COMMISSION DECISION (EU) 2022/1328

of 30 September 2021

on the measures SA.32014, SA.32015, SA.32016 (2011/C) (ex 2011/NN) implemented by Italy and the Region of Lazio for Laziomar and its acquirer CLN

(notified under document C(2021) 6989)

(Only the Italian text is authentic)

(Text with EEA relevance)

TABLE OF CONTENTS

1. Procedure 157

2. Background and description of the measures subject to investigation 158

2.1. General framework 158

2.1.1. The initial Conventions 158

2.1.2. The prolongation of the initial Conventions 160

2.1.3. The privatisation of Laziomar and the conclusion of the new service contract 161

2.2. Measures in scope of the 2011 and 2012 Decisions 161

2.3. Detailed description of the measures subject to this Decision 161

2.3.1. The prolongation of the initial Convention between Laziomar and Italy 162

2.3.1.1. The public service obligations 162

2.3.1.2. Budget and duration 162

2.3.2. Laziomar’s privatisation 164

2.3.2.1. The sale procedure and final award 165

2.3.2.2. The sale contract 165

2.3.2.3. Proceedings at national level 165

2.3.3. The new service contract between the Region of Lazio and Laziomar 166

2.3.3.1. The beneficiary 166

2.3.3.2. The routes 166

2.3.3.3. Duration 166

2.3.3.4. The public service obligations 166

2.3.3.5. The compensation provisions and final award 166

2.3.4. The berthing priority 168

2.3.5. The measures laid down by the 2010 Law 168

2.4. Infringement procedure No 2007/4609 168

3. Grounds for initiating and extending the procedure 170

3.1. The prolongation of the initial Convention between Laziomar and Italy 170

3.1.1. Observance of Altmark and existence of aid 170

3.1.2. Compatibility 171

3.2. Laziomar’s privatisation 171

3.3. The new service contract between the Region of Lazio and Laziomar 172

3.3.1. Observance of Altmark, existence of aid and compatibility 172

3.3.2. Compatibility 172

3.4. The berthing priority 172

3.5. The measures laid down by the 2010 Law 173

4. Comments from Italy 173

4.1. On the public service obligations and the competitive environment 173

4.2. On the privatisation of Laziomar 173

4.2.1. On the sale price of Laziomar 173

4.2.2. On the transparent and non-discriminatory character of the procedure 174

4.3. On the compliance of the prolongation of the initial Convention and of the new public service contract with the Altmark conditions 174

4.4. On the berthing priority 175

4.5. On the measures laid down by the 2010 Law 175

4.6. On the rules for calculating the compensation for the period 2011–2019 and on the 6,5 % risk premium laid down in the CIPE Directive as of 2010 175

4.7. On the compliance of the new public service contract with the 2011 SGEI Decision 176

4.8. On the compliance of the new public service contract with the 2011 SGEI Framework 176

5. Assessment 177

5.1. Existence of aid within the meaning of Article 107(1) TFEU 177

5.1.1. The prolongation of the initial Convention between the Laziomar and Italy 177

5.1.1.1. State resources 177

5.1.1.2. Selectivity 178

5.1.1.3. Economic advantage 178

5.1.1.4. Effect on competition and trade 179

5.1.1.5. Conclusion 179

5.1.1.6. New or existing aid 180

5.1.2. The award of the new public service contract bundled with Laziomar’s business 180

5.1.2.1. Altmark 1 180

5.1.2.2. Altmark 2 187

5.1.2.3. Altmark 3 187

5.1.2.4. Altmark 4 190

5.1.2.5. Conclusion 196

5.1.3. The measures laid down by the 2010 Law 196

5.1.3.1. Possible use of funds to upgrade ships for liquidity purposes 196

5.1.3.2. Fiscal exemptions related to the privatisation process 197

5.1.3.3. Possibility of using FAS resources to meet liquidity needs 197

5.1.4. Conclusion on the existence of aid 198

5.2. Lawfulness of aid 198

5.3. Compatibility of the aid 198

5.3.1. Applicable rules 198

5.3.2. Genuine service of general economic interest as referred to in Article 106 TFEU 200

5.3.3. Need for an entrustment act specifying the public service obligations and the methods of calculating compensation 202

5.3.4. Duration of the period of entrustment 203

5.3.5. Compliance with Directive 2006/111/EC 203

5.3.6. Amount of compensation 204

5.3.7. The berthing priority 206

5.3.8. Conclusion 206

6. Conclusion 206

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 (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) On 23 March 2009, 9 December 2009, 21 December 2009, 6 January 2010, 27 September 2010 and 12 October 2010, the Commission received six complaints concerning various support measures adopted by Italy in favour of the companies of the former Tirrenia Group (2). The complaints concerned the public service compensation granted to these companies after the expiry of the initial public service contracts concluded with Italy for the period between January 1989 and December 2008 (‘the initial Conventions’), additional support measures laid down in national law in the context of the privatisation process of the companies, as well as certain issues regarding particularly the privatisation procedure of Tirrenia di Navigazione S.p.A. (‘Tirrenia’) and Siremar – Sicilia Regionale Marittima S.p.A. (‘Siremar’).

(2) On 29 July 2010, Italy notified to the Commission the compensation paid in 2008, 2009 and 2010 by Italy to Caremar – Campania Regionale Maritima S.p.A. (‘Caremar’). That notification was resubmitted on 1 December 2010 covering the compensation paid to Caremar in 2009 and 2010. The compensation paid to Caremar in 2008 was covered by a separate decision (see recital 20).

(3) On 5 October 2011, the Commission opened the formal investigation procedure in respect of various measures adopted by Italy in favour of the companies of the former Tirrenia Group (‘the 2011 Decision’) (3). The investigation concerned inter alia the compensation granted to Caremar for the operation of a number of maritime routes as of 1 January 2009 and a number of other measures granted to that company (see recital 38).

(4) At that time, Caremar operated maritime cabotage (4) routes in the Gulf of Naples (Region of Campania) and in the Pontino archipelago (Region of Lazio). Subsequently, the Region of Campania transferred to the Region of Lazio the routes in the Pontino archipelago on a standalone basis under the name Laziomar S.p.A. (‘Laziomar’). (5) That transfer was formalised on 1 June 2011 (see recitals 32 and 33).

(5) The 2011 Decision was published in the Official Journal of the European Union. The Commission invited interested parties to submit their comments on the measures under investigation.

(6) By letter dated 28 September 2011, Italy confirmed its intention to privatise the regional companies of the former Tirrenia Group, including Laziomar. On 26 October 2011, the Commission sent a request for information to Italy concerning the privatisation procedure. On 30 November 2011, Italy submitted a reply to the Commission's request for information of 26 October 2011.

(7) On 15 November 2011, Italy submitted comments on the measures covered by the 2011 Decision.

(8) On 25 April 2012, the Commission sent another request for information to Italy concerning the privatisation procedure. Italy replied by letter dated 22 May 2012.

(9) On 7 November 2012, the Commission extended the investigation procedure inter alia to cover certain additional support measures granted by the Region of Lazio to Laziomar in respect of the public service compensation granted to Laziomar under the new public service contract. An amended version of that Decision was adopted by the Commission on 19 December 2012 (‘the 2012 Decision’) (6).

(10) The 2012 Decision was published in the Official Journal of the European Union. The Commission invited interested parties to submit their comments on the measures under investigation.

(11) On 11 December 2012, Italy submitted its comments.

(12) On 25 January 2018, 29 March 2018, 31 August 2018, 4 March 2019, 15 April 2020, 9 and 26 February 2021, the Commission requested additional information from Italy. Italy provided this information on 26 April 2018, 8 and 31 May 2018, 2 November 2018, 11 December 2018, 30 April 2019, 22 June 2020, 22 February 2021 and 17 March 2021.

(13) This Decision only concerns possible aid to Laziomar as specified in Section 2.3. All remaining measures subject to the 2011 and 2012 Decisions are being investigated separately under Cases SA.32014, SA.32015 and SA.32016 and are not therefore covered by this Decision. In particular, those remaining measures concern other companies of the former Tirrenia Group.

2. BACKGROUND AND DESCRIPTION OF THE MEASURES SUBJECT TO INVESTIGATION

2.1. General framework

2.1.1. The initial Conventions

(14) The Tirrenia Group was traditionally owned by Italy through the company Fintecna (7) and initially included six companies, namely Tirrenia, Adriatica, Caremar, Saremar, Siremar and Toremar. These companies provided maritime transport services under separate public service contracts concluded with Italy in 1991, in force for twenty years between January 1989 and December 2008 (‘the initial Conventions’). Fintecna held 100 % of Tirrenia’s share capital, which in turn wholly owned the regional companies Adriatica, Caremar, Siremar, Saremar and Toremar. Adriatica, which used to operate a number of routes between Italy and respectively Albania, Croatia, Greece, and Montenegro, was merged with Tirrenia in 2004.

(15) The purpose of these initial Conventions was to guarantee the regularity and reliability of the maritime transport services, the majority of them connecting mainland Italy with Sicily, Sardinia and other smaller Italian islands. To that effect, Italy granted financial support in the form of subsidies paid directly to each of the companies of the Tirrenia Group.

(16) On 1 June 2011 Laziomar started operating a series of maritime cabotage routes between the Region of Lazio and the smaller neighbouring islands (see recital 33). The exact routes concerned are described under recital 43.

(17) On 6 August 1999, the Commission decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (‘TFEU’) in respect of aid paid on the basis of the initial Conventions to the six companies that then formed the Tirrenia Group.

(18) During the investigation phase, Italy requested that the Tirrenia Group case would be split up so that priority could be given to reaching a final decision concerning Tirrenia. This request was motivated by Italy’s plan to privatise the Group, beginning with Tirrenia, and its intention to speed up the process in relation to that company.

(19) The Commission decided that it could accede to Italy’s request, and by its Decision 2001/851/EC (8) (‘the 2001 Decision’), it closed the procedure initiated in respect of the aid awarded to Tirrenia. The aid was declared compatible subject to certain commitments by Italy.

(20) By its Decision 2005/163/EC (9) (‘the 2004 Decision’), the Commission declared the compensation granted by Italy to the Tirrenia Group companies other than Tirrenia to be partially compatible with the internal market, partially compatible conditional upon the respect of a number of undertakings by the Italian authorities, and partially incompatible with the internal market. The decision was based on accounting data spanning from 1992 to 2001 and contained certain conditions aimed at ensuring the compatibility of the compensation throughout the duration of the initial Conventions.

(21) By Judgment of 4 March 2009 in Cases T-265/04, T-292/04 and T-504/04 (10) (‘the 2009 Judgment’) the General Court annulled the 2004 Decision.

(22) By its Decision (EU) 2018/261 (11) (‘the 2014 Decision’), the Commission closed the formal investigation procedure as concerns various measures adopted by the Region of Sardinia in favour of Saremar. The appeal lodged by Saremar and the Region of Sardinia against that decision was dismissed by the General Court in 2017 (12).

(23) By its Decision (EU) 2020/1411 (13) (the ‘2020 Tirrenia Group Decision’), the Commission concluded the investigation on the Tirrenia Group companies other than Tirrenia for the period 1992–2008. The Commission concluded that the aid granted for the provision of maritime cabotage transport services constituted existing aid, while most aid granted for the provision of international maritime transport services was compatible with the 2011 services of general economic interest (‘SGEI’) Framework (14) (the ‘2011 SGEI Framework’).

(24) By its Decision (EU) 2020/1412 (15), (the ‘2020 Tirrenia/CIN Decision’) the Commission closed the formal investigation procedure as concerns the measures granted to Tirrenia and its acquirer CIN, for the period 2009–2020.

(25) By its Decision (EU) 2021/4268 (16) and its Decision (EU) 2021/4271 (17), the Commission closed the formal investigation procedure as concerns the measures granted to Siremar and Toremar and their acquirers, for the period from 2009 onwards.

2.1.2. The prolongation of the initial Conventions

(26) Article 26 of Decree Law No 207 of 30 December 2008, converted into Law No 14 of 27 February 2009, laid down the prolongation of the initial Conventions (including the one applicable to Laziomar) which were initially to expire on 31 December 2008 for one year, until 31 December 2009.

(27) Article 19-ter of Decree Law No 135 of 25 September 2009, converted into Law No 166 of 20 November 2009 (‘the 2009 Law’), laid down that, in view of the privatisation of the Tirrenia Group companies, the shareholding of the regional companies (except for Siremar) would be transferred from parent company Tirrenia without any consideration being paid as follows: (a) Caremar would initially be transferred to the Region of Campania. The latter would subsequently transfer to the Region of Lazio Caremar’s business operating the transport connections with the Pontino archipelago on a standalone basis under the name Laziomar; (b) Saremar would be transferred to the Region of Sardinia; and (c) Toremar would be transferred to the Region of Tuscany.

(28) The 2009 Law also specified that new Conventions would be agreed between Italy and Tirrenia and Siremar by 31 December 2009. Likewise, the regional services would be enshrined in draft Public Service Contracts, to be agreed between the Regions of Sardinia and Tuscany and Saremar and Toremar respectively by 31 December 2009 and between the regions of Campania and Lazio and Caremar and Laziomar respectively by 28 February 2010. The draft new Conventions / Public Service Contracts would be put up for tender with the companies themselves and signed with the buyers upon finalisation of the privatisation of each of those companies (18).

(29) To that end, the 2009 Law further prolonged the initial Conventions (including the one applicable to Caremar) from 1 January 2010 until 30 September 2010.

(30) The 2009 Law also set annual compensation ceilings for the operation of the services as of 2010 (under the prolongation of the initial Conventions, as well as under the new Conventions and Public Service Contracts), at a total of EUR 184 942 251, as follows: Table 1 Compensation ceilings as of 2010 Company Maximum annual compensation (EUR) Tirrenia 72 685 642 Siremar 55 694 895 Saremar 13 686 441 Toremar 13 005 441 Caremar 29 869 832 (19)

(31) Article 1 of Law No 163 of 1 October 2010 converting Decree-Law No 125 of 5 August 2010 (‘the 2010 Law’) laid down the further prolongation of the initial Conventions from 1 October 2010 until the completion of the privatisation processes of Tirrenia and Siremar, which took place on 19 July 2012 and 31 July 2012 respectively.

(32) In view of the provisions of Article 19-ter of the 2009 Law, the Region of Lazio has established on 1 December 2010, by means of Regional law No 2/2010, a public limited company for the regional maritime cabotage services, called Laziomar, in order to acquire the branch of Caremar that was operating the Pontino archipelago routes and to subsequently be privatised.

(33) On 7 March 2011, Caremar sold its branch concerning the Pontino archipelago routes to Laziomar. The latter, commenced operating the routes on 1 June 2011.

(34) According to the Region of Lazio Decree No 508 of 28 October 2011 (‘the Lazio Decree’), guidelines were provided concerning the privatisation process of Laziomar bundled with the conclusion of the new public service contract for the Pontino archipelago routes.

(35) Further, according to Law No 228 of 24 December 2012, the Region of Lazio entrusted, on the basis of a ‘bridge’ contract, Laziomar with the obligation to ensure the territorial continuity of the Pontino archipelago routes until its privatisation, under the same conditions. This contract was signed on 12 February 2013 and remained in force until Laziomar’s privatisation.

2.1.3. The privatisation of Laziomar and the conclusion of the new service contract

(36) In February 2012, a tender procedure was launched (see Section 2.3.2) to find a buyer for Laziomar bundled together with the new public service contract for the provision of maritime services over a period of 10 years in exchange of public service compensation.

(37) Following a successful offer in the tender procedure, Compagnia Laziale di Navigazione S.r.l. (‘CLN’) became the new owner of Laziomar. The sale contract between the Region of Lazio and CLN was signed on 30 December 2013. On 15 January 2014, the Region of Lazio and Laziomar signed the new service contract for the provision of maritime services in the Pontino archipelago.

2.2. Measures in scope of the 2011 and 2012 Decisions

(38) The following measures have been subject to assessment in the formal investigation procedure opened by the 2011 and 2012 Decisions: (a) Compensation for the provision of services of general economic interest (‘SGEI’) under the prolongation of the initial Conventions (measure 1); (b) Potential misuse of rescue aid by Tirrenia and Siremar (measure 2); (c) The privatisation of the companies of the former Tirrenia Group (20) (measure 3); (d) Compensation paid for the operation of SGEI under the new Conventions / Public Service Contracts (measure 4); (e) The berthing priority (measure 5); (f) The measures laid down by the 2010 Law converting Decree Law 125/2010 (measure 6); (g) Additional measures adopted by the Region of Sardinia in favour of Saremar (measure 7);

(39) By its 2014 Decision the Commission closed the formal investigation procedure as concerns the measures adopted by the Region of Sardinia in favour of Saremar referred to above as Measure 7 with the exception of one measure (21).

2.3. Detailed description of the measures subject to this Decision

(40) This Decision only deals with measures 1, 3, 4, 5 and 6 as listed in recital 38 in so far as they involve Laziomar and CLN. Those measures are described in more detail in the following sections.

2.3.1. The prolongation of the initial Convention between Laziomar and Italy

2.3.1.1. The public service obligations

(41) Article 1 of the initial Convention with Caremar provided for five-year plans to detail the ports to be served, the type of vessels to be used and the required frequency of the service entrusted to Caremar (and subsequently to Laziomar following the transfer of the Pontine routes to the Region of Lazio on 1 June 2011).

(42) According to Italy, the last five-year plan for Caremar (at the time) formally approved is the one relating to the period 2000–2004, whereas a plan for the period 2005–2008 was drawn up but never formally approved by the competent ministries. Instead, ad hoc decisions have been taken by the government with a view to bringing the services more closely into line with the needs of the local communities, without however making substantive changes to the public service system.

(43) Based on the initial Convention, as prolonged, with subsequent legal acts mentioned in recitals 26 to 33, Laziomar operated the following routes all year round: — On the Ponza – Formia route (Line T1) Laziomar operated the only connection to this line. It ensured two daily connections providing mixed services (passengers, vehicles and goods). The vessel, leaving the island at 5.30 a.m. guaranteed the residents the connection with the mainland for study and work reasons with the last return at 17.30 p.m.; — On the Ponza – Formia route (Line A2); Laziomar operated also the only high-speed passenger service with one daily connection and maintained the vessel on the island overnight; — On the Anzio – Ponza route (Line A1) Laziomar ensured a daily high-speed passenger service in the high season from Monday to Saturday. The service was however increased on Sundays and holidays and was justified on social and economic development grounds (in particular because tourism is basically the only source of income of the island). One competitor, Vetor, also operated on the same line a high-speed passenger service during the high season; — On the Ventotene – Formia route (Line T2) Laziomar ensured all year round a daily service using a mixed vessel. The mixed service was the only regular connection for transport of passengers, vehicles and goods all year round; — On the Ventotene – Formia route (Line A3) Laziomar operated also the only high-speed connection. It departed at 6.45 a.m., thus enabling the residents to travel to the mainland for professional or study reasons, and remained overnight on the island to ensure permanence in case of a medical emergency.

2.3.1.2. Budget and duration

(44) Table 2 shows the annual compensation paid to Laziomar by Italy for the period 2011–2013: Table 2 Compensation granted for 2011–2013 (EUR) Year Compensation paid (EUR) 2011 8 601 187 2012 13 780 506 2013 12 696 006

(45) The initial Convention provides for the annual public service compensation to be paid as follows: an initial advance payment is made in March of each year, equivalent to 70 % of the compensation paid the previous year. A second payment, made in June, is equal to 20 % of the compensation. The difference between the amounts paid and the shortfall between operating costs and revenue during the year in progress constitutes the balance, which is paid by 30 November. If it turned out that Laziomar has received a sum greater than the net cost of the services provided (revenue minus losses), the initial Convention provides that Laziomar is required to reimburse the difference. (22)

— Compensation granted in 2011–2013

(46) Presidential Decree No 501 of 1 June 1979 (‘Decree No 501/79’) specifies the various elements (revenues and costs) which enter into the calculation of the subsidy paid to maritime public service operators. Furthermore, Law No 856 of 5 December 1986 (‘Law 856/86’) provided for certain alterations to the system of maritime public service obligations in Italy. Regarding the connections with minor and major islands, Article 11 thereof amended the criteria for the calculation of the public service compensation. Indeed, the subsidy had to be calculated based on the difference between the revenues and the costs of the service as determined with reference to average and objective parameters, and had to include a reasonable return on invested capital. Article 11 also lays down that the public service contracts had to include the list of the subsidised routes, the frequency and the types of ships to be used. The subsidies were to be approved by the responsible Ministers. The principles laid down in Presidential Decree No 501/79 and Law No 856/86 were reflected in the initial Conventions.

(47) As from 2010, the compensation for the operation of the SGEI has been determined by the application of a new methodology laid down in the CIPE (23) Directive of 9 November 2007 titled ‘Criteria for the definition of the public service obligations and the fare dynamics in the sector of maritime cabotage of public interest’ (‘the CIPE Directive’) (24). According to the preamble, the CIPE Directive was issued in view of the privatisation of the public companies operating maritime services under a public service regime (25). The provisions of the CIPE Directive were applied in respect of the services provided by the companies of the Tirrenia Group as of 2010, even prior to the entry into force of the respective new Conventions and Public Service Contracts following the respective privatisations.

(48) The method laid down in the CIPE Directive allows the companies operating the maritime public service to make an appropriate return. The rate of return on capital is calculated on the basis of the weighted average cost of capital (‘WACC’).

(49) The required return to equity (26) is calculated using the Capital Asset Pricing Model (the ‘CAPM’). On the basis of the capital asset pricing model the cost of equity is derived as a function of (i) the risk-free rate; (ii) the Beta (an estimate of risk profile of the company relative to equity market); and (iii) the equity risk premium assigned to the equity market.

(50) In particular, the cost of equity would be calculated by applying a premium for bearing extra risk to the rate of return on risk-free activities. This premium is calculated as the risk premium of the market multiplied by its Beta, which measures how risky a specific activity is relative to the market.

(51) According to the CIPE Directive, the rate of return on risk-free activities corresponds to the average gross yield on benchmark ten-year bonds with reference to the previous twelve months for which available data exists.

(52) The CIPE Directive sets a 4 % market risk premium. However, in case of a service that is operated on a non-exclusive basis, the presumably greater risk borne by the operator is remunerated by the addition of an extra 2,5 % to the market risk premium.

(53) In practice, the amount of compensation paid to Laziomar can however not exceed the ceiling of EUR 10 030 606 per year as laid down by the 2009 Law (see recital 30). Although the 2009 Law caps the annual compensation paid to all Tirrenia companies for the operation of the maritime services subject to the public service regime, the CIPE Directive also contains certain safeguards that enable those operators to sufficiently cover their operating costs. In view of this, as shown in Table 2, the compensation paid in 2012 and 2013 has been increased to cover the totality of the public service cost in those years.

(54) In particular, according to the CIPE Directive the scope of the services, the maximum fares set out by the new public service contract and the compensation actually granted must be defined such as to grant the service provider coverage of the entirety of admissible costs. The following formula is applicable: VA(RSP)+ VA(AI(X)) = VA(CA) where: — VA(RSP) is the discounted value of the compensation for the discharge of the public service obligations; — VA(AI(X)) is the discounted value of other revenue (fare receipts and other); — (VA(CA)) is the discounted value of the admissible operating costs, debt repayment and return on invested capital.

(55) In case the above equation does not hold, the scope of the subsidised activities could be reduced, or alternatively the service organisation (e.g. type of ships) would be reviewed or the fare constraints would be modified.

(56) Furthermore, the fare ceiling applicable to each service, net of taxes and port dues, is adjusted every year on the basis of a price-cap formula as follows: ΔT = ΔP – X where: — ΔT is the annual percentage change in the fare ceiling; — ΔP is the rate of inflation for the year of reference; — X is a real annual rate of adjustment of the fare ceiling, laid down in the public service contract, which remains constant over the duration of the contract.

(57) The CIPE Directive also specifies that the fare ceiling may be adjusted to reflect variations in fuel costs, taking standard publicly available prices as reference.

2.3.2. Laziomar’s privatisation

(58) On 13 February 2013, the Region of Lazio published on its website the call for tenders for the sale of Laziomar and the award of a public service compensation for the discharging of public service obligations in the maritime routes identified in recital 43 (27). This notice was also published in the Official Journal of the European Union (28), in the Official Gazette of the Italian Republic (29) and in four daily national and local Italian newspapers.

(59) Italy chose the restricted tender procedure referred to in Article 55(6) of the Code of Public Contracts – Legislative Decree No 163/2006 (il Codice dei Contratti pubblici). The chosen award criterion was that of the most economically advantageous offer.

(60) In order to encourage the broadest possible participation in the procedure, the call for tenders expressly allowed bidders to take part in joint form though temporary groupings of tenderers, consortia or European Economic Interest Groupings (‘EEIGs’).

2.3.2.1. The sale procedure and final award

(61) Following the publication of the call for tenders, on the expiry of the deadline, eight parties expressed an interest to participate in the tender procedure (namely: Navigazione Libera del Golfo S.r.l., Carpoint Motorsport S.p.A., Blu Navy Cruise & Tour S.r.l., Traghetti Lines, CLN, Navigazione Generale Italiana S.p.A., Vetor S.r.l. and Ustica Lines, the latter now operating under the name Liberty Lines) and provided the information requested for the qualitative selection of the first stage of the procedure. Seven of these participants, with the exclusion of Blu Navy Cruise & Tour S.r.l., were admitted to the subsequent stage and invited to submit a tender on 16 May 2013.

(62) The invitation to submit a tender contained the new draft 10-year contract to be signed between the successful bidder and the Region of Lazio and more detailed information concerning the tendering procedure. Particularly, the invitation letter confirmed that the most economically advantageous offer would be chosen for the service contract with price scoring 30 points and technical qualifications 70 points. As regards the price for the sale of Laziomar, the invitation letter mentioned a fixed amount corresponding to EUR 2 272 000, calculated on the basis of an independent study, which had assessed the total value of Laziomar's assets (see recitals 66 and 67). This price was non-negotiable and was therefore not subject of the financial offer of the tenderers.

(63) For this reason, all potential tenderers were requested to include the above fixed amount for the sale of Laziomar in their financial offer, while the Region of Lazio would choose the most economically advantageous offer for the tender as a whole based on the price and other, mainly technical, criteria concerning the service, as set out in the invitation letter (see recital 62).

(64) At the expiry of the deadline, CLN submitted its bid, whose specifications were examined and the outcome was positive. No other bid was submitted.

(65) The tender was therefore awarded to CLN both as regards the privatisation of Laziomar business and the operation of the maritime services (see Section 2.3.3).

2.3.2.2. The sale contract

(66) The sale contract was concluded on 30 December 2013 and defines the transfer of Laziomar shares to CLN for the fixed price of EUR 2 272 000, on the basis of an independent expert evaluation commissioned by the Region of Lazio.

(67) The amount mainly reflects the value of the fixed tangible assets (consisting of four vessels and industrial and commercial equipment) and the value of ticketing for the island of Ventotene, as appeared in the balance sheet of the company at 1 June 2011.

(68) In accordance with Article 4 of the sale contract, CLN is obliged to notify the Region of Lazio of any future sale of the Laziomar shares to third parties in which case CLN would however remain jointly responsible with the new purchaser of the Laziomar, with respect to the obligations of the service contract.

2.3.2.3. Proceedings at national level

(69) The result of the tender procedure awarding the Laziomar business and the public service contract to CLN was the subject of a dispute at the Regional Administrative Court of Lazio (‘TAR’).

(70) Vetor S.r.l. (‘Vetor’), operating also the Anzio-Ponza route with hydrofoils (Line A1) brought an application for interim relief against the legitimacy of the tender procedure before TAR, which was rejected by Order No 2995/2013. The same court also ruled on the merits and rejected Vetor’s complaint by Judgement No 467/2014. The Council of State confirmed the above rulings on appeal with Judgement No 5421/2018.

2.3.3. The new service contract between the Region of Lazio and Laziomar

2.3.3.1. The beneficiary

(71) As mentioned in recital 64, CLN submitted a bid for the new public service contract. Following the successful tender, Laziomar (acquired by CLN but retained its separate legal identity) signed the new public service contract with the Region of Lazio for the operation of maritime routes on 15 January 2014.

2.3.3.2. The routes

(72) Laziomar provides passenger, mixed (passenger, vehicles and freight) and only freight (goods and special goods) services under the public service regime on multiple cabotage routes as follows: Table 3 Network of routes operated by Laziomar under the new service contract Formia – Ponza (ferry – mixed service) – Line T1 Formia – Ventotene (ferry – mixed service) – Line T2 Terracina – Ponza (ferry – mixed and freight (30) services) – Line T3 Terracina – Ventotene (ferry – freight service)- Line T4 Anzio – Ponza (hydrofoil – passenger service) – Line A1 Formia – Ponza (hydrofoil – passenger service ) – Line A2 Formia – Ventotene (hydrofoil – passenger service) – Line A3

2.3.3.3. Duration

(73) The new service contract between the Region of Lazio and Laziomar has a duration of ten years (2014–2024).

2.3.3.4. The public service obligations

(74) The public service obligations imposed on Laziomar concern among others the ports served, the type and capacity of the vessels assigned to the maritime routes operated, the frequency of service and the maximum fares.

2.3.3.5. The compensation provisions and final award

(75) The annual base remuneration on the basis of the tender procedure for the compensation under the new contract for the discharging of public service obligations on the maritime routes identified under recital 43 was set by the Region of Lazio at EUR 14 300 550, subject to downwards revision. The amount was finally fixed at EUR 12 752 074 (totalling EUR 127 520 740 over the 10-year contract period).

(76) Pursuant to Article 6 of the contract, the Region of Lazio can adjust the compensation, upwards or downwards, to take account of changes concerning the actual sailings made every year. The compensation level is not affected if the number of sailings made every year is higher or lower than the contractually agreed number by 3 % or less. In case of changes, upwards or downwards, by more than 3 %, the compensation is adjusted accordingly, by multiplying the number of extra or fewer sailings by the unit price, as indicated in the bid. In 2017, the service contract was amended to adjust the compensation level at the amount of EUR 13 524 536.

(77) This amount of compensation is determined on the basis of the methodology laid down by the CIPE Directive (see recitals 47 to 57). The safeguards laid down by the CIPE Directive have been reflected in the new service contract.

(78) The service contract provides for a payment of compensation that does not exceed what is necessary to cover the net costs incurred for the fulfilment of the public service obligations (economic-financial balance). In case of deviations from this contractual equilibrium, the service contract provides in Article 25 for a rebalancing mechanism that evaluates all the parameters linked to the payment of the compensation. Should, therefore, as a result of a material change (31) in the economic parameters on which it is based, the compensation amount proves insufficient to cover all costs incurred in the provision of the service, the new service contract allows for a revision of the key parameters of the compensation namely: (i) the fare system; (ii) the level of the public services offered; (iii) the level of the annual price cap; and (iv) the capital contributions for investments.

(79) Under Article 4 (paragraphs 4 to 6) of the service contract the compensation paid to the operator shall be reduced by 80 % in the case of interruption of services because of employees’ strikes and 30 % in the case of other unforeseen events, whereas failure to perform the services in circumstances other than strikes or unforeseen events would result in the payment of penalties, pursuant to Article 9 of the service contract.

(80) Pursuant to Article 22 of the service contract, the operator is required to implement a system of technical, economic and management monitoring, according to which the profit and loss annual accounts related to the service provided on the basis of the service contract are sent to the regional authority for verification.

(81) Pursuant to Article 4(2) of the service contract, the annual compensation to be paid to Laziomar was estimated to amount to EUR 12 752 074. Nevertheless, according to Article 4(3) of the service contract, the actual price paid to Laziomar is determined as the outcome of the production actually carried out (i.e. price per mile for each route), taking into account the risks involved (commercial and industrial) as laid down in the contract (e.g. compensation reduction in case of the company not sailing, penalties in case of services being disconnected etc.).

(82) Table 4 shows the compensation fixed on the basis of the tendering procedure over the whole contract period and the compensation actually paid to Laziomar for the period 2014–2019, following amendments concerning the sailing production, pursuant to Article 6 of the service contract. Table 4 Compensation fixed and paid to Laziomar under the new service contract 2014–2019 Year Compensation fixed (EUR) Compensation paid (EUR) 2014 12 752 074 13 374 589 2015 12 752 074 13 376 167 2016 12 752 074 13 330 304 2017 12 752 074 13 370 070 2018 12 752 074 13 356 282 2019 12 752 074 13 366 510

2.3.4. The berthing priority

(83) Article 19-ter, paragraph 21 of the 2009 Law laid down that, in order to guarantee the territorial continuity with the islands and in light of their public service obligations, the companies of the former Tirrenia Group, including Laziomar, would keep the berthing already allocated and the priority in the allocation of new slots in line with the procedures set forth by the Maritime Authorities as established by Law No 84 of 28 January 1994 and the Italian Maritime Code.

2.3.5. The measures laid down by the 2010 Law

(84) The 2010 Law laid down the possibility for the undertakings of the former Tirrenia Group to use, on a temporary basis, the financial resources already committed (32) to the upgrade and modernisation of the fleet to cover pressing liquidity needs instead. The undertakings of the former Tirrenia Group that made use of this possibility were however required to replenish these dedicated funds, so that they could still undertake the necessary upgrades for their ships. These upgrades were necessary to meet new international safety standards following the 1996 Stockholm Agreement. (33)

(85) In particular, drawing from two facilities (34), EUR 23 750 000 were set aside to pay for the upgrades of the entire Tirrenia Group. Laziomar however did not make any use of these facilities (see recital 132).

(86) In addition, Article 1 of the 2010 Law also laid down the following: (a) the initial Conventions are prolonged as from 1 October 2010 until the end of the privatisation process of Tirrenia and Siremar (see also recital 31); (b) Article 19-ter of Decree Law 135/2009, converted with modifications into the 2009 Law is amended is amended by the introduction of paragraph 24 bis. According to that paragraph, all official acts and operations in the implementation of the provisions of paragraphs 1-15 of the 2009 Law benefit from fiscal exemption. Those paragraphs relate to the liberalisation of the maritime cabotage sector through the privatisation of the Tirrenia group, including its preparatory step, i.e. the transfer of the regional companies to the respective regions; (c) in order to ensure the continuity of the public service and to support the privatisation process of the former Tirrenia group companies, the regions in question may make use of the resources of the Fondo Aree Sottoutilizzate (‘FAS’) (35) pursuant to CIPE Directive No 1/2009 of 6 March 2009. (36)

2.4. Infringement procedure No 2007/4609

(87) Following earlier exchanges between the Commission’s services and Italy, the Commission’s Director-General responsible for energy and transport on 19 December 2008 sent a request for information to Italy. This request concerned among other things, an overview of the public service routes at that time and the public service remit that Italy envisaged under the proposed new Conventions. Furthermore, Italy was asked to provide more details about the privatisation plans for the Tirrenia Group.

(88) In its letter of 28 April 2009, Italy provided a detailed reply to the Commission’s request of 19 December 2008. In that letter, among other things Italy stated the following: (1) the extension of the initial Conventions until 31 December 2009 was necessary to achieve the liberalisation of the maritime cabotage sector in Italy through the privatisation of the Tirrenia Group; (2) the public service compensation granted to the Tirrenia Group was necessary to ensure territorial continuity with the islands through maritime links which were not satisfactorily provided by private operators on the market; (3) a thorough rationalisation process of the routes had been concluded on 10 March 2009. This process took into account the relevant social, employment and economic aspects, as well as the need to safeguard essential links for territorial continuity and included a consultation of the six Regions concerned. This rationalisation would result in the reduction of the net cost of the public service of approximately EUR 66 million and the redundancy of some 600 crew members for the entire Tirrenia Group. Italy also recalled that the 2009 rationalisation complemented earlier efforts (in 2004, 2006 and 2008) to reduce the services operated by the Tirrenia Group; (4) the objectives were to (i) maintain the links necessary to ensure territorial continuity with and between islands and the mainland, and the right to health, study and mobility; (ii) rationalise links where there were private operators who provided the same connections over the same time period, with similar guarantees of quality and continuity; and (iii) rationalise summer and high-speed connections which transport only persons; (5) in the letter, Italy gave an overview of the routes operated by the companies of the Tirrenia Group during 2008 and the reduced number of routes the Tirrenia Group companies would operate in 2009. According to Italy, the latter routes would form the basis for the new Conventions that were to be concluded with the new owners of the Tirrenia Group companies.

(89) On 21 December 2009, the Commission’s Director-General responsible for energy and transport sent a letter to Italy noting inter alia that in the light of the radical overhauling of the maritime cabotage sector in Italy, and because of the sizable social impact the privatisation would have entailed, if the tenders were carried out on a simple public service contract basis, tendering out the shipping companies endowed with such contracts was acceptable – in principle and as an exception – for the purpose of ensuring compliance with the criterion of non-discrimination among Community ship-owners laid down in Council Regulation (EEC) No 3577/92 (37) (‘the Maritime Cabotage Regulation’). The Commission notes that the Maritime Cabotage Regulation does not require Member States to privatise their maritime transport companies but only to liberalise that specific market.

(90) On 29 January 2010 (38), the Commission sent a letter of formal notice regarding the wrong implementation of the Maritime Cabotage Regulation. In that letter, the Commission recalled that that Regulation requires that, whenever a Member State concludes public service contracts or imposes public service obligations, it is to do so on a non-discriminatory basis in respect of all Union shipowners. The Article 4(3) of that Regulation provides that existing public service contracts may remain in force up to the expiry date of the relevant contract. However, the Commission noted that the companies of the Tirrenia Group continued to operate maritime transport services after the expiry of the respective public service contracts (the initial Conventions). In particular, those Conventions were due to expire at the end of 2008 but were repeatedly prolonged by Italy. Therefore, the Commission invited Italy to present its observations.

(91) Also on 29 January 2010, the Commission’s Director-General responsible for energy and transport replied to Italy’s letter of 22 January 2010. The Director-General emphasised that his reply only concerned the compliance with the Maritime Cabotage Regulation and not State aid issues. Against this background, the Director-General indicated that the justifications provided concerning certain routes were sufficient to remove the doubts expressed earlier. The Director-General recalled that public service contracts can only cover routes for which there is market failure.

(92) On 29 March 2010, Italy replied to the Commission’s letter of formal notice of 29 January 2010.

(93) On 10 September 2010, Italy informed the Commission during an ad hoc meeting, that the competitive procedure for the contract involving among others the Pontino archipelago routes operated by Caremar at the time was also delayed. Subsequently, Law No 163 of 1 October 2010 further prolonged the initial Conventions until the completion of the privatisation processes of Tirrenia and Siremar (see also recital 31).

(94) In light of these developments, the Commission sent a complementary letter of formal notice on 24 November 2010. In this letter, the Commission stated the following: (a) the initial Convention of among others Caremar was extended automatically and without any competitive procedure; (b) while the public service contracts in question continued to be applied, no competitive procedure had been completed, for Caremar among others; (c) it reserved its right to issue a reasoned opinion if necessary (taking into account any comments Italy might make).

(95) On 21 June 2012, the Commission adopted a reasoned opinion concerning the delay of privatisation of three companies (Caremar, Laziomar and Saremar) of the former Tirrenia Group. Since the tender procedures for the other three companies (Tirrenia, Toremar and Siremar) had been completed in the course of 2011 (39) these companies were not covered by the reasoned opinion. The Commission noted that Italy had not put in place competitive procedures for the award of public service contract for maritime cabotage operated by among others Laziomar, more than three years after the normal expiry of the respective initial Conventions. Those Conventions had been extended automatically and indefinitely thereby preventing other Union ship-owners from competing for the award of these contracts.

(96) On 8 August 2012, Italy replied to the reasoned opinion stating that tender notices for the award of the companies endowed with new public service contracts were or would be published in the Official Journal of the European Union. In particular, for Laziomar the notice was sent for publication on 1 August 2012.

(97) On 14 January 2014, CLN became the new owner of Laziomar and signed a ten-year public service contract for links with the Pontino archipelago.

(98) By letter of 15 July 2016, Italy informed the Commission that the privatisation of all companies of the former Tirrenia Group had been completed. On 8 December 2016, the Commission decided to close the infringement procedure.

3. GROUNDS FOR INITIATING AND EXTENDING THE PROCEDURE

3.1. The prolongation of the initial Convention between Laziomar and Italy (40)

3.1.1. Observance of Altmark and existence of aid

(99) In its 2011 Decision, the Commission took the preliminary view that the definition of the public service obligations included in the initial Conventions with all the companies of the former Tirrenia group had not been sufficiently clear and hence did not allow the Commission to definitely conclude whether it contained manifest error. In particular, the Commission did not at that stage have a complete view on the actual obligations imposed for the operation of the routes in among others the Pontino archipelago as compared to the services offered by competitors on some of those routes.

(100) The Commission took the preliminary view that the second condition of the Altmark judgment (41) was observed as the parameters at the basis of the calculation of the compensation had been established in advance and observed the transparency requirements. In particular, the Commission noted that these parameters are described in the initial Conventions (for compensation concerning the year 2009) and in the CIPE Directive (for compensation from 2010 onwards).

(101) The Commission however considered that the third condition of the Altmark judgment did not seem to be observed and that the operators might have been over-compensated for the performance of the public service tasks. In particular, the Commission expressed doubts as to the proportionality of the compensation paid to the companies of the former Tirrenia group as from 2009, given the absence of a clear definition of the obligations imposed on those companies. Likewise, the Commission doubted whether the risk premium of 6,5 %, which applies from 2010 onwards, reflects an appropriate level of risk since prima facie the operators did not seem to assume the risks normally borne in the operation of such services.

(102) The Commission also took the preliminary view that the fourth Altmark condition was not observed inasmuch as the prolongation of the initial Conventions had not been tendered out. The Commission moreover noted that it had not received any evidence to support the argument that the operators in fact provided the services at stake at the least cost to the community.

(103) In the 2011 Decision, the Commission therefore came to the preliminary conclusion that the public service compensation paid to the operators during the prolongation of the initial Conventions constitutes State aid within the meaning of Article 107(1) TFEU. In addition, the Commission took the view that this aid should be considered as new aid.

3.1.2. Compatibility

(104) In the 2011 Decision, the Commission took the preliminary view that the public service compensation for the years 2009–2011 falls outside the scope of both the 2005 SGEI Decision (42) and the 2005 SGEI Framework (43). The Commission therefore assessed this measure directly under Article 106(2) TFEU and found it had doubts on whether the applicable compatibility conditions were fulfilled.

(105) In the 2012 Decision, the Commission noted that on 31 January 2012, a new SGEI package consisting of the 2011 SGEI Decision (44) and 2011 SGEI Framework (45) had entered into force. The Commission however took the preliminary view that the public service compensation under the prolongation of the initial Conventions could not be considered compatible with the internal market and exempted from the notification requirement under the 2011 SGEI Decision.

(106) The 2010 Law provided for the prolongation of the initial Conventions from 30 September 2010 up to the end of the privatisation process. As a result, the compensation received by Laziomar as of 1 June 2011 until its privatisation could be assessed on the basis of the 2011 SGEI Framework.

3.2. Laziomar’s privatisation

(107) In the 2012 Decision, the Commission expressed doubts that the tender procedure for the sale of Laziomar had been sufficiently transparent and unconditional so as to ensure that the sale took place at market price.

(108) The Commission considered that certain conditions imposed in the privatisation might have restricted the number of bidders and/or influenced the sale price. The Commission restated its established practice concerning sales of assets of State owned undertakings by the State (or in this case imputable to the State): non-economic considerations which a private seller would not make, such as public policy reasons, employment requirements or regional development, point to the existence of State aid if they impose onerous obligations on the potential buyer and are therefore liable to reduce the sale price.

(109) The Commission also considered that the so called financial requirements as imposed in the Laziomar tender effectively disrupted the tender by restricting potential bidders to existing maritime companies, given that in the present case, the company itself, endowed with the public service contract, was put up for sale. (46)

(110) Likewise, the Commission held that the technical offers were scored, carrying out a significantly higher weight than the economic offers (see recital 62), whilst the shares’ price was fixed by the public authorities.

(111) For the above reasons, the Commission preliminarily concluded that the privatisation procedure of Laziomar had not been sufficiently transparent and unconditional so as to ensure by itself that the sale took place at market price and obtained the highest price for the shares. The Commission could therefore at that stage not exclude that an economic advantage was conferred to the buyer.

(112) The Commission also considered, on the basis of the information available when issuing its 2012 Decision, that any aid that might have arisen in the course of the privatisation process would be incompatible.

3.3. The new service contract between the Region of Lazio and Laziomar

3.3.1. Observance of Altmark, existence of aid and compatibility

(113) In the 2012 Decision, the Commission took the preliminary view that the compensation paid to Laziomar did not fulfil the criteria laid down in the Altmark judgment and therefore amounted to aid within the meaning of Article 107(1) TFEU. The Commission came to this conclusion given that: (i) competitors who seemed to be offering similar services were present at least on certain routes operated by Laziomar and there was insufficient information available that would enable the Commission to conclude on whether the SGEI reflected a real public service need which could not be met by market forces alone; (ii) the calculation of the compensation pursuant to the CIPE Directive appeared to have resulted in the operator being overcompensated for the provision of the public service for the same reasons as expressed in the 2011 Decision; and (iii) the fourth criterion of the Altmark judgment was seemingly not observed, given that the public service was tendered out on the condition that the successful bidder would acquire the Laziomar company as a whole. The Commission considered that had the public service contract been tendered out without the purchase requirement, it could have resulted in a lower cost for the community.

3.3.2. Compatibility

(114) With respect to the compatibility of the compensation to Laziomar, the Commission noted that, on the basis of the information provided by the Italian authorities, the 2011 SGEI Decision appeared not to be applicable. In any event, the Commission could not conclude on the application of the 2011 SGEI Decision because at that stage the signed contract had not been provided. The Commission did not receive any information (e.g. number of passengers transported in the two previous years to that of the entrustment) to examine the remaining compatibility conditions of the 2011 SGEI Decision. The Commission then assessed the aid based on the 2011 SGEI Framework but found that it had doubts on whether the compatibility conditions of that Framework were fulfilled and invited Italy to demonstrate that this was the case.

3.4. The berthing priority

(115) In the 2011 Decision, the Commission took the preliminary view that to the extent that the berthing priority is not remunerated, the measure is a regulatory advantage, which does not involve any transfer of State resources and cannot therefore qualify as State aid. Alternatively, if the berthing priority is remunerated, the Commission considered that to the extent Laziomar provides a genuine SGEI and that this priority is only granted in relation to routes covered by the SGEI, it would not result in an additional economic advantage since it would be intrinsic to the provision of the SGEI. Nevertheless, the Commission invited Italy and third parties to provide further information on this measure.

(116) Since it had raised doubts on the legitimacy of the SGEI mission, the Commission could not conclude on the compatibility of the measure if it were to be aid.

3.5. The measures laid down by the 2010 Law

(117) In the 2011 Decision, the Commission took the preliminary view that all measures laid down by the 2010 Law constituted State aid in favour of the companies of the former Tirrenia Group, including Laziomar. These included: (1) the possible use for liquidity purposes of the funds earmarked for the upgrade of the ships; (2) the fiscal exemptions related to the privatisation process; and (3) the possible use of FAS resources. The Commission invited Italy to clarify if and how each of these measures was necessary to provide the public service.

(118) The Commission also took the preliminary view that these measures likely constituted operating aid reducing the costs that Laziomar, and the other companies of the former Tirrenia Group, would otherwise have to bear themselves and thus those measures should be considered as incompatible with the internal market.

4. COMMENTS FROM ITALY

4.1. On the public service obligations and the competitive environment

(119) Italy provided a list of routes (supported by the corresponding legal documentation) operated by Caremar and subsequently by Laziomar that are subject to public service obligations, including the seasonal frequency and timetables, the competitive environment and the reasons leading to these public service obligations.

(120) As regards the existence of a genuine SGEI, Italy noted that the above public service obligations were laid down in order to maintain the territorial continuity and the connection of the mainland with the islands and ensure the supply of goods, including special goods, necessary for the proper function of public and social services for the islands. That service also contributes to the economic development of the islands, guarantees the essential mobility needs of the islands’ communities throughout the year and ensures that the constitutional right to territorial continuity is respected (47).

(121) As far as the competitive environment is concerned, Italy submitted information showing that Laziomar is the only operator sailing the lines throughout the year, whereas there has been competition on some routes only during the high season. That said, Italy is of the view that the service offered by Laziomar cannot be substituted and that the guarantee for territorial continuity could not have been achieved by the market forces alone.

4.2. On the privatisation of Laziomar

4.2.1. On the sale price of Laziomar

(122) According to Italy, the privatisation of Laziomar involved the transferring of the entire share capital of the company via a public tender procedure launched by the Region of Lazio. This procedure additionally entailed the simultaneous entrustment of maritime public services in the Pontino archipelago for a period of 10 years, in order to maintain territorial continuity.

(123) The Region of Lazio commissioned an independent expert evaluation (see recitals 66 and 67) to assess the legal and economic issues of Laziomar’s sale. According to Italy, this evaluation sets out clearly and concisely the procedures followed to determine the market value of Laziomar’s share capital.

4.2.2. On the transparent and non-discriminatory character of the procedure

(124) Italy stresses that the procedures were conducted in compliance with the legal principles of transparency and non-discrimination. It defended that all seven parties that were admitted to the next stage of the tender procedure were given the relevant information necessary to submit their bid, including the ‘tender regulations’ and annexes, the ‘service contract’ and annexes and the ‘contract for the transfer of the shares’ and annexes.

(125) Italy further submits that the Region of Lazio eliminated from the invitation to tender the financial eligibility requirements that would have made it possible only for shipping companies to take part in the procedure (see recital 109). In order to enable the broadest possible participation in the tender, the invitation to tender, additionally, expressly allowed bidders to take part in joint form through temporary groupings of tenderers, consortia or EEIGs.

(126) Concerning the Commission’s doubts on the fact that the technical offers carried a significantly higher weight compared to the economic offers (i.e. 70 and 30 points respectively), Italy refers to the Judgement No 782/2017 of 30 March 2017 of the Council of State (48), where it was stated that the contracting party, when applying this criterion, should ‘emphasise the qualitative elements of the offer and select criteria that will ensure an effective competitive comparison of the technical profiles. To this end, it should establish the maximum score envisaged for the economic offer in order to ensure that this element does not prevail over the others’.

(127) Thus, according to Italy, the different weight made it possible to evaluate the qualitative elements of the offer consistently and discourage excessive downwards revisions of the price that would have been difficult to sustain without sacrificing the quality of the public service. Moreover, it also allowed achieving significant cost savings for the Region of Lazio, given that the winning bidder was awarded the contract on the basis of which it would perform the public service for a compensation amount that was set 10,8 % lower compared to the base price (see recital 75).

4.3. On the compliance of the prolongation of the initial Convention and of the new public service contract with the Altmark conditions

(128) Italy argues that the four Altmark criteria are complied with, both for the period 2011–2013 and for the period 2014–2024 for the following reasons: — The first and second Altmark criteria were not contested by the Commission in its 2012 Decision; — With reference to the third Altmark criterion, and the doubts expressed by the Commission in its 2011 Decision that the 6,5 % risk premium laid down in the CIPE Directive, does not appear to reflect an appropriate level of risk (recitals 206-207), Italy refers to the Commission decision of 13 June 2017 concerning fast passenger maritime connection in Italy between Messina and Reggio Calabria, where the calculation methodology, using the fixed 8 % as expected rate of remuneration, was not contested. (49) In particular, in the latter case the Commission accepted a rate of 8% being comprised of the 6,5 % risk premium referred to in the CIPE Directive, in view of that fact that the contract did not involve the award of exclusive rights, plus a further 1,5 % increase, in view of the short duration of the contract. Further, Italy, referring to the new public service contract, submits that any measures to restore the economic – financial balance could be applied only in the event of a change in net revenues of more than 3 %, whereas any reduction of below 3 % would have been borne by Laziomar. As a result, any possible overcompensation is avoided; and — Italy considers that the fourth Altmark criterion is also fulfilled, given that the award of the public service contract was the subject of a transparent and competitive tender procedure, which allowed selecting the tenderer capable of providing the services at the least possible cost. In addition, as regards the bundling of the new service contract with the privatisation of Laziomar, Italy argues that the tender amount for the sale of Laziomar represents only around 1,4 % of the total amount established for the public service (i.e. of the total compensation of EUR 127 520 740 over the 10-year contract period). Thus, it does not appear to have any significant impact on the outcome of the selection of the tenderer, as regards to the cost of the service.

4.4. On the berthing priority

(129) Concerning the berthing priority (see recital 83), Italy argues that this is justified by the need to provide the public service, and no economic advantage is conferred to Laziomar that would also imply a loss of State resources.

(130) According to Italy, all ferry operators pay regular fees to the relevant port authorities for berthing. Italy also claims that this berthing priority has been applicable only to the public service routes, and that Laziomar did not and does not pay any additional fee for this berthing priority, as ports would give it the first choice of berthing slots even in the absence of a formal berthing priority on account of its public service mission.

4.5. On the measures laid down by the 2010 Law

(131) Likewise, as regards the measures laid down by the 2010 Law (see recitals 84, 85 and 86), Italy submits that Laziomar has not been allocated nor has it benefited or will benefit in the future of these measures.

(132) In this context, Italy submits that Caremar, which at the time operated itself the maritime cabotage routes in the Pontino archipelago, had been allocated and effectively used the financial resources already committed by Law 102/2009. In particular, Caremar was allocated EUR 1 410 000 to upgrade two of the vessels that were later transferred to Laziomar free of charge (Quirino and Tetide). It is also submitted that these funds have not been used for liquidity purposes.

(133) With regard to the fiscal exemptions related to the privatisation process, Italy argues that as regards corporate income tax, the measure has not been applied since the transfers of Caremar, Saremar and Toremar to the regions were made free of charge. Therefore, in the absence of any remuneration, Article 86(1)(a) of the Consolidated Income Tax Law concerning capital gains in the event of asset transfers against payment does not apply. With respect to VAT, Italy noted that the transfers of Caremar, Saremar and Toremar constitute transactions which are exempt from VAT under Article 10(1)(4) of Presidential Decree No 633 of 26 October 1972. With respect to indirect taxes other than VAT, Italy emphasised that the exemption provided for by the 2010 Law was designed with a view to administrative simplification. From the taxation perspective, its effects can be regarded as negligible and of little impact in relation to taxes, which are charged at flat rates. More specifically, it concerns the registration duty (EUR 168 per document), land registry and mortgage registration fees (EUR 168 each) and stamp duty (EUR 14,62 for four sides).

(134) Concerning the FAS resources, Italy submits that Laziomar has not received any benefit thereof. In addition, it clarified that the FAS resources were not used to give an additional compensation to the companies of the former Tirrenia Group, including Laziomar. Instead, these resources were made available to supplement the budget appropriations set up for the payment of the public service compensations to the companies of the former Tirrenia Group, in case those budget appropriations proved to be insufficient. Italy notes that Article 1, paragraph 5-ter of Decree Law 125/2010 enabled the regions to use the FAS resources to fund (part of) the regular public service compensation and thereby ensure continuity of the maritime public services. Moreover, Italy clarified that, under Article 26 of Decree Law 185/2008, EUR 65 million for each of the years 2009, 2010 and 2011 were earmarked to the Tirrenia group and EUR 195 million were accordingly drawn from the FAS resources. Those funds were then transferred to the account of the Ministry of Transport earmarked for the payment of the public service compensation to the companies of the former Tirrenia Group (Tirrenia, Siremar, Caremar (at the time), Toremar and Saremar). Therefore, this measure would merely concern an allocation of resources in Italy’s budget for payment of the public service compensations.

4.6. On the rules for calculating the compensation for the period 2011–2019 and on the 6,5 % risk premium laid down in the CIPE Directive as of 2010

(135) Italy submits that until 14 January 2014, the parameters used to calculate the compensation paid to Laziomar were those defined by the CIPE Directive. As from 15 January 2014, the compensation is defined in the public service contract, based on the methodology referred to in the CIPE Directive and taking also into consideration the economic offer submitted by Laziomar’s buyer, CLN, under the tender procedure.

(136) Italy clarifies that, because the amount of compensation is capped by the 2009 Law, it was decided indeed to simplify the calculation by applying the 6,5 % as a flat rate return on capital. This simplified approach was applicable during the prolongation of the initial Convention and still applies under the new public service contract with Laziomar.

(137) In addition, according to Italy, the 6,5 % flat rate return on capital is considered appropriate considering that the rebalancing mechanism laid down in Article 25 of the contract (see recital 78) is very strict to apply. Further, such mechanism (e.g. a revision of the annual price cap) could not apply in cases where a beneficiary, such as Laziomar, is under-compensated.

(138) In Table 5, Italy provides the elements taken to calculate the risk premium for Laziomar during the period 2011–2019: Table 5 ROCI of Laziomar for 2011–2019 (EUR ‘000) 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tangible and intangible fixed assets […] […] […] […] […] […] […] […] […] Inventories […] […] […] […] […] […] […] […] […] Customer and commercial credits […] […] […] […] […] […] […] […] […] Payables to suppliers […] […] […] […] […] […] […] […] […] Net invested capital […] […] […] […] […] […] […] […] […] Return on capital (6,5 %) […] […] […] […] […] […] […] […] […]

4.7. On the compliance of the new public service contract with the 2011 SGEI Decision

(139) Even if Italy considers that the public service compensation paid to Laziomar under the new public service contract does not constitute State aid, it also argued why that measure would comply with the 2011 SGEI Decision, if it were aid.

(140) In its reply, Italy submits that both the 2005 and 2011 SGEI Decisions are applicable, considering that the conclusion of the public service contract was provided for in Article 19-ter of the 2009 Law, as well as in the Lazio Decree.

(141) Italy has presented figures for the years 2012 and 2013 showing that the average annual number of passengers has not exceeded the threshold of 300 000 passengers as laid down in Article 2(1)(d) of the 2011 SGEI Decision in any of the sailing routes concerned during the two financial years preceding that in which the SGEI was assigned to Laziomar (i.e. 240 430 passengers in 2012 and 254 167 passengers in 2013).

4.8. On the compliance of the new public service contract with the 2011 SGEI Framework

(142) Italy submits that the public service entrusted to Laziomar constitutes a genuine SGEI based on an entrustment act, i.e. the service contract, which contains and describes the content and duration of public service obligations, the territory concerned, the compensation mechanism and the parameters for calculating the compensation.

(143) Further, according to Italy, the compensation does not exceed what is necessary to cover the costs incurred in discharging the public service obligations, as the amount of compensation was established in the context of a tendering procedure on the basis of criteria set out in the CIPE Directive, whereas the contract provides for a monitoring system to avoid overcompensation.

(144) Likewise, as regards the rate of return, Italy refers to the Commission’s decision of 13 June 2017 (in Case SA.42710) (see recital 128), where a higher rate of return than the 6,5 % (i.e. 8 %) was not contested by the Commission.

5. ASSESSMENT

5.1. Existence of aid within the meaning of Article 107(1) TFEU

(145) Article 107(1) TFEU provides that ‘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 production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market’.

(146) The criteria laid down in Article 107(1) TFEU are cumulative. Therefore, in order to determine whether the notified measures constitute State aid within the meaning of Article 107(1) TFEU, all the above-mentioned conditions need to be fulfilled. Namely, the financial support should: (a) be granted by a Member State or through State resources; (b) favour certain undertakings or the production of certain goods; (c) distort or threaten to distort competition; and (d) affect trade between Member States.

(147) The Commission notes that the berthing priority, which only applies to the public service routes, is inextricably linked with the performance of the SGEI by Laziomar and by its acquirer CLN. Therefore, this measure will be assessed jointly with the respective public service compensation granted to these companies (see Sections 5.1.1 and 5.1.2).

(148) Furthermore, the Commission notes that the new public service contract between Italy and Laziomar should be assessed jointly with the privatisation of Laziomar. Such joint assessment is appropriate because in essence Italy organised a tender for the new public service contract whereby the winning bidder had to acquire the entire share capital of Laziomar in order to discharge the public service obligations laid down in that public service contract.

5.1.1. The prolongation of the initial Convention between the Laziomar and Italy

5.1.1.1. State resources

(149) Laziomar was entrusted by Italy with the operation of maritime routes as detailed by the initial Convention, as prolonged. The initial Convention was concluded with the State and the resulting public service compensation for Laziomar is paid by the State from its own budget. Therefore, the public service compensation to Laziomar is imputable to the State and is given through State resources.

(150) The Commission takes note that, according to Italy, all ferry operators pay regular fees to the relevant port authorities for berthing but that Laziomar did not pay any additional fee for the berthing priority. Nevertheless, the Commission considers that in principle Italy could have chosen to impose an additional fee for the berthing priority and that by not doing so, it has foregone State revenues. Furthermore, since the berthing priority is granted by law (see recital 83) it is imputable to the State.

5.1.1.2. Selectivity

(151) In order to be qualified as State aid, a measure must be selective. The public service compensation for the provision of the maritime services in question is only granted to Laziomar, thus it is selective. Since the berthing priority was only granted to the companies of the former Tirrenia Group, including to Laziomar, it is also selective.

5.1.1.3. Economic advantage

(152) The Commission recalls that public service compensations granted to a company may not constitute an economic advantage under certain strictly defined conditions.

(153) In particular, in its Altmark judgment (50), the Court of Justice held that where a State measure must be regarded as compensation for the services provided by the recipient undertakings in order to discharge public service obligations, so that those undertakings do not enjoy a real financial advantage and the measure thus does not have the effect of putting them in a more favourable competitive position than the undertakings competing with them, such a measure is not within the scope of Article 107(1) TFEU.

(154) However, the Court of Justice also made clear that for such public service compensation to escape qualification as State aid in a particular case, the four cumulative criteria (the ‘Altmark criteria’), summarised below, must be satisfied: — the recipient undertaking must actually have public service obligations to discharge and these obligations must be clearly defined ( ‘Altmark 1’); — the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner (‘Altmark 2’); — the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations (‘Altmark 3’); — where the undertaking which is to discharge public service obligations, in a specific case, is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be 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 revenues and a reasonable profit for discharging the obligations (‘Altmark 4’).

(155) The Commission specified how it applies the Altmark criteria in its Communication on the application of State aid rules to compensation granted for the provision of services of general economic interest (the ‘SGEI Communication’) (51).

(156) Given that the Altmark criteria have to be complied with cumulatively, non-observance of either one of these criteria would lead the Commission to the conclusion that the measure under assessment provides an economic advantage to the beneficiary. The Commission will then first assess observance of Altmark 4.

(157) Altmark 4 provides that the compensation must be the minimum necessary in order for it not to qualify as State aid. This criterion is deemed to be fulfilled if the recipient of the public service compensation has been chosen following a tender procedure, which allows for the selection of the tenderer capable of providing the services at the least cost to the community or, failing that, the compensation has been calculated by reference to the costs of an efficient undertaking.

(158) For none of the prolongations of the initial Convention in the period 1 June 2011 until 14 January 2014 was Laziomar selected following a public tender procedure. Italy merely prolonged the system already in force thereby entitling the pre-established operator to continue receiving compensation for the discharge of the public service obligations.

(159) Moreover, Italy has not provided to the Commission any indication that the level of compensation 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 revenues and a reasonable profit for discharging the obligations.

(160) The Commission therefore concludes that Altmark 4 has not been complied with in the present case.

(161) Given that the four Altmark conditions are not cumulatively observed in the present case, the Commission concludes that the compensation for the operation of maritime routes under the prolongation of the initial Convention provided Laziomar with an economic advantage.

(162) With respect to the berthing priority, the Commission first recalls that the Italian competition authority AGCM has at least on two occasions considered that this measure has economic value (52). Nevertheless, Laziomar does not pay any fee for the berthing priority (see recital 130). Furthermore, the Commission observes that the berthing priority has at least in theory the potential to lower the operator's costs (e.g. because the guaranteed berthing could reduce waiting times in ports and hence result in lower fuel costs) or increase its revenues (e.g. because some timings possibly attract more demand from passengers). Indeed, to the extent the berthing priority allows for a faster docking procedure, users of the ferry service may prefer the ferry operator that benefits from this measure. Even if these effects would only materialise in limited circumstances or would be relatively small, the berthing priority could nevertheless constitute an economic advantage for Laziomar.

5.1.1.4. Effect on competition and trade

(163) When aid granted by a Member State strengthens the position of an undertaking compared to other undertakings competing in intra-Union trade, the latter must be regarded as affected by that aid (53). It is sufficient that the recipient of the aid competes with other undertakings on markets open to competition (54).

(164) In the present case, the beneficiary operates in competition with other undertakings providing maritime transport services in the Union, in particular since the entry into force of the Council Regulation (EEC) No 4055/86 (55) and the Maritime Cabotage Regulation, liberalising the market of the international maritime transport and maritime cabotage, respectively. The fact that on some routes Laziomar was at that time the only operator does not mean that other (international) operators could not be interested to offer similar maritime transport services. Therefore, the compensation for the operation of maritime routes under the prolongation of the initial Convention is liable to affect Union trade and distort competition within the internal market. For the same reasons that conclusion also holds for the berthing priority.

5.1.1.5. Conclusion

(165) Since all criteria laid down in Article 107(1) TFEU are fulfilled, the Commission concludes that both the public service compensation paid on the basis of the successive prolongations of the initial Convention and the berthing priority for the public service routes constitutes State aid to Laziomar.

5.1.1.6. New or existing aid

(166) The Commission first notes that the compensation paid to Caremar (at the time) for the operation of maritime public service obligations until the end of 2008 is not assessed in this Decision. The assessment of that compensation, and whether or not it can be classified as existing aid on the basis of Article 4(3) of the Maritime Cabotage Regulation, is the subject of a separate Commission decision. (56)

(167) According to Article 1(c) of Council Regulation (EU) 2015/1589 (57), new aid means ‘all aid, that is to say, aid schemes and individual aid, which is not existing aid, including alterations to existing aid’. Furthermore, Article 108(3) TFEU provides that plans to grant or alter existing aid must be notified, in due time, to the Commission and may not be implemented until the procedure has led to a final decision (58). In line with the position of Union Courts (59), the Commission considers that amending (i.e. prolonging) the duration of an aid scheme that had a clear expiry date (i.e. 31 December 2008) is sufficient to make it a new aid irrespective of whether or not other characteristics of the measure were changed.

(168) For the above reasons, the Commission considers that regardless of the fact that the compensation awarded to Caremar (at the time) up until end 2008 has been classified as existing aid (60), the public service compensation paid to Laziomar on the basis of the successive prolongations of the initial Convention should be considered as new aid. This conclusion also holds for the berthing priority.

5.1.2. The award of the new public service contract bundled with Laziomar’s business

(169) In order to conclude on whether the award of the new public service contract bundled with Laziomar’s business constitutes an advantage to Laziomar and its acquirer, within the meaning of Article 107(1) TFEU, the Commission must assess observance of the Altmark criteria (see recital 154).

5.1.2.1. Altmark 1

(170) The Commission recalls that there is no uniform and precise definition of a service that may constitute an SGEI under Union law, either within the meaning of the first Altmark condition or within the meaning of Article 106(2) TFEU (61). Paragraph 46 of the Communication is worded as follows: ‘In the absence of specific Union rules defining the scope for the existence of an SGEI, Member States have a wide margin of discretion in defining a given service as an SGEI and in granting compensation to the service provider. The Commission’s competence in this respect is limited to checking whether the Member State has made a manifest error when defining the service as an SGEI and to assessing any State aid involved in the compensation. Where specific Union rules exist, the Member States' discretion is further bound by those rules, without prejudice to the Commission's duty to carry out an assessment of whether the SGEI has been correctly defined for the purpose of State aid control.’

(171) National authorities are therefore entitled to take the view that certain services are in the general interest and must be operated by means of public service obligations to ensure that the public interest is protected when market forces do not suffice to guarantee that they are provided at the level or conditions required.

(172) In the field of cabotage, detailed Union rules governing public service obligations have been laid down in the Maritime Cabotage Regulation and, for the purpose of examining potential State aid to undertakings engaged in maritime transport, in the Community guidelines on State aid to maritime transport (‘the Maritime Guidelines’) (62).

(173) Article 4(1) of the Maritime Cabotage Regulation provides: ‘A Member State may conclude public service contracts with or impose public service obligations as a condition for the provision of cabotage services, on shipping companies participating in regular services to, from and between islands. Whenever a Member State concludes public service contracts or imposes public service obligations, it shall do so on a non-discriminatory basis in respect of all Community shipowners.’

(174) Article 2(3) of the Maritime Cabotage Regulation sets out that a public service contract may cover: transport services satisfying fixed standards of continuity, regularity, capacity and quality, additional transport services, transport services at specified rates and subject to specified conditions, in particular for certain categories of passengers or on certain routes and adjustments of services to actual requirements.

(175) In accordance with Section 9 of the Maritime Guidelines, ‘public service obligations may be imposed or public service contracts (PSCs) may be concluded for the services indicated in Article 4 of Regulation (EEC) No 3577/92’, i.e. scheduled services to, from and between islands.

(176) It results from established case-law that public service obligations may only be imposed if justified by the need to ensure adequate regular maritime transport services which cannot be ensured by market forces alone. (63) The Communication on interpretation of the Maritime Cabotage Regulation (64) confirms that ‘it is for the Member States (including regional and local authorities where appropriate) and not the shipowners to determine which routes require public service obligations. In particular, public service obligations may be envisaged for regular (scheduled) island cabotage services in the event of market failure to provide adequate services’. Moreover, Article 2(4) of the Maritime Cabotage Regulation defines public service obligations as obligations, which ‘the ship-owner in question, if he were considering his own commercial interest, would not assume or would not assume to the same extent or under the same conditions’.

(177) In line with the case-law (65), to verify whether there is a real public service need and whether it was necessary and proportional, and hence also whether the first Altmark criterion is met, the Commission will assess: (1) Whether there was user demand; (2) Whether that demand was not capable of being satisfied by the market operators in the absence of an obligation imposed by the public authorities (existence of a market failure); (3) Whether simply having recourse to public service obligations was insufficient to remedy that shortage (least harmful approach).

(1) User demand

(178) In this case, Laziomar was entrusted with the provision of passenger, mixed and freight services on multiple lines as presented in Table 9. The public service obligations imposed on Laziomar concerned the ports served, the type and capacity of the vessels assigned to the maritime connections operated under the public service regime, the frequency of service and the maximum fares to be charged.

(179) As described in recital 120, Italy has imposed the public service obligations laid down in the new Convention mainly to (i) ensure the territorial continuity between the mainland and the islands; and (ii) contribute to the economic development of the islands concerned, through regular and reliable maritime transport services. The Commission considers that those are indeed legitimate public interest objectives.

(180) Historically, the objectives pursued by Italy have not been achieved through the interplay of market forces alone. In fact, the adequacy of these services has been traditionally ensured by public service obligations imposed to that effect on the companies of the former Tirrenia Group and enshrined in the initial Conventions. Indeed, the Commission notes that the routes in question have been operated, largely unaltered, for many years i.e. at least since the entry into force of the initial Convention. Italy, and in particular the regional authorities concerned, considered that these services were (and continued to be) necessary to meet user demand.

(181) With respect to the freight-only routes (i.e. Line T3 and Line T4), the Commission recalls that the General Court has already established (66) that, in order to be capable of being characterised as a service of general economic interest, the service in question must not necessarily constitute a universal service stricto sensu. In effect, the concept of universal service does not mean that the service in question must respond to a need common to the whole population or be supplied throughout a territory (67) but rather to serve the interests of society as a whole. In addition, it is the Commission’s view that Union legislation does not prevent Member States from validly qualifying in the exercise of their discretion certain maritime freight services to and from remote areas as SGEI, provided that the principles laid down by the Maritime Cabotage Regulation are complied with.

(182) Italy has explained that the public service needs are linked to the special geographical and socio-economic characteristics of the islands in the Pontine archipelago. Article 1 of the service contract stipulates that the services awarded to Laziomar are ‘[…]necessary to maintain territorial continuity so as to ensure the supply of goods, including special goods, necessary for the proper functioning of public and social services for the Pontine islands […]’. As regards the island of Ponza, the need for territorial continuity and supply of goods and special goods is necessary in view of its distance from the mainland (about 27 nautical miles from Terracina) and its low population numbers (around 3 500 inhabitants). Similar considerations apply to the island of Ventotene (about 31 nautical miles from Terracina and around 800 inhabitants). The regular frequency of those freight services all year round ensures that also in the low season, when there is less demand from tourists, the inhabitants and companies of these islands remain adequately supplied. In addition, those services also contribute to the economic development of both islands by transporting goods and special goods (e.g. dangerous goods, municipal solid waste, etc.) from and to the mainland.

(183) As regards the passenger and mixed services, to illustrate the genuine demand, Italy provided aggregated statistics, which show that in 2012 Laziomar transported 240 430 passengers and 13 228 vehicles on the public service routes combined during the respective time periods covered by the public service obligations. The numbers for 2013 were higher (i.e. 254 167 passengers and 16 927 vehicles). This shows that in the two years before Laziomar was entrusted with its public service obligations, there was a significant aggregate demand for maritime transport services on the routes concerned (see recital 291) for detailed route-by-route statistics for the years 2011 to 2013).

(184) To further demonstrate that user demand remained present when Laziomar started operating on the basis of the new public service contract on all routes, Italy also provided aggregated statistics until the end of 2019 (see Tables 6 to 8). These confirm that user demand remained present, with some slight deviations, upwards or downwards. In any case, an analysis of the route-by-route statistics for each year until end 2019 did not provide any indications that the user demand on specific routes would have disappeared. Table 6 Passengers’ statistics for the years 2014–2019 Year Line T1 Line T2 Line T3 Line T4 Line A1 Line A2 Line A3 Total No of passengers 2014 125 720 63 376 30 812 1 509 36 474 58 680 40 000 356 571 2015 131 453 65 822 40 211 165 37 442 69 327 46 847 391 267 2016 141 720 81 572 45 006 308 42 209 60 263 37 981 409 959 2017 154 948 86 832 57 165 360 48 985 68 573 39 482 456 345 2018 160 304 85 310 59 642 168 58 013 68 405 37 226 447 581 2019 170 636 88 728 55 047 177 52 569 48 198 32 226 442 409 Table 7 Vehicles’ statistics for the years 2014–2019 Year Line T1 Line T2 Line T3 Line T4 Line A1 Line A2 Line A3 Total No of vehicles (68) 2014 12 822 2 587 3 482 35 18 926 2015 12 874 2 819 3 212 390 19 295 2016 12 942 3 245 3 590 784 20 561 2017 13 796 3 331 3 772 324 21 223 2018 14 165 3 171 3 846 152 21 334 2019 14 011 3 242 3 316 172 20 741 Table 8 Freight transported in linear metres for the years 2014-2019 (69) Year Line T3 Line T4 Total No of linear metres 2014 206 514 16 367 222 881 2015 259 112 22 659 281 771 2016 281 229 23 230 304 459 2017 294 442 27 623 322 065 2018 310 736 14 256 324 992 2019 302 631 15 228 317 859

(185) The Commission considers that the above statistics clearly demonstrate that there is a genuine demand for passenger, mixed and freight services on each of the respective public service routes. It can therefore be concluded that these services address real public needs and meet a genuine user demand.

(2) Existence of market failure

(186) According to paragraph 48 of the SGEI Communication, ‘it would not be appropriate to attach specific public service obligations to an activity which is already provided or can be provided satisfactorily and under conditions, such as price, objective quality characteristics, continuity and access to the service, consistent with the public interest, as defined by the State, by undertakings operating under normal market conditions (70)’. Therefore, the Commission must examine whether the service would be inadequate if its provision were left to the market forces alone in the light of the public service requirements imposed by the Member State by virtue of the new public service contract. Paragraph 48 of the SGEI Communication notes in this respect that ‘the Commission’s assessment is limited to checking whether the Member State has made a manifest error’.

(187) The Commission notes that during the time period leading up to the signature of the new public service contract with Laziomar, other operators offered ferry services on some of the routes subject to the new public service contract albeit not necessarily throughout the entire year, with the same frequency and same type of service. On the basis of the competitive situation leading up to the moment of entrustment on 15 January 2014, the Commission will assess for each of the routes concerned whether the services provided by other operators were equivalent to those that Laziomar has to provide under the new public service contract.

(188) Table 9 displays the competitive situation on each of the routes operated by Laziomar at the time of the entrustment act: Table 9 Competitive situation on the routes operated by Laziomar Route Laziomar (all year round sailings) Competitors Formia – Ponza (Line T1) Mixed service (passengers, vehicles and goods) None Formia – Ventotene (Line T2) Mixed service (passengers, vehicles and goods) None Terracina – Ponza (Line T3) – new route Freight and mixed service with an average of: — From January to March and from October to December four sailings (per week) – freight service only — In April and September four sailings (per week) – freight service only, and four sailings (per week) – mixed service — From May to August five sailings (per week) – freight service only, and five sailings (per week) – mixed service Navigazione Libera del Golfo (‘NLG’), passenger-only service with an average of: — From April to May and September to October three sailings (per week) — From June to August one to two sailings (per day) Terracina – Ventotene (Line T4) – new route Freight service with an average of: — From January to March and from October to December one sailing (per week) — In April and September two sailings (per week) — From May to August five sailings (per week) NLG passenger-only service (as an extension to Line T3) with only one sailing per week from July to August Anzio – Ponza (Line A1) Passenger service (hydrofoil) between June and September with one sailing per day and two on Fridays, weekends and bank holidays Vetor, passenger service with an average of: — From to June to July two to three sailings during week days and four to five during weekends (per day – see recital 192) — In August three to four sailings during week days and four to five during weekends (per day) — September one sailing (per day – see recital 192) Formia – Ponza (Line A2) Passenger service (hydrofoil) None Formia – Ventotene (Line A3) Passenger service (hydrofoil) None

(189) The Commission considers, as it is clearly shown in Table 9, that the services offered by Laziomar are not substitutable to those