EN Official Journal of the European Union L 317/1

COMMISSION DECISION (EU) 2017/2111

of 5 July 2016

on the setting-up and capitalisation of Airport Handling SpA SA.21420 (2014/C) (ex 2014/NN) implemented by Italy

(notified under document C(2016) 4103)

(Only the Italian text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

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

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

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

Whereas:

1. PROCEDURE

(1) On 23 June 2010, following a complaint, the Commission notified the Italian authorities of its decision to initiate the formal investigation procedure pursuant to Article 108(2) of the Treaty on the Functioning of the European Union (‘the Treaty’), in connection with the capital injections carried out between 2002 and 2010 by SEA SpA (hereinafter ‘SEA’), the state-owned operator of the Milan Malpensa and Milan Linate airports, in its subsidiary SEA Handling SpA (hereinafter ‘SEAH’), ground handling provider at those airports.

(2) During that period, SEA had been almost entirely owned by public bodies, namely the Municipality of Milan (84,56 %) and the Province of Milan (14,56 %), alongside with smaller shareholders (0,88 %). In December 2011, 29,75 % of SEA’s capital was sold to the private fund F2i (Fondi italiani per le infrastrutture). End 2012, F2i increased its shareholding in SEA to 44,31 %. At the closure of the formal investigation procedure by this Decision, SEA is owned 54,81 % by the Municipality of Milan, 44,31 % by F2i and 0,88 % by other shareholders.

(3) On 19 December 2012 the Commission adopted decision C(2012) 9448, corrected by decision C(2013)1668 of 22 March 2013 (hereafter ‘the recovery decision’) concerning aid granted by SEA to its subsidiary SEAH during the years 2002-2010. The Commission concluded that the entirety of the injections carried out by SEA into its subsidiary’s capital constituted unlawful State aid. The Commission also concluded that, although SEAH could be classified as an undertaking in difficulty, those capital injections could not be declared compatible with the internal market under the EU guidelines on State aid for rescuing and restructuring firms in difficulty (2).

(4) Consequently, Italy was ordered to take all necessary steps, in accordance with the applicable national laws, to recover from SEAH the incompatible State aid of approximately EUR 359,644 million plus recovery interest.

(5) On 4 March 2013, 15 March 2013 and 18 March 2013 respectively, Italy, SEAH and the Municipality of Milan lodged actions for annulment against the recovery decision before the General Court (Cases T-125/13, T-152/13 and T-167/13). Cases T-125/13, T-152/13 and T-167/13 are pending.

(6) On 18 March 2013 and 21 March 2013, SEAH and the Municipality of Milan introduced applications to suspend the operation of the recovery decision (Cases T-152/13 R and T-167/13 R). On 21 May 2013, the Administrative Court of Lombardy (‘TAR Lombardia’) ordered the suspension of the implementation of the recovery decision. On 25 September 2013, the Council of State (‘CdS’) annulled the order of TAR Lombardia. The application for suspension brought before the General Court was withdrawn in June 2013 (3).

(7) On 27 November 2013, by way of an informal pre-notification process, Italy consulted the Commission on the following projects: First, on SEA’s plan to liquidate SEAH; second on SEA’s intention to establish a new subsidiary providing ground handling services at Milan airports, named ‘Airport Handling SpA’ (hereinafter ‘Airport Handling’) and to inject initial equity into it. In that pre-notification process, Italy asked the Commission to confirm that: (a) the sale of SEAH’s assets in the liquidation procedure does not involve elements of economic continuity with Airport Handling, and thus does not transfer the former’s liabilities to the latter, and in particular the requirement to recover the unlawful and incompatible State aid granted to SEAH; (b) SEA’s equity injection into Airport Handling’s capital does not qualify as State aid.

(8) By letter dated 9 July 2014, the Commission informed Italy that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty in respect of the setting-up by SEA of Airport Handling (‘the 2014 opening decision’). With that procedure, the Commission invited Italy to provide all such information as may help to assess the question of the transfer of the recovery obligation from SEAH to Airport Handling as well as the possible aid inherent in SEA’s capital injection in Airport Handling, within 1 month of the date of receipt of this letter.

(9) On 19 September 2014, Italy, SEA and Airport Handling lodged actions for annulment against the 2014 opening decision before the General Court (Cases T-673/14, T-674/14 and T-688/14). The General Court (Fourth Chamber) rejected the action in Case T-673/14 by Order of 8 December 2015; the actions in Cases T-674/14 and T-688/14 were withdrawn on 14 and 15 July 2015 respectively.

(10) On 23 September 2014 and 25 September 2014, SEA and Airport Handling introduced applications for interim measures to suspend the operation of the Commission’s 2014 opening decision (Cases T-674/14 R and T-688/14 R). On 29 September 2014, the President of the General Court ordered the suspension of the publication of the 2014 opening decision in the Official Journal of the European Union. On 28 November 2014, the President of the General Court rejected SEA’s and Airport Handling’s requests for interim measures and revoked the preliminary interim measure whereby it ordered the Commission not to publish the 2014 opening decision (4).

(11) On 6 February 2015, the 2014 opening decision was published in the Official Journal of the European Union (5) and the Commission thereby invited interested parties to submit their comments on the measures under investigation.

(12) Italy submitted its comments on the 2014 opening decision by letter dated 9 September 2014.

(13) The Commission received comments from four interested parties. It forwarded those comments to Italy and gave it the opportunity to react. Italy informed the Commission of its observations on said comments by letter of 26 May 2015.

(14) The Commission asked Italy to provide additional information by letter of 20 May 2015. Italy replied by letters of 19 and 22 June 2015 and 2 July 2015.

(15) Meetings between the Commission’s services and the representatives of the Italian authorities and the Milan Airport Handling Trust took place on 30 January 2015, 7 May 2015, and 15 September 2015. Those meetings were followed by several submissions to the Commission by the Trust on 6 February 2015, 8 June 2015, 13 August 2015 and 23 September 2015, essentially aiming to inform the Commission on the state of the procedure for the sale of a minority shareholding in Airport Handling. The nature and task of the Trust will be explained in Section 2.3 below.

(16) By letter dated 23 October 2015, the Commission asked Italy to provide supplementary information. Italy responded by letter dated 10 November 2015.

(17) On 25 November 2015, a meeting was held between the Commission services and the Italian authorities, the Milan Airport Handling Trust and the company D’Nata that was preparing to acquire a participation in Airport Handling’s share capital.

(18) By letter of 16 December 2015, Italy informed the Commission on plans to partially alter the scope of Airport Handling’s economic activities.

(19) Italy presented a summary of the main elements it had supplied in the course of the proceedings, by letter of 18 December 2015. The Commission responded by letter of 19 January 2016.

(20) By letters dated 29 January and 15 February 2016, Italy updated the Commission on the process of the privatisation of Airport Handling.

2. DESCRIPTION OF THE MEASURE

(21) There are two measures under investigation: First, the creation of Airport Handling combined with the liquidation of SEAH. The Commission assessed whether this measure gave rise to economic continuity between the two companies, leading to a transfer of the recovery obligation from SEAH to Airport Handling. Second, the provision of equity capital to Airport Handling, by its public mother company SEA. The Commission assessed whether this measure was implemented on market terms. In the following, a description of the circumstances surrounding these transactions is given.

2.1. Agreements with the trade unions and new work contracts

(22) In the period during which the measures under investigation were implemented, SEA Group (SEA and SEAH), SEAH and Airport Handling respectively concluded agreements with the trade unions that represented the employees of SEAH, against the backdrop of SEAH’s voluntary liquidation, initiated by SEA. The overall objective of these agreements was to safeguard the jobs of all SEAH personnel and to ensure continued and sustainable handling operations in the SEA-Group. The following agreements were concluded:

(23) After SEA had decided that SEAH should be wound up in order to comply with the recovery decision, SEA Group concluded an agreement with trade union organisations, on 4 November 2013, to solve the issue of SEAH workers becoming redundant. The agreement provided for a voluntary termination incentive plan for all SEAH employees, to be implemented through collective dismissals and the incorporation of a new whollyowned subsidiary of SEA which would hire part of SEAH’s workforce.

(24) That agreement specified a ‘draft settlement’ and stipulated that an ‘Implementing Agreement’ was necessary to set out rules for new contractual conditions and a new working structure for Airport Handling employees, because the requirement for discontinuity stated by the Commission would dictate the creation ex novo of employment relationships. Further according to the agreement, conclusion of such Implementing Agreement would only be possible following the completion of ‘commercial negotiations between Airport Handling and the carriers operating at Linate and Malpensa Airports, in a context of free competition’ (6). In summary, the Implementing Agreement had to be based on the following principles: — continuation of the objective to safeguard the jobs of all SEAH personnel, — identification of clear criteria for the possible relocation of personnel within the SEA group, — economic viability of the handling business, — definition of an appropriate, inclusive system of industrial relations, — continued application of the SEA Group company welfare system.

(25) On 22 April 2014, SEAH initiated the laid-off workers’ mobility scheme (Collocamento in mobilità), a social security scheme put in place by the Italian State mainly aiming to support employees of companies in difficulties during unemployment periods (7). At that time, SEAH had 2 214 employees, being the equivalent of 1 980 full time employees.

(26) On 31 May 2015, Airport Handling had […] (*1) employees ([…] (*1) full-time equivalents, hereinafter ‘FTE’), of which […] (*1) employees ([…] (*1) FTE) were previous SEAH-employees.

(27) On 4 June 2014, SEAH and the trade unions signed the Implementing Agreement aiming to implement the provisions of the draft settlement described under recital 24 above.

(28) The agreement laid down that SEA had consented, firstly, that Airport Handling employs SEAH personnel, to the extent and subject to the job profiles required by Airport Handling and secondly, that negotiations with the trade union organisations commence with regard to staff selection criteria. The agreement also points out that any new employment contract with Airport Handling would be necessarily characterised by a break with the formal and substantive content of the employment contract with SEAH.

(29) According to that agreement, SEAH showed its availability to provide for a financial incentive scheme for workers who by 30 June 2014 agree not to oppose the layoff measures.

(30) Also on 4 June 2014, Airport Handling concluded an agreement with the trade union organisations. That agreement specifies the number of employees with contracts of an indefinite duration required by Airport Handling on 1 July 2014. It further specified that Airport Handling agreed to re-employ with priority former employees of SEAH.

(31) That agreement indicates Airport Handling’s presumed labour demand expressed in FTE. In that context, the agreement emphasises that those indications may be subject to change in terms of the total number and/or variables stated in the agreement. The staff estimates were as follows: […] (*1) FTE permanent staff for operations; […] (*1) FTE administrative staff; […] (*1) FTE fixed-term personnel for seasonal activities. The agreement stipulates that, in order to satisfy that demand, Airport Handling’s priority strategy will be to approach individuals currently employed by SEAH. The agreement also provides for the recruitment procedure, the legal and financial content of employment contracts, welfare policy and work organisation. The agreement’s provisions imply that former SEAH staff will be hired under new contracts with materially different economic conditions.

(32) Working arrangements set out in that agreement differ from those which SEAH applied to its employees. In particular: — under the national collective labour agreement for aviation staff, Airport Handling would apply the Handlers section, while the Airport operators section applied to labour contracts of workers previously employed by SEAH. According to Italy, the Handlers section provides for different conditions concerning leave (20 instead of 22 days per year), duration of work (7h30 minutes a day instead of 7h15 minutes a day) and remuneration and allowances (elimination of 6 days’ remuneration), — different organisation of salary rights, e.g. the non-application by Airport Handling of certain headings of the corporate contract supplementing the national collective labour agreement, which SEAH used to apply to its employees, — different organisation of employees (e.g. […] (*1)).

(33) According to Italy, as a result: — Airport Handling’s total labour cost decreased by 30 % compared to SEAH’s total labour cost, — the weight of the costs of Airport Handling’s supplementary corporate contract decreased by […] (*1) % when compared to SEAH’s, with average salary cuts on an annual basis being […] (*1) times the monthly salary.

(34) On 9 June 2014 SEAH’s Extraordinary Shareholders Assembly approved the winding up of the company and its placement into voluntary liquidation, establishing the effective winding-up date as being 1 July 2014 (8).

(35) A liquidator was appointed and tasked to sell the company’s assets, pay off creditors and prepare the final liquidation balance sheet and report.

(36) The trade union organisations had conditioned the entry into force of the agreements of 4 June 2014 on the positive result of a referendum amongst SEAH employees. That referendum was held between 11 and 13 June 2014. In that referendum, the agreement of 4 June 2014 was rejected.

(37) Therefore, on 1 July 2014, SEAH’s Shareholders Assembly decided the prolongation to 31 August 2014 of the deadline for SEAH’s cessation of activities, empowering the liquidator (who had assumed his role on 1 July 2014) to provisionally manage the company until that date, and, on expiry of that term, to proceed to the disposal of SEAH’s assets and the cessation of its activity.

(38) In order to overcome the negative vote of the referendum of 14 June 2014, the trade union organisations on 4 July 2014 proposed certain clarifications on points stipulated under the June 4, 2014 agreement, such as that additional days of work had to be spread evenly throughout the year, that reference to the ‘effectiveness of the working hours’ meant that at least 7,5 hours per day, per 5-day working weeks, had to be worked, and that workers had the possibility to select, between two options, how to work during certain festivities which were no longer paid under the new agreement. On 7 July 2014 Airport Handling endorsed those proposals. On 15 July 2014, Airport Handling signed a supplementary agreement which confirmed the validity of the agreement of 4 June 2014 and included the clarifications requested by the trade union organisations. That new agreement however did not introduce any material alterations as compared to the previously rejected agreement of 4 June 2014.

(39) In August 2014, SEAH proceeded to the dismissal of its entire workforce. At the same time, Airport Handling started to recruit, amongst former workers of SEAH, those workers which it considered essential to its activities. Airport Handling also contacted Adecco, a service provider in the field of temporary work, for the procurement of temporary workers.

(40) SEAH ceased operations as of 1 September 2014. On that day, Airport Handling started operations at Milan airports. As of 1 September 2014, Airport Handling had […] (*1) employees ([…] (*1) FTE), thus employing […] (*1) % of the workers employed by SEAH as of 22 April 2014, date on which SEAH initiated official proceedings for the collective dismissal of its employees. In addition, Airport Handling used […] (*1) interim-workers ([…] (*1) FTE) […] (*1).

2.2. Contract with the air carriers

(41) By letter of 22 April 2014, SEAH informed air carriers, suppliers and other interested parties, that it would cease operations as of 1 July 2014 and that therefore, on that date, it would cease providing ground handling services at Milan Airports.

(42) Following the above communication, ten airlines decided to entrust ground handling services at Milan airports to providers other than SEAH and Airport Handling.

(43) At the same time, Airport Handling was selected as ground handler service provider by 19 airlines operating at Milan airports based on open tenders. Other airlines selected Airport Handling based on competitive dialogue procedures. According to Italy, the selection of the service provider is normally based on the assessment of certain factors such as price, financial soundness of the provider, availability of efficient equipment, existence of a network, track record, experience and competences of the operator.

2.3. Creation of Airport Handling and transfer of SEA’s participation to the Milan Airport Handling Trust; capitalisation of Airport Handling

(44) Airport Handling was incorporated on 9 September 2013 as a limited liability company with a share capital of EUR 10 000.

(45) On 10 March 2014, SEA’s Board of Directors decided to increase the capital of Airport Handling by up to EUR 2,5 million, in order for Airport Handling to meet the requirements for certification as ground handler by the National Civil Aviation Authority (ENAC). Pursuant to the national rules in force, ENAC grants licences to ground handling services providers that meet the following requirements (9): — capital of at least one fourth of the likely turnover, — operating resources and organisational capacity adequate to carry out the services, — certificate proving that all obligations arising from labour and safety laws are complied with.

(46) On 30 June 2014, SEA’s Board of Directors decided the setting-up of the Milan Airport Handling Trust (‘the Trust’) and the increase in Airport Handling’s capital by up to EUR 25 million.

(47) The Trust was incorporated on 30 June 2014 and the Trust Deed was signed on the same day. According to its deed of incorporation, the Trust: (i) acts as sole shareholder of Airport Handling pending the sale of a minority shareholding in the company; and (ii) ensures that Airport Handling operates in economic discontinuity with SEA Handling.

(48) According to the Trust Deed, the Trust was set up for the specific purposes to: — confirm and verify the absence of economic continuity of Airport Handling with SEA and SEAH, ensured notably by managing Airport Handling independently of SEA, — allow the entry of independent third-party investors in the share capital of Airport Handling for a percentage shareholding of not less than 30 %.

(49) The Trust Deed states that in order to implement this mission, the Trust exercises its power to: — appoint directors, statutory auditors and other corporate bodies, choosing among eligible candidates that have no operational responsibility or employment relationship with SEA or SEAH, — ask for a report from the directors on the events of economic discontinuity which occurred prior to the incorporation of the Trust, and — ensure that appropriate procedures are in place to avoid that the commercial information of SEA unduly benefits Airport Handling in acquiring or maintaining contracts with airlines, compared to competitors, with the observance of the limitations contained in Annex A of the Trust Deed.

(50) In particular, according to the Trust Deed, the trustee shall verify that, since the incorporation of Airport Handling, no legal acts have been put in place which result in the transfer by SEAH to Airport Handling of any assets, moveable and immoveable property, contracts with airlines and/or with handling services suppliers, intellectual property rights or unilateral undertakings with economic effects (i.e. real or personal guarantees) other than those provided under the Trust Deed.

(51) In this sense, the Trust Deed excludes from the scope of the controlling power of the trustee: — the fact that Airport Handling was incorporated and capitalised by SEA, — the fact that Airport Handling had taken over personnel from SEAH, — the fact that Airport Handling leases its assets and handling equipment from SEAH under a lease contract due to expire on 28 February 2015.

(52) In addition, the Trust Deed also provides that the trustee is required to verify that: — with the exception of the powers granted to SEA under the Trust Deed, Airport Handling’s operational management is separate from SEA’s management, under the control and oversight of the Board of Directors, whose members are appointed autonomously by the trustee, — before or after the creation of the Trust, SEA and Airport Handling do not put in place legal deeds resulting in the transfer by SEA of assets, moveable or immoveable property, contracts, unilateral undertakings with economic effect (i.e. real or personal guarantees) or intellectual property rights, other than those provided in the Trust Deed or requested by SEA in its capacity as concession holder of the Milan airports, and — Airport Handling puts in place procedures and controls to avoid that it can benefit from SEA’s proprietary commercial information which could unduly benefit Airport Handling in acquiring or maintaining contracts with airlines, such as information on the contracts entered into in the past by SEAH or requirements of the airlines communicated to SEA in its capacity as airport operator.

(53) According to the Trust Deed, it is however not the task of the trustee to verify or assess the circumstances that: — representatives of SEA participated to the negotiations with the employees to be assumed by Airport Handling, — Airport Handling benefits from outsourced SEA-employees, including its general manager, which was to be maintained for the duration of the Trust, — certain centralised services would continue to be provided by SEA, — SEA may verify quality service levels in order to comply with its duties as airport operator of the Milan airports infrastructure, — decisions on the future funding of Airport Handling are entirely left to SEA, without prejudice to the rights of the Board of Directors of Airport Handling to take decisions in order to implement the business plan.

(54) As far as the entry of a third party investor in Airport Handling is concerned, the Trust Deed provides that the initial phase of the procedure for the opening of Airport Handling’s capital to ‘eligible shareholders’ (namely physical or legal persons or entities which, if resident in Italy, do not qualify as public entities or companies controlled by the Italian state, with the exception of listed companies) was to be managed by SEA and was supposed to be completed by 28 February 2015.

(55) The Trust Deed stipulates that if by 1 March 2015 SEA is still a shareholder of Airport Handling for more than […] (*1) %, the trustee shall start searching for investors which must comply with conditions previously communicated to it by SEA through a deed which must be notified to the lawyer acting as Trust Guardian, and subject to revision by SEA in due time. In any other case, the trustee may not alienate the shareholding in Airport Handling without SEA’s consent.

(56) The Trust Deed further stipulates that after the sale of […] (*1) % of SEA’s shareholding in Airport Handling, SEA shall search for private investors willing to take on further participations in Airport Handling’s capital, taking into account social considerations and the obligation on SEA to continue ensuring the provision of ground handling services at Milan airports.

(57) On 26 August 2014 Airport Handling’s Board of Directors approved an Addendum to the Trust Deed. The Addendum laid down that Airport Handling would issue 20 000 participating equity instruments — SFPs (strumenti finanziari partecipativi) pursuant to Article 2346 paragraph 6 of the Italian Civil Code (10), with a nominal value of EUR 1 000 each, to be proposed to SEA. The Addendum was signed on the following day.

(58) On 27 August 2014, Airport Handling’s Shareholders Assembly (11) decided to increase Airport Handling’s capital from EUR 1,3 million to EUR 5 million, subscribed and paid-in by SEA.

(59) On the same day SEA transferred the entire holding of Airport Handling to the Trust and appointed a trustee, namely Crowe Horwath Trustee Services (‘the Trustee’) to manage Airport Handling.

(60) On 27 August 2014 the Trustee appointed a new Board of Directors of Airport Handling. SEA […] (*1) senior managers […] (*1), out of five, […] (*1). According to Italy, both perform their activities in the exclusive interest of Airport Handling on the basis of a secondment contract from parent company SEA.

(61) Still on 27 August 2014, after the conferral of SEA’s participation in the Trust, Airport Handling’s Shareholders Assembly (12) decided the conversion of Airport Handling from a limited liability company (SRL) to a joint stock company (SpA) and the issuance of the 20 000 SFPs, offered for subscription to SEA at a price of EUR 1 000 each. The SFPs were subscribed and paid in by SEA the following day, thereby increasing Airport Handling’s capital to EUR 25 million in total (EUR 5 million share capital and EUR 20 million in the form of SFPs).

2.4. The attempted sale of SEAH’s assets; the lease contract with Airport Handling

(62) On 12 November 2014, the liquidator issued a call for expression of interest in the purchase of SEAH’s assets; the call was published in the Supplement to the Official Journal of the European Union: ‘Italy — Milan: Sale of equipment comprising, for information only: Cargo loaders, transporters, lifting platforms, pallet jack, mobile/mobile/conveyor belts, towed/BAE towed stairs, electric/diesel/hybrid tractors, barrels, generators, air conditioner units, compressors, baggage/goods trolleys 2014/5 218-385934 — Call for expression of interest’ (13). For the purposes of the call for expression of interest, the assets were grouped in nine lots.

(63) SEAH commissioned Istituto del Marchio di Qualità SpA (‘IMQ’) to establish a comprehensive valuation of SEAH’s assets and on that base to set the fee for the lease of SEAH’s ground handling equipment as well as the price for the sale of the assets. IMQ delivered two reports: On 25 June 2014 as regards the lease fee; on 16 October 2014 as regards the division of assets in lots for sale. According IMQ, the estimated value of the assets shall be understood as the likely market value that assets of similar technical characteristics, performance, state of repair and storage, use and age would have in monetary terms.

(64) The closing date for the submission of bids for the nine lots for sale was set for 26 January 2015.

(65) IMQ proposed as a fee for the lease of SEAH’s ground handling equipment EUR […] (*1) per semester (EUR […] (*1) per year).

(66) On 1 September 2014, SEAH and Airport Handling entered into a lease contract by which Airport Handling would lease SEAH’s ground handling equipment at a lease fee of EUR […] (*1), i.e. the amount proposed by IMQ. The lease contract was to expire on 31 August 2015.

(67) In order to confirm the correctness of the valuation process carried out by IMQ, Airport Handling and SEAH on 1 September 2014 contracted a second independent expert, Ernst & Young financial-business Advisors SpA (‘E&Y’), to revalue the level of the lease fee. In this context, SEAH and Airport Handling had contractually agreed that, should the second valuation conclude that the market value deviated by at least […] (*1) % from the level set by IMQ, the contractual fee would be adjusted accordingly with retroactive effect.

(68) On 15 October 2014, E&Y delivered its report and set the market rate for the lease of SEAH’s assets at EUR […] (*1) per year. On 25 October 2014, Airport Handling and SEAH agreed to broaden the analysis carried out by E&Y and entrusted the latter with the task of analysing the actual operating conditions and physical state of the assets (E&Y had initially based its assessment on a physical check of the assets on a sample basis). This analysis revealed that a number of machinery and equipment were not suitable for use taking into account the short duration of the lease and the high costs of necessary repairs in view of the obsolete nature of many pieces of equipment. According to the Trust, at the date when it submitted its comments on the 2014 opening decision, SEAH and Airport Handling were contemplating a solution to avoid litigation. Consequently, the lease fee was retroactively adjusted to EUR […] (*1) per annum.

(69) On November 26, 2014, Airport Handling’s Board of Directors decided to start the public tender for the purchase of new equipment on the market. On 11 February 2015, as a result of that tender procedure, Airport Handling replaced roughly […] (*1) % of its equipment by assets bought on the market, costing approximately EUR […] (*1). According to the Italian authorities, Airport Handling financed that purchase exclusively through its own resources.

(70) On 9 February 2015, the tender for the sale of SEAH’s assets was declared unsuccessful, as no bidder had expressed interest in the purchase of any of the lots.

(71) On 26 February 2015, SEAH received a first notice from Airport Handling, whereby the latter expressed its interest in the purchase of 6 of the 9 tender lots. On 3 June 2015, Airport Handling renewed its notice of interest. On 18 September, 2015, […] (*1) were sold to Airport Handling at the price indicated in the initial tender procedure, being EUR […] (*1).

2.5. The sale of a minority shareholding in Airport Handling

(72) As laid down by the Trust Deed, the Trustee initiated the procedure for the sale of a minority share of Airport Handling’s capital.

(73) For that purpose, the Trustee on 27 January 2015 appointed the Italian branch of BNP Paribas as financial advisor in relation to the sale of ‘at least 30 %’ of the share capital of Airport Handling to third party investors. The Italian authorities pointed out that BNP Paribas in its capacity of financial advisor organised the sale process in complete independence. BNP Paribas scheduled the following sale phases: 1. Preliminary screening; 2. Organisation of the transaction; 3. Closing of the transaction.

(74) Five interested investors submitted non-binding offers for the purchase of a […] (*1)-[…] (*1) % stake in Airport Handling: […] (*1), […] (*1), […] (*1), […] (*1), and […] (*1).

(75) According to the draft sale contract provided by Italy, in order to allow the investor to have operational control of Airport Handling, the Trustee undertakes, for the entire period until the expiry of the standstill period (14), to grant the investor the right to appoint the majority, i.e. three out of five members, of the Board of Directors, among which the CEO of the company, whilst the Chairman of the Board of the Directors shall be appointed by the shareholder’s meeting.

(76) On 21 September 2015, the Trustee signed a binding Framework Investment agreement with D’Nata, for the sale of […] (*1) % of Airport Handling shares. Pursuant to that agreement, the following arrangements apply:

(77) Initial investment: After merger control authorities have cleared the acquisition, D’Nata acquires […] (*1) % of Airport Handling’s shares with the right to appoint the majority of the board of directors and the CEO. The objective of that arrangement was that D’Nata, despite being a minority shareholder, would effectively be in the position of a controlling shareholder.

(78) Additional investment: Under a call-option arrangement, D’Nata is entitled to acquire a further […] (*1) % stake in Airport Handling. A specific ‘State Aid Put-Option’ stipulates that D’Nata will have the right to sell back its […] (*1) % stake for the adjusted initial acquisition price, if either the Commission adopts a negative decision, or if 18 months after completion of the initial investment, the State aid procedure is still pending.

(79) On 8 February 2016, the Italian Competition Authority, Autorità Garante della Concorrenza e del Mercato, cleared the acquisition of the sole control of Airport Handling by D’Nata under Italian merger control law. The Trustee informed the Commission that subsequent to that clearance, it would proceed with D’Nata to closing of the investment on 8 March 2016.

2.6. The business plan 2014-2017

2.6.1. The business plan of 14 November 2013

(80) During the preliminary investigation phase, Italy had provided the business plan of Airport Handling for the period 2014-2017, dated 14 November 2013 (‘the business plan of November 2013’), to evidence that SEA’s investment in the capital of Airport Handling complied with the market economy investor principle. The main elements of that plan are summarised below:

(81) The business plan focuses on ramp (15) and passenger (16) services, which represent the main part of Airport Handling’s business. The company’s overall market share at both Malpensa and Linate airports was expected to be [50-70] (*1) % and [50-70] (*1) % respectively in the second semester of 2014 and to increase to [60-80] (*1) % and [60-80] (*1) % respectively by 2017.

(82) The projections developed in the plan depict increasing operating revenues on account of a forecasted increasing market share. Total revenue was assumed to increase from EUR […] (*1) for the second half of 2014 to EUR […] (*1) in 2017, based on an assumption of an […] (*1)-[…] (*1) % p.a. increase in passenger traffic for the period 2014-2017.

(83) Average staff numbers were projected to increase from […] (*1) FTE in 2014 to […] (*1) FTE in 2017 due to an increase in the number of contracts with fixed duration. Labour costs were estimated to be around […] (*1) % of total operating costs. SEA would increase productivity by 12 % in the reference period, using three main drivers: — efficiency gains in the start-up of Airport Handling (adjusting the share of fixed duration and part time contracts; better definition of the work programme 2; adjusting the organisational structure to use resources effectively by restricting use of seasonal workers; maximising capacity of existing workforce), — economies of scale resulting from the increase in traffic, — structural adjustments in the business processes (better work planning and organisation; investments in technical solutions to enable partial or total automation of certain activities; linking workforce expenditure against business outputs and outcomes).

(84) Initial start-up costs for the renegotiation of client and supplier contracts, workforce agreements, recruitment, writing of organisational/administrative/operational procedures, legal costs, bank charges, consultancy and purchase of small items and sundry supplies were expected to amount to EUR […] (*1).

(85) Operational start-up costs, i.e. capital expenditure required for Airport Handling to become operational were estimated at EUR […] (*1) for new equipment. However, for the purpose of the business plan of November 2013, it was assumed that Airport Handling would acquire used ground handling equipment valued at EUR […] (*1).

(86) In order to cover the outlay for all estimated start-up costs, the business plan requires a capital increase of EUR […] (*1) in […] (*1).

2.6.2. The business plan of 6 August 2014

(87) Further in the course of the investigation, Italy submitted a revised business plan for the period 2014-2017, dated 6 August 2014 (‘the business plan of August 2014’), as approved by Airport Handling’s Board on 26 August 2014. According to information provided by Italy, that revision was already being finalised in the month of July 2014. That plan’s main assumptions are summarised below:

(88) Market share: As regards […] (*1), the business plan of August 2014 assumes slightly lower growth than the previous plan, with a market share of [70-80] (*1) % in […] (*1), based on updated forecasted levels of traffic of […] (*1), and the […] (*1).

(89) Prices: Unit prices (per aircraft movement) are higher than the prices assumed in the business plan of November 2013, and are constant in nominal terms over the entire period 2014-2017.

(90) Personnel costs: Estimated personnel costs in the business plan of August 2014 are slightly higher than those assumed for the November-2013 Business Plan and are ranging between […] (*1) and […] (*1) % of operating costs. That increase is due to the […] (*1).

(91) Other costs taken into account were external costs, depreciation and provisions, which together accounted for about […] (*1) % of total operating costs, and regulated costs (about […] (*1) %) of services which SEA provides to Airport Handling for the use of common shared infrastructures of the airport (notably […] (*1)). The August-2014 business plan estimated that EUR […] (*1) would have to be invested for the purchase of equipment, of which […] (*1) % for the purchase of new equipment and […] (*1) % for the purchase of second-hand vehicles on the market. These figures were based on bids by potential suppliers received by airport handling in March 2014.

(92) Like the business plan of November 2013, the business plan of August 2014 shows a reduction in operating costs as compared to SEAH’s cost structure, achieved in essence through efficiency increase and personnel reduction.

2.6.3. Economic valuations of the business plan

2.6.3.1. The BCG report

(93) Airport Handling commissioned Boston Consulting Group with a preliminary independent evaluation of the Business Plan 2014-2017 (‘the BCG-Report’). BCG delivered its report on 14 October 2014.

(94) The BCG-Report is based on the business plan approved on 26 August 2014, on the business plan drawn up in November 2013, on BCG’s own industrial experience and know-how as well as on public data relating to market developments and the main handling operators.

(95) In summary, BCG evaluated the following assumptions underlying the business plan: Revenue perspectives (based on assumed traffic growth potential, assumed growth of volumes handled by Airport Handling); personnel costs (based on costs per FTE; assumed productivity gains); planned investments (total amount EUR […] (*1)).

(96) BCG summarised its findings as follows:

(97) In essence, the assumptions concerning traffic volumes at the level of SEA appear to be sustainable and consistent with provisions made by major organisations, in particular IATA and Eurocontrol. BCG however noted that the intention to maintain a constant mix of carriers, consisting of low-cost carriers (‘LCCs’) and so-called legacy carriers, would not be in line with historical development of the mix at the Malpensa terminal, where over the past 4 years the share of LCC would have increased by […] (*1) percentage points. Moreover, a new national regulation (Decreto Linate) could lead to the relocation of some carriers from Malpensa to Linate.

(98) The assumption on possible development of the volumes handled by Airport Handling seems broadly achievable because firstly, the agreements signed with new carriers at the date when BCG wrote the report would ensure a market share of [60-70] (*1) %; secondly, the [70-80] (*1) % target market share for 2017 would be sustainable in view of current competitive dynamics in the sector as well as of SEAH’s historical [70-80] (*1) % market share.

(99) According to BCG, assumptions on revenue from services to the airport manager seemed to be broadly pursued in ongoing negotiations with SEA. BCG however could not assess expected revenues in the last year of the plan (2017), due to the assumed 2-year contract duration.

(100) Assumptions on average personnel unit cost increases of […] (*1) % per year from 2014 to 2017 would be broadly aligned with the agreement signed between the Italian Association of Airport Operators, Assaeroporti, and trade unions in October 2014.

(101) The […] (*1) % improvement in resource productivity would appear to be broadly sustainable firstly, because […] (*1) % productivity gain had already been achieved when the report was written and secondly, because the remaining […] (*1) % seem reasonable in light of current organisational levers and technical stage of implementation.

(102) BCG also found that the EUR […] (*1) budget for investments appears broadly consistent with the purchase of a new fleet mainly consisting of new vehicles (95 %), as shown by the detailed purchase values indicated in the tenders received by Airport Handling at the date of March 2014.

(103) BCG found that in summary, the profit margin foreseen in the business plan to 2017 ([…] (*1) %, EUR […] (*1)) would appear broadly in line with, or slightly below the average profitability of a significant sample of other European companies operating in the private and public sector (based on a comparison with Portway, Acciona, Aviapartner, Fraport and ATA-Handling). BCG however pointed out that the actual evolution of the traffic mix as well as possible impacts of a new regulation concerning Linate (Decreto Linate) might lead to less traffic at Malpensa.

2.6.3.2. The Brattle Report

(104) SEA commissioned Brattle Group to analyse SEA’s equity injection in Airport Handling, and in particular to analyse whether that investment complied with the market economy investor principle. Brattle delivered its report on 30 March 2015.

(105) According to the Brattle Report, the analysis is based on the information that was known to SEA at the time the decision to invest in Airport Handling was taken, as well as on public data concerning the competitive position of SEA. According to the Brattle report, the assumptions in the business plan of November 2013 are the most relevant for the market economy investor test, since they represent the basis on which SEA carried out the investment (17).

(106) According to the Brattle Report, the doubt spelt out by the Commission in the 2014 opening decision, namely that Airport Handling’s business plan was overly optimistic, can be dispelled, given that key assumptions of the business plan have been realised in practice. In particular, Airport Handling’s market share in 2014 exceeded the forecasts of the business plan of November 2013.

(107) According to the Brattle Report, unit prices (prices charged by Airport Handling for each aircraft movement) shown in the Business Plan of August 2014 are based on contracts already signed with the airlines, on average being EUR […] (*1), which is higher than the price assumed in the Business Plan of November 2013, ranging from EUR […] (*1) in 2014 to EUR […] (*1) in 2017. This led the experts to the following conclusions: First, market prices in the Business Plan of August 2014 are closer to the actual process achieved, because they were based on signed contracts. Second, that the Business Plan of November 2013, on which SEA based its investment decision, actually underestimated the market price that Airport Handling could charge. Third, this confirms that market prices in the Business Plan of November 2013 were not only reasonable but in fact were too low.

(108) Lastly, the experts noted that market prices that Airport Handling negotiated with the airlines were lower than the prices that SEAH was actually charging.

(109) The experts agree that the initial market share for Airport Handling, as anticipated in the business plan of November 2013, may seem high for a new entrant. They however assume that a market economy investor would have known that the demise of SEAH would create an unusual situation, whereby a large number of the handling contracts at the SEA airports were ‘up for grabs’. The experts conclude that Airport Handling would have therefore taken advantage of this situation in the same way the other operators at the Milan airports could have done. In addition, according to the report, Airport Handling’s anticipated market share would be typical for large Italian airports, where the largest handler normally holds a share of around 70 % of the market. In addition, the experts had established that Airport Handling is the only handler with sufficient assets and equipment to guarantee 24-hour full service, which would be a key advantage with respect to competitors.

(110) The experts also found that lower personnel costs was one of the key reasons why Airport Handling expected to be profitable although SEAH had been loss making. The experts considered such assumption as reasonable, since Airport Handling was negotiating new labour contracts where workers agreed to work 20 additional days per year relative to the previous SEAH contracts.

(111) Moreover, according to the Brattle report, although the business plan of November 2013 slightly underestimated labour costs, the business plan of August 2014 showed FTE costs of EUR […] (*1)/hour, […] (*1).

(112) In the experts’ view, when investing in Airport Handling, a market economy investor would have expected to earn a rate of return (Internal Rate of Return — IRR) equal to or greater than the Weighted Average Cost of Capital (WACC) according to standard financial theory. In this case the calculations confirmed that in all scenarios the expected IRR of the project exceeds the WACC and therefore a private investor would have expected to earn profit from its investment in Airport Handling.

(113) The consultant also noted that when SEA made its decision to set up Airport Handling in 2013, the private equity fund F2i owned 44,31 % of the company. F2i appoints two members to SEA’s Board of Directors and according to the Brattle report neither Board member had voted against the proposal for SEA to invest in Airport Handling, which would evidence that the investment was expected to be profitable and was therefore consistent with the market economy investor principle.

(114) Further according to the Brattle report, a market economy investor would have considered the probability that the Commission finds economic continuity between SEAH and Airport Handling, and therefore requires the latter to repay the aid found incompatible in the recovery decision, to be relatively low. This is because SEA undertook measures to ring-fence Airport Handling and to prevent economic continuity, such as the setting up of the Trust. According to Brattle’s financial estimations on the November 2013 business plan, as long as the chance of a finding of economic continuity was less than […] (*1) % (assuming the cost of capital estimate proposed by SEA) or less than […] (*1) % (assuming the cost of capital estimate proposed by Brattle), then SEA’s investment with AH was consistent with the market economy investor principle. Brattle found it reasonable to assume that given the context and in particular the notification to the Commission, a market economy investor would judge such probability to be less than […] (*1) %, and would therefore invest in Airport Handling on purely economic terms.

2.7. Announced reduction of the scope of Airport Handling’s economic activities

(115) Italy proposed to further reduce the scope of the activities currently carried out by Airport Handling in comparison with those carried out in the past by SEAH. In particular relating to […] (*1).

(116) SEA currently provides […] (*1), pursuant to a new and different agreement expiring on 31 December 2018.

(117) SEA declared that it was willing to terminate, by 31 December 2016 at the very latest, the agreement relating to […] (*1), thereby taking it away from Airport Handling, and also to hire around […] (*1) Airport Handling employees currently […] (*1). As a result of this change, the turnover of Airport Handling, being in the order of EUR […] (*1) in its first year of activity, would be reduced by around EUR […] (*1).

3. GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

3.1. On economic continuity and transfer of the recovery obligation

(118) In the 2014 opening decision, the Commission took the preliminary view that in this case, the criteria identified by the Court of Justice to establish if a company other than the initial aid beneficiary can be held responsible to pay back the aid were largely fulfilled. In particular: — even if the staff would be re-employed by Airport Handling, according to the agreement signed by SEA, SEAH and the trade unions on 4 November 2013, it appeared that former employees of SEAH were being guaranteed the rights acquired under the previous contracts with SEAH, — according to information available to the Commission at that stage, SEA and Airport Handling, even before the expiry of the main contracts with the airlines, had engaged in joint marketing efforts aiming to reassure airlines operating at the airport that SEA would continue the ground handling business through its new subsidiary Airport Handling after SEAH’s liquidation has been completed, — the equipment required to provide ground handling services would be leased by Airport Handling from SEAH, pending the (possible) sale of such assets to third parties in the open tender. The Commission considered that Italy’s argument that such assets would be leased by Airport Handling at the market price could be accepted, to the extent the value of the assets in question was assessed by an expert appointed by the parent company SEA and the eventual sale of those assets was not certain, — the new ground handling business would have the same owner as SEAH, namely SEA. The Commission considered Italy’s proposal to tender out 20 % of the capital of the new ground handling provider insufficient to guarantee discontinuity from SEAH since first, the proposal was only limited to a minority shareholding and second, no guarantees were provided that that would actually happen. Moreover, this opening of the capital would only occur after the entry of Airport Handling on the market, — the timing — after adoption of the recovery decision — and economic logic of the creation of the new ground handling provider suggested that the plan pre-notified by Italy constitutes a mechanism to circumvent recovery.

(119) The Commission therefore preliminarily concluded that the object and effect of the creation of the new company appeared to be the circumvention of the obligation to repay the aid and that Airport Handling was the successor of SEAH. On this basis the Commission took the preliminary view that Airport Handling could be held liable to pay back the aid granted to SEAH in the past and found incompatible in the 2012 recovery decision.

3.2. On the capital injection

(120) The Commission took the preliminary view that SEA’s decisions to set up Airport Handling and to inject equity into it was imputable to the State: Firstly, the Commission noted that the Municipality of Milan held a majority stake of 54,81 % in SEA and that therefore the State should be regarded as having an influence on SEA’s decision-making processes and being involved in the decisions taken by the company. Secondly, the Commission referred to certain statements made by representatives of Italian authorities in relation to the issue, which seemed to indicate that the creation of Airport Handling was orchestrated by the Italian authorities, notably in order to protect employment at Milan airports.

(121) In addition, since SEA appeared to be controlled by the Italian authorities, the Commission reached the preliminary conclusion that the capital injection, which was financed by SEA, involved State resources.

(122) The Commission also took the preliminary view that SEA did not act as a market economy investor when performing the injection in Airport Handling’s capital.

(123) Firstly, the Commission expressed doubts that a private investor would have provided capital to Airport Handling at the time when SEA did, since the Commission’s services had already informed the Italian authorities that the intended setting-up of a new ground handling provider would likely lead to economic continuity and thus liability of the new company to reimburse the aid found incompatible in the 2012 recovery decision. The business plan of November 2013 however did not take the risk of a transfer of the recovery liability from SEAH to Airport Handling into account.

(124) Secondly, the Commission expressed doubts as to whether the business plan underpinning SEA’s decision to invest in Airport Handling relied on sufficiently robust assumptions.

(125) The Commission therefore considered that SEA’s investment of EUR 25 million into Airport Handling does not appear to be based on economic evaluations comparable to those which, in the relevant circumstances, a rational private investor in a similar situation would have had carried out, before making such investments, in order to determine its future profitability. On that basis, the Commission took the preliminary view that the EUR 25 million capital injection amounted to State aid in favour of Airport Handling.

4. COMMENTS FROM ITALY

4.1. On economic continuity

(126) Italy recalled that according to settled case-law, the recovery of illegal and incompatible State aid aims to eliminate the distortion of competition caused by the competitive advantage conferred by the unlawful aid. Consequently, the unlawful and incompatible aid must be recovered from the undertaking that actually benefited from it. The recovery obligation may only be extended to companies other than the original beneficiary of the aid if the following cumulative conditions are fulfilled: — that the company was found to continue the activity of the recipient undertaking, and — that the company retains the actual benefit of the competitive advantage connected with the receipt of the aid.

(127) In Italy’s view, in this case the transfer of the competitive advantage linked to the aid granted to SEAH can be excluded from the outset.

(128) In particular, Italy notes that the alleged advantage granted to SEAH was defined by the Commission in recitals 219 et seq. of its recovery decision as corresponding to the compensation of SEAH’s losses during the period 2002-2010. As indicated by the Commission, those losses had been generated by high personnel costs, which represent a significant share of the cost structure of a ground handling provider. Since the capital injections classified as State aid by the Commission served primarily to cover losses resulting from excessive personnel costs of SEAH, in Italy’s view the competitive advantage which SEAH benefitted from would ipso facto be removed with its liquidation and exit from the market.

(129) Italy also noted that even if a part — albeit small — of the competitive advantage linked to the aid granted to SEAH could be associated with the assets of the company, i.e. the assets used by SEAH to carry out its ground handling activity at Milan airports, those assets would however not be subject to transfer from SEAH to Airport Handling. Rather, they would be leased temporarily by the latter under market conditions pending their sale on the open market.

(130) Italy further noted that, even if a transfer of competitive advantage from SEAH to Airport Handling effectively took place, it cannot be established in this case that Airport Handling de facto continues the economic activity of SEAH.

(131) First, no transfer, de facto or de jure, of work contracts would have taken place between SEAH and Airport Handling. According to Italy, Airport Handling had only employed, under substantially new conditions, the staff strictly necessary for the performance of the ground handling activity. In addition, the new employment contracts were governed by a different regime (the Handler Section rather than the Airport operators Section of the national collective labour contract (Contratto Collettivo Nazionale di Lavoro (CCNL)) and association of employees (Assohandlers instead of Assoaeroporti). On that basis, Italy pointed out that Airport Handling would achieve a reduction of personnel costs, with a significant increase in productivity.

(132) Italy also added that the Commission’s assertion in the 2014 opening decision that former employees of SEAH were guaranteed the rights acquired in respect of previous contracts with SEAH would not be supported by factual evidence. According to Italy the agreement of 4 November 2013 did not provide for any guarantee to the benefit of former employees of SEAH on acquired rights, and clearly laid down the need for new employment contracts to be based on new conditions.

(133) Nor would there be any transfer of the contracts between SEAH and the air carriers operating at Milan airports to Airport Handling. According to Italy, upon the termination of contracts between SEAH and air carriers, Airport Handling negotiated ex novo the contracts with the air carriers operating at Milan airports. In addition, according to Italy, SEA and Airport Handling did not engage in common marketing efforts to this end, contrary to the Commission’s allegations in the 2014 opening decision which according to Italy is supported by no factual evidence. This circumstance would in any event be irrelevant to the assessment of economic continuity between SEAH and Airport Handling. In that respect, Italy recalled that the current portfolio of clients of Airport Handling is different from that of SEAH. Rather, Airport Handling would have concluded certain contracts with air carriers that were not already customers of SEAH, whilst at the same time failed to retain some of the former customers of SEAH.

(134) Italy stated that the fact that the business plan of Airport Handling provides for a market share […] (*1) cannot, as such, be considered proof of economic continuity. Such market share should be assessed in the light of the objective pursued by Airport Handling of reaching viability in the medium term.

(135) Italy also submitted that Airport Handling is not involved in the procedure for the sale of SEAH’s assets and, therefore, there would be no transfer of assets between the two companies. Furthermore, in Italy’s view the mere fact that the assets of the beneficiary of the aid are leased to a third undertaking cannot constitute sufficient evidence that the latter enjoyed the competitive advantage linked to the aid. In Italy’s view, for this to constitute an indication of continuity, the lease of those assets must take place at a price below the market price. In this case, however, the lease price would have been determined by an independent company (IMQ).

(136) Italy also recalled that SEA’s shareholding differs significantly from the period when the alleged aid was granted to SEAH. While SEA was entirely State-owned in the period 2002-2010, a private investor, F2i, currently owns 44,31 % of its capital.

(137) Furthermore, in Italy’s view the setting-up of the Trust constitutes an additional guarantee of the absence of continuity between SEAH and Airport Handling. Indeed, as laid down by the Trust Deed, the activities of the Trustee should be instrumental in achieving the following objectives: — ensure the independent management of SEA’s participation in Airport Handling, assuming sole control over the company and thus ensuring the absence of any interest and/or information flow between Airport Handling and the SEA group, with particular reference to SEAH and handling activities previously carried out by the latter at Milan airports, — allow the entry into the capital of Airport Handling of new private investors not connected to the SEA group, as a first step not less than […] (*1) %.

(138) As a result of the transfer of 100 % of SEA’s shareholding in Airport Handling to the Trust, the Trustee was entered in the business register as sole shareholder of the company. In this capacity, the Trustee has full and substantial control over SEA’s participation in Airport Handling.

(139) As sole shareholder of Airport Handling the Trustee must, inter alia: — Exercise voting rights on the appointment of the managing bodies of Airport Handling independently and without any interference by SEA, and in such a way as to ensure that the members of those bodies do not have or have not had operational roles or dependence on SEA or SEAH. At the moment of the transfer of SEA’s participation to the Trust, all members of the managing bodies of Airport Handling appointed by SEA handed in their resignation and were replaced by those appointed by the Trustee. — Monitor the economic discontinuity between SEAH and Airport Handling, requesting regular reports on the management of the company, the correct implementation of the business plan, the market share and development prospects. — Ensure that procedures are in place to prevent that Airport Handling unduly benefits from information held by SEA in the acquisition or maintenance of contracts with air carriers or suppliers of goods or services. — Verify that no sale transaction has taken place between SEAH and Airport Handling.

4.2. On the capital injection

4.2.1. On States resources and imputability

(140) In Italy’s view, SEA’s status as a public undertaking is not sufficient to conclude that its resources qualify as State resources within the meaning of Article 107(1) of the Treaty. In that respect, Italy recalled that Airport Handling’s financial resources are not in the possession or under the control of SEA, as its participation in Airport Handling is being managed by an independent body, the Trust, in total independence from SEA.

(141) SEA would therefore not have the possibility to exercise typical majority-shareholder powers, namely, inter alia, the power to appoint the members of the managing bodies of the subsidiary and, therefore, to participate in a decisive manner to the management of the company.

(142) According to Italy, the Commission cannot infer the imputability of the contested measures to the State by the mere fact that it is highly unlikely that those measures have been taken without any intervention by the State. According to Italy, the Commission is required to meet a high standard of proof. The measures at hand may be deemed imputable to the State only to the extent that the public shareholder of SEA played a key role in the adoption of the capital injection in favour of Airport Handling. In this sense, Italy considers it is important to note that Article 15 of SEA’s by-laws provides that the deliberations relating, inter alia, to the increase in capital of subsidiaries must be taken with the favourable vote of at least six members out of seven, which requires the consent of administrators appointed by the private shareholder F2i. Consequently, irrespective of their ownership of the majority of the shares of SEA, the public shareholder cannot validly deliberate a capital increase without recourse to consent (or rather, the decisive vote) of directors appointed by the private shareholder.

(143) Furthermore, Italy submitted that statements such as those made by the Minister for Infrastructure and Transport to reassure workers, quoted by the Commission in the opening decision, are fully in line with European and Italian practice and, therefore cannot be used as proof of the imputability to the State of the measure. The statements in question must be regarded as political declarations intended to mitigate adverse effects of unemployment.

(144) On this basis, Italy considers that SEA’s investment in Airport Handling is not imputable to the State and does not involve State resources and thus does not constitute State aid within the meaning of Article 107(1) of the Treaty.

4.2.2. On the existence of an economic advantage

(145) Italy recalled that the private shareholder contributes to capital injections in proportion to the share of the capital held at SEA, 44,31 %. According to Italy, the participation of the private investor F2i has a real economic impact and is significant. In this respect, Italy considers it important to note that according to the Commission’s practice, private investment of around one third of the total investment was considered significant. In Italy’s view this is in itself sufficient to exclude the State aid qualification within the meaning of Article 107(1) of the Treaty of the capital injection.

(146) Second, Italy submits that the business plan of Airport Handling was evaluated by an independent expert who concluded that SEA’s investment is justified from a purely economic point of view and therefore complies with the market economy investor principle.

(147) On this basis Italy considers that the SEA’s investment in Airport Handling was made in circumstances that would be acceptable to a private investor operating under normal market conditions and that, therefore, the measure does not constitute State aid within the meaning of Article 107(1) of the Treaty.

5. COMMENTS FROM INTERESTED PARTIES

(148) The Commission received comments from SEAH (in liquidation), the Milan Airport Handling Trust and Airport Handling, SEA and an interested party which asked for anonymity.

5.1. Comments from the Milan Airport Handling Trust and Airport Handling (hereinafter referred to as ‘the Trust’)

5.1.1. On the transfer of workforce

(149) According to the Trust, Airport Handling has from the beginning of its activity structured its business model based on an economic logic different from that of SEAH, having as objective to operate on the market on a standalone basis and to reach viability without capital interventions from its shareholder.

(150) In particular, Airport Handling always had considered that its business model should follow a modulation of the labour force organised according to criteria of efficiency and relevance. According to the Trust the handling activity is characterised by labour peaks at certain times of the year (e.g. summer). To address those rapid changes in demand, the service provider must respond flexibly, by means of recruiting temporary staff for those periods when the recruitment is justified in relation to the volume of work required.

(151) While SEAH mostly used […] (*1) ([…] (*1)), Airport Handling has adopted an approach based on […] (*1) (e.g. […] (*1)). Although this would require more complex training, management and coordination activities, it would in turn lead to higher flexibility and, consequently, a drop in operating costs. According to the Trust, this allowed for […] (*1) (On 31 December 2014, Airport Handling had […] (*1)).

(152) The Trust submitted that there was no transfer of employment contracts between SEAH and Airport Handling, as demonstrated by the following circumstances: — Airport Handling recruited its staff according to a plan defined in complete autonomy, according to expected traffic volumes and the specific organisation of work, thereby achieving a significant reduction of the workforce compared with SEAH, — former employees of SEAH were recruited by Airport Handling based on conditions that are formally and substantially different, according to a business model different from that of SEAH.

(153) In addition, the Trust recalled the climate of strong opposition and the very difficult relations with the trade union organisations in June 2014. It is in the Trust’s view evident that if indeed Airport Handling would have re-employed former SEAH employees based on the same conditions, those employees would have had no reason to complain. On the contrary, the strong resistance of trade unions to the agreement of June 2014 would evidence the fact that the workers were fully aware that their employment conditions had deteriorated.

5.1.2. On the contracts with the air carriers

(154) First, the Trust submitted that the contracts with the air carriers are by nature not transferable to third parties. Article 3.2 of the Standard Ground Handling Agreement expressly provides that, save in exceptional cases to be agreed with the ground handling companies, the carrier cannot assign tasks to third parties under the contract: ‘The carrier shall not appoint any other person, company or organisation to provide the services which the handling company has agreed to provide by virtue of this Agreement, except in such special cases as shall be mutually agreed between the parties’.

(155) The Trust provided several statements by airlines which had not carried out a tender procedure within the meaning of the public procurement procedures, in order to select Airport Handling as ground handler. Those airlines indicated that Airport Handling had however been selected on the basis of a competitive procedure based on benchmarking with other ground handling providers.

(156) In addition, the Trust recalled that the duration of the handling agreement is set by the air carrier and often provides for the possibility for the latter to withdraw by notice. For instance the IATA standard contract provides that each party may terminate the contract with a 60 days’ notice. Therefore, the contract with the air carrier is not necessarily a long lasting contract based on which the handler may be sheltered from competition. In fact, carriers may withdraw from the contract if they obtain better conditions from other service providers.

(157) According to the Trust, when SEAH exited the market and Airport Handling negotiated new contracts with the air carriers, the latter proposed to Airport Handling, as well as to the other service providers contacted, different — more favourable — conditions than those obtained from SEAH. It is, according to the Trust, quite common that an air carrier decides to terminate the contract when it receives more favourable conditions from other competing handlers; or threatens the continuation of the contract if the current handler is not willing improve its offer as compared to that of other providers.

(158) Airport Handling started its activity at Milan airports on 1 September 2014, after SEA’s shareholding was transferred to the Trust. Although Airport Handling initially notified to ENAC and to the air carriers the start of its activity on 1 July 2014, the delays arising from the transfer of the shares to the Trust and the difficulties with the trade unions have further delayed this launch of operations to 1 September 2014.

(159) On 28 February 2015, Airport Handling had concluded ground handling contracts with […] (*1) air carriers, […] (*1) operating at Linate and […] (*1) operating at Malpensa. The Trust further submitted that Airport Handling did not conclude contracts with all carriers previously in a contractual relation with SEAH. More specifically, […] (*1).

(160) According to the Trust, the contracts signed by Airport Handling with the air carriers are different from those with SEAH: — From a legal perspective: Airport Handling has entered into a new contractual relationship and did not become the successor of a former contract. Therefore Airport Handling is not responsible for previous liabilities, claims or debts of carriers in respect of SEAH. — From the point of view of the content: — Airport Handling has almost systematically received from carriers (directly or through tender notices) requests for […] (*1), — some carriers have […] (*1), — some carriers requested […] (*1).

(161) In particular, according to the Trust, […] (*1) carriers have obtained from Airport Handling, within the framework of the negotiation of the new ground handling contract, […] (*1). At the same time, […] (*1) carriers have contracted […] (*1) with SEAH.

(162) The Trust also submitted that some of the most important contracts with carriers ([…] (*1)) would expire as follows: — the contract with […] (*1) on […] (*1), — the contract with […] (*1) on […] (*1), — the contract with […] (*1) on […] (*1).

5.1.3. On the presumed joint marketing efforts

(163) Like Italy, the Trust considers that any joint marketing efforts undertaken by SEA/SEAH and Airport Handling, if such effort could be proven, would be irrelevant to the assessment of economic continuity.

(164) In addition, the Trust considers that the fact that SEA may have stated publicly and/or communicated to carriers that the group intended to continue ground handling operations is irrelevant for the purposes of the investigation to the extent the creation and capitalisation of Airport Handling had been known to the Commission since 2013.

5.1.4. On the expected market share of Airport Handling

(165) According to the Trust, the fact that Airport Handling may acquire a significant presence on the market for ground handling services at Milan airports results not from the transfer of any assets from SEAH to Airport Handling, but from the particular context of Milan airports and the business models pursued by the different handlers.

(166) In the Trust’s view the fact that a company exiting the market and another operator (be it a new entrant or an already existing operator) gains similar market shares is a phenomenon that markets observe on a regular basis, and is the result of cross elasticity between competing undertakings. In a hypothetical market with only two undertakings A and B, it is likely that, if company A fails, its customers and market share transfer to undertaking B, without any legal or factual link between the two undertakings. In the case of the Milan airports, it is true that more than two handlers operate, however according to the Trust to date only two of those operators focused their business model on the Milan airports. The similar market shares could in the Trust’s opinion be justified by reference to the fact that Airport Handling is the only service provider that has organised its activity at Milan airports as hub-provider, in order to largely satisfy the demand of the carriers and provide high quality services.

(167) According to the Trust the reasoning of the Commission is circular: Either the market share that Airport Handling was expected to reach at Milan airports, as estimated by the business plan is unrealistic, and therefore the capital injection in Airport Handling would amount to State aid, or the market share is in fact realistic, however in that case the fact that Airport Handling could reach that market share is relevant to the issue of economic continuity.

5.1.5. On the use of SEAH’s assets by Airport Handling

(168) The Trust emphasises that the tender for the sale of SEAH’s assets was declared unsuccessful since no bidder had expressed an interest in the purchase of the lots put up for sale.

(169) According to Airport Handling, the main reason for that is that SEAH’s assets are obsolete and, therefore, do not appear attractive to the market. Indeed, the Trust submits that out of the […] (*1) most valuable components (i.e. the […] (*1)), only around […] (*1) assets were purchased by SEAH after 31 December 2006. Most assets would be more than 15 years old, which causes significant difficulties in obtaining spare parts and consequently in ensuring the required performance levels.

(170) The Trust also recalled that Airport Handling did not bid in the tender for the sale of SEAH’s assets. However, it considers that its acquisition of the assets would not constitute proof of economic continuity with SEAH.

(171) The Trust also submitted that Airport Handling is currently using SEAH’s assets under a bilateral contract signed on 1 September 2014. According to the Trust, the contract was negotiated at arm’s length by SEAH and the Trustee in the period between the date of setting-up of the Trust (30 June 2014) and the date of the actual transfer of SEA’s participation in Airport Handling to the Trust (27 August 2014).

(172) Significant changes would have been brought to the contract by the Trustee, such as: — the verification of the market value of the lease fee by an independent expert appointed jointly by Airport Handling and SEAH, to ensure that Airport Handling paid a market oriented fee for the use of SEAH’s assets, — the adjustment of that lease fee in case of a deviation of more than 10 % from the lease fee indicated by the independent expert, — the prolongation of the contract up to 31 August 2015, to bring it in line with the normal commercial practice, — the possibility to sublet the equipment to third parties, — a condition that routine and damage maintenance is borne by Airport Handling, while extraordinary maintenance remains in the responsibility of SEAH.

(173) The Trust recalled that the lease fee had been set based on independent valuations by different experts and therefore reflected the market price.

(174) The Trust also submitted that Airport Handling had already put in place procedures for the purchase from third parties of a significant portion of assets ([…] (*1) %) required to run the business, to replace the assets leased from SEAH at the expiry of the lease contract. In this sense: — On 26 November 2014, the Board of Directors of Airport Handling resolved to initiate a tender procedure for the renewal of the assets leased from SEAH, for a total estimated value of approximately EUR […] (*1). — Those tenders (all but one which at the time the Trust’s comments on the 2014 opening decision were submitted was still in its start-up phase) were concluded at the beginning of January 2015 and Airport Handling had already approved a first order for the purchase of around […] (*1) % of the assets (including […] (*1)) on 11 February 2015. According to the Trust a second order could be placed shortly, subject to the finding of alternative forms of funding or supply since the results of the selection procedure showed a significant increase in the costs of new equipment.

5.1.6. On the timing and logic of the operation

(175) According to the Trust, concluding that the creation of a new ground handling subsidiary by SEA has the aim of circumventing the recovery order is the same as stating that a negative State aid decision prevents the beneficiary of the alleged aid from resuming its business under new conditions.

5.1.7. On the actions taken by the Trustee to ensure economic discontinuity

(176) The Trust points out that on 1 August 2014, the Trustee and SEA concluded a Protocol to allow the Trustee to start performing certain functions leading and monitoring the operation of Airport Handling during the months of July and August 2014.

(177) At that stage, in addition to measures taken in consultation with SEAH concerning the lease of SEAH assets and the expert report, the Trustee requested and obtained from SEA the financial resources required to carry out its work in complete independence from the latter. In addition, the Trustee urged SEA to redefine its service contracts with Airport Handling, identified a new general counsel for Airport Handling and required changes to Airport Handling’s by-laws to ensure full autonomy of the company.

(178) Following the transfer of SEA’s participation to the Trust, on 27 August 2014 the Trustee appointed a new Board of Directors.

(179) The Trustee also saw to it that the new Board: — asked the members of the Board of Directors of Airport Handling to prepare and deliver a complete assessment of the business to ensure that no acts have been adopted which are incompatible with the requirement of economic discontinuity, — required the putting into place of procedures in order to: — ascertain, inter alia, that no legal acts were in place between SEAH and Airport Handling concerning the supply of goods, movable and/or immovable property, contracts with airlines and/or suppliers of goods and services relating to the handling activities, — verify that Airport Handling would put in place necessary procedures and controls so as to avoid that the company benefits from undue commercial information held by SEA which could benefit Airport Handling vis-à-vis competitors in the acquisition or maintenance contracts with carriers or is relevant for the positioning of Airport Handling on the ground handling market, — took note of existing posts, by integrating senior functions where deemed insufficient (primarily Legal and Resources Directorate), — modified the governance of Airport Handling delegating to CEO, who is a member of the Trustee, Trustee) extensive decision-making powers, — assessed and provisionally confirmed the Director-General, — decided that Airport Handling should have its own website, — undertook intense negotiations with SEA for a thorough revision of service contracts existing between Airport Handling and SEA with the aim to ensure that all services are available at the best possible conditions and obtained the possibility of discontinuing the service without penalty if and when Airport Handling decides to make use of internal structures or approach different and more convenient suppliers, — communicated to customers, suppliers and the competent authority (ENAC) the change in control of the company.

(180) Furthermore, the Trustee took measures in order to ensure economic discontinuity. In summary, those procedures encompass: — the listing of operations deemed relevant to ensure economic discontinuity, — the appraisal and approval of those operations, — the information flow to the Board, — the procedures concerning management, separation and storage of information which may be relevant for economic discontinuity.

(181) According to the Trust, those internal procedures were explained in two training sessions for Airport Handling senior and middle management respectively.

5.1.8. On the imputability to the State of the measures

(182) According to the Trust, in the period June — August 2014 the Italian authorities have not exercised direct influence on SEA and its decision to invest in Airport Handling. There would never have been any indication, direct or indirect, which could have given rise to even the remote doubt that the decision of setting up and/or capitalise Airport Handling depended upon the Italian authorities.

5.1.9. On Airport Handling’s business plan and compliance with the market economy investor principle

(183) According to the Trust there is no continuity between SEAH and Airport Handling, therefore any private investor would have considered the fragility of the Commission’s assessment in the 2014 opening decision and would not have been influenced by that assessment in its decision to invest in Airport Handling.

(184) The Trust clarified that the business plan of November 2013 initially presented to the Commission had been refined in the meantime. Therefore the business plan at the basis of the decision to capitalise Airport Handling was the business plan of August 2014 adopted by the Board of Directors of Airport Handling on 26 August 2014.

(185) Following the transfer of SEA’s participation to the Trust, the Trustee proceeded to verify that Airport Handling’s business plan was credible. According to the Trust, the newly appointed Board of Airport Handling first examined whether the business plan of 6 August 2014 was reliable, entrusting the task to Boston Consulting Group (‘BCG’).

(186) BCG reported its findings to Airport Handling on 14 October 2014. BCG came to the conclusion that the aim of the business plan, i.e. EBIT in 2017 of EUR […] (*1), with a margin of […] (*1) %, was reasonable and that the level of deviation was broadly in line or slightly below the average profitability of a significant sample of other public and private European companies operating in the ground handling sector. BCG also confirmed the validity of the business plan of November 2013.

5.1.9.1. On the intended workforce reduction and efficiency gains

(187) According to the Trust, Airport Handling is determined to deliver maximum efficiency and flexibility by means of […] (*1). According to the business plan of 6 August 2014, Airport Handling is expected to employ […] (*1). This will be achieved by streamlining coordination structures and the introduction of new performant equipment and computer systems for personnel management, which will allow Airport Handling not to replace outgoing staff.

5.1.9.2. On efficiency gains linked to factors specific to the organisation of work

(188) According to the Trust, an even greater degree of efficiency will result from the following series of measures: — Optimisation of the share of fixed-term contracts and part-time contracts: efficiency is estimated to increase by around […] (*1) % already in 2015; and together with the […] (*1) would increase by an additional […] (*1) % by 2017. — Better definition of the work programme: the work contract applied by Airport Handling foresees […] (*1) than the contract SEAH applied to its employees. This allows savings of […] (*1) % in respect of the number of working employees. In addition, the daily working time of full time staff has been […] (*1), with an impact on staffing needs of […] (*1) %. With the renewal of the collective agreement, expected during 2015, a further […] (*1). Furthermore, Airport Handling intends to optimise the use of resources by introducing instruments such as working in shifts and contracts with modulation of the daily and weekly schedule according to the actual requirements in line with the new possibilities offered by collective agreements at national level. These mechanisms will enable Airport Handling to increase efficiency for at least a further […] (*1) %. — Adapting the organisational structure in order to use resources effectively by […] (*1): already from 2015, there will be an increase in efficiency resulting from the seasonal upgrading of the matrices in function of traffic growth and by the redistribution of leave on nine periods which entails a […] (*1). The estimated savings will be […] (*1) %. — Optimisation of the capacity of existing staff: the progressive use of […] (*1) will lead to a positive increase in productive efficiency of 0,5 %. The reduction of posts for […] (*1), in part already carried out ([…] (*1) and partly under implementation during 2015 ([…] (*1)), will further contribute to increasing efficiency. — Economies of scale arising from the higher traffic: traffic increase of existing customers and contracting with new carriers, even those operating in non-peak times, will allow the improvement of staff saturation factors with an effect in terms of productive efficiency of + […] (*1) % in 2017. — Structural adjustments in the industrial processes: the Trust mentioned the following routes envisaged to foster efficiency: better work planning and organisation, investments in technical solutions to enable partial or total automation of certain activities, linking workforce expenditure to business outputs and outcomes. As concerns work planning, the Trust indicated that Airport Handling had foreseen investments in new IT systems for the management of personnel and allocation to shifts leading to a more rational use of resources with an efficiency of […] (*1) %. In addition, Airport Handling has begun a process of acquisition of new equipment endowed with modern geo-location systems. Efficiencies in respect of staff use are estimated to […] (*1) %.

(189) According to the Trust, the results achieved by Airport Handling in its first months of operation allow the Commission to verify ex-post that the assumptions in the business plan were sound. The Trust pointed to the results of the first 4 months of activity, showing […] (*1) EBIT of EUR […] (*1) and […] (*1) of EUR […] (*1) as compared to the forecasts of the business plan of 6 August 2014. This positive trend was the result of […] (*1) revenues (EUR […] (*1)) and […] (*1) costs (EUR […] (*1)).

5.2. Comments from SEAH (in liquidation)

5.2.1. On SEAH’s assets

(190) According to SEAH the ground handling equipment had a book value of EUR […] (*1) prior to SEAH’s entry into liquidation. The average age of these assets was […] (*1). Of the approx. […] (*1) items of higher value […] (*1) equipment except […] (*1)), only […] (*1) had been acquired after 31 December 2006.

(191) When SEAH was put into liquidation, the only other assets of the company consisted of working capital linked to the business ceased at 1 September 2014. In addition, certain […] (*1) were present. Those positions had been liquidated in the meantime. Therefore, according to SEAH, the liquidator can only count on the sale of the ground handling equipment to fund liquidation costs and any other residual debit.

5.2.2. On the tender for the sale of SEAH’s assets

(192) One of the main tasks of the liquidator was to complete the open, public and non-discriminatory tender procedure for the sale of SEAH’s assets already launched before the entry of the company into liquidation proceedings.

(193) According to SEAH, the assets were grouped in nine bundles that included complementary assets of different values, and with functional autonomy. The objective was to guarantee a wide participation in the tender. The distribution of the assets in bundles was aimed at addressing market requirements, as identified based on the activity of major handlers at Italian airports. Available information shows that the sales procedure was restricted to handlers, airport operators, air carriers, manufacturers of the types of equipment sold, resellers and leasing companies. Moreover, certain minimum solvency requirements were set out, concerning in particular (i) a turnover of at least EUR 1 million per bundle of assets for which they intend to submit a bid; (ii) net assets of at least EUR 1 million or EUR 2 million in case potential buyers bid for more than one bundle; (iii) debt to total assets ratio not higher than 3. The call for tenders did not lay down any selection criteria other than the mandatory requirements set out above.

(194) SEAH notes that no potential bidder expressed interest in the acquisition of those assets. The only requests for information would have been submitted outside the framework of the procedure from parties interested in acquiring only certain assets, however at prices significantly lower than those set by the independent experts. SEAH also submitted that Airport Handling had expressed an interest to acquire the assets in question but had not bid. The Commission notes that the Italian authorities had already declared on 27 November 2013, when they consulted the Commission on SEA’s plan to liquidate SEAH, establish Airport Handling and provide it with capital, that Airport Handling would not participate in the sales procedure and thus would not submit any offer in that procedure.

(195) Following the unsuccessful attempt to sell out SEAH’s assets, the liquidator proceeded to contact the main operators in the sector to discuss the possibility of a sale of those assets and the conditions that might apply to such sale.

5.2.3. On the valuation of the assets

(196) SEAH recalled that prior to the entry into liquidation of SEAH, its Board of Directors had selected IMQ as independent expert entrusted with the valuation of the assets. The valuation was delivered on 25 June 2014 and proposed a lease fee of EUR […] (*1) per year, as a value considered in line with market conditions. On 1 September 2014, SEAH entrusted E&Y with a second valuation of the assets. Upon request from the Trustee, SEAH and the Trustee jointly tasked E&Y with providing such a second valuation. E&Y then proposed a lease fee of EUR 1,4 million per year.

(197) SEAH added that Airport Handling currently uses SEAH’s assets under a lease contract and is responsible for their maintenance (maintenance costs are estimated at EUR […] (*1) per year).

5.2.4. On the lease contract

(198) According to SEAH, the lease contract prior to its conclusion was subject to intense negotiations between the parties, without any interference from SEA. SEAH submitted that the conclusion of the lease contract is a mandatory condition for the maintenance of the value of the assets in view of their dismissal. Absent the lease contract with Airport Handling, SEAH would have had to remove the equipment from the airport premises therefore incurring significant transport and maintenance costs.

(199) SEAH also submitted that, given the expiry of the lease contract at 31 August 2015, the liquidator was considering options for the dismissal of the assets. SEAH points out that a sale of the assets to Airport Handling once the doubts of the Commission on economic continuity have been alleviated, would enable SEAH to maximise the value of those assets in the liquidation procedure.

5.3. Comments from SEA

5.3.1. On economic continuity

(200) In SEA’s view the case law quoted in the 2014 opening decision differs quite significantly from the case at hand.

(201) Firstly, that case-law would exclusively refer to situations characterised by the presence of a transfer of assets from the beneficiary of the aid to a newly created company. The case law would essentially concern cases where the undertaking which had benefitted from incompatible State aid and was not in the position to repay such advantage established a new undertaking to which it transferred part of its activities. Secondly, in all cases quoted by the Commission, the transfer between the beneficiary and the new undertaking concerned assets of significant value (activities, facilities, goods, property, trademarks, industrial property rights).

(202) According to SEA, the characteristics of the present case lead to the conclusion that Airport Handling could not have continued to enjoy the competitive advantage linked to presumed aid received by SEAH, given that it had not taken over any assets from SEAH. Rather, the alleged competitive advantage granted to SEAH would have been terminated with the liquidation of the company and could not therefore be transferred.

(203) SEA recalls that in the recovery decision of 2012, the Commission concluded that the alleged competitive advantage granted to SEAH corresponded to the financing of the losses incurred by the company, which were generated mainly by high staff costs. While recalling that staff costs have a major impact on the cost structure of ground handling providers, accounting for between 65 % and 80 % of total costs, SEA points out that, unlike those cases quoted by the Commission, the present case does not concern a transfer of shares or assets required to exercise (or rather to continue) SEAH’s activity nor an operation whose aim is to protect the assets of the beneficiary and therefore circumvent the recovery order.

(204) According to SEA, it should also be noted that since the advantage derived from the alleged State aid received by SEAH was used to cover losses resulting from excessive labour costs, such advantage was definitely terminated with the liquidation of the company and the dismissal of the workers. In SEA’s view the fact that former employees of SEAH were subsequently recruited by Airport Handling at conditions formally and substantially different, cannot materially alter this conclusion.

(205) SEA adds that, even if it were accepted that the absence of an asset transfer from SEAH to Airport Handling is not sufficient to conclude on the absence of economic continuity, the circumstances of the transaction underlying the creation of Airport Handing, viewed as a whole, cannot be regarded as having had the effect of circumventing the recovery order.

(206) According to SEA the decision to set up a new ground handling company operating on market conditions in competition with other service providers is based on economic logic and justified by a management model that differs significantly from that of the previous operator SEAH ([…] (*1)) in order to pursue an objective of sustainable profitability in the medium to long term.

(207) SEA states that SEAH’s announcement that the company would cease operations at Milan airports and SEAH’s entry into liquidation have created a momentum of effective competition on the market, during which the air carriers operating at Milan airports could choose the provider of ground handling services based on a comparative evaluation of the offers submitted by different providers.

(208) According to SEA it was following this competitive process that Airport Handling successfully concluded contracts with air carriers, in complete independence from SEA. Indeed, some carriers, formerly clients of SEAH, decided not to use the services of Airport Handling whilst Airport Handling concluded contracts with carriers not previously served by SEAH.

(209) In addition, according to SEA, within the meaning of Council Directives 78/660/EEC (18) and 83/349/EEC (19) on consolidated financial statements, transposed into Italian legislation by Legislative Decree No 127 of 9 April 1991, failing any power of control and management by SEA of Airport Handling following the transfer of its participation to the Trust, Airport Handling is no longer part of the SEA group for accounting purposes and therefore its budget is not consolidated with that of SEA.

(210) Furthermore, in order to speed up the entry of third parties in the capital of Airport Handling, SEA and the Trustee on 26 January 2015 signed an ‘implementing regulation under Article 20 of the Trust Deed’, with the aim of conferring to the Trustee the responsibility to look for a third-party investor. The Trustee and SEA decided to appoint BNP Paribas as independent advisor for the assignment.

(211) BNP Paribas assisted Airport Handling in the preparation of the offer for the sale of shares, took contact with several investors potentially interested to enter the capital of Airport Handling and carried out meetings with potential investors.

(212) SEA added that once a private investor has acquired at least 30 % of Airport Handling, SEA will consider searching for investors interested to take over the majority shareholding in the company.

5.3.2. On State resources and imputability

(213) SEA is of the view that the fact that Airport Handling is a public undertaking is not sufficient to conclude that its resources are State resources within the meaning of Article 107(1) of the Treaty. In addition, following the setting up of the Trust, the financial resources of Airport Handling are not under the control of SEA, therefore it cannot be claimed tha