COMMISSION DECISION (EU) 2020/1412

of 2 March 2020

on the measures SA.32014, SA.32015, SA.32016 (11/C) (ex 11/NN) implemented by Italy for Tirrenia di Navigazione and its acquirer Compagnia Italiana di Navigazione

(notified under document C(2020) 1110)

(Only the Italian text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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

Having called on interested parties to submit their comments pursuant to the provisions cited above (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) 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 (2) (‘the 2011 Decision’). The investigation concerned inter alia the compensations granted to Tirrenia di Navigazione (‘Tirrenia’) for the operation of a number of maritime routes as of 1 January 2009, and the privatisation process (see section 2.3.3) which resulted in the Tirrenia business branch (see also recital 27) being acquired by Compagnia Italiana di Navigazione (‘CIN’).

(2) The 2011 Decision was published in the Official Journal of the European Union (3). The Commission invited interested parties to submit their comments on the measures under investigation.

(3) As concerns the measures subject to this Decision, the Commission received comments from Tirrenia in Extraordinary Administration (‘Tirrenia in EA’), Pan Med Lines (‘Pan Med’), CIN and Grandi Navi Veloci (also referred to as GNV) (see section 5). It forwarded them to Italy, which had the opportunity to react. Italy did not submit any comments.

(4) On 10 January 2012, the Italian authorities formally notified, allegedly for reasons of legal certainty, the draft public service contracts (‘Conventions’) which would be concluded with the respective future acquirers of the Tirrenia and Siremar business branches and on which basis compensation would be granted to these acquirers. On 24 January 2012, 4 February 2012 and 3 July 2012, the Commission requested additional information from the Italian authorities on the notified measures. That information was provided by the Italian authorities by letters dated 9 February 2012, 11 May 2012 and 19 July 2012. By their letter dated 19 July 2012, the Italian authorities also informed the Commission that the new Convention between the Italian State and CIN had been signed the day before.

(5) On 7 November 2012, the Commission extended the investigation procedure inter alia (see section 2.2) in respect of (i) the illegal prolongation of rescue aid granted to Tirrenia; and (ii) public service compensation granted to CIN under the new Convention concluded with the Italian State. An amended version (4) of that Decision was adopted by the Commission on 19 December 2012 (‘the 2012 Decision’).

(6) The 2012 Decision was published in the Official Journal of the European Union (5). The Commission invited interested parties to submit their comments on the measures under investigation.

(7) As concerns the measures subject to this Decision, the Commission received comments from CIN, Tirrenia in EA and Pan Med (see section 5). It forwarded them to Italy, which had the opportunity to react. Italy did not submit any comments.

(8) On 5 October 2012 the Commission contracted Ecorys Netherlands BV to provide it with an estimation of the market value of the relevant assets of Tirrenia put up for sale (see section 2.3.3.5) based on two alternative scenarios. Ecorys submitted its final report on 4 September 2013 (‘the Ecorys Report’). The Commission forwarded this report to Italy on 27 September 2013. Italy submitted its comments to the Ecorys Report, including a counter-valuation by its own independent expert Banca Profilo, by letter dated 17 December 2013.

(9) By its decision of 22 January 2014 (‘the 2014 Decision’) (6), the Commission closed the formal investigation procedure as concerns various measures adopted by the Sardinian Region in favour of Saremar. The appeal lodged by Saremar and the Region against that decision was dismissed by the General Court in 2017 (7).

(10) On 12 February 2016, 29 May 2018, 18 September 2018, 10 October 2018 and 22 November 2018, Grimaldi Euromed S.p.A. (‘Grimaldi’) made submissions to the Commission as described in section 6. At Grimaldi’s request, the Commission services also met with the company’s legal representative on 17 July 2018.

(11) On 25 January 2018, 29 March 2018, and 31 August 2018 the Commission requested additional information from the Italian authorities. The Italian authorities provided this information on 26 April 2018, 31 May 2018, 2 November 2018 and 11 December 2018. On 23 and 24 January 2019, the Commission services met with the Italian authorities in Rome. In the following months, the Italian authorities submitted the additional information requested by the Commission during that meeting.

(12) This Decision only concerns possible aid measures to Tirrenia and CIN, as specified in recital 31. 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

(13) The Tirrenia Group was traditionally owned by the Italian State through the company Fintecna (8) 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 the Italian State in 1991, in force for twenty years between January 1989 and December 2008 (hereinafter ‘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 Albania/Croatia/Greece/Montenegro, was merged with Tirrenia in 2004.

(14) The purpose of these public service contracts 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, the Italian State granted financial support in the form of subsidies paid directly to each of the companies of the Tirrenia Group.

(15) Tirrenia has been providing maritime transport services on a number of mixed (passengers, cars and lorries) routes and also on some freight routes, mostly between mainland Italy and respectively Sardinia, Sicily and the Tremiti Islands, and also between Sardinia and Sicily. The exact routes concerned are described below.

(16) On 6 August 1999, the Commission initiated 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.

(17) During the investigation phase, the Italian authorities 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 the Italian authorities’ plan to privatise the Group, beginning with Tirrenia, and their intention to speed up the process in relation to that company.

(18) The Commission acceded to the Italian authorities’ request, and by Commission Decision 2001/851/EC (9) it closed the procedure initiated in respect of the aid awarded to Tirrenia (‘the 2001 Decision’). The aid was declared compatible subject to certain commitments by the Italian authorities.

(19) By Commission Decision 2005/163/EC (10) (‘the 2004 Decision’), adopted on 16 March 2004, the Commission declared the compensation granted by Italy to the Tirrenia Group companies other than Tirrenia (11) to be partially compatible with the internal market, partially compatible conditional upon the respect of a number of commitments 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.

(20) By Judgment of 4 March 2009 in Cases T-265/04, T-292/04 and T-504/04 (12) (‘the 2009 Judgment’) the General Court annulled the 2004 Decision. This Decision is without prejudice to the ongoing procedure following the 2009 Judgment.

2.1.2. The prolongation of the initial Conventions

(21) 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 Tirrenia) which were initially due to expire on 31 December 2008 for one year, until 31 December 2009.

(22) 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: (1) Caremar to the Region of Campania. Subsequently, the Region of Campania would transfer to the Region of Lazio the going concern (13) operating the transport connections with the Pontino archipelago on a stand-alone basis from that moment under the name Laziomar; (2) Saremar to the Region of Sardinia; (3) Toremar to the Region of Tuscany.

(23) The 2009 Law also specified that new ‘Conventions’ were to be agreed between the Italian State and Tirrenia and Siremar by 31 December 2009. Likewise, the regional services would be enshrined in draft ‘Public Service Contracts’, to be agreed by Saremar, Toremar, and Caremar with the regional authorities by 31 December 2009 (with Sardinia and Tuscany) and 28 February 2010 (with Campania and Lazio) respectively. The draft new Conventions / Public Service Contracts would be put up for tender with the companies themselves and then signed with the buyers upon finalisation of the privatisation of each of those companies (14).

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

(25) The 2009 Law also laid down fixed 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 amount 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 (15)

(26) Finally, 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 (including the one applicable to Tirrenia) from 1 October 2010 until the completion of the privatisation processes of Tirrenia and Siremar.

2.1.3. The privatisation of Tirrenia and the conclusion of the new Convention

(27) In September 2010, a tender procedure (see section 2.3.3) was launched to find a buyer for the Tirrenia business branch bundled together with the new Convention for the provision of maritime services over a period of eight years in exchange for public service compensation. In this context, reference is made to the Tirrenia business branch instead of to Tirrenia since the tender procedure concerned only those assets and contracts necessary to perform the public service obligations specified in a new Convention to be concluded with the acquirer. Tirrenia’s remaining assets, which it used for other purposes (such as ships, real estate and works of art), were to be sold via separate procedures. Furthermore, the tender procedure did not concern the liabilities of Tirrenia so none of the debts accrued by Tirrenia until the date of sale were transferred to the buyer. To this date, Tirrenia in EA continues to exist as a separate entity albeit with the primary purpose of being liquidated after having reimbursed its creditors.

(28) Following its successful offer in the tender procedure, CIN signed on 25 July 2011 the contract to acquire the Tirrenia business branch. The new Convention between the Italian State and CIN was signed on 18 July 2012. On this basis, the ownership of the Tirrenia business branch was transferred from the State to CIN on 19 July 2012.

2.2. Measures in scope of the 2011 and 2012 Decisions

(29) The following measures have been subject to assessment in the formal investigation procedure opened by the 2011 and 2012 Decisions (see also section 3): (a) Compensation for the provision of services of general economic interest (‘SGEI’) under the prolongation of the initial Conventions (measure 1); (b) Illegal prolongation of rescue aid to Tirrenia and Siremar (measure 2); (c) The privatisation of the companies of the former Tirrenia Group (16) (measure 3); (d) Compensation paid for the operation of SGEI under the future 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);

(30) 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 (17).

2.3. Detailed description of the measures subject to this Decision

(31) This Decision only deals with measures 1 to 6 as listed in recital 29. These measures are described in more detail in the following sections.

2.3.1. The prolongation of the initial Convention between the State and Tirrenia

2.3.1.1. The public service obligations

(32) Article 1 of the initial Convention with Tirrenia 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 Tirrenia.

(33) Italy informed the Commission that for Tirrenia the last five-year plan adopted by Ministerial Decree of 20 September 2001 covers the period 2000-2004. This plan fully reflects the commitments (most notably reductions in the scope of the public service regime) made by Italy in the context of the Commission’s 2001 Decision. 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. The Italian authorities argued that longer-term planning had no longer been possible due to the lack of budgeting of the required funds. For this reason, the limited changes that were made mostly concerned reductions of the public service.

(34) Based on the initial Convention, as prolonged and modified (for selected routes), Tirrenia operated the following routes between 1 January 2009 and 18 July 2012: — Genova – Porto Torres: Tirrenia provided mixed services under the public service regime during the low season (18) and on a commercial basis during the high season. Under the public service regime, Tirrenia provided daily services with evening departures from both ports, based on pre-established timetables in order to provide reliable links to the rail network in Sardinia. The only competitor that also operated this route throughout the year during the relevant time period, Grandi Navi Veloci, only guaranteed three weekly departures in the low season. While in the high season Grandi Navi Veloci offered a daily service, it did not ensure evening departures from both ports. — Civitavecchia – Olbia: Tirrenia provided mixed services under the public service regime during the low season (19) and on a commercial basis during the high season. Under the public service regime, Tirrenia provided daily services with evening departures from both ports, based on pre-established timetables. During at least part of the time period under assessment, SNAV operated on this route both during the low and the high season. However, in 2008 SNAV only operated on this route three times a week during the low season and daily during the high season. In 2009 and 2010, SNAV seems to have increased the operating frequency in the low season to daily. However, after May 2011, SNAV stopped operating on this route when Grandi Navi Veloci took over this route. The latter company then decided to operate this connection only in the high season. The presence of other operators (e.g. Moby, Sardinia Ferries) on this route during part of this period was limited to the high season. — Napoli – Palermo: in 2009 Tirrenia provided mixed services under the public service regime all year round, while from 2010 onwards Tirrenia provided these services under the public service regime during the low season and on a commercial basis during the high season. Under the public service regime, Tirrenia provided daily services with evening departures from both ports according to a pre-established schedule. During the entire prolongation period the only competitor that also operated this route throughout the year, SNAV, while offering daily departures would however not have guaranteed the same regularity and continuity as Tirrenia (20). In addition, SNAV used much older ships than Tirrenia to operate on this route and hence did not offer the same quality (21). Grandi Navi Veloci indicated that it operated on this route in 2011 from May to December, and all year in 2012 (see also recitals 266 and 267). Grandi Navi Veloci offered services on this route in collaboration with SNAV. — Genova – Olbia – Arbatax: under the public service regime Tirrenia provided mixed services at least three times a week throughout the year. Arbatax was served twice a week as an extra stop after having called first at Olbia. During the period under assessment, the private operator Moby operated between Genova and Olbia during only part of the year (in most years from mid-March until mid-October). Likewise, GNV was only operating between Genova and Olbia in the high season. Tirrenia was the only operator operating the service to Olbia the entire year round. Furthermore, throughout the entire period under assessment Tirrenia was the only operator providing a link to Arbatax. — Civitavecchia – Cagliari – Arbatax: under the public service regime Tirrenia provided mixed services on a daily basis with evening departures from both ports throughout the year. Arbatax was served twice a week as an extra stop. During the entire prolongation period Tirrenia was the only operator on this route both in the low and high season. — Napoli – Cagliari: under the public service regime Tirrenia provided mixed services at least once per week from each port throughout the year. During the entire prolongation period Tirrenia was the only mixed service operator on this route both in the low and high season. — Palermo – Cagliari: under the public service regime Tirrenia provided mixed services on a weekly basis from each port throughout the year. During the entire prolongation period Tirrenia was the only mixed service operator on this route both in the low and high season. — Trapani – Cagliari: under the public service regime Tirrenia provided mixed services on a weekly basis from each port throughout the year. During the entire prolongation period Tirrenia was the only mixed service operator on this route both in the low and high season. — Termoli – Tremiti Islands: under the public service regime Tirrenia provided mixed services on at least a daily basis from each port throughout the year. During the entire prolongation period Tirrenia was the only operator on this route both in the low and high season. — Livorno – Cagliari (22): under the public service regime Tirrenia provided freight services five times a week throughout the year. During the relevant time period competitors (e.g. Moby) on this route only offered one departure per week and suspended the service during the high summer season and Christmas holidays. — Napoli – Cagliari: under the public service regime Tirrenia provided freight services two to three times a week throughout the year. During the entire prolongation period Tirrenia was the only freight operator on this route both in the low and high season (in addition to its mixed service on the same route). — Ravenna – Catania: under the public service regime Tirrenia provided freight services three times a week from each port throughout the year. During the entire prolongation period Tirrenia was the only freight operator on this route both in the low and high season.

2.3.1.2. Budget and duration

(35) The table below shows the annual compensation granted to Tirrenia for the period 2009 - July 2012: Table 2 Compensation granted for the period 2009 – July 2012 Year Compensation (EUR) 2009 (January – December) 80 010 000 2010 (January – December) 72 685 642 2011 (January – December) 72 685 642 2012 (January – July) 39 978 409,46 (23)

(36) The initial Convention provides for the annual public service compensation to be paid as follows: an initial advance payment is made by 30 March of each year, equivalent to 70 % of the compensation paid the previous year. A second payment, made by 30 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 Tirrenia has received a sum greater than the net cost of the services provided (revenue minus losses), it is required to reimburse the difference (24).

(37) As described above (see recital 34), during the high season Tirrenia operates the routes Genova – Porto Torres, Civitavecchia – Olbia and Napoli – Palermo (from 2010 onwards) on a commercial basis. Any profits made on those routes during the high season are deducted from the amount of public service compensation payable to Tirrenia, while any losses incurred during that period would have to be borne by Tirrenia itself. This reduces the amount of compensation necessary for the operation of these routes under the public service regime that applies during the low season. — Compensation granted in 2009

(38) 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 major and minor 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. The same article also lays down that the public service contracts had to include the list of the subsidized 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.

(39) Indeed, for 2009, the compensation for the discharge of SGEI was calculated in accordance with the methodology laid down by the initial Convention in force since 1991 and prolonged after its initial expiry date of 31 December 2008. In particular, the compensation corresponded to the accumulated net loss on the services operated under the public service regime, to which a variable amount corresponding to the return on invested capital was added.

(40) The various cost elements taken into consideration in order to calculate the compensation defined by the public authorities were the following: acquisition, advertising and accommodation costs, loading, unloading and manoeuvring costs, cost of shore administrative personnel, ship maintenance costs, administrative costs, insurance costs, rent and leasing costs, fuel, taxes and depreciation costs. — Compensation granted in 2010, 2011 and 2012

(41) 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 (25) 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’) (26). According to its preamble, the CIPE Directive was issued in view of the privatisation of the public companies operating maritime services under a public service regime (27). 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.

(42) 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 would be calculated on the basis of the weighted average cost of capital (WACC).

(43) The required return to equity (28) is to be calculated using the Capital Asset Pricing Model. On the basis of this 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.

(44) 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 to be calculated as the risk premium of the market multiplied by its Beta, which measures how risky a specific activity is relative to the market.

(45) 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.

(46) The CIPE Directive sets a 4 % market risk premium. Moreover, in case of a service which 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.

(47) In practice, the amount of compensation paid to Tirrenia can however not exceed the ceiling of EUR 72 685 642 per year as laid down by the 2009 Law (see recital 25). 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.

(48) In particular, according to the CIPE Directive the scope of the services, the maximum fares set out by the new Convention 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.

(49) In case the above equation does not hold, the scope of the subsidised activities could be reduced (see also recital 103), or alternatively the service organisation (e.g. type of ships) could be reviewed, or the maximum fares could be modified.

(50) 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 Convention, which remains constant over the duration of the Convention.

(51) 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. Illegal prolongation of rescue aid to Tirrenia

(52) On 16 November 2010, the Commission approved rescue aid to Tirrenia and Siremar (‘the 2010 Decision’) (29). The aid consisted of a guarantee on credit lines provided by private banks for an amount of up to EUR 95 000 000. Italy undertook to communicate to the Commission, no later than six months after the rescue aid measure had been authorized, a restructuring plan or proof that the loan had been reimbursed in full and/or that the guarantee had been terminated.

(53) Italy subsequently informed the Commission that the selected financial institutions, Banca Infrastrutture Innovazione e Sviluppo (‘BIIS’) and Unicredit, had authorised a credit line of EUR 40 000 000 to Tirrenia and Siremar (i.e. EUR 25 000 000 for Tirrenia and EUR 15 000 000 for Siremar) with the maturity date set at 30 June 2011. The State guaranteed the credit line on 15 February 2011.

(54) The financing was disbursed as follows: (a) the first instalment on 28 February 2011 (EUR 20 000 000 for Tirrenia and EUR 12 000 000 for Siremar); (b) the second instalment on 23 March 2011 (EUR 5 000 000 for Tirrenia and EUR 3 000 000 for Siremar).

(55) Italy informed the Commission that, given that the first instalment of the guaranteed loan had been disbursed to Tirrenia and Siremar only on 28 February 2011, the six-month period for the reimbursement of the credit within the meaning of paragraph 25(a) of the Community guidelines on State aid for rescuing and restructuring firms in difficulty (‘the 2004 Rescue and Restructuring Guidelines’) (30) and recitals 32 and 47 of the 2010 Decision, would elapse on 28 August 2011.

(56) However, Tirrenia and Siremar defaulted on their loans and as a result on 11 July 2011 the State guarantee was called by BIIS. On this date, therefore, Tirrenia held a debt towards the State of EUR 25 203 063,89. This includes both the principal amount of the respective loans and outstanding interest owed to the bank.

(57) The Bankruptcy Court authorised the inclusion of the Ministry for Economy and Finance amongst the preferential (‘prededucibili’) creditors of Tirrenia. According to the Italian authorities, the Extraordinary Commissioner entrusted with the management of the company in the insolvency procedure considered, at that time, that Tirrenia could reimburse the financing by 28 August 2011, drawing from the proceeds of the planned privatisation (see section 2.3.3).

(58) On 25 July 2011 the contract for the sale of the Tirrenia business branch to CIN was signed. However, the transfer of the assets and hence also the payment was delayed, mostly due to difficulties to obtain the necessary merger authorisations (31). The Italian competition authority, the Autorità Garante della Concorrenza e del Mercato (‘AGCM’), eventually approved the Tirrenia – CIN transaction on 21 June 2012, and the sale was finalised on 19 July 2012.

(59) On 18 September 2012, Tirrenia reimbursed an amount of EUR 25 852 548,93 to the State. On 24 October 2012, Italy informed the Commission that the amounts due by Tirrenia as of 11 July 2011, including interest owed to the State for an amount of EUR 649 485,04, had been fully repaid by the company, and provided proof thereof.

2.3.3. Tirrenia’s privatisation and the deferred payment of the purchase price by CIN

(60) On 23 December 2009 Fintecna published the first call for tenders for the sale of the entire share capital of Tirrenia including its subsidiary Siremar. On 19 February 2010, 16 expressions of interests had been received from 19 entities. On 4 August 2010, after the failure of the negotiations with the only bidder having submitted a binding offer, Fintecna declared the procedure closed. According to Italy, the negotiations failed due to concerns related to financial aspects of the offer.

(61) After the failure of the first privatisation attempt, Tirrenia and Siremar, facing severe financial difficulties, were both admitted into the collective insolvency procedure foreseen under the Italian law for large companies, i.e. the extraordinary administration procedure (‘amministrazione straordinaria’) and were soon thereafter declared insolvent. More specifically, Tirrenia was admitted to the extraordinary administration procedure on 5 August 2010. On 12 August 2010, the Court of Rome delivered judgment No 332/2010 by which it declared Tirrenia insolvent.

2.3.3.1. Extraordinary administration procedure

(62) Unlike the normal bankruptcy procedure, whose primary aim is to liquidate the insolvent company in order to satisfy claims of the creditors, the extraordinary administration procedure, laid down by Decree Law No 270 of 8 July 1999, is a specific insolvency procedure for large companies that aims to safeguard the assets and ensure the continuation of the business.

(63) Under this procedure, the management of the insolvent company is transferred to an Extraordinary Commissioner who is appointed by the competent Ministry. The Extraordinary Commissioner proposes a recovery plan of the business in question, either by the restructuring or the sale of assets of the insolvent company. This plan is subject to previous authorisation by the competent Ministry, whilst considering the opinion of a Supervisory Board (composed by experts appointed by the Ministry).

(64) The Decree Law No 347 of 23 December 2003 laying down urgent measures for the restructuring of large insolvent companies, converted with amendments into Law No 39 of 18 February 2004 (‘Marzano law’), regulates the extraordinary administration procedure applicable to insolvent companies, which intend to undergo this restructuring procedure. These companies also need to satisfy cumulatively certain criteria concerning the number of employees in the preceding year and the level of indebtedness.

(65) The procedure requires that the insolvent company file both an application to the Italian Minister for Economic Development and a petition to the competent bankruptcy Court. The Ministry then decides on the admission of the insolvent company to the procedure and appoints the Extraordinary Commissioner under the supervision of the Supervisory Board, while the Court ascertains the state of insolvency of the company.

(66) Within 180 days of his appointment, the Extraordinary Commissioner must submit a restructuring plan to the Ministry. The ordinary bankruptcy procedure is only triggered in case the Ministry does not approve such restructuring plan and the alternative asset sale procedure is not viable.

(67) Decree Law 134/2008 (‘Decree 134/2008’) (32) introduced several amendments to the Marzano law. These amendments are applicable to companies providing essential public services, and concern inter alia the possibility for the Extraordinary Commissioner to identify a buyer of the insolvent company’s assets through a negotiation procedure with parties that guarantee continuity of the public service on the medium term and an expeditious intervention. Decree 134/2008 specifies that the sale price cannot be lower than the market value of the assets as set by an independent expert appointed by Ministerial Decree.

(68) Decree 134/2008 also introduced the possibility to pursue – in the immediate – an asset disposal plan, as compared to the previous regime, which required first a restructuring plan being submitted to the Ministry. Finally, Decree 134/2008 lays down that, in case neither an asset disposal plan nor a restructuring plan can be implemented or approved by the Ministry, the ordinary bankruptcy procedure is initiated.

2.3.3.2. The sale procedure

(69) On 15 September 2010, the call for tenders for the sale of the Tirrenia business branch (33) bundled together with the new eight-year Convention was published. The aim of this call was to check whether there were any potential national or international entities interested in acquiring the Tirrenia business branch that were able to guarantee the continuity of the transport services.

(70) This call was published on Tirrenia’s website, in several newspapers (34) and also on selected specialist websites (35). The deadline for this call for expressions of interest was originally set on 29 September 2010 but was then extended until 20 October 2010 by a public notice published in the same aforementioned national and international newspapers and websites in order to allow for a reasonable time period for the submission of expressions of interest.

(71) A total of 21 expressions of interest to participate in this tender were made by national, European, and non-European entities. The Extraordinary Commissioner then invited the sixteen entities whose expressions of interest had demonstrated that they could guarantee the continuity of the maritime transport service (36) to perform an in-depth due diligence check on the Tirrenia business branch. Access to the relevant documentation was granted on the condition that the interested parties signed confidentiality agreements.

(72) The eleven parties (37) that eventually chose to carry out this due diligence were given access to virtual data rooms containing the following: (a) all technical, legal and financial information, including details of the business branch put up for sale; (b) the business plan of the Tirrenia business branch prepared by the Extraordinary Commissioner; (c) the vendor’s due diligence report and the balance sheet of the company on the date of admission to the extraordinary administration procedure; (d) the new draft eight-year Convention to be signed between the successful bidder and the State; (e) all other information required so that potential buyers may valuate correctly the object of the sale.

(73) By Ministerial Decree of 4 February 2011, the Minister for Economic Development appointed Banca Profilo as the independent expert tasked with performing a valuation of the Tirrenia business branch under Article 4(4-quater) of Decree-Law No 347/2003. On 8 March 2011, Banca Profilo estimated the value of the Tirrenia business branch (including the new eight-year Convention) as equal to EUR 380 000 000. This information was uploaded to the data room for all potential bidders before expiry of the deadline for the submission of binding offers.

(74) On 15 March 2011, after the last deadline for submitting binding offers had passed, the Extraordinary Commissioner noted that only CIN – a company comprising Onorato Partecipazioni S.r.l., Grimaldi Compagnia di Navigazione S.p.A. and Marinvest S.r.l. – had submitted a binding offer pursuant to the terms of the letter of procedure of 2 February 2011 (38).

(75) On 14 April 2011, following a request for clarifications by the Extraordinary Commissioner, CIN made a final binding offer for the acquisition of the Tirrenia business branch. Specifically, this offer, supplemented by (i) a business plan consistent with the public service obligations laid down in the Convention; and (ii) bank guarantees for a total amount of EUR 20 000 000, provided for the following: (i) the price offered for purchasing the Tirrenia business branch including the new eight-year Convention totalling EUR 380 100 000; (ii) the payment of the offer by paying EUR 200 100 000 following the transfer of the business branch and the remaining amount to be paid over time as follows: (a) EUR 55 000 000 by 15 December of the third year following the transfer of the business branch; (b) EUR 60 000 000 by 15 December of the sixth year following the transfer of the business branch; (c) EUR 65 000 000 by 15 December of the eighth year following the transfer of the business branch.

(76) In view of the above, the Extraordinary Commissioner entered the binding offer submitted by CIN into the data room, and on 2 May 2011, sent all tenderers considered for the due diligence phase a letter inviting them to submit a better offer than the one submitted by CIN on 14 April 2011, by 12 May 2011. Following a request by one of the potential buyers, the deadline for submitting better offers was then extended by the Extraordinary Commissioner to 19 May 2011. However, the Extraordinary Commissioner received no other offers by that date.

(77) On the basis of the assessment carried out by the Extraordinary Commissioner and its advisers, the purchase offer submitted by CIN on 14 April 2011 was deemed consistent with the value of the Tirrenia business branch as determined by Banca Profilo. The business plan included with the offer was found to comply with what was requested in the letter of procedure of 2 February 2011 (see recital 74) and was considered appropriate proof of the tenderer’s ability to guarantee the seamless continuation of the maritime connection public service.

(78) On 23 May 2011, the Ministry of Economic Development then authorised the Extraordinary Commissioner to sell the Tirrenia business branch to CIN in accordance with the terms and conditions of the offer submitted on 14 April 2011. Following some further consultations, the Extraordinary Commissioner signed the contract with CIN on 25 July 2011.

(79) On 21 November 2011, the resulting transaction was notified for approval to the Commission. On 18 January 2012, the Commission opened an in-depth investigation under the EU Merger Regulation (39).

(80) The Commission’s initial market investigation indicated serious competition concerns, in particular because the parties to the merger had very high, if not monopolistic, combined market shares on a number of maritime routes in Italy, and in particular on certain routes to and from Sardinia. Initially, CIN was a joint-venture between Tirrenia’s main competitors: Grimaldi, Marinvest (which for instance controls Grandi Navi Veloci and SNAV) and Onorato Partecipazioni (which controls Moby). In light of the Commission’s concerns, Grimaldi and Marinvest withdrew from CIN by selling their shares to Onorato Partecipazioni. The latter then attracted new shareholders so that eventually, CIN was owned for 40 % by Moby (itself being controlled by Onorato Partecipazioni), for 30 % by Clessidra Società del Risparmio, for 20 % by Gruppo Investimenti Portuali and for 10 % by Shipping Investment S.r.l..

(81) On 27 April 2012, the Commission closed its in-depth investigation after the parties had abandoned the notified transaction. On 7 May 2012, the revised merger transaction, which no longer required approval at European level, was notified to the AGCM. By its resolution n. 23670 of 21 June 2012, the AGCM authorised the transaction subject to certain conditions (40). Ownership of the Tirrenia business branch was finally transferred to CIN on 19 July 2012.

(82) On 6 July 2015, Onorato Partecipazioni notified its intention to acquire full control over Moby and CIN by acquiring shares from the other shareholders of both companies. The AGCM approved this operation – which effectively amounted to a concentration between Moby and CIN – with its resolution n. 25773 of 10 December 2015, also subject to conditions for the Civitavecchia – Olbia and Genova – Olbia routes (41). As a result of this reorganisation, CIN is currently fully owned by Moby, and both companies are therefore fully owned by Onorato Partecipazioni.

(83) On April 26, 2018, Moby’s Board of Directors approved the plan to merge with CIN. Provided that the necessary approvals were obtained, this merger was planned to be completed by end 2018 but was delayed following an intervention by Tirrenia in EA.

2.3.3.3. The sale contract

(84) The sale contract of 25 July 2011 defines the Tirrenia business branch transferred as the branch of Tirrenia dedicated to the provision of transport services under the ongoing public service obligations. In particular, Article 4 of the contract spells out that the assets of the business branch are listed in an annex to the sale contract, and cover all intangible (42) and tangible assets (43) used by the company in the discharge of its public service obligations.

(85) Article 11(3) of the sale contract stipulates that the sale is conditional on the signing of the new Convention between CIN and the Ministry of Transport within a certain predefined time period. In other words, the signing of the new Convention is a necessary condition for the definitive conclusion of the sale.

(86) Article 7(9) of the sale contract further spells out that CIN will make new job offers (on the basis of new employment contracts) to all the administrative and crew personnel employed by Tirrenia for the operation of the public service obligations, taking into account the qualifications acquired and/or the equivalence of the job descriptions, as well as possible agreements with the trade unions. As required by Article 63(2) of Decree Law 270/1999, CIN has to refrain from any non-disciplinary dismissals for a two-year period. Under Articles 7(11) and 7(12) of the sale contract, CIN is obliged to regularly inform the seller on the observance of these obligations, with significant penalty amounts to be paid in case of breaches.

(87) Article 7(6)(d) of the sale contract lays down that the buyer is capable, in compliance with Article 4, paragraph 4-quater of the Marzano law, to guarantee the medium term continuity of the service and the observance of the national and international applicable legislation.

(88) Under Article 5 of the sale contract the EUR 380 100 000 sale price is payable as follows: (a) EUR 200 100 000 (the so-called Fixed Price) within three working days of adoption by the Ministry of Economic Development of a decree which removes any entry related to the pre-emptive rights and registration of seizures and attachments on the Tirrenia business branch; (b) The remaining EUR 180 000 000 (the so-called Deferred Price) deferred as follows: EUR 55 000 000 on 30 April of the fourth year following the initial date of entering into force of the new Convention; EUR 60 000 000 on 30 April of the seventh year following the initial date of entering into force of the new Convention, EUR 65 000 000 on 30 April of the ninth year following the initial date of entering into force of the new Convention (44).

(89) Article 8(23) of the sale contract spells out that, in accordance with Art. 63(5) of Decree Law 270/1999, the new owner will not be liable to repay any of the debts incurred by Tirrenia before the transfer of the business branch.

(90) An Addendum to the sale contract was signed by the parties on 16 July 2012 amending among others the means of payment of the Fixed Price of EUR 200 100 000 (see recital 88(a)). In particular, EUR 138 200 000 remains payable within three days from the adoption of the decree referred to in recital 88(a), and the remaining EUR 61 900 000 will be paid, with interest (45), on 1 March of the eighth year after the entry into force of the new Convention (i.e., 2020). The parties agreed that two years after the entry into force, they would consult each other to determine whether it is possible to renegotiate the terms and conditions of payment of the remaining EUR 61 900 000. As a result, the latter amount was paid earlier than initially foreseen (i.e. in February 2016 instead of in March 2020). No change occurs in the payment of the Deferred Price of EUR 180 000 000.

2.3.3.4. The Banca Profilo Study

(91) As described above (see recital 73), Banca Profilo was appointed by the Minister for Economic Development as the independent expert tasked with performing a valuation of the Tirrenia business branch under Article 4(4-quater) of Decree-Law No 347/2003. On 8 March 2011, Banca Profilo issued a report in which it described the valuation methodologies and data it had used, which included Tirrenia’s own business plan for the period 2011-2018. This report included an estimated range of values for the Tirrenia business branch.

(92) Banca Profilo’s valuations are based on several assumptions including, most notably, that the new public service contract would apply until its expiry and that as a result the Tirrenia business branch would receive public service compensation for operating the maritime transport connections laid down in that contract. In its valuation report, Banca Profilo refers to the Discounted Cash Flow (‘DCF’) and the Economic Added Value (‘EAV’) as its main methodologies and to the Market Multiples and Equity Method as secondary methodologies for the purpose of control.

(93) Under the DCF methodology, Banca Profilo takes into account: (i) the cash flows generated until the expiry date of the new Convention; (ii) the liquidation value of the Tirrenia business branch on the moment of expiry of the new Convention, based on the assumption that it will not be possible to continue the operations after that date; and (iii) the equity value of some limited minority shareholdings of the Tirrenia business branch. Under the EAV methodology, Banca Profilo assesses: (i) the adjusted book value; (ii) the goodwill; (iii) the liquidation value of the Tirrenia business branch on the moment of expiry of the new Convention (for the same reason as under the DCF approach). This assessment relies on data from the company’s industrial plan and Banca Profilo’s calculations using those data.

(94) With regard to the secondary methodologies, these entailed the following. The Market Multiples analysis is based on Banca Profilo’s calculations using Bloomberg data for nine comparable maritime transport companies. The Equity Method consists of an appraisal of the net value of the assets as recorded in the balance sheet but with some adjustments where appropriate (e.g. value of the fleet, public service contract, etc.).

(95) Banca Profilo concluded, on the basis of the above methodologies, that the value of the Tirrenia business branch would be in the range of EUR 380 to 426 million. As a result, the minimum price for this company would have to be set at EUR 380 000 000.

2.3.3.5. The Ecorys Report

(96) In the course of the formal investigation procedure, the Commission entrusted an independent consultant (Ecorys) with the task of establishing the market value of the Tirrenia business branch put up for sale (see recital 8). The consultant was asked (i) to confirm the validity of the valuation carried out by Banca Profilo; and (ii) to establish the market value of the business unit without any conditions attached.

(97) To determine the value of the Tirrenia business branch bundled with the new Convention, Ecorys applied the main methodologies also used by Banca Profilo. In particular, Ecorys used the Discounted Cash Flow and the Economic Value Added methodologies but modified the relevant assumptions where it considered this appropriate (46). Ecorys assumes that the new Convention will not be prolonged (47) at its expiry date and that therefore the public service routes will no longer be operated after that date. On this basis, Ecorys determined that the minimum market value of the Tirrenia business branch as sold amounted to EUR 409,5 million (i.e., almost 8 % higher than Banca Profilo’s valuation).

(98) Ecorys also concluded that, had the Tirrenia business branch been sold without any condition attached, and in particular without the new public service contract for the operation of the public service (and hence also without the obligation to ensure the continuity of said public service), the company would have been sold at its liquidation value (48), i.e. EUR 303,5 million. Ecorys based this conclusion on the assumption that the Tirrenia business branch could not profitably continue its operations without public service compensation. Ecorys characterised the public-service routes operated by both Tirrenia and Siremar as ‘heavily loss-making operations characterised by low passenger volumes and fully dependent on funding from the Conventions’. Furthermore, Ecorys considered that ‘the possibility to change the quality of the services and more headroom to set ticket prices are not sufficient conditions to make these routes economically viable from a business point of view’. Ecorys observed that this liquidation value is lower than the value that resulted from the tender and indicated that therefore immediate liquidation (in essence a sale of the ships) was not a viable alternative for a market economy operator.

(99) Moreover, Ecorys compared the staffing of the Tirrenia business branch with that of several comparable ferry companies and concluded that Tirrenia’s staff number and personnel cost structure are ‘not dissimilar from these comparable companies, with reference to the labour cost’s share of total revenues (49) and the labour cost/staff ratio’ (50). The analysis showed no substantive difference between the Tirrenia business branch and comparable companies which could have suggested overstaffing or excessive labour costs. A potential buyer would thus have had little margin of manoeuvre in terms of dismissing or replacing part of the workforce. On this basis, Ecorys concluded that there are no elements showing that the workforce condition had any significant impact on the value of the Tirrenia business branch.

2.3.4. The new Convention between the Italian State and CIN

2.3.4.1. The beneficiary

(100) CIN is the successful bidder for the Tirrenia business branch, initially created for this purpose by Onorato Partecipazioni S.r.l., Grimaldi Compagnia di Navigazione S.p.A. and Marinvest S.r.l. although the latter two parties had to be replaced by three other investors to obtain merger approval (see recital 80). As explained above (see recital 82), CIN is since July 2015 controlled solely by Onorato Partecipazioni S.r.l..

2.3.4.2. The routes

(101) According to the new Convention of 18 July 2012 between Italy and CIN, the following routes would be operated by the latter under the public service regime: Table 3 Routes operated by CIN under the new Convention Mixed service routes Freight service routes Napoli – Palermo (low season only): Daily service (over-night) from both ports. Livorno – Cagliari (all year round): Five departures per week from each port. Genova – Porto Torres (low season only): Daily service (over-night) from both ports. Genova – Olbia – Arbatax (all year round): To Sardinia: three (five) departures per week from Genova to Olbia in the low (high) season with two extensions per week from Olbia to Arbatax. To mainland: two departures per week from Arbatax to Genova with a stop in Olbia. One (three) additional departures from Olbia to Genova in the low (high season). Napoli – Cagliari (all year round): One to three departures per week from each port. One of the three departures can be carried out on the route Cagliari – Palermo in function of traffic requirements. Civitavecchia – Olbia (low season only): Daily service (over-night) from both ports. Ravenna – Catania (all year round): Three departures per week from each port. Napoli – Cagliari (all year round): One (two) departure(s) per week from each port in the low (high) season. Palermo – Cagliari (all year round): One departure per week from each port in the low and high season. Trapani – Cagliari (all year round): One departure per week from each port in the low and high season. Civitavecchia – Cagliari – Arbatax (all year round): To Sardinia: daily service (over-night) from Civitavecchia to Cagliari with two extensions per week to Arbatax. To mainland: daily service (over-night) from Cagliari to Civitavecchia with two extensions per week to Arbatax. Termoli – Tremiti Islands (all year round): Daily service from both ports plus two additional connections per week from both ports. One weekly connection for the transport of hazardous goods. In the high season one additional connection per week.

(102) CIN will operate the routes Napoli – Palermo, Genova – Porto Torres, Civitavecchia – Olbia on commercial terms during the high season. Annex A to the new Convention details how each of the routes in Table 3 are to be operated (e.g. type of ships, hour of departure for some of the routes, etc.). In addition, the fares charged to the users (respectively to island residents and to other passengers) cannot exceed the limits set by Article 6 of the new Convention and detailed in the same Annex A.

(103) By letter of 7 November 2013, CIN applied for a review of the economic-financial balance conditions, as foreseen by Article 9 of the new Convention (see recital 107). On 7 August 2014, the Italian Ministry of Infrastructure and Transport and CIN on this basis agreed to a number of amendments to the Convention of 18 July 2012. To restore the economic-financial balance of operations, the amendment agreement laid down that: — The mixed route Trapani – Cagliari would be abolished, — The freight route Napoli – Cagliari would be abolished, — The freight route Ravenna – Catania would be modified to enable departures from either Ravenna, Venice or Monfalcone to Catania and to allow for a possible stop in Brindisi and vice versa, — The freight routes (as amended) would no longer have to be operated during specific periods of the year (51) (mainly public holidays and holiday periods), — The service frequency and minimum frequencies on some routes would be modified. The most notable changes are the following: (a) on the mixed route Genova – Olbia – Arbatax the connection to Arbatax would be abolished in the low season (but kept in the high season); (b) on the mixed route Civitavecchia – Cagliari – Arbatax the frequency in the low season was reduced from daily to three departures per week with two connections per week to Arbatax with no changes in the high season; (c) on the mixed route Napoli – Cagliari the frequency in the low season was increased from one to two departures per week with no changes in the high season; (d) on the mixed route Palermo – Cagliari the frequency in the high season was increased from one to two departures per week with no changes in the low season; (e) on the freight route Livorno – Cagliari the frequency was amended from five weekly departures to four to six weekly departures, — The maximum amount of annual public service compensation would be kept at EUR 72 685 642 and could under no circumstances be increased.

2.3.4.3. Duration

(104) The new Convention signed between the Italian State and CIN on 18 July 2012 will be in force for eight years and will hence expire on 18 July 2020.

2.3.4.4. The public service obligations

(105) The public service obligations imposed on CIN concern the maritime transport links to be operated (see recital 101), the type and capacity of the vessels assigned to the respective maritime routes operated, the availability of a backup ship to ensure continuity of service, the frequency of service, and the maximum fares charged to users of the service on each of the respective routes.

2.3.4.5. The compensation

(106) The yearly compensation to be received by CIN under the new Convention is capped at EUR 72 685 642. The amount of compensation is to be determined based on the methodology laid down by the CIPE Directive (see recitals 41-51).

(107) Article 8 of the new Convention provides for a regular three-year review of the scope of the subsidised activities, to verify that there is no financial imbalance. Additionally, Article 9 of the new Convention lays down that, under very specific circumstances of unexpected and structural changes to the revenues or the costs, and in any event, only after the first year of each three-year period, the parties may trigger such a review earlier (the ‘safeguard clause’).

2.3.5. The berthing priority

(108) 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 Tirrenia, 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.

2.3.6. The measures laid down by the 2010 Law

(109) 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 (52) to the upgrade and modernisation of the fleet to cover pressing liquidity needs. 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 to their ships. These upgrades were necessary to meet new international safety standards following the 1996 Stockholm Agreement (53).

(110) In particular, drawing from two facilities (54), EUR 23 750 000 were set aside to pay for the upgrades of the entire Tirrenia Group. Of this amount, EUR 12 051 900 were deposited into a dedicated bank account at Banca Carige specifically for Tirrenia, still with the aim of using these funds as originally intended, i.e. to carry out the required upgrades to respect international safety standards. However, on 12 August 2010 Banca Carige executed an offset between this deposit and two debts owed to it by Tirrenia, for an amount of EUR 4 657 005,35. Therefore, Tirrenia did effectively take advantage of the possibility laid down in the 2010 Law to use the funds earmarked for upgrading the fleet to meet liquidity demands, even if it remained under an obligation to repay this aid to the Italian state by replenishing the account dedicated to the upgrade works.

(111) 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 processes of Tirrenia and Siremar (see also recital 26); (b) Article 19-ter of Decree Law 135/2009, converted with modifications into the 2009 Law, 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. These 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’) (55) pursuant to CIPE Directive No 1/2009 of 6 March 2009 (56).

2.4. Infringement procedure No 2007/4609

(112) Following earlier exchanges between the Commission’s services and the Italian authorities, 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.

(113) In their letter of 28 April 2009, the Italian authorities provided a detailed reply to the Commission’s request of 19 December 2008. In that letter, Italy among other things: — Noted that 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; — Argued that 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; — Pointed out that 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; — Explained that the rationalisation’s 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; — 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 the Italian authorities, 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.

(114) On 21 December 2009, the Commission’s Director-General responsible for energy and transport sent a letter to the Italian authorities 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, according to the Italian authorities, 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 (57) (‘the Maritime Cabotage Regulation’); — Public service compensation had to be restricted to those lines in which the continuous presence of other operators all the year round was limited and thus unsatisfactory to respond to the market needs. In that regard, clarifications were asked about the market failure on the routes Genova – Porto Torres, Genova – Olbia – Arbatax and Civitavecchia – Olbia. Furthermore, Italy was asked to explain if Tirrenia received compensation for the operation of these three routes in the high season. Questions were also asked about lines operated by Caremar. The letter also pointed out that only the inclusion of domestic lines (and not international lines) in a public service contract may be justified on the basis of the Maritime Cabotage Regulation; — The public service contracts of the Tirrenia group expired on 31 December 2008 and the privatisation planned by Italy may have taken longer than foreseen. The letter therefore pointed to the possibility of sending a letter of formal notice for wrong implementation of the Maritime Cabotage Regulation.

(115) On 22 January 2010, the Italian authorities replied to the Commission services’ letter of 21 December 2009. In their letter, the Italian authorities: — Took note that the Commission agreed in principle to the proposed approach for privatising the Tirrenia Group together with new public service contracts; — Provided detailed explanations on the routes Genova – Porto Torres, Genova – Olbia – Arbatax and Civitavecchia – Olbia for which the Commission had raised a number of questions. Italy also confirmed that the routes Genova – Porto Torres and Civitavecchia – Olbia are only operated under the public service regime during the low season; — Mentioned that the call for expressions of interest for the sale of Tirrenia (including Siremar) had been published on 23 December 2009. Italy indicated that it intended to complete the privatisation of the entire Tirrenia Group by 30 September 2010; — Asked the Commission to expressly confirm whether the arguments provided with regard to the market failure were sufficient.

(116) On 29 January 2010 (58), the Commission sent a letter of formal notice regarding the wrong implementation of the Maritime Cabotage Regulation. In this letter, the Commission recalled that this Regulation requires that 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. According to Article 4(3) of that Regulation, 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, these Conventions were due to expire at the end of 2008 but were repeatedly prolonged by Italy. Therefore, the Commission invited the Italian authorities to present their observations.

(117) Also on 29 January 2010, the Commission’s Director-General responsible for energy and transport replied to the Italian authorities’ 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 the lines Genova – Porto Torres, Genova – Olbia – Arbatax and Civitavecchia – Olbia were sufficient to remove the doubts expressed earlier. Furthermore, the Director-General noted positively that, following his earlier request, Italy had removed an international connection from the new draft Convention for Tirrenia. With respect to the questions raised concerning routes operated by Caremar, only for some of these routes the justifications were considered sufficient. Italy was therefore asked to provide further clarifications about some of Caremar’s routes. The Director-General recalled that public service contracts can only cover routes for which there is market failure.

(118) On 29 March 2010, the Italian authorities replied to the Commission’s letter of formal notice of 29 January 2010. In their reply, the Italian authorities: — Recalled that the Commission services, by their letter of 21 December 2009 (see recital 114), in principle agreed to the privatisation of the Tirrenia Group by means of the bundling of the companies with new public service contracts; — Noted that the prolongation of the initial Conventions was motivated only by the need to ensure continuity in the operation of the maritime public service until completion of the respective privatisation processes; — Confirmed their intention to carry out the privatisation process by 30 September 2010 so as to liberalise the maritime cabotage sector by that date. — Provided an overview of the privatisation process for Tirrenia (including Siremar). In particular, Italy indicated that following the publication of the call for expressions of interest, 16 expressions of interest had been submitted on 19 February 2010 by 19 entities. As part of the due diligence phase, a data room had been opened on 22 March 2010 and would remain open until end of May 2010. At that time, Italy expected that the sale contract could be signed by mid-July 2010 and that the ownership would be transferred by September 2010. — Clarified that in the tender procedure for Toremar, 11 interested parties would take part in the next phases of that procedure. — Pointed out that the continued uncertainty that arises as a result of continuing the infringement procedure could jeopardise the privatisation processes and also negatively affect the value of the companies put up for tender. — Offered full cooperation with the Commission to clarify any remaining doubts with respect to both the infringement procedure and possible State aid issues.

(119) On 10 September 2010, the Italian authorities informed the Commission during an ad hoc meeting, that the procedure for the privatisation of Tirrenia and Siremar had been cancelled at the final stage and that, consequently, the deadline of 30 September would not be met. In addition, the Italian authorities reported that the competitive procedures for the contracts of Caremar, Saremar, Siremar and Toremar were 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 26).

(120) In light of these developments, the Commission adopted a complementary letter of formal notice on 24 November 2010. In this letter, the Commission: — Noted that the initial Conventions of Tirrenia, Siremar, Caremar, Saremar and Toremar were extended automatically and without any competitive procedure; — Pointed out that while the public service contracts in question continued to be applied, no competitive procedure had been completed, either for Tirrenia, nor for Siremar, Caremar, Saremar or Toremar; — Indicated that it reserved its right to issue a reasoned opinion if necessary (taking into account any comments Italy might make).

(121) 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 2011 (59) 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 contracts for maritime cabotage operated by the companies Caremar, Laziomar and Saremar, more than three years after the normal expiry of the respective initial Conventions. Those Conventions had been extended automatically and indefinitely thereby preventing other Community ship-owners from competing for the award of these contracts.

(122) On 8 August 2012, the Italian authorities 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 EU. In particular, for Caremar the notice was published on 20 July 2012 and for Laziomar the notice was sent for publication on 1 August 2012. Finally, for Saremar a law was adopted on 2 August 2012 that required publication of such a notice by 2 October 2012.

(123) On 13 January 2014, Compagnia Laziale di Navigazione became the new owner of Laziomar and signed a ten-year public service contract for links with the Pontine archipelago. On 16 July 2015, ATI SNAV-Rifim took ownership of Caremar and was entrusted with a nine-year public service contract. Finally, following the 2014 Decision, Saremar was put into liquidation and the public service contract for the routes between Sardinia and small islands was awarded to Delcomar in March 2016.

(124) By letter of 15 July 2016, the Italian authorities 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 the State and Tirrenia

3.1.1. Observance of Altmark and existence of aid

(125) In its 2011 Decision the Commission took the preliminary view that the definition of the public service obligations was not sufficiently clear and hence did not allow the Commission to definitely conclude whether it contained manifest error. In particular, the Commission did not have a complete view on the actual obligations imposed on Tirrenia for the operation of the routes in question as compared to the services offered by competitors on some of those routes. In addition, the Commission had doubts on whether the freight routes operated by Tirrenia could be seen as aiming to satisfy general economic interests within the meaning of Union law.

(126) The Commission took the preliminary view that the second criterion of the Altmark judgment (60) was met 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 Convention (for compensation concerning the year 2009) and in the CIPE Directive (for compensation from 2010 onwards).

(127) The Commission however considered that the third Altmark criterion did not seem to be met and that the operators might have been over-compensated for the performance of the public service tasks. In particular, the Commission expressed doubts whether the risk premium of 6,5 %, which applies from 2010 onwards, reflects an appropriate level of risk since prima facie Tirrenia did not seem to assume the risks normally borne in the operation of such services.

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

(129) In the 2011 Decision, the Commission therefore came to the preliminary conclusion that the public service compensations paid to Tirrenia during 2009-2011 constitute 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.

(130) In the 2012 Decision, the Commission considered that, to the extent all conditions had remained unchanged in 2012 and until the entry into force of the new Convention, the compensation granted to Tirrenia since 1 January 2012 under the further prolongation of the initial Convention also constitutes State aid.

3.1.2. Compatibility

(131) 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 Commission Decision 2005/842/EC (61) (2005 SGEI Decision) and the 2005 SGEI Framework (62). 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.

(132) In the 2012 Decision, the Commission noted that on 31 January 2012, a new SGEI package consisting of Commission Decision 2012/21/EU (63) (2011 SGEI Decision) and 2011 SGEI Framework (64) had entered into force. The Commission however took the preliminary view that the public service compensation under the prolongation of the initial Convention could not be considered compatible with the internal market and exempted from the notification requirement under the 2011 SGEI Decision.

(133) The 2010 Law provided for the prolongation of the initial Convention from 30 September 2010 up to the end of the privatisation process. Tirrenia was in difficulty at the moment of adoption of the 2010 Law (see recital 61). As a result, the compensation received by the company as of 1 October 2010 until its privatisation could not be assessed on the basis of the 2011 SGEI Framework. Instead, following paragraph 9 (65) of the 2011 SGEI Framework, the Commission took the preliminary view that this aid should be assessed on the basis of the 2004 Rescue and Restructuring Guidelines.

(134) The Commission noted that the compatibility criteria laid down by the 2004 Rescue and Restructuring Guidelines were not met in this case and therefore took the preliminary view in the 2012 Decision that the compensation paid to Tirrenia in difficulty would amount to incompatible restructuring aid.

3.2. Illegal prolongation of rescue aid to Tirrenia

(135) In the 2012 Decision, the Commission took the preliminary view that the rescue aid had been illegally prolonged from 28 August 2011 until 18 September 2012 and that the prolongation of the rescue aid during this period constituted incompatible aid to Tirrenia and Siremar and possibly also to their respective buyers. In particular, the Commission noted that Italy had not submitted a restructuring or liquidation plan within six months after the disbursement of the first instalment of the rescue aid to these companies as required by the 2004 Rescue and Restructuring Guidelines. The Commission considered that the conditions for an extension of the rescue aid as laid down in the 2004 Rescue and Restructuring Guidelines were also not fulfilled.

3.3. Tirrenia’s privatisation and the deferred payment of the purchase price by CIN

(136) In the 2011 Decision, the Commission expressed its doubts that the tender procedure for the sale of the Tirrenia business branch had not been sufficiently transparent and unconditional so as to ensure that the sale took place at market price.

(137) First, the Commission noted that although the call for expression of interest was published in several newspapers and on a number of websites, that call did not seem to detail the scope of the sale and did not give bidders any clear instructions as to the subsequent phases of the procedure. The call also did not seem to contain any pre-qualification or selection criteria or any other conditions that had to be met by the bidders apart from the mandatory condition to continue to provide the public service. Furthermore, all relevant information as regards the assets subject to the sale procedure was made available to the bidders only during the due diligence phase.

(138) Second, the Commission also considered that certain requirements 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 publicly owned undertakings by the State or imputable to the State: non-economic considerations which a private seller would not make, such as public policy, employment or regional development concerns, suggest the existence of State aid if they impose onerous obligations on the potential buyer and are therefore liable to reduce the sale price.

(139) The sale procedures of the Tirrenia and Siremar business branches were based on the procedure laid down by the Marzano law (see recital 64). Therefore, the Commission assessed the two procedures together. It considered that the sale of the business branches entrusted with new Conventions resulted in an obligation on the buyers to provide the public service subject to the pre-established quality, frequency and fare obligations as laid down by the new Conventions. By imposing such obligations, it seemed to the Commission that the State did not seek to obtain the highest price, but rather to pursue public interest objectives. The Commission considered it was highly unlikely that a private vendor would have given the same significance to the uninterrupted operation of the public service.

(140) Likewise, the Commission considered that a private vendor, operating under normal market conditions, would not have imposed the obligation to maintain employment levels for two years.

(141) For the above reasons, the Commission preliminarily concluded that the privatisation procedure of the Tirrenia business branch had not been sufficiently transparent and unconditional so as to ensure by itself that the sale took place at market price. Therefore, the Commission could not exclude that an economic advantage was conferred either to the sold economic activity or to the buyer.

(142) The Commission also considered, based on the available information, that any aid that might have arisen in the course of the privatisation process would have been incompatible.

(143) In the 2012 Decision, the Commission took the preliminary view that the deferred payment by CIN of the purchase price for the Tirrenia business branch could constitute State aid to CIN. In particular, the Commission noted that the real value of the purchase price, obtained by discounting the deferred payments at their value at the moment of the sale, is lower than the market value set by the independent expert appointed by Italy. The Commission therefore considered that CIN may have benefited from an advantage represented by at least the difference between the price set by the independent expert and the future payments discounted at their present value. Based on the available information, the Commission considered that this measure might have constituted operating aid, which is in principle incompatible with the internal market.

3.4. The new Convention between the Italian State and CIN

(144) In the 2012 Decision the Commission took the preliminary view that the compensation to the purchaser of the Tirrenia business branch (i.e., CIN) did not fulfil the criteria laid down in the Altmark Judgment and therefore amounted to aid within the meaning of Article 107(1) TFEU.

(145) The Commission came to this conclusion given that: — competitors who seemed to be offering similar services were apparently present at least on certain routes operated by CIN, — 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 — the fourth criterion of the Altmark Judgment (66) was seemingly not observed, given that the Tirrenia business branch endowed with a new Convention, rather than the public service contract in itself, had been tendered out and it had not been shown that this enabled the selection of the tenderer capable of providing the services at the least cost to the community.

(146) With respect to the compatibility of the compensation to CIN, the Commission noted that, on the basis of the information provided by the Italian authorities, it appeared that for the links operated by CIN under the public service regime, the number of passengers transported in the two previous years to that of the entrustment does not exceed the threshold laid down by the 2011 SGEI Decision, namely 300 000 passengers. However, in light of its doubts on the genuine nature of the SGEI and on there being possible overcompensation to CIN, the Commission took the preliminary view that the compensations could not be considered compatible on the basis of the 2011 SGEI Decision. The Commission then assessed the aid on the basis of the 2011 SGEI Framework but found it had doubts on whether the compatibility conditions of that Framework were fulfilled and invited Italy to demonstrate that this was the case.

3.5. The berthing priority

(147) 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 that does not involve any transfer of State resources and cannot therefore qualify as State aid. If the berthing priority is remunerated, the Commission considered that to the extent Tirrenia 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 the Italian authorities and third parties to provide further information on this measure.

(148) 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.

3.6. The measures laid down by the 2010 Law

(149) 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 Tirrenia. 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; (3) the possible use of FAS resources. The Commission invited the Italian authorities to clarify if and in what way each of these measures were necessary to provide the public service.

(150) The Commission also took the preliminary view that these measures likely constituted operating aid reducing the costs that Tirrenia, and the other companies of the former Tirrenia Group, would otherwise have to bear themselves and thus these 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

(151) Italy provided a list of routes operated by Tirrenia that are subject to public service obligations, including the seasonal frequency and timetables, the competitive environment and the reasons leading to the imposition of public service obligations.

(152) As regards the existence of a genuine SGEI, Italy noted that the public service obligations it imposed on Tirrenia and later CIN ensure, in terms of regularity, continuity and quality, a satisfactory service connecting the mainland with the ports on the islands. This service contributes to the economic development of the islands, while at the same time guaranteeing the essential mobility needs of the island communities and ensuring that the constitutionally guaranteed right to territorial continuity is respected. In this context, Italy noted that the public service obligations are fully in line with the objectives of Articles 174 et seq. TFEU and Declaration No 30 on island regions (annexed to the Final Act of the Amsterdam Treaty). Italy also referred to the jurisprudence of the Court of Justice of the European Union (the ‘Court of Justice’) which confirms that the aim of ensuring that there are sufficient regular shipping services to islands, from islands and between islands, is covered by a legitimate public interest objective (67).

(153) Italy claimed that the services operated by companies subject to public service obligations and those managed by companies carrying out business activity freely are not fully comparable. In particular, the regularity, continuity and quality of the services provided by the former would be fully guaranteed thanks to clear obligations laid down in Conventions while the latter would be dependent solely on the calculation by the operator of its return on investment. In this regard, Italy gave the example of the route La Maddalena – Palau for which Enermar, operating this route on commercial terms, decided to discontinue the service without prior notice. Saremar, on the contrary, which operated this route under a public service contract, was required to continue its service and hence effectively ensured territorial continuity. Italy also referred to the private operator Go In Sardinia which due to financial difficulties unexpectedly suspended its services in August 2014. This caused distress for thousands of passengers who had already paid their tickets and who would not have reached their destinations without Tirrenia’s intervention.

4.2. On the potential illegal prolongation of rescue aid to Tirrenia

(154) The Italian authorities recalled that they had informed the Commission, by letter of 16 May 2011, that Tirrenia in EA would reimburse the State-guaranteed loans after completion of the sale of the Tirrenia and Siremar business branches, using the funds from these sales (68). Given that on 25 July 2011 CIN signed the contract for the sale of the Tirrenia business branch, both the Italian authorities and Tirrenia in EA legitimately believed that the aid could be repaid by the deadline of 28 August 2011.

(155) Italy highlighted that the subsequent events unexpectedly delayed the completion of the sale of the Tirrenia and Siremar business branches. As a result, Tirrenia in EA had to continue to operate its services for considerably longer than planned bearing the related costs. According to Italy, the liquidation plan for Tirrenia was available on the website of Tirrenia in EA long before the expiry of the six-month time limit established by the 2004 Rescue & Restructuring Guidelines. Italy added that the Commission was at all times kept up to date of the progress of the privatisation process. The entire amount due from both Tirrenia and Siremar, including interest, was paid back to the State a mere 48 days after payment by CIN of the first instalment of the price for the Tirrenia business branch.

4.3. On the privatisation of the Tirrenia business branch

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

(156) Italy stressed that the procedures were conducted in full compliance with the Marzano law. Although the law in question refers to the possibility of identifying the buyer through private negotiation, this would not preclude observance of the principles of openness, transparency and non-discrimination. Moreover, in this case other legal provisions that explicitly require transparent and non-discriminatory competitive procedures to be organised would rule out the possibility of resorting to any form of private negotiation. In particular, Article 1(5-bis)(b) of the 2010 Law would require the Extraordinary Commissioner to restrict proceedings to ‘the minimum time that is possible under the extraordinary administration procedure while complying with the competitive, transparent and non-discriminatory procedure required for the sales’.

(157) The procedure provided for in Article 4 (4-quater) of Decree Law 347/2003, according to Italy, offered additional guarantees in terms of transparency and non-discrimination, in particular given the valuation of the market price of the business unit put up for sale by an independent expert and the selection of the most advantageous offer in terms of price.

(158) Italy claimed that all parties had equal access to all the information necessary to clearly identify the assets put up for sale and prepare an offer. Indeed, the sale was confined to the assets and contractual relations inherent in the provision of the public service, as follows: (a) vessels and auxiliary equipment necessary for the discharge of the public service obligations; (b) contracts with strategic suppliers for the services necessary for the normal running of the business; (c) a legal requirement to make a proposal for the re-employment of the staff necessary to perform the public service obligations on the basis of the fleet manning tables (see recital 160 for more detail).

(159) Italy also clarified that six of Tirrenia’s vessels, which were not necessary for the provision of the public service, were sold under separate sale procedures. Separate sales procedures were also launched for the disposal of real estate and art works belonging to Tirrenia. These assets were hence not included in the tender for the Tirrenia business branch (see also section 4.3.2).

(160) As concerns specifically the obligation to maintain employment levels, Italy stressed that the sale of the Tirrenia and Siremar business branches does not fall within the scope of Article 2112 of the Civil Code and thus there is no automatic transfer of staff (with their existing contracts) to the successful bidders. The only legal obligation on the successful bidders was to re-employ the staff of the seller (on the basis of new contracts) and maintain employment levels for two years, as required by Article 63(2) of Decree Law 270/1999, which applies to all large companies in extraordinary administration. This however did not mean that Tirrenia’s employees would be automatically transferred to the buyer. In addition, this obligation was confined to staff that, according to the business plan and the manning tables of the vessels of the business branch, were deemed essential for the continued operation of the public service.

(161) Italy claimed that such obligation, imposed by general domestic law, and which serves to ensure the continuity of business and the performance of the public service, would have been imposed on the same terms by a private vendor.

(162) Following the publication of the call for expressions of interest in Italian and in English on the website of Tirrenia and in a number of national and international newspapers and specialist websites, 21 expressions of interest were made by Italian, European and non-European entities. Italy considered that this demonstrates that the content of this call made it possible to clearly identify what was being sold and the nature of the procedure to be followed, while at the same time safeguarding commercially sensitive information (primarily to protect the interests of potential buyers). During the due diligence phase, the entities were then provided with detailed information concerning among others the specific assets for sale, the business plan, the draft new Convention (see recital 72).

(163) Therefore, Italy claimed that all entities interested in acquiring the Tirrenia business branch were provided in a transparent and non-discriminatory manner with the information required to make a purchase offer in full knowledge of the facts.

4.3.2. On the sale of the assets not in scope of the Tirrenia business branch

(164) Italy explained that the Extraordinary Commissioner launched independent, transparent and non-discriminatory tender processes for the sale of the six ships (69) which Tirrenia did not need to operate the public service. On 10 December 2010, calls for expression of interest were published in national and international newspapers and also in some specialised publications. On the expiry of the deadline, which had been extended twice, only offers for demolition purposes had been received for the five so-called fast ferries. However, on the expiry of the deadline for the procedure concerning the Domiziana motor ship, two bids were received for the purchase of this vessel for commercial (i.e. shipping purposes). Attempts were made to acquire higher offers (both from the two initial bidders as from potential additional bidders) but no such offers were received. The tender was therefore awarded to the bidder who had made the highest offer.

(165) Italy also indicated that several real estate properties owned by Tirrenia were planned to be sold via independent separate tender procedures as they were not necessary for the operation of the public service and therefore not included in the Tirrenia business branch. Italy referred to the sale of the Palazzo Molin in Venice to illust