Contents

1. Procedure 5

2. Background and description of the measures subject to investigation 7

2.1. General framework 7

2.1.1. The initial Conventions 7

2.1.2. The prolongation of the initial Conventions 7

2.1.3. The privatisation of Siremar and the signing of the new Convention 8

2.2. Measures in scope of the 2011 and 2012 Decisions 9

2.3. Detailed description of the measures subject to this Decision 9

2.3.1. The prolongation of the initial Convention between the State and Siremar 9

2.3.2. Illegal prolongation of rescue aid to Siremar 12

2.3.3. Siremar’s privatisation, the counter-guarantee, and the increase in CdI’s capital 13

2.3.4. The new Convention 20

2.3.5. The berthing priority 22

2.3.6. The measures laid down by the 2010 Law 22

2.4. Infringement procedure No 2007/4609 22

3. Grounds for initiating and extending the procedure 25

3.1. The prolongation of the initial Convention between the State and Siremar 25

3.1.1. Compliance with Altmark and existence of aid 25

3.1.2. Compatibility 26

3.2. Illegal prolongation of rescue aid to Siremar 26

3.3. Siremar’s privatisation, the counter-guarantee, and the increase in CdI’s capital 26

3.3.1. Siremar’s privatisation 26

3.3.2. The counter-guarantee 27

3.3.3. The increase in CdI’s capital 27

3.3.4. Compatibility 27

3.4. The new Convention between the Italian State and CdI 27

3.5. The berthing priority 28

3.6. The measures laid down by the 2010 Law 28

4. Comments from Italy 28

4.1. On the public service obligations and the competitive environment 28

4.2. On the potential illegal prolongation of rescue aid to Siremar 29

4.3. On the privatisation of the Siremar business branch 30

4.3.1. On the transparent and non-discriminatory character of the procedure 30

4.3.2. On the sale of the assets not in scope of the Siremar business branch 30

4.3.3. On the bundling of the assets of the Siremar business branch with a new Convention 31

4.3.4. On the appointment of the independent expert 31

4.3.5. On the transparency of the procedure 31

4.3.6. On the First and Second Ecorys report 31

4.3.7. On national litigation and the final award to SNS 32

4.4. On the compliance of the new Convention with the Altmark criteria 33

4.5. On the 6,5 % risk premium laid down in the CIPE Directive as of 2010 33

4.6. On the compliance of the new Convention with the 2011 SGEI Decision 34

4.7. On the counter-guarantee 34

4.8. On the berthing priority 35

4.9. On the measures laid down by the 2010 Law 35

4.10. On the absence of economic continuity between Siremar in EA and CdI 36

5. Comments from interested parties 37

5.1. Comments from Siremar in extraordinary administration 37

5.1.1. On the infringement procedure No 2007/4609 37

5.1.2. On the prolongation of the initial Convention 37

5.1.3. On the potential illegal prolongation of rescue aid to Siremar 38

5.1.4. On the new Convention 39

5.1.5. On Siremar’s privatisation and the counter-guarantee 39

5.1.6. On the absence of economic continuity between Siremar in EA and CdI 40

5.1.7. Additional submission of the decision of the CdS on the counter-guarantee 41

5.2. Comments from SNS 41

5.2.1. First submission 41

5.2.2. Second submission 41

5.2.3. Third submission 42

5.3. Comments from Pan Med 43

5.4. Comments from Grandi Navi Veloci 44

5.5. Letter from the mayor of Lipari 45

6. Submissions from Compagnia delle Isole 45

6.1. First submission 45

6.2. Second submission 46

6.3. Third submission 46

7. Comments from Italy on interested parties comments and submissions 47

8. Assessment 47

8.1. Existence of aid within the meaning of Article 107(1) TFEU 47

8.1.1. The prolongation of the initial Convention between Siremar and Italy 48

8.1.2. Illegal prolongation of rescue aid to Siremar 50

8.1.3. The award of the new Convention bundled with the Siremar business branch and the berthing priority to SNS, the increase in CdI’s capital and the counter-guarantee 51

8.1.4. The measures laid down by the 2010 Law 71

8.1.5. Conclusion on existence of aid 73

8.2. Lawfulness of the aid 74

8.3. Compatibility of the aid 74

8.3.1. The prolongation of the initial Convention between the State and Siremar 74

8.3.2. Illegal prolongation of rescue aid to Siremar 83

8.3.3. Fiscal exemptions related to the privatisation process 84

8.3.4. Conclusion on compatibility of the aid 84

8.4. Response to CdI’s submissions 85

9. Conclusion 85

10. Recovery 86

11. Economic continuity 87

11.1. The scope of the transfer 87

11.2. The transfer price 88

11.3. The identity of the owners 89

11.4. The timing of the transfer 89

11.5. The economic logic of the transfer 89

11.6. Conclusion on economic continuity between Siremar in EA and SNS 90

COMMISSION DECISION (EU) 2022/448

of 17 June 2021

on the measures SA.32014, SA.32015, SA.32016 (2011/C) (ex 2011/NN) implemented by Italy for Siremar and its acquirer Società Navigazione Siciliana

(notified under document C(2022) 4268)

(Only the Italian version is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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

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

Whereas:

1. PROCEDURE

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

(2) During the investigation phase, the Italian authorities requested the Tirrenia Group case to be split up, so that priority could be given to reaching a final decision concerning only Tirrenia di Navigazione (‘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.

(3) The Commission acceded to the Italian authorities’ request, and by Commission Decision 2001/851/EC (3) 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.

(4) By Commission Decision 2005/163/EC (4) (‘the 2004 Decision’), the Commission declared the compensation granted to the Tirrenia Group companies other than Tirrenia (5) to be partially compatible with the internal market, partially compatible conditional upon the respect of certain 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 included conditions to ensure the compatibility of the compensation throughout the entire duration of the initial Conventions (i.e. until 2008).

(5) By Judgment of 4 March 2009 in cases T-265/04, T-292/04 and T-504/04 (6) (‘the 2009 Judgment’) the General Court annulled the 2004 Decision.

(6) On 5 October 2011, the Commission opened a new formal investigation procedure in respect of various additional measures adopted by Italy in favour of the companies of the former Tirrenia Group (‘the 2011 Decision’). The investigation concerned, inter alia, the compensations granted to Siremar – Sicilia Regionale Marittima (‘Siremar’) for the operation of a number of maritime routes as of 1 January 2009, and the privatisation process of the Siremar business branch (see Section 2.3.3).

(7) The 2011 Decision was published in the Official Journal of the European Union (7). The Commission invited interested parties to submit their comments on the measures under investigation.

(8) Italy submitted its reply to the 2011 Decision by letter of 15 November 2011. As concerns the measures subject to this Decision, the Commission also received comments from Società Navigazione Siciliana SpA (‘SNS’), Pan Med Lines S.r.l. (‘Pan Med’), and Grandi Navi Veloci SpA (‘GNV’) (see Section 5). It forwarded them to Italy, which had the opportunity to react.

(9) On 10 January 2012, the Italian authorities formally notified to the Commission, allegedly for reasons of legal certainty, the draft public service contracts (‘Conventions’) that any future acquirer of the Tirrenia and Siremar business branches was required to sign and on the basis of which compensation for the provision of public service would be paid.

(10) On 7 November 2012, the Commission extended the investigation procedure, inter alia, in respect of (i) the illegal prolongation of rescue aid granted to Siremar, (ii) potential aid to Compagnia delle Isole (‘CdI’), the first acquirer of Siremar’s branch, in the context of the privatisation of the latter and (iii) public service compensations to be paid to CdI under the new Convention concluded with the Italian State. On 19 December 2012, the Commission adopted an amended version (8) of that Decision (the ‘2012 Decision’, when referred to together with the 2011 Decision, the ‘2011 and 2012 Decisions’).

(11) The 2012 Decision was published in the Official Journal of the European Union (9). The Commission invited interested parties to submit their comments on the measures under investigation.

(12) Italy submitted its reply to the 2012 Decision by letters of 7 and 13 December 2012. As concerns the measures subject to this Decision, the Commission received comments from Pan Med Lines S.r.l. (‘Pan Med’), Siremar, SNS and CdI (see Sections 5 and 6). It forwarded them to Italy, which had the opportunity to react.

(13) On 5 October 2012, the Commission contracted Ecorys Netherlands BV (‘Ecorys’) to provide it with an estimation, based on two alternative scenarios, of the market value of the relevant assets of Siremar put up for sale (see Section 2.3.3.7). On 4 September 2013, Ecorys submitted its final report (‘the First Ecorys Report’). On 27 September 2013, the Commission forwarded this report to Italy. On 18 November 2013, upon request of the Italian authorities, the Commission provided an Italian translation of the Ecorys Report. On 17 December 2013, Italy submitted its comments, including a counter-valuation by its own independent expert, Banca Profilo SpA.

(14) On 24 June 2013, the Commission sent a letter to several companies operating in the maritime sector, asking on a voluntary basis for detailed information on routes operated by Siremar in the period 2009-2012 and the conditions of its privatisation. Only CdI, which was operating the new Convention at the time, replied.

(15) By Commission Decision (EU) 2018/261 of 22 January 2014 (10) (‘the 2014 Decision’), the Commission closed the formal investigation procedure as concerns certain measures adopted by the Region of Sardinia in favour of Saremar (see recital (36)).

(16) On 15 October 2014, the Commission’s services met with representatives of Siremar and the Italian authorities. In addition, on 23 October 2014 the Commission services also met with representatives of CdI and the Italian authorities. As a follow up to the latter meeting, on 30 October 2014 CdI provided additional information to the Commission.

(17) Concerning Siremar, the Commission requested additional information from Italy by letters of 30 January 2012, 16 March 2012, 1 August 2012, 22 November 2012, 12 April 2013, 12 June 2013, 27 June 2013, 11 July 2013, 29 July 2014, 6 November 2014, 16 October 2015, 25 January 2018, 29 March 2018, 31 August 2018, 18 March 2019, 16 October 2019, 31 July 2020 and 29 October 2020.

(18) Concerning Siremar, Italy submitted additional information by letters of 28 March 2012, 5 October 2012, 23 October 2012, 13 May 2013, 8 August 2013, 19 September 2014, 20 November 2014, 12 December 2014, 12 February 2015, 13 November 2015, 18 April 2016, 2 August 2017, 26 April 2018, 31 May 2018, 29 May 2019, 26 July 2019, 3 January 2020, 24 January 2020, 8 February 2021 and 11 March 2021 (11).

(19) By Commission Decision (EU) 2020/1411 of 2 March 2020 (12), the Commission concluded the investigation on the Tirrenia Group companies other than Tirrenia, including Siremar, for the period 1992-2008 (the ‘2020 Tirrenia Group decision’). The Commission concluded that the aid granted for the provision of maritime cabotage transport services constituted existing aid, while the aid granted for the provision of international maritime transport services was compatible with the 2011 services of general economic interest (‘SGEI’) Framework (the ‘2011 SGEI Framework’) (13).

(20) By Commission Decision (EU) 2020/1412 of 2 March 2020 (14), the Commission closed the formal investigation procedure as concerns the measures granted to Tirrenia and its acquirer CIN, for the period 2009-2020 (the ‘2020 Tirrenia/CIN decision’).

(21) This Decision concerns all the possible aid measures to Siremar, CdI, and SNS as specified in recitals (36) and (37) and as identified in the 2011 and 2012 Decisions, as well as the possible aid granted to Unicredit through the counter-guarantee (see Sections 2.3.3.5 and 3.3.2). The Commission will address all the remaining measures subject to those Decisions, under the case numbers SA.32014, SA.32015 and SA.32016 in separate Decisions. In particular, those remaining measures all concern other companies of the former Tirrenia Group (i.e. Caremar, Laziomar, Saremar and Toremar).

2. BACKGROUND AND DESCRIPTION OF THE MEASURES SUBJECT TO INVESTIGATION

2.1. General framework

2.1.1. The initial Conventions

(22) The Tirrenia Group was originally owned by the Italian State through the company Finanziaria per i Settori Industriale e dei Servizi SpA (‘Fintecna’) (15) and included six companies, namely Tirrenia, Adriatica, Caremar, Saremar, Siremar and Toremar. These companies provided maritime transport services under separate public service contracts concluded in 1991 with the Italian State, in force for 20 years between January 1989 and December 2008 (the initial Conventions). Fintecna held 100 % of Tirrenia’s share capital. Tirrenia wholly owned Adriatica, Caremar, Siremar, Saremar and Toremar (together, ‘the regional companies’). Adriatica, which used to operate a number of routes between Italy and Albania, Croatia, Greece and Montenegro, merged with Tirrenia in 2004.

(23) The purpose of these public service contracts was to guarantee the regularity and reliability of a large number of maritime transport services, chiefly 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.

(24) Siremar, fully owned by Tirrenia, operated a series of maritime cabotage routes, both between Sicily and several smaller neighbouring islands and between Milazzo and Naples. The exact routes concerned are described in recital (41).

2.1.2. The prolongation of the initial Conventions

(25) The initial Conventions, including the one applicable to Siremar, were prolonged three times.

(26) Firstly, Article 26 of Decree Law No 207 of 30 December 2008 (‘Decree Law 207/2008’), converted into Law No 14 of 27 February 2009, laid down the prolongation of the initial Conventions, which were initially due to expire on 31 December 2008, until 31 December 2009.

(27) Secondly, Article 19ter of Decree Law No 135 of 25 September 2009 (‘Decree Law 135/2009’), 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, excluding Siremar, would be transferred from the parent company Tirrenia as follows: (a) Caremar to the Region of Campania. Subsequently, the Region of Campania transferred the going concern operating the transport connections with the Pontino archipelago to the Region of Lazio (thereby setting up Laziomar) (16); (b) Saremar to the Region of Sardinia; (c) Toremar to the Region of Tuscany.

(28) The 2009 Law also specified that new ‘Conventions’ would be agreed between the Italian State and Tirrenia and Siremar by 31 December 2009. Likewise, the regional services would be enshrined in new ‘Public Service Contracts’, to be agreed between Saremar, Toremar, and Caremar and the respective regional authorities by 31 December 2009 (Sardinia and Tuscany) and 28 February 2010 (Campania and Lazio). The new Conventions or Public Service Contracts would be put up for tender jointly with the companies themselves. The new owners of each of these companies would then sign the respective Convention or Public Service Contract (17).

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

(30) 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: Company Maximum annual compensation Tirrenia EUR 72 685 642 Siremar EUR 55 694 895 Saremar EUR 13 686 441 Toremar EUR 13 005 441 Caremar EUR 29 869 832 (18) Table 1 – Compensation ceilings as of 2010

(31) Finally, Law No 163 of 1 October 2010 (‘the 2010 Law’), converting Decree Law No 125 of 5 August 2010 (‘Decree Law 125/2010’), laid down the further prolongation of the initial Conventions, including the one applicable to Siremar, from 1 October 2010 until the completion of the privatisation processes of Tirrenia and Siremar.

2.1.3. The privatisation of Siremar and the signing of the new Convention

(32) In October 2010, a tender procedure was launched to find a buyer for the Siremar business branch (see Section 2.3.3). In this context, reference is made to the Siremar business branch, instead of Siremar, since the tender procedure concerned only those assets and contracts necessary to perform the public service obligations (19) specified in a new Convention to be concluded with the acquirer. Therefore, reference is made to ‘the Siremar business branch’ instead of simply ‘Siremar’. Siremar’s remaining assets such as the fast ship Guizzo, which were used for other purposes, were to be sold via separate procedures. Furthermore, the sale did not result in the transfer to the purchaser of the debts accrued by Siremar until the date of sale. To this date, Siremar in Extraordinary Administration (‘Siremar in EA’) continues to exist as a separate entity albeit with the primary purpose of being liquidated after having reimbursed its creditors.

(33) Following its successful offer in the tender procedure, on 20 October 2011 CdI signed the contract to acquire the Siremar business branch. Then, on 30 July 2012, the new Convention for the provision of maritime services was signed by Italy and CdI. On this basis, the ownership of the Siremar business branch was transferred from the Italian State to CdI on 31 July 2012.

(34) However, SNS – the other company that had submitted a bid for the Siremar business branch – challenged the transfer before the Italian administrative tribunals, which ultimately ruled that the tender procedure had to be partially redone, excluding CdI from submitting new bids (see recitals (93) to (100)). Following a confirmation of its earlier bid, SNS thus won the renewed tender procedure, taking over the Siremar business branch and signing the new Convention with Italy on 11 April 2016.

(35) Since that date, SNS has been operating the routes under the new Convention while Siremar in EA and CdI are both being liquidated.

2.2. Measures in scope of the 2011 and 2012 Decisions

(36) The following measures have been subject to assessment in the formal investigation procedure opened by the 2011 and 2012 Decisions (see also Section 3): (1) Compensation for the provision of SGEI under the prolongation of the initial Conventions (measure 1); (2) Illegal prolongation of rescue aid to Tirrenia and Siremar (measure 2); (3) The privatisation of the companies of the former Tirrenia Group (20) (measure 3); (4) Compensation paid for the operation of SGEI under the future Conventions/Public Service Contracts (measure 4); (5) The berthing priority (measure 5); (6) The measures laid down by the 2010 Law (measure 6); (7) Five additional measures adopted by the Region of Sardinia in favour of Saremar (measure 7) (21).

2.3. Detailed description of the measures subject to this Decision

(37) This Decision only deals with measures 1 to 6 as listed in recital (36), as far as they involve Siremar, CdI or SNS. These measures are described in more detail in the following sections.

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

2.3.1.1. The public service obligations

(38) Article 1 of the initial Convention with Siremar provided for 5-year plans to detail the ports to be served, the type of vessels to be used and the required frequency of the service. The initial convention with Siremar was amended in 1994 and 1995.

(39) The first 5-year plan (1990-1994) was approved by Ministerial Decree of 29 May 1990, and applied retroactively as of 1 January 1990. The second plan, covering the period 1995-1999 and approved by Ministerial Decree of 14 May 1996, left the routes and frequencies largely unchanged.

(40) As for the 2000 – 2004 and 2005 – 2008 periods, no 5-year plans were formally adopted concerning Siremar. Instead, the network of routes and frequencies remained largely the same between 1999 and 2008. Indeed, the Inter-Ministerial Decree of 9 March 2004 (‘the 2004 Decree’) set out limited changes for Siremar, concerning the replacement of old ships and a capacity increase under the same frequencies (22).

(41) Based on the initial Convention, as prolonged and modified (for selected routes), Siremar operated five bundles of routes all year round between 1 January 2009 and 30 July 2012, with varying frequencies and timings depending on the individual route, type of service (ferry or high-speed), and season of the year, as follows: — On the Milazzo – Aeolian Islands – Naples bundle, which includes the islands of Vulcano, Lipari, Salina, Filicudi, Alicudi, Panarea and Stromboli (‘Aeolian Islands’) as well as the cities of Milazzo in Sicily and Naples in Campania, Siremar provided both ferry and high-speed services on ten individual routes (23); — of 17.6.2021 — On the Palermo – Ustica bundle, Siremar provided both ferry and high-speed services on two individual routes (24); — On the Porto Empedocle – Pelagie Islands bundle, which includes the islands of Linosa and Lampedusa (‘Pelagie Islands’), Siremar offered ferry services on one individual route; — On the Trapani – Pantelleria bundle, Siremar provided ferry services on one individual route.

2.3.1.2. Budget and duration

(42) The table below shows the annual compensation paid to Siremar in the period 2009 – July 2012: Year Compensation 2009 EUR 67 009 405 2010 EUR 55 694 895 2011 EUR 55 694 895 2012 EUR 32 348 816 (January – July) (25) Table 2 – Compensation 2009-2012 (EUR)

(43) The initial Convention (as modified in 1994) provides for the annual public service compensation to be paid as follows: by 1 March of each year, an initial advance payment equivalent to 70 % of the compensation paid the previous year; by 30 June, a second payment covering another 20 %; by 30 November, a final payment covering the balance of the compensation for the relevant year, based on an estimate of future revenues and losses (26). The final results are then verified when the company prepares the yearly statement of accounts. If it turned out that Siremar had received a sum greater than the net cost of the services provided (revenue minus losses), it was required to reimburse the difference within 15 days of the approval of the statement of accounts. After 25 November 2010, by decision of the Interdepartmental Conference on the establishment of the annual subsidy set up under Article 11 of Law No 856/1986 between the Ministry of Infrastructure and Transport (the ‘Ministry of Transport’), the Ministry of Economy, and the Ministry of Economic Development (the ‘Interdepartmental Conference’), any amount of overcompensation is deducted from future advance subsidy payments.

(44) The compensation was calculated differently in 2009, when compared to 2010, 2011 and 2012 as described below. — Compensation granted in 2009

(45) Presidential Decree No 501 of 1 June 1979 (‘Presidential Decree 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 capital. The same Article also lays down that the public service contracts had to include the list of the subsidised routes, the frequency and the types of ships to be used. The subsidies were to be approved by the responsible Ministers. The principles laid down in Presidential Decree 501/79 and Law 856/86 were reflected in the initial Conventions.

(46) Indeed, for 2009, the compensation for the discharge of SGEI was calculated in accordance with the methodology laid down by the initial Conventions in force since 1991 and prolonged after their 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 was added, corresponding to the return on capital.

(47) 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, personnel costs, ship maintenance costs, administrative costs, insurance costs, rent and leasing costs, fuel, taxes and depreciation costs. — Compensation granted in 2010, 2011 and 2012

(48) As from 2010, the compensation for the operation of the SGEI has been determined through a new methodology laid down in the CIPE (27) 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’) (28). According to its Preamble, the CIPE Directive was issued in view of the upcoming privatisation of the public companies operating maritime services under a public service regime (29). The provisions of the CIPE Directive were applied in respect of the services provided by the companies of the Tirrenia Group as of 2010.

(49) 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 (‘return on capital’ or ‘ROIC’) would be calculated on the basis of the weighted average cost of capital (‘WACC’). The required return to equity (30) is to be calculated using the Capital Asset Pricing Model.

(50) On the basis of that 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.

(51) 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.

(52) According to the CIPE Directive, the rate of return on risk-free activities corresponds to the average gross yield on benchmark 10-year bonds over the previous 12 months, for which data is available.

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

(54) However, the amount of compensation paid to Siremar as laid down by the 2009 Law cannot in practice exceed EUR 55 694 895 per year (see recital (30)). Although the 2009 Law caps the annual compensation paid to all Tirrenia companies for the operation of their public service obligations, the CIPE Directive includes certain safeguards to guarantee that those operators are ensured sufficient coverage of operating costs.

(55) In particular, according to the CIPE Directive, the scope of the services, the maximum fares and the compensation must be defined to grant the service provider full coverage of all the admissible costs, according to the following equation: 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 capital.

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

(57) 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: ΔΤ = ΔΡ – Χ where: — ΔΤ is the annual percentage change in the fare ceiling; — ΔΡ is the rate of inflation for the year of reference; — Χ is a real annual rate of adjustment of the fare ceiling, laid down in the Convention or Public Service Contracts, which remains constant over the duration of the Convention or Public Service Contracts.

(58) 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 Siremar

(59) On 16 November 2010, the Commission approved rescue aid to Tirrenia and Siremar (‘the 2010 Decision’) (31). 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 6 months after the authorisation of the rescue aid measure, a restructuring plan or proof that the loan had been reimbursed in full and/or that the guarantee had been terminated.

(60) Subsequently, the private banks, Banca Infrastrutture Innovazione e Sviluppo (‘BIIS’) and Unicredit, 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 that credit line on 15 February 2011.

(61) The financing was then 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).

(62) Italy informed the Commission that, as the first instalment of the guaranteed loan was disbursed only on 28 February 2011, the 6-month period for its reimbursement according to paragraph 25(a) of the Community guidelines on State aid for rescuing and restructuring firms in difficulty (‘the 2004 Rescue and Restructuring Guidelines’) (32) and to recitals (32) and (47) of the 2010 Decision, would elapse on 28 August 2011.

(63) Before that date, Tirrenia and Siremar defaulted on the loan and, as a result, on 11 July 2011 BIIS called the State guarantee. On this date, therefore, Siremar held a debt towards the State of EUR 15 121 838,33. This includes both the principal amount of the respective loans and outstanding interest owed to the bank.

(64) The Bankruptcy Court authorised the inclusion of the Ministry of Economy amongst the preferential (‘prededucibili’) creditors of Tirrenia and Siremar. According to the Italian authorities, the Extraordinary Commissioner entrusted with the management of the company considered at that time that Siremar could reimburse the financing by 28 August 2011, drawing from the proceeds of the planned privatisation of the Tirrenia and Siremar business branches.

(65) 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 (first from the Commission, then by the Italian competition authority, the Autorità Garante della Concorrenza e del Mercato (‘AGCM’). The AGCM, eventually approved the Tirrenia – CIN transaction on 21 June 2012, and the sale was finalised on 19 July 2012. On 20 October 2011, the contract for the sale of Siremar business branch to CdI was signed. However, the transfer of those assets was also delayed, in this case until 1 August 2012 (see recitals (93) to (95)). On 18 September 2012, Siremar repaid its debt to the State, including interest, for a total amount of EUR 15 511 529,35.

2.3.3. Siremar’s privatisation, the counter-guarantee, and the increase in CdI’s capital

(66) 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 the financial elements of the offer.

(67) After the failure of the first privatisation attempt, Tirrenia and Siremar, facing severe financial difficulties, were both admitted into the collective insolvency procedure provided for under Italian law for large companies, the so-called extraordinary administration procedure (‘amministrazione straordinaria’) and were soon thereafter declared insolvent. More specifically, Siremar was admitted to the extraordinary administration procedure on 17 September 2010. On 5 October 2010, the Court of Rome delivered judgment No 381/2010 by which it declared Siremar insolvent.

2.3.3.1. The rules of the extraordinary administration procedure

(68) 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 (‘Decree Law 270/1999’), is a specific insolvency procedure for large companies, which aims to safeguard the assets and ensure the continuation of the business.

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

(70) The Decree Law No 347 of 23 December 2003 laying down urgent measures for the restructuring of large insolvent companies (‘Decree Law 347/2003’), converted with amendments into Law No 39 of 18 February 2004 (the ‘Marzano law’), regulates the extraordinary administration procedure applicable to large 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.

(71) 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 bankruptcy Court ascertains the state of insolvency of the company.

(72) 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.

(73) Article 4 (4-quater) of Decree Law No 134 of 28 August 2008 (‘Decree Law 134/2008’), converted into Law No 166 of 27 October 2008, concerning urgent measures for the restructuring of large insolvent companies (‘Disposizioni urgenti in materia di ristrutturazione di grandi imprese in crisi’), 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 both continuity of the public service on the medium term and an expeditious intervention. Decree Law 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.

(74) Decree Law 134/2008 also introduced the possibility to pursue an asset disposal plan immediately, as compared to the previous regime, which required that the company first submit a restructuring plan to the Ministry. Finally, Decree Law 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 company will undergo the ordinary bankruptcy procedure.

2.3.3.2. The sale procedure

(75) On 4 October 2010, the call for tenders for the sale of the Siremar business branch (33) bundled together with the new 12-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 Siremar business branch that were able to guarantee the continuity of the transport services. It was published on Siremar’s website, several newspapers (34) and on selected specialist websites (35). The deadline for submitting expressions of interest in the purchase of the Siremar business branch was 20 October 2010.

(76) On expiry of the deadline, six parties (two of which jointly) had submitted five expressions of interest to participate in the Siremar tender. All of these parties demonstrated that they met the requirement set out in the tender notice. Therefore, the Extraordinary Commissioner invited them to perform an in-depth due diligence check on the Siremar business branch. Access to the relevant documentation was granted on the condition that the interested parties signed confidentiality agreements.

(77) One of the six parties decided to not take part in the due diligence phase (36). During that phase, the remaining five parties (two of which jointly bidding) accessed the virtual data rooms containing the following: (a) detailed technical, legal and financial information of the business branch put up for sale; (b) the business plan of the Siremar 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 12-year Convention to be signed between the successful bidder and the State; (e) additional information required so that potential buyers may valuate correctly the object of the sale.

(78) By Ministerial Decree of 4 February 2011, the Minister for Economic Development appointed Banca Profilo SpA as the independent expert tasked with performing a valuation of both the Tirrenia and the Siremar business branches under Article 4(4-quater) of Decree Law 347/2003. On 8 March 2011, Banca Profilo SpA estimated the value of the Siremar business branch as equal to EUR 55 million. This information was uploaded to the data room for all potential bidders before expiry of the deadline for the submission of binding offers.

(79) On 15 March 2011, at the expiry of the initial deadline for submission of binding offers, the Extraordinary Commissioner of Siremar noted that it had not received any offer consistent with the provisions of the tender regulations. The procedure was therefore reopened, with a new deadline of 5 April 2011. At that date, CdI issued an offer of EUR 60,1 million, while Ustica Lines asked for a prolongation of the deadline, to secure the necessary financing to issue its own offer. The extraordinary commissioner uploaded CdI’s offer to the data room and invited the other participants to improve it by 23 May 2011. The following offers were received by that date: (a) EUR 69 million offer by CdI, of which EUR 20 million payable upfront and the remaining deferred over 10 years (with 1,5 % interest); (b) EUR 55,1 million offer by SNS, of which EUR 30,1 million payable upfront and the remaining deferred over 8 years (with 1,5 % interest).

(80) CdI was set up for the purpose of bidding in the procedure by Mediterranea Holding di Navigazione SpA (‘Mediterranea’), Davimar Eolia Navigazione S.r.l. (‘Davimar’), Navigazione Generale Italiana SpA (37) (‘NGI’), Lauro.it SpA, Isolemar S.r.l. and Riccardo Sanges & C. S.r.l. (38) Mediterranea held a 60 % equity stake in CdI (39). The other shareholders who held the remaining 40 % of CdI’s equity were privately owned. Mediterranea had participated in the procedure for the first privatisation attempt of Tirrenia (see recital (66)) and was owned by the Region of Sicily (‘Sicily’) (43,02 %), by Lauro.it SpA (34,36 %), by Isolemar S.r.l. (14,61 %) and by Acies S.r.l. (8,11 %).

(81) SNS was set up for the purpose of bidding in the procedure by Ustica Lines SpA (40) and Caronte & Tourist SpA (41) (50 % share each).

(82) On 26 July 2011, following further requests for information to the two bidders, with deadline of 18 July 2011, the financial advisor to the procedure made the following remarks: (a) CdI’s offer was higher in absolute terms than that of SNS, however the risk profile of the latter was lower than that of the former; (b) the part of the sale price offered upfront by SNS, i.e. EUR 30,1 million, was entirely guaranteed, whereas the part of the sale price offered by CdI, i.e. EUR 20 million, was only partly guaranteed; (c) SNS had already approved and implemented a EUR 25 million capital increase, as compared to the EUR 12 million capital increase which had been approved but only partially implemented by CdI.

(83) On 3 August 2011, Sicily issued an unconditional and irrevocable counter-guarantee to Unicredit, against no remuneration, for EUR 40 million. That counter-guarantee notes that Unicredit had conditioned the granting of a guarantee to CdI for EUR 39 million on the granting of a counter-guarantee for EUR 40 million by Sicily.

(84) On 5 August 2011, CdI forwarded to the Extraordinary Commissioner a comfort letter, issued on the same day by Unicredit, by which the bank undertook to guarantee the deferred instalments of the sale price offered by CdI up to EUR 39 million (42). Unicredit’s comfort letter spells out that the guarantee was conditional on: 1) the signing by CdI of the sale contract of the Siremar business branch before the deadline of 31 December 2011, and 2) the verification of the powers of the General Accountant of Sicily to issue the counter-guarantee.

(85) The financial advisor and other consultants involved in the procedure confirmed that the documents had been submitted by CdI after the deadline of 18 July 2011 for the submission of additional clarifications and documentary evidence and could not therefore be taken into account. Consequently, on 29 August 2011, the Supervisory Board to Siremar in EA approved the awarding of the business branch to SNS and on 1 September 2011, the Extraordinary Commissioner asked the responsible Ministry to authorise that awarding.

(86) On 2, 6 and 7 September 2011 Sicily sent letters to the same Ministry, stressing that CdI had offered the highest price and was partly owned by Sicily, which should be considered a sufficient guarantee as to its financial stability. Sicily also sent directly to the Ministry: Unicredit’s comfort letter, its own counter-guarantee, and legal advice testifying to the powers of the General Accountant to issue that counter-guarantee. On 8 September 2011, the Ministry asked the Extraordinary Commissioner to provide further information and clarifications on CdI’s submission, without prejudice to the lateness of submission of the documents concerned. On 22 September 2011, the financial advisor communicated to the Extraordinary Commissioner that, notwithstanding non-observance by CdI of the procedural deadlines, the new documentation reduced CdI’s risk profile considerably, which meant that the present value of SNS’s offer could no longer be considered more advantageous than that of CdI.

(87) On 26 September 2011, the Ministry inquired with the Presidenza del Consiglio on whether the counter-guarantee of CdI’s financial obligations by Sicily could raise any State aid concerns. The Presidenza del Consiglio confirmed that, since Unicredit had conditioned its decision to provide a guarantee on a counter-guarantee by Sicily, the counter-guarantee needed to be assessed under the Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in the form of guarantees (‘the Guarantee Notice’) (43).

(88) On 27 September 2011, the Extraordinary Commissioner requested authorisation from the Ministry to launch an additional phase of the procedure. After receiving such authorisation, on 29 September 2011 the financial advisor invited CdI and SNS to submit new and improved binding offers by 13 October 2011.

(89) CdI submitted a new and improved offer, structured as follows: (a) EUR 69,15 million sale price, payable EUR 34,65 million upfront and the remaining deferred (EUR 13,8 million at the end of the third year, EUR 10,35 million at the end of the sixth year, EUR 10,35 million at the end of the eighth year, with 1,5 % interest); (b) As guarantee of the sale price: comfort letter of 12 October 2011 by Unicredit (undertaking to guarantee the amount of the deferred payments of the new sale price offered by CdI, i.e. EUR 34,5 million); notary authentication of the shareholders’ resolution to increase capital up to EUR 21,48 million (see Section 2.3.3.4); two letters of MPS Capital Services, committing to finance the first instalment of the sale price (up to EUR 20 million) and prolonging the previous EUR 5 million guarantee on the offer of 23 May 2011.

(90) SNS confirmed the offer it had submitted on 23 May 2011.

(91) On 13 October 2011, the extraordinary administration and its consultants noted that the bid by CdI was consistent with the value of the business branch as estimated by Banca Profilo and was financially more advantageous than the offer made by SNS. Furthermore, the business plan attached to CdI’s offer was compliant with the requirements and there was adequate evidence to prove that CDI could ensure the continuity of the maritime public service. Therefore, the Extraordinary Commissioner asked the Ministry to award the tender to CdI.

(92) On 14 October 2011, the Supervisory Board delivered its favourable opinion and the Ministry authorised the award of the tender to CdI.

(93) On 20 October 2011, Siremar’s Extraordinary Commissioner and CdI signed the contract for the sale of the Siremar business branch. However, on 22 November 2011, SNS appealed the Extraordinary Commissioner’s decision to award the business branch to CdI before the Tribunale Amministrativo Regionale of Lazio (‘TAR’).

(94) On 7 June 2012, the TAR of Lazio ruled that the counter-guarantee by Sicily to Unicredit of part of the sale price offered by CdI constituted State aid, irrespective of whether it had been ultimately executed or withdrawn (‘decision 5172/2012’). The TAR declared the sale procedure of the Siremar business branch partially void (44).

(95) Mediterranea appealed that decision at the Consiglio di Stato (the ‘CdS’). By interim order of 18 July 2012, the latter suspended the execution of decision 5172/2012 (without ruling on the substance of the appeal). Therefore, on 30 July 2012, CdI signed the new Convention for the operation of the public service, and on 1 August 2012, the Extraordinary Commissioner transferred the Siremar business branch to CdI.

(96) On 7 February 2014, the CdS ruled on the substance of the appeal lodged by Mediterranea and concluded that the counter-guarantee provided by Sicily had not observed the transparency and non-discrimination principles laid down by the national legislation (‘decision 592/14’). In its decision, the CdS ruled that the counter-guarantee had jeopardised the full effectiveness of the non-discrimination principle between the two participants to the tender and declared, therefore, the sale procedure of the Siremar business branch partially void (by annulling the act of award of the tender to CdI). In particular, the guarantee by Unicredit was de facto conditional on the issuing of the counter-guarantee by Sicily, even if the former did not explicitly mention the latter (see Section 2.3.3.5).

(97) The sale contract signed by CdI with the Italian State following the tender was not annulled by the judgment of the CdS. Indeed, the latter only annulled the award, as it was an administrative act, but neither annulled the sale contract nor the new Convention, which were civil law contracts. Therefore, CdI continued operating the public service as laid down in the new Convention (45).

(98) On 9 February 2015, upon request from the Italian authorities and SNS, the TAR of Lazio ruled on the interpretation of its earlier decision of June 2012 and the decision of February 2014 by the CdS (‘decision 2351/15’). In its decision, the TAR of Lazio ruled that the last phase of the Siremar sale procedure needed to be re-launched from 29 September 2011 onwards (46). The TAR of Lazio confirmed that CdI should be excluded from this new phase of the procedure. The TAR of Lazio also ruled that the Ministry of Economy had to take the necessary measures to allow the re-launch of the procedure within 120 days from the date of the judgment.

(99) In order to implement the judgment of the TAR of Lazio, Siremar in EA: — excluded CdI’s offer from the procedure; — verified with SNS that its offer of 23 May 2011 of EUR 55,1 million was still standing (confirmed by SNS on 19 January 2016); — checked that SNS’ offer was compliant with the necessary requirements in terms of provision of public services and with the applicable legislation; — verified the value of the assets through a new report commissioned to Ecorys (the ‘Second Ecorys Report’), which estimated a value of EUR 34,4-39,9 million (see recital (122)); — rescinded the sale contract of the business branch with CdI and transferred to SNS the debt of EUR 37,1 million, already paid by CdI (47); — after receiving on 6 April 2016 the authorisation of the Ministry, awarded the business branch to SNS on 11 April 2016.

(100) On the same date, SNS and the Ministry of Transport signed the new convention.

2.3.3.3. The sale contract with SNS

(101) The sale contract between Siremar in EA and SNS defines the Siremar business branch transferred as the branch of the company dedicated to the provision of maritime transport services under the ongoing public service obligations (48). In particular, Article 4 spells out that the assets of the business branch are listed in an annex, and cover all intangible (49) and tangible assets (50) used by the company in the discharge of its public service obligations.

(102) Under Article 5 of the sale contract, the EUR 55,1 million sale price is payable as follows: (a) EUR 37,1 million as of the signing of the sale contract (through the transfer of the obligation to reimburse CdI); (b) The remaining deferred as follows, with interest of 1,5 %: EUR 9 million, after 72 months; EUR 9 million, after 96 months.

(103) Article 7(6)(d) of the sale contract lays down that the buyer is capable, in compliance with Article 4, paragraph 4-quarter of Decree Law 347/2003, to guarantee continuity of service in the medium term.

(104) Article 7(9) of the sale contract spells out that the buyer will make new job offers to all the administrative and crew personnel occupied in 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. That article also spells out that, as required by Article 63(2) of Decree Law 270/1999, the buyer has to refrain from any non-disciplinary dismissals for a 2-year period (the ‘workforce condition’). Under Article 7(11) and (12) of the sale contract, the buyer is obliged to regularly inform the seller on the observance of these obligations, with significant penalties to be paid in case of breaches.

(105) Article 8(12) of the sale contract spells out that, in accordance with Article 63(5) of Decree Law 270/1999, the new owner will not be liable to repay any of the debts incurred by Siremar before the transfer of the business branch.

2.3.3.4. The capital increase

(106) On 13 October 2011, CdI’s shareholders committed to increase its capital up to EUR 21 480 236. On 3 February 2012, Mediterranea, the majority shareholder with over 60 % of CdI’s shares, undertook a capital increase itself, which resulted in Sicily no longer being a majority shareholder, with its share being reduced to approximately 43 %.

(107) CdI’s capital increase happened while Sicily was the majority shareholder of Mediterranea, which in turn was (and still is) the majority shareholder of CdI. The objective of the capital increase was to acquire the Siremar business branch and operate the new convention.

2.3.3.5. The counter-guarantee

(108) In the course of the privatisation, Sicily issued a counter-guarantee in favour of Unicredit.

(109) Firstly, on 3 August 2011, as described in recital (83), Sicily issued a counter-guarantee in favour of Unicredit, which allowed the latter to issue 2 days later a first comfort letter undertaking to guarantee the deferred instalments of the sale price offered by CdI (i.e. EUR 39 million). That letter explicitly conditioned the validity of its guarantee to the validity of the counter-guarantee by Sicily.

(110) Secondly, on 7 October 2011, in a later stage of the procedure, Sicily confirmed its availability to counter-guarantee the deferred payments of the new sale price up to an amount of EUR 34,6 million. On 12 October 2011, Sicily modified the counter-guarantee of 3 August 2011, guaranteeing payments up to EUR 36 million. On the same day, Unicredit issued the second comfort letter that was included in the successful offer by CdI described in recital (89), without mentioning that the counter-guarantee by Sicily was still standing, as amended.

(111) On 20 November 2011, Sicily’s counter-guarantee was replaced by a counter-guarantee by all of CdI’s shareholders. On 31 January 2012, Sicily sent a letter to Siremar in EA stating that the counter-guarantee of 12 October 2011 is to be considered recalled. On 3 February 2012, Unicredit issued a note confirming that its guarantee of the deferred instalments of the sale price was not conditional on a counter-guarantee by Sicily.

2.3.3.6. The Banca Profilo Study

(112) As described above (see recital (78)), Banca Profilo was appointed by the Minister for Economic Development as the independent expert tasked with performing a valuation of the Siremar business branch under Article 4(4-quater) of the Marzano law. On 8 March 2011, Banca Profilo issued a report in which it described the valuation methodologies and data it had used, which included Siremar’s own business plan for the period 2011-2022. This report included an estimated range of values for the Siremar business branch.

(113) 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 Siremar business branch would receive public service compensation for operating the maritime transport connections laid down in that contract. In its valuation report, Banca Profilo uses the Discounted Cash Flow (‘DCF’) and the Economic Added Value (‘EAV’) methods as its main methodologies and to the Market Multiples and Equity methods as secondary methodologies for control purposes.

(114) 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 Siremar business branch on the day of expiry of the new Convention, based on the assumption that it will not be possible to continue the operations after that date. Under the EAV methodology, Banca Profilo assesses: (i) the adjusted book value; (ii) the badwill/goodwill; (iii) the liquidation value of the Siremar business branch on the day of expiry of the new Convention. This assessment relies on data from the company’s industrial plan and on Banca Profilo’s own calculations.

(115) 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 on assets and liabilities and adding the estimated value of immaterial assets.

(116) Banca Profilo concluded that the value of the Siremar business branch at the time of its appraisal was in the range of EUR 55 to 61 million. As a result, the minimum price for this company would have to be set at EUR 55 million.

2.3.3.7. The First Ecorys Report and Second Ecorys Report

(117) In the course of the investigation, the Commission entrusted Ecorys with the task of establishing the market value of the Siremar business branch. The consultant was asked to (i) establish the market value of the Siremar business branch bundled with the new Convention, (ii) establish the market value of the business branch without any conditions attached and (iii) establish whether the workforce condition depressed the sale price.

(118) To determine the value of the Siremar business branch bundled with the new Convention, the First Ecorys Report applied the main methodologies also used by Banca Profilo. In particular, Ecorys applied the Discounted Cash Flow and the Economic Value Added methodologies.

(119) Firstly, Ecorys concluded that, had the Siremar business branch been sold without any conditions attached, and in particular without the new contract for the operation of the public service, the company would have been sold at its liquidation value (51). i.e. EUR – 0,3 million. Ecorys noted that this liquidation value is negative and indicated that therefore immediate liquidation (in essence a sale of the ships) was not a viable alternative for a market economy operator. Ecorys based this conclusion on the assumption that the Siremar business branch could not profitably continue its operations without public service compensation. Ecorys described 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’.

(120) Secondly, in order to evaluate the Siremar business branch bundled with the new Convention, Ecorys assumed that the new Convention would not be prolonged at its expiry date and that therefore Siremar would be liquidated (52). On this basis, Ecorys determined that the minimum market value of the Siremar business branch amounted to EUR 57 million (i.e. 5 % higher than Banca Profilo’s valuation).

(121) Thirdly, Ecorys compared the staffing of both the Tirrenia and the Siremar business branches with that of several comparable ferry companies and concluded that Siremar’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 (53) and the labour cost/staff ratio’ (54). On this basis, Ecorys concluded that there are no elements showing that the workforce condition has had any significant impact on the value of the Siremar business branch.

(122) As explained in recital (99), Italy also commissioned the Second Ecorys Report before concluding the sale procedure with SNS, to verify that the renewed offer of the latter reflected the market value of the business branch, endowed with the public service contract, as of 31 August 2015. This Second Ecorys Report, issued on 28 October 2015, applied the Discounted Cash Flow method as its main evaluation tool and the Equity Method to check the robustness of their findings. The new estimate by Ecorys was EUR 34,4 million with the Discounted Cash Flow method, with the assumption that the new convention would be in force until 31 July 2024. Should the new convention be prolonged until 31 July 2026, the estimated value of the Siremar business branch would then be EUR 35,7 million. The Equity Valuation method yielded an estimate of EUR 39,9 million.

(123) Finally, that report was complemented by a comparison of the two business plans prepared by SNS: a first one, covering the period 2011-2022 and written in May 2011, and a second one, covering the period 2016-2027 and written in February 2016. Ecorys concluded that the two plans were not identical in their assumptions and did not include the same level of detail (e.g., the second business plan did not include the list of routes and frequencies). In particular, the main differences between the plans were: the assumptions on the use of the fleet, on amortisations, on staff costs; and the use of previous data from CdI, which was not available in the first business plan. Ecorys also prepared a one-page assessment confirming to the Italian authorities the internal logical consistency of SNS’ second business plan for the period 2016-2027.

2.3.4. The new Convention

2.3.4.1. The beneficiary

(124) Initially, CdI was the successful bidder for the Siremar business branch and signed the new Convention for the operation of maritime routes on 30 July 2012. Then, on 11 April 2016, SNS replaced CdI and started operating the same routes.

2.3.4.2. The routes

(125) Under the new Convention, CdI and later SNS had to provide passenger and ferry services on 20 cabotage routes divided in 5 bundles, sometimes with different frequencies and/or routes between the high season and the low season (55) (see Table 3). Ferry connections (mixed) Passenger connections (fast ships) Milazzo – Aeolian Islands – Naples bundle C/1: Milazzo – Vulcano – Lipari – Rinella – Panarea – Ginostra – Stromboli – Naples and back (all year, two connections per week) C/2: Milazzo – Vulcano – Lipari – Rinella – Salina and back (all year, one connection per day, no service on Sunday in the low season) C/3: Milazzo – Vulcano – Lipari – Salina – Panarea – Ginostra – Stromboli and back (all year, two connections per week) C/4: Milazzo – Vulcano – Lipari – Salina – Rinella – Filicudi – Alicudi and back (all year, five connections per week in the high season and four per week in the low season) C/6: Lipari –Vulcano – Milazzo and back (all year, one connection per day) ALC/2: Milazzo – Vulcano – Lipari – Rinella – Salina and back (all year, at least one connection per day) ALC/3: Milazzo – Vulcano – Lipari – Salina – Panarea – Ginostra – Stromboli and back (all year, at least one connection per day) ALC/4: Milazzo – Vulcano – Lipari – Salina – Rinella – Filicudi – Alicudi and back (all year, at least one connection per day) ALC/6: Lipari –Vulcano – Milazzo and back (all year, one connection per day) ALC/2 BIS: Lipari – Rinella – Salina – Lipari (all year, four connections per week in the high season, three per week and one per day up to Salina in the low season) Palermo – Ustica bundle D/1: Palermo – Ustica and back (all year, one connection per day) ALD/1: Ustica – Palermo and back (all year, at least one connection per day) Trapani – Egadi Islands bundle D/2: Trapani – Favignana – Levanzo – Marettimo and back (all year, at least one connection per day) D/3: Trapani – Favignana – Levanzo – Trapani (all year, two connections per day in the high season, 12 per week and less frequent connections to Levanzo in the low season) ALD/2: Trapani – Favignana – Levanzo – Marettimo and back (all year, two connections per day) ALD/3: Trapani – Favignana – Levanzo – Trapani (all year, at least one connection per day) ALD/2 BIS: Marettimo – Levanzo – Favignana – Trapani and back (all year, at least one connection per day) ALD/3 BIS: Trapani – Favignana – Levanzo – Trapani (all year, at least two connections per day) Trapani – Pantelleria bundle D/4: Trapani – Pantelleria and back (all year, one connection per day in the high season, six per week in the low season) Porto Empedocle – Pelagie Islands bundle D/5: Porto Empedocle – Linosa – Lampedusa and back (all year, six connections per week) Table 3 – Routes operated by CdI and later SNS under the new Convention

(126) Annex A to the new Convention details how each of the routes in Table 3 are to be operated (e.g. type of ships, seasonal frequency). In addition, the fares charged to the users cannot exceed the limits set by Article 6 of the new Convention and detailed in the same Annex A.

2.3.4.3. Duration

(127) Both the new Convention between Sicily and CdI and that between Sicily and SNS have a duration of 12 years. The contract with SNS entered into force on 12 April 2016 and will expire on 11 April 2028.

2.3.4.4. The public service obligations

(128) The public service obligations imposed concern the maritime transport links to be operated (see recital (125)), 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

(129) The yearly compensation to be received by the company entrusted with the public service obligations defined in the new Convention is capped by law at EUR 55 694 895. The amount of compensation is to be determined based on the methodology laid down by the CIPE Directive (see recitals (48) to (58)). The compensation was paid to the two companies as follows: Compensation paid to CdI Compensation paid to SNS 2012 EUR 23 346 079 (August-December) — 2013 EUR 55 694 895 — 2014 EUR 55 694 895 — 2015 EUR 55 694 895 — 2016 EUR 15 397 836 EUR 40 297 059 2017 — EUR 55 694 895 2018 — EUR 55 694 895 2019 — EUR 55 694 895 Table 4 – Compensation 2012-2019

(130) Article 8 of the new Convention provides for a regular 3-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 3-year period, the parties may trigger such a review earlier.

2.3.5. The berthing priority

(131) Article 19-ter, paragraph 21 of Decree Law 135/2009 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 Siremar, would keep the berthing already allocated and the priority in the allocation of new slots, in line with the procedures set forth by the Italian 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

(132) The 2010 Law laid down the possibility for the undertakings of the former Tirrenia Group, including Siremar, to use the financial resources already committed to the upgrade and modernisation of the fleet (56), to cover pressing liquidity needs. In particular, drawing from two facilities (57), EUR 23 750 000 had already been set aside to pay for the upgrades of the entire Tirrenia Group, of which EUR 7 215 800 for Siremar. The undertakings of the former Tirrenia Group that used these funds for liquidity purposes were required to later return them, so that the necessary upgrades to the ships could still take place. Those upgrades were necessary to meet certain international safety standards following the 1996 Stockholm Agreement (58).

(133) In addition, 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 (31)); (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 pursuant to paragraphs 1-15 of Article 19-ter of Decree Law 135/2009 benefit from fiscal exemption. Those paragraphs relate to the liberalisation of the maritime cabotage sector through the privatisation of the Tirrenia group; (c) In order to ensure the continuity of the public service and to support the privatisation process of the former Tirrenia group companies, the relevant regions may make use of the resources of the Fondo Aree Sottoutilizzate (‘FAS’) (59) pursuant to CIPE Directive No 1/2009 of 6 March 2009 (60).

2.4. Infringement procedure No 2007/4609

(134) Following earlier exchanges between the Commission’s services and the Italian authorities, on 19 December 2008, the Commission’s Director-General responsible for energy and transport 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.

(135) In their letter of 28 April 2009, the Italian authorities provided a detailed reply: — Noting 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; — Arguing that the public service compensation granted to the Tirrenia Group was necessary to ensure territorial continuity with the islands through maritime links which are not provided by private operators on the market; — Pointing 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 employed 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; — Explaining 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 provide the same connections over the same time period, with similar guarantees of quality and continuity, and (iii) rationalise high season and high-speed connections which transport only persons; — Giving 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.

(136) 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: — Against the background 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 (61) (‘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. In that regard, clarifications were asked about the market failure on certain routes operated by Tirrenia and 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 territorial continuity objective; — The public service contracts of the Tirrenia group expired on 31 December 2008 and the privatisation planned by Italy may take 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.

(137) On 22 January 2010, the Italian authorities replied to the Commission services’ letter of 21 December 2009: — Taking note that the Commission agreed in principle to the proposed approach for privatising the Tirrenia Group together with new public service contracts; — Providing explanations on the routes for which the Commission had raised a number of questions; — Mentioning 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; — Asking the Commission to confirm that the arguments provided with regard to the market failure were sufficient.

(138) On 29 January 2010 (62), the Commission sent a letter of formal notice regarding the infringement of the Maritime Cabotage Regulation. In this letter, the Commission recalled that that 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 ship-owners. According to Article 4(3) of the Maritime Cabotage 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, those 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.

(139) 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 indicated that the justifications provided concerning the lines operated by Tirrenia 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 a market failure. The Director-General also emphasised that his reply only concerned the compliance with the Maritime Cabotage Regulation and not any State aid issues.

(140) On 29 March 2010, the Italian authorities replied to the Commission’s letter of formal notice of 29 January 2010: — Recalling that the Commission services, by their letter of 21 December 2009 (see recital (136)), in principle agreed to the privatisation of the Tirrenia Group by means of the bundling of the companies with new public service contracts; — Noting 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; — Confirming their intention to carry out the privatisation process by 30 September 2010 so as to liberalise the maritime cabotage sector by that date; — Providing 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 would arise as a result of continuing the infringement procedure may 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.

(141) 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, the 2010 Law further prolonged the initial Conventions until the completion of the privatisation processes of Tirrenia and Siremar.

(142) Following these developments, the Commission sent a complementary letter of formal notice on 24 November 2010. In that 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; — Indicated that it reserved its right to issue a reasoned opinion if necessary (taking into account any comments Italy might make).

(143) On 21 June 2012, the Commission adopted a reasoned opinion concerning the delay of privatisation of three companies (Caremar, Laziomar and Saremar) of the former Tirrenia Group. Since the tender procedures for the other three companies (Tirrenia, Toremar and Siremar) had been completed in the course of 2011 (63) those 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 3 years after the normal expiry of the respective initial Conventions. On the contrary, those Conventions had been extended automatically and indefinitely thereby preventing other Community shipowners from competing for the award of those contracts.

(144) 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 soon be published in the Official Journal of the European Union. 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.

(145) On 13 January 2014, Compagnia Laziale di Navigazione became the new owner of Laziomar and signed a 10-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 9-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.

(146) 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 Siremar

3.1.1. Compliance with Altmark and existence of aid

(147) In its 2011 Decision, the Commission took the preliminary view that the definition of the public service obligations had not been sufficiently clear and hence did not allow the Commission to definitely conclude whether it contained manifest error. In particular, even if the Italian authorities argued that Siremar’s competitors on the routes falling within the scope of the SGEI mission were operators equally providing maritime services under public compensation, without a prior definition of the level of the services required, the Commission could not conclude on whether there was a real need for a public service on these routes.

(148) The Commission took the preliminary view that the second criterion of the Altmark judgment (64) 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).

(149) The Commission however considered that the third criterion of the Altmark judgment 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 Siremar did not seem to assume the risks normally borne in the operation of such services.

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

(151) The Commission therefore came to the preliminary conclusion that the public service compensations paid to Siremar 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.

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

3.1.2. Compatibility

(153) In the 2011 Decision, the Commission took the preliminary view that the public service compensation for the years 2009-2011 falls outside the scope of both the 2005 SGEI Decision (65) and the 2005 SGEI Framework (66). The Commission therefore assessed that measure directly under Article 106(2) TFEU and found it had doubts on whether the applicable compatibility conditions were fulfilled.

(154) In the 2012 Decision, the Commission noted that on 31 January 2012, a new SGEI package consisting of the 2011 SGEI Decision (67) and 2011 SGEI Framework 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.

(155) The 2010 Law provided for the prolongation of the initial Convention from 30 September 2010 up to the end of the privatisation process. Siremar was in difficulty at the moment of adoption of the 2010 Law (see recital (67)). 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, based on paragraph 9 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.

(156) 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 that the compensation paid to Siremar in difficulty would amount to incompatible restructuring aid.

3.2. Illegal prolongation of rescue aid to Siremar

(157) 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 6 months after the disbursement of the first instalment of the rescue aid to these companies, as required by the 2004 R&R Guidelines. The Commission considered that the conditions for an extension of the rescue aid as laid down in the 2004 R&R Guidelines were also not fulfilled.

3.3. Siremar’s privatisation, the counter-guarantee, and the increase in CdI’s capital

3.3.1. Siremar’s privatisation

(158) In the 2011 Decision, the Commission expressed its doubts that the tender procedure for the sale of the Siremar business branch had been sufficiently transparent and unconditional so as to ensure that the sale took place at market price.

(159) First, the Commission noted that although the call for expression of interest was published in several newspapers and on a number of websites, the 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.

(160) 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 State 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.

(161) The sale procedures of the Tirrenia and Siremar business branches were based on the procedure laid down by the Marzano law (see recital (70)). Therefore, the Commission assessed the two procedures together. It considered that the sale of the business branches entrusted with the new Conventions resulted in an obligation on the buyers to provide the public service subject to pre-established quality, frequency and fare obligations 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.

(162) Likewise, the Commission considered that a private vendor, operating under normal market conditions, would not have imposed the obligation to maintain employment levels for 2 years.

(163) For the above reasons, the Commission preliminarily concluded that the privatisation procedure of the Siremar 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.

(164) 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.

3.3.2. The counter-guarantee

(165) In the 2012 Decision, the Commission took the preliminary view that the counter-guarantee by Sicily of the deferred instalments of the sale price for the Siremar business branch may have constituted aid to CdI as the borrower and to Unicredit as first guarantor.

(166) Indeed, the counter-guarantee seemed to have allowed CdI to benefit from a guarantee which otherwise would not have been granted or would have been granted on different, less favourable terms. The Commission noted that, based on the information available, the counter-guarantee did not seem to have been remunerated.

(167) Moreover, the Commission noted that the position of the General Accountant appeared to be such as to influence the decision-making process in Sicily. Given his involvement in the day-to-day management of Mediterranea, and the latter’s significant share in CdI’s capital, the Commission considered it was likely that the counter-guarantee was granted to favour CdI in the sale process, rather than on market terms.

(168) The Commission also noted that the documents submitted by Italy to prove that the counter-guarantee had not produced any effects did not pre-date the award of the tender to CdI. On the contrary, both documents were issued after SNS had submitted a complaint to the Commission.

(169) Finally, the Commission considered that the counter-guarantee might have also procured an economic advantage to Unicredit, as first guarantor, by decreasing the risks associated with its own guarantee, unless the counter-guarantee was remunerated by an appropriate premium.

(170) On the basis of the considerations above, the Commission took the preliminary view that the counter-guarantee may have constituted aid to Unicredit and CdI.

3.3.3. The increase in CdI’s capital

(171) In the 2012 Decision, the Commission considered that the capital increase by Mediterranea could have conferred an advantage to CdI, to the extent that Sicily had not behaved like a private market investor. Moreover, the Commission considered that the capital increase by Mediterranea was financed by State resources and was imputable to the State.

(172) Therefore, the Commission took the preliminary view that the capital increase may have constituted aid to CdI.

3.3.4. Compatibility

(173) In the 2011 Decision, the Commission considered, based on the available information, that any aid that might have arisen in the course of the privatisation process would have been incompatible.

(174) In the 2012 Decision, the Commission considered, based on the available information, that both the counter-guarantee and the increase in CdI’s capital might have constituted operating aid, which is in principle incompatible with the internal market.

3.4. The new Convention between the Italian State and CdI

(175) In the 2012 Decision, the Commission took the preliminary view that the compensation to the purchaser of the Siremar business branch (at the time, CdI), did not fulfil the criteria laid down in the Altmark Judgment and therefore amounted to aid within the meaning of Article 107(1) TFEU.

(176) The Commission came to this conclusion based on these considerations: (a) competitors who seemed to be offering similar services were present at least on certain routes operated by CdI; (b) 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 expressed in the 2011 Decision; (c) the fourth criterion of the Altmark Judgment (68) was seemingly not observed, given that the Siremar 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.

(177) With respect to the compatibility of the compensation to CdI, the Commission first assessed it under the 2011 SGEI Decision. However, as the contract duration seemed to be longer than 10 years and as it had doubts on the proportionality of the compensation, it took the preliminary view that the compensation could not be considered compatible on the basis of the 2011 SGEI Decision. The Commission then assessed the compatibility of the aid under the 2011 SGEI Framework, and found that it had doubts on whether all the compatibility conditions of that Framework were fulfilled.

3.5. The berthing priority

(178) 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 that Siremar provides a genuine SGEI and that this priority is only granted in relation to routes covered by that SGEI, it would not result in an additional economic advantage since it would be intrinsic to the provision of the SGEI.

(179) 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

(180) In the 2011 Decision, the Commission took the preliminary view that the measures laid down by the 2010 Law constituted State aid in favour of the companies of the former Tirrenia Group, including Siremar. These measures were: (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. Indeed, the Commission noted that all the abovementioned measures allowed the companies of the former Tirrenia Group to avoid costs which would ordinarily have to be borne by means of their own financial resources. As a consequence, those companies were able to improve their overall financial situation.

(181) The Commission also took the preliminary view that these measures likely constituted operating aid reducing the costs that Siremar, 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

(182) After the 2011 and 2012 Decisions, Italy submitted several letters and documents on all the measures that are assessed in this Decision. This section summarises the main arguments and contributions presented (69).

4.1. On the public service obligations and the competitive environment

(183) Italy provided a list of routes operated by Siremar 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.

(184) As regards the existence of a genuine SGEI, Italy noted that the public service obligations it imposed on Siremar and later CdI and SNS ensure, in terms of regularity, continuity and quality, a satisfactory service connecting Sicily with its smaller islands. This service contributes to the economic development of those 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 (70).

(185) In particular, Italy pointed out that structural conditions on all of these routes require the imposition of public service obligations to guarantee territorial continuity. The five route bundles described in recital (41) are considered ‘metropolitan maritime areas’: the population of all of those islands depends on the main island of Sicily for the provision of essential services and employment. At the same time, the tourist business is relevant only in the high season. Therefore, shipping companies have a commercial interest in operating the routes only in the high season. In the low season, the demand from tourists almost disappears, to the point where it is im