regulation (EC) No 1370/2007 has not been complied with.(98)Second, the Commission notes that regardless of whether Buonotourist concluded a public service contract or was subject to                                 tariff obligations by way of general rules, not all the provisions of Article 4 of Regulation (EC) No 1370/2007, which establishes                                 the mandatory content of public service contracts and general rules, appear to have been respected. For instance, Article 4(1)(b)                                 requires the parameters on the basis of which the compensation is calculated to be established in advance in an objective                                 and transparent manner in a way that prevents overcompensation, while Article 4(1)(c) and Article 4(2) lay down the arrangements                                 with regard to the allocation of costs and revenues. As explained in relation to the Commission’s examination of the second                                 condition laid down by the CJEU’s *Altmark* judgment in section 6.1, the parameters on the basis of which the alleged undercompensation was calculated by the second                                 expert were not established in advance and therefore Article 4 of Regulation (EC) No 1370/2007 has not been complied with.(99)Third, Article 6(1) provides that in the case of directly awarded public service contracts, compensation must comply with                                 the provisions of Regulation (EC) No 1370/2007 and with the provisions laid down in the Annex to ensure that the compensation                                 does not go beyond what is necessary to carry out the public service obligation. The Annex to Regulation (EC) No 1370/2007                                 provides that the compensation may not exceed an amount corresponding to the financial amount composed of the following factors:                                 costs incurred in relation to the PSO minus ticket revenue, minus any positive financial effects generated within the network                                 operated under the public service obligation, plus a reasonable profit. In addition, that Annex requires costs and revenues                                 to be calculated in accordance with the accounting and tax rules in force. Furthermore, for transparency reasons, there should                                 be separation of accounts (Point 5 of the Annex to Regulation (EC) No 1370/2007).(100)As noted in recital 85, Buonotourist did not apply proper account separation. Consequently, it is impossible to demonstrate                                 that whatever compensation is ultimately awarded does not exceed an amount corresponding to the net financial effect equivalent                                 to the total of the effects, positive or negative, of compliance with the public service obligation on the costs and revenue                                 of the public service operator (point 2 of the Annex).(101)Moreover, in the absence of compensation parameters laid down in advance, any cost allocation must necessarily be conducted                                 *ex post* on the basis of arbitrary assumptions, as was done through the inductive methodology.(102)Accordingly, the Commission considers that the additional compensation ordered by the Council of State was not paid in accordance                                 with Regulation (EC) No 1370/2007, and therefore that the non-notified measure is incompatible with the internal market.6.4.THE COMPENSATION AWARDED BY THE CONSIGLIO DI STATO DOES NOT CONSTITUTE DAMAGES(103)In the opening decision, the Commission invited interested parties to comment on whether the judgment of the Consiglio di                                 Stato concerns an award for damages for alleged breach of law as opposed to an award of public service compensation based                                 on the applicable Council Regulations. Neither the Italian authorities or Buonotourist addressed the question in their observations.(104)The Commission notes in this respect that, under certain circumstances, compensation for damages due to the wrongful acts                                 or other conduct by the national authorities(23) does not provide for an advantage and is therefore not to be considered State aid within the meaning of Article 107(1) of                                 the Treaty(24). The purpose of compensation for damage suffered is different from that of State aid since it aims to bring the damaged party                                 back to the situation in which it found itself prior to the damaging act, as if the latter had not occurred (*restitutio in integrum*). The Commission further notes, in that respect, that for compensation for damages to fall outside the State aid rules, it                                 must be based on a general rule of compensation(25). The Commission finally recalls that the CJEU, in its judgment in *Lucchini*, held that a national court was prevented from applying national law where the application of that law would have the effect                                 of frustrating ‘the application of Community law in so far as it would make it impossible to recover State aid that was granted                                 in breach of Community law’(26). The principle underlying this pronouncement is that a rule of national law cannot be applied where such application would                                 frustrate the proper application of Union law(27).(105)As regards the additional compensation awarded to Buonotourist by the Consiglio di Stato, the Commission observes that, while                                 no reference was made to Regulation (EEC) No 1191/69 in the operative part of the Consiglio di Stato’s judgment, that judgment                                 refers to Buonotourist’s right to receive amounts by way of compensation pursuant to Articles 6, 10 and 11 of Regulation (EEC)                                 No 1191/69, which must be determined by the administration on the basis of reliable data. This would suggest that Buonotourist’s                                 right to additional compensation flows, according to the Consiglio di Stato, not from a general rule of compensation for damages                                 as a result of a wrongful act or other conduct of the national authorities, but from rights allegedly derived from Regulation                                 (EEC) No 1191/69.(106)In any event, the Commission considers that an award of damages in favour of Buonotourist for the alleged illegal unilateral                                 imposition of PSOs by the Italian authorities, calculated on the basis of the common compensation procedure laid down by Regulation                                 (EEC) No 1191/69, would be in breach of Articles 107 and 108 of the Treaty. This is because such an award would produce the                                 same result for Buonotourist as an award of public service compensation for the period under review, despite the fact that                                 the concession specifications governing the services in question were neither exempt from prior notification nor complied                                 with the substantive requirements of Regulation (EEC) No 1191/69 or Regulation (EC) No 1370/2007, as demonstrated above. The                                 availability of such an award would thus effectively enable the circumvention of the State aid rules and of the conditions                                 laid down by the Union legislator under which competent authorities, when imposing or contracting for PSOs, compensate public                                 service operators for costs incurred in return for the discharge of PSOs. Indeed, an award of damages equal to the sum of                                 the amounts of aid that were planned to be granted would constitute an indirect grant of State aid found to be unlawful and                                 incompatible with the internal market(28). Following that line, the General Court has considered indemnification clauses for the recovery of State aid to constitute                                 State aid(29).(107)In any event, the sample concession contract from 1972 under which Buonotourist supposedly provided the transport services                                 in question did not provide for the payment of any financial compensation. Buonotourist agreed to run the services under the                                 conditions established in the concession at its own risk. This conclusion is also confirmed by Article 2 of Regional Law No 16/1983,                                 which provided that any loss or deficit not covered by public contributions was to be borne by the service providers.(108)Accordingly, the Commission does not consider the judgment of the Consiglio di Stato to constitute an award of compensation                                 for damages suffered by Buonotourist as a result of the wrongful act or other conduct of the national authorities, but as                                 the grand of unlawful and incompatible State aid, which is prohibited under Article 107(1) of the Treaty.(109)In the light of the foregoing, the Commission concludes that the non-notified measure constitutes State aid within the meaning                                 of Article 107(1) of the Treaty which is incompatible with the internal market.

7.**RECOVERY OF THE AID**(110)In accordance with the Treaty and the CJEU’s established case-law, the Commission is competent to decide that the Member State                                 concerned must abolish or alter aid(30) when it has found that it is incompatible with the internal market. The Court has also consistently held that the obligation                                 on a State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish                                 the previously existing situation(31). In this context, the CJEU has established that that objective is attained once the recipient has repaid the amounts granted                                 by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation                                 prior to the payment of the aid is restored(32).(111)In line with that case-law, Article 14 of Council Regulation (EC) No 659/1999(33) laid down that ‘where negative decisions are taken in respect of unlawful aid, the Commission shall decide that the Member                                 State concerned shall take all necessary measures to recover the aid from the beneficiary’.(112)Therefore the State aid identified in this Decision must be recovered by Italy, insofar as it has already been paid out to                                 Buonotourist. Italy must add recovery interest to that aid amount, calculated from the date on which the unlawful aid was                                 put at the disposal of Buonotourist (i.e. from 21 December 2012) until the date of its recovery(34), pursuant to Chapter V of Commission Regulation (EC) No 794/2004(35).(113)Accordingly, the Commission,

HAS ADOPTED THIS DECISION:

# Article 1U.K.

The State aid amounting to EUR 1 111 572 in favour of Buonotourist unlawfully granted by the Italian Republic, in breach of                     Article 108(3) of the Treaty on the Functioning of the European Union, is incompatible with the internal market.                  

# Article 2U.K.

1.The Italian Republic shall recover the aid referred to in Article 1 from the beneficiary.                  

2.The sums to be recovered shall bear interest from 21 December 2012 until their actual recovery.                  

3.The interest shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004 and Commission                        Regulation (EC) No 271/2008(36) amending Regulation (EC) No 794/2004.                  

4.The Italian Republic shall cancel all outstanding payments of the aid referred to in Article 1 with effect from the date of                        this Decision.                  

# Article 3U.K.

1.Recovery of the aid referred to in Article 1 shall be immediate and effective.                  

2.The Italian Republic shall ensure that this Decision is implemented within 4 months following the date of its notification.                  

# Article 4U.K.

1.Within 2 months following notification of this Decision, the Italian Republic shall submit the following information to the                        Commission:                  

(a)the total amount (principal and interest) to be recovered from the beneficiary;                  

(b)a detailed description of the measures already taken and planned to comply with this Decision;                  

(c)documents demonstrating that the beneficiary has been ordered to repay the aid.                  

2.The Italian Republic shall keep the Commission informed of the progress of the national measures taken to implement this Decision                        until the aid referred to in Article 1 has been fully recovered. At the Commission’s request, it shall immediately submit                        information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information                        concerning the amounts of aid and recovery interest already recovered from the beneficiary                  

# Article 5U.K.

This Decision is addressed to the Italian Republic.

Done at Brussels, 19 January 2015.

*For the Commission*                            

Margrethe Vestager                            

*Member of the Commission*                            

1

Commission Decision of 20 February 2014 on State aid SA.35843 (2012/NN) — Italy — PSO compensation for Buonotourist (OJ C 156, 23.5.2014, p. 51).                           

2

The Commission recalls that, pursuant to Article 15 of the Council Regulation (EC) No 659/1999 of 22 March 1999 laying down                              detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 83, 27.3.1999, p. 1), the powers of the Commission to recover aid are subject to a limitation period of 10 years, beginning on the day on which                              the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme. Any action taken by                              the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid interrupts the                              limitation period.                           

3

Council Regulation (EEC) No 1191/69 of 26 June 1969 on action by Member States concerning the obligations inherent in the                              concept of a public service in transport by rail, road and inland waterway (OJ L 156, 28.6.1969, p. 1).                           

4

Article 4(1) of Regulation (EEC) No 1191/69 states that: ‘It shall be for transport undertakings to apply to the competent                              authorities of the Member States for the termination in whole or in part of any public service obligation where such obligation                              entails economic disadvantages for them’. Article 6(3) reads: ‘The competent authorities of the Member States shall take decisions                              within one year of the date on which the application is lodged as regards obligations to operate or to carry, and within six                              months as regards tariff obligations. The right to compensation shall arise on the date of the decision by the competent authorities...’.                           

5

That sum therefore replaced the original claim for compensation by Buonotourist of EUR 5 567 582.57.

6

*Legge Regionale 25 gennaio 1983, n. 16 Interventi regionali in materia di servizi di trasporto pubblico locale per viaggiatori* (Regional measures for local passenger transport services) available at*:* http://jtest.ittig.cnr.it:8080/cocoon/regioneCampania/xhtml?css=4&doc=/db/nir/RegioneCampania/1983/urn_nir_regione.campania_legge_1983-01-25n16&datafine=19830205                           

7

Instead of the difference between, on the one hand, the product of the anticipated number of units of measure of transport                              and — either the most favourable existing rate which might be claimed by users if the obligation in question did not exist                              or — where there is no such rate, the rate which the undertaking, operating on a commercial basis and taking into account                              both the costs of the operation in question and the state of the market, would have applied.                           

8

Instead of the product of the actual number of units of measure of transport and the rate imposed for the period under consideration.

9

Instead of the costs which would be incurred applying either the most favourable existing rate or the rate which the undertaking                              would have applied if operating on a commercial basis.                           

10

Instead of the costs actually incurred under the obligatory rate.

11

Case C-280/00 *Altmark Trans and Regierungspräsidium Magdeburg,* [2003] EU:C:2003:415.                           

12

Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport                              services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ L 315, 3.12.2007, p. 1).                           

13

*Modelli E*, namely the documents based on the accounts of the company containing the information necessary for the annual calculation                              of the public contribution.                           

14

Case C-527/12 *Commission* v *Germany,* EU:C:2014/2193, paragraph 56 and the case-law cited. See also Case C-119/05 *Lucchini,* EU:C:2007:434, paragraph 59, described in recital 94 below.                           

15

Case C-280/00 *Altmark Trans and Regierungspräsidium Magdeburg,* [2003] EU:C:2003:415, paragraphs 87 and 88.                           

16

Case C-172/03 *Heiser* EU:C:2005:130, paragraph 55.                           

17

Case T-157/01 *Danske Busvognmænd,* [2004] EU:T:2004:76, paragraphs 77 to 79.                           

18

Case C-504/07 *Associação Nacional de Transportadores Rodoviários de Pesados de Passageiros (Antrop) and Others* v *Conselho de Ministros, Companhia Carris de Ferro de Lisboa SA (Carris) and Sociedade de Transportes Colectivos do Porto SA                                 (STCP),* [2009] EU:C:2009:290.                           

19

Case 156/77 *Commission* v *Belgium,* [1978] EU:C:1978:180, paragraph 10.                           

20

Regulation (EEC) No 1107/70 of the Council of 4 June 1970 on the granting of aids for transport by rail, road and inland waterway                              (OJ L 130, 15.6.1970, p. 1).                           

21

The Commission refers in this respect to the reasoning developed in recitals 307 to 313 of its Decision 2011/3/EU of 24 February                              2010 concerning public transport service contracts between the Danish Ministry of Transport and Danske Statsbaner (Case C                              41/08 (ex NN 35/08)) (OJ L 7, 11.1.2011, p. 1). That Decision was annulled by the General Court in Case T-92/11 *Jørgen Andersen* v *European Commission,* [2013] EU:T:2013:143, and an appeal against that judgment is currently pending before the Court of Justice in Case C-303/13                              P. The outcome of that appeal is not relevant for the outcome of the present case, since the General Court confirmed in the                              judgment under appeal that it is the date on which the effects of the disbursed aid occurred which determines which set of                              rules applies. In this case the aid was paid on 21 December 2012, so the rules, principles and criteria for assessing the                              compatibility of state aid which are in force on the date on which the Commission takes its Decision should be applied (see                              paragraph 39 of that judgment).                           

22

Case C-334/07 P *Commission* v *Freistaat Sachsen,* [2008] EU:C:2008:709, paragraphs 50 to 53; Case T-3/09 *Italy* v *Commission,* [2011] EU:T:2011:27, paragraph 60.                           

23

For example, tort or unjust enrichment.

24

Joined Cases 106 to 120/87, *Asteris and others* v *Greece and EEC,* [1988] EU:C:1988:457.                           

25

See Commission Decision of 16 June 2004 on Dutch aid in favour of Akzo Nobel in order to minimise chlorine transports (Case                              N 304/2003), summary notice in OJ C 81, 2.4.2005, p. 4; See also Commission Decision of 20 December 2006 on Dutch aid for relocation of car dismantling company Steenbergen (Case                              N 575/2005), summary notice in OJ C 80, 13.4.2007, p. 1.                           

26

Case C-119/05 *Lucchini,* EU:C:2007:434, paragraph 59.                           

27

Ibid, paragraph 61.

28

Opinion of 28 April in Joined Cases C-346/03 and C-529/03 *Atzori,* EU:C:2005:256, paragraph 198.                           

29

Case T-384/08 *Elliniki Nafpigokataskevastiki AE Chartofylakeiou* v *Commission,* EU:T:2011:650, and Case T-565/08 *Corsica Ferries* v *Commission,* EU:T:2012:415, paragraphs 23, 114 and 120 to 131. See also, by analogy, Case C-111/10 *Commission* v *Council,* EU:C:2013:785, paragraph 44.                           

30

Case C-70/72 *Commission* v *Germany,* [1973] ECR 813, paragraph 13.                           

31

Joined Cases C-278/92, C-279/92 and C-280/92 *Spain* v *Commission,* [1994] ECR I-4103, paragraph 75.                           

32

Case C-75/97 *Belgium* v *Commission,* [1999] ECR I-3671, paragraphs 64 and 65.                           

33

Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 108 of the                              Treaty on the Functioning of the European Union (OJ L 83, 27.3.1999, p. 1).                           

34

See Article 14(2) of Regulation (EC) No 659/1999.

35

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed                              rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, p. 1).                           

36

Commission Regulation (EC) No 271/2008 of 30 January 2008 amending Regulation (EC) No 794/2004 implementing Council Regulation                              (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 82, 25.3.2008, p. 1).