OPINION OF ADVOCATE GENERAL

BOT

delivered on 5 September 2013 ( 1 )

Case C‑388/12

Comune di Ancona

v

Regione Marche

(Request for a preliminary ruling from the Tribunale amministrativo regionale per le Marche (Italy))

‛Structural Funds — Financial contributions from those funds — Criteria for eligibility of expenditure — Principle of compatibility of the operation with European Union law as referred to in Article 12 of Regulation (EC) No 1260/1999 — Principle of durability of the operation as referred to in Article 30(4) of Regulation (EC) No 1260/1999 — ‘Substantial modification’ of an operation — Award of a concession contract without prior advertising or competitive selection — Financial corrections for the purposes of Article 39 of Regulation (EC) No 1260/1999’

1. By this request for a preliminary ruling, the Tribunale amministrativo regionale per le Marche (Regional Administrative Court for the Marche Region) (Italy) raises the question of the scope of the rules governing the eligibility of a project for European funding as laid down in Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds. ( 2 )

2. In particular, the Court is asked to clarify the meaning and scope of the principle of compatibility with European Union (‘EU’) law and the principle of durability of the operation, as laid down in Articles 12 and 30 of Regulation No 1260/1999, respectively.

3. The request has been submitted in the course of proceedings between the Comune di Ancona, the final beneficiary of a grant made from the European Regional Development Fund (ERDF), and the Regione Marche, the authority responsible for managing and supervising the use of that grant at regional level. The Regione Marche decided to withdraw and recover the financial assistance paid to the Comune de Ancona for the construction of a slipway and the purchase of a lorry‑mounted mobile crane on account of irregularities found in connection with the management of that port facility. ( 3 ) In particular, the Comune di Ancona is accused of granting a concession for the management of that infrastructure facility to an external service provider without organising a prior competitive selection procedure.

I – EU law

4. The ERDF is one of the four Structural Funds set up by the European Commission to strengthen economic, social and territorial cohesion in the European Union, in accordance with the objective referred to in Article 174 TFEU. That Fund contributes essentially to reducing economic, social and territorial disparities which have arisen in particular in regions whose development is lagging behind, those undergoing economic conversion and those facing structural difficulties. ( 4 )

5. The ERDF comes out of the European budget, the implementation of which is the responsibility of the Commission. Since that budget is very restricted and limited, the Council of the European Union wished to be able, through the implementing rules which it laid down, to satisfy itself that the Fund is used lawfully and prudently. To that end, in order to ensure that the Fund is used properly, the Commission provides assistance only in the form of the reimbursement of expenditure which has been incurred beforehand in connection with projects. The expenditure must have been justified by the project organisers and checked by the competent national authorities. All of this gives rise, for the beneficiaries, to increased obligations in terms of monitoring and justification of projects carried out and expenditure incurred.

6. Every operation must be consistent with common principles governing eligibility. ( 5 )

7. One of those principles is the principle of compatibility, laid down as follows in Article 12 of Regulation No 1260/1999: ‘Operations financed by the Funds … shall be in conformity with the provisions of the Treaty, with instruments adopted under it and with Community policies and actions, including the rules on competition, on the award of public contracts…’ ( 6 )

8. Moreover, the eligibility of an operation for European funding must satisfy the principle of durability referred to in Article 30(4) of Regulation No 1260/1999. ( 7 ) That provision is worded as follows: ‘The Member States shall ensure that an operation retains the contribution from the Funds only if that operation does not, within five years of the date of the decision of the competent national authorities or the managing authority on the contribution of the Funds, undergo a substantial modification: (a) affecting its nature or its implementation conditions or giving to a firm or a public body an undue advantage; and (b) resulting either from a change in the nature of ownership in an item of infrastructure or a cessation or change of location in a productive activity. The Member States shall inform the Commission of any such modification. Where such a modification occurs, Article 39 shall apply.’

9. Article 39(1) of Regulation No 1260/1999 provides: ‘The Member States shall, in the first instance, bear the responsibility for investigating irregularities, acting upon evidence of any major change affecting the nature or conditions for the implementation or supervision of assistance and making the financial corrections required. The Member State shall make the financial corrections required in connection with the individual or systemic irregularity. The corrections made by the Member State shall consist in cancelling all or part of the Community contribution. …’

II – The main proceedings

10. The Regione Marche, which is the managing authority of the single programming document (‘the SPD’) for EU structural assistance in that region, published a call for various infrastructure projects in the local port areas for the 2002 to 2006 programming period.

11. Responding to that call, the Comune di Ancona applied for funding for three projects: the construction of a slipway, the purchase of a lorry‑mounted mobile crane and the carrying out of improvement works. Those three projects were favourably received.

12. After the slipway had been constructed and after the lorry‑mounted mobile crane installed, the Comune di Ancona – as beneficiary of the funding in question – consulted the Regione Marche about the possibility of granting to a third party a concession for the management of both the slipway and the related service. The Regione Marche saw no obstacle to this, but drew attention to the need to comply with the legislation in force concerning the award of public service concessions. ( 8 )

13. The Comune di Ancona entrusted management of the slipway to Cooperativa Pescatori e Motopescherecci di Ancona a.r.l. (‘the Pescatori cooperative’). According to the order for reference, the concession contract is so designed that neither the Comune di Ancona nor the concessionaire can derive substantial revenue from management of the slipway. In addition, the concessionaire is required to comply with the applicable EU legislation and barred from modifying the implementation conditions of the operation. Lastly, the concession contract provides that the slipway is to remain the property of the Comune di Ancona.

14. Nevertheless, following an audit carried out by the Guardia di Finanza in June 2010, the Regione Marche found a number of irregularities in the management of the slipway: — firstly and principally, the Comune di Ancona had awarded the concession for management of the work without holding a public tendering procedure, which constitutes an infringement of the rules on public procurement procedures and justifies the withdrawal of all funding; — secondly, part of the structure (the oil separator and one of the two ramps) remains unused, which justifies a partial withdrawal of the funding (EUR 325 000 from the funds granted in respect of the 2002 call for projects); and — thirdly, the slipway is also used by pleasure craft, accounting for an estimated 18% of usage; this justifies a partial withdrawal (EUR 39 000 from the funds granted in respect of the 2006 call for projects).

15. It was on the basis of those findings that, by decree of 1 July 2011, the Regione Marche ordered withdrawal and recovery of the funding granted to the Comune di Ancona. The latter thereupon brought an action for annulment of that decision before the referring court.

16. In support of its action, the Comune di Ancona has made the following submissions: — first, it submits that failure to organise a competitive selection process does not constitute grounds for forfeiture of the assistance. Indeed, the Comune di Ancona maintains that the requirement to comply with the tendering procedure had been expressly imposed only with respect to the contract award stage and not for the slipway management stage. It also states that the other conditions laid down in Article 30 of Regulation No 1260/1999 are not met, since the structure has always remained its property and its intended use has not been modified; — secondly, the Comune di Ancona maintains that it was not necessary to publish a call for tenders for the management of the facility, since no other operator expressed an interest in that concession; — thirdly, the Comune di Ancona submits that the decree of 1 July 2011 infringes its legitimate expectations, in so far as the Regione Marche had never made any complaint against it, despite being aware of its intention to award the management of the slipway to a third party; — fourthly, it maintains that the partial withdrawal of EUR 39 000 of the funds granted in respect of the 2006 call for projects is unlawful on the ground that the figure of 18% was determined arbitrarily and the use of the slipway by pleasure craft is not contrary to the ethos of the ERDF, since the pleasure navigation sector is an economic sector closely related to that of fisheries; and — fifthly, the Comune di Ancona submits that the Regione Marche did not state reasons for the decree of 1 July 2011 and, in particular, did not assess the consequences of the withdrawal of that funding, thereby infringing the rules governing the administration’s power to withdraw, suspend or modify its own measures.

III – The questions referred for a preliminary ruling

17. Because of its doubts as to the correct interpretation of Article 30(4) of Regulation No 1260/1999, the Tribunale amministrativo regionale per le Marche, before which the main proceedings have been brought, decided to stay those proceedings and to submit the following questions to the Court for a preliminary ruling: ‘(1) Must Article 30(4) of [Regulation No 1260/1999] be interpreted as meaning that it is not possible to undertake an assessment of whether the grant of the concession generates substantial revenue for the contracting authority or undue advantage for the concessionaire without first establishing whether the works under concession have undergone substantial modification? (2) If the answer to Question 1 is in the affirmative, what is meant by “substantial modification”, that is to say, does [Article 30(4) of Regulation No 1260/1999] refer only to physical modifications – in the sense that the structure set in place is not as specified in the project approved for funding – or does it also include modifications with regard to function, in which case has there been “substantial modification” if the structure is used “also” – but not predominantly – for activities other than those envisaged in the call for projects or in the application to participate in the call for projects? (3) If the answer to Question 1 is in the negative, does Article 30(4) of [Regulation No 1260/1999], with reference to those cases in which the public funding is used to carry out works the management of which is likely to be of economic interest, apply only to the construction stage of the project, or does the requirement to comply with the rules on competitive tendering procedures continue to apply when a management concession is granted? (4) Must Article 30(4) of [Regulation No 1260/1999] be interpreted as meaning that the process of establishing whether the concession of the management to a third party actually generates substantial net revenue or gives undue advantage to a firm or a public body constitutes a stage which, logically and legally, follows on after the preliminary question (that is to say, the question whether a competitive tendering procedure must be held), or must account also be taken, in determining the existence of the obligation to hold a competitive tendering procedure, of the actual rules governing the concession relationship?’

18. Written and oral observations have been submitted by the Comune di Ancona, as well as by the Portuguese Government and the Commission.

IV – My analysis

A – The subject-matter of the questions

19. The questions from the referring court concern the interpretation of Article 30(4) of Regulation No 1260/1999, which lays down a fundamental principle in relation to the implementation of the European Structural Funds, namely, the principle of the durability of the co‑financed operation.

20. Under that principle, the funds assigned to an operation will be definitively retained by that operation only if it does not undergo substantial modification within five years of the date of the decision of the competent national authorities or the managing authority on the contribution from those funds. If the Member States find evidence of any such modification, they are obliged to carry out the financial corrections required, in accordance with Article 39(1) of Regulation No 1260/1999.

21. Under those legislative provisions, the referring court is required to establish whether, in the circumstances of the case before it, the operation consisting in the construction of a slipway by the Comune di Ancona, which received ERDF support, must be regarded as having undergone a ‘substantial modification’ for the purposes of Article 30(4) of Regulation No 1260/1999. It is common ground between the parties that the Comune di Ancona granted a concession for management of the slipway to an external service provider without first holding a competitive tendering procedure. Consequently, two questions arise. First, did the concession at issue give rise to a ‘substantial modification’ of the operation for the purposes of Article 30(4) of Regulation No 1260/1999? Secondly, does the breach of the rules governing the award of concession contracts give rise to consequences as regards the European funding?

22. In order to answer those questions, I think that it is necessary to take into account rules of law other than those expressly referred to in the order for reference. While the Tribunale amministrativo regionale per le Marche centres all its questions around the interpretation of Article 30(4) of Regulation No 1260/1999, I believe that it is necessary to refer to Article 12 of that regulation, concerning the principle of compatibility of the operation with EU law.

23. I also consider it necessary to reformulate the questions submitted by the referring court in so far as they are sometimes, to my mind, worded ambiguously. ( 9 )

24. In the light of those considerations, I therefore propose to address Questions 1 and 2 and the first part of Question 3 together. ( 10 ) Those questions all relate to the interpretation of the term ‘substantial modification’ of an operation as used in Article 30(4) of Regulation No 1260/1999 and arise within the context of a situation where the management of the co‑financed operation is delegated to an external service provider.

25. Next, I shall address the second part of Question 3. This is more concerned with the scope of the principle, laid down in Article 12 of Regulation No 1260/1999, of compatibility of the operation with EU law. The referring court seeks to ascertain whether observance of that principle and, in particular, compliance with the obligation to organise a call for tenders, is required of the beneficiary of the funds where that beneficiary, acting as contracting authority, awards a concession contract for the management of a service co‑financed by the Structural Funds.

26. Lastly, I shall address Question 4, which – as I see it – relates to the possible qualifications attaching to the obligation of transparency. The referring court asks whether compliance with that obligation is called for in a situation where the concession at issue is not a source of profit and where only one economic operator expresses an interest and is likely to take over responsibility for managing the service.

27. In the light of those considerations, I therefore suggest that the Court reformulate the questions referred by the Tribunale amministrativo regionale per le Marche as follows: ‘(1) For the purposes of Article 30(4) of Regulation No 1260/1999, (a) does the assessment as to whether there has been a substantial modification apply only to the construction stage of the project or does it also cover its management stage? (b) does ‘substantial modification’ of the operation cover only physical or material modifications to the structure set in place or does it also cover modifications with regard to function, such as use of the structure for purposes other than those originally envisaged? (c) is the competent national authority first required to establish that there has been a substantial modification of the operation before assessing whether there has been an undue advantage for the concession-granting authority or the concessionaire? (2) Does the principle of compatibility of the operation with EU law, laid down in Article 12 of Regulation No 1260/1999, and in particular the consequent obligation to comply with the rules on competitive tendering imply that the beneficiary of the funds must first advertise the concession and hold a competitive tendering procedure where that beneficiary, acting as contracting authority, awards the concession of a service co‑financed by the Structural Funds to an external service provider? (3) In circumstances such as those of the case before the referring court, does the principle of compatibility of the operation with EU law, laid down in Article 12 of Regulation No 1260/1999, and in particular the consequent obligation to comply with the rules on competitive tendering preclude the direct award by a contracting authority of a concession where the service at issue does not, in accordance with the concession contract, enable substantial revenue to be obtained and only one economic operator in the sector concerned has expressed an interest and is likely to take over responsibility for management of the service?’

B – Question 1: meaning and scope of ‘substantial modification’ of the operation, for the purposes of Article 30(4) of Regulation No 1260/1999

28. The first question, as I have reworded it, groups together a number of questions relating to the scope of Article 30(4) of Regulation No 1260/1999 and to the meaning to be ascribed to the concept of ‘substantial modification’ of an operation.

29. If the answer to those questions emerges from the wording of that provision and from the scheme of which it forms part, that answer must be applied, above all in the light of the objectives pursued by the EU legislature.

30. I reiterate that, under Article 30(4) of Regulation No 1260/1999: ‘… an operation retains the contribution from the Funds only if that operation does not, within five years of the date of the decision of the competent national authorities or the managing authority on the contribution of the Funds, undergo a substantial modification: (a) affecting its nature or its implementation conditions or giving to a firm or a public body an undue advantage; and (b) resulting either from a change in the nature of ownership in an item of infrastructure or a cessation or change of location in a productive activity. …’ ( 11 )

31. Article 30(4) of Regulation No 1260/1999 lays down a fundamental principle for the implementation of the Structural Funds, namely, the principle of durability of the operations carried out by the beneficiary of the funds.

32. Under that principle, the Member States must ensure that investment by the European Union in regional firms and infrastructure is effective and prudently used, and that it can be amortised over a sufficiently long period. ( 12 ) Consequently, they must ensure – by exercising supervision which must, in my view, be particularly strict – that the beneficiary of the funds does not make modifications to the operation which could alter its nature, divert it from the objectives originally envisaged in the operational programme and in the SPD, or constitute a misappropriation of funds. ( 13 )

33. The EU legislature accordingly seeks to ensure that, during the five years following the decision approving the funding, every project and every item of expenditure co‑financed by the Structural Funds continues to be compatible with the principles of material and geographical eligibility referred to, in particular, in Article 30(1) of Regulation No 1260/1999 ( 14 ) and with the objectives of economic and social cohesion at which European funding is aimed.

34. None the less, the EU legislature does not seek to cover all the changes made to an operation in the course of its implementation. An operation may be affected by unforeseen developments connected, for example, with the socio‑economic context, as well as performance setbacks which are inevitable in the case of long‑term investments. However, there is no question of paralysing the implementation of the operation and the action of the authorities by requiring all modifications, even the most minor, to be checked. The EU legislature therefore refers only to substantial modifications to the operation. Under Article 30(4) of Regulation No 1260/1999, the question whether such modifications are substantial is to be assessed in the light of the consequences to which they give rise for the operation’s eligibility for funding.

35. Accordingly, in point (a) of Article 30(4) of Regulation No 1260/1999, the EU legislature refers to substantial modifications which affect the nature of the operation or its implementation conditions, or which give an undue advantage to a public body or firm. It is obvious that such circumstances substantially modify the implementation of the project as compared with what was envisaged and are liable to compromise the very eligibility of the operation for European funding.

36. Furthermore, in point (b) of Article 30(4) of Regulation No 1260/1999, the EU legislature limits such modifications to those brought about either by a change in the nature of the ownership of the item of infrastructure or by a cessation or change of location of the productive activity.

37. Those provisions set out very clearly the constituent elements of a substantial modification of the operation and, as is indicated by the use of the conjunction ‘and’, the conditions which they respectively lay down are cumulative.

38. Those elements having been established, it now falls to answer each of the questions from the referring court.

39. In the first place, I think that the supervision which the Member State is required to exercise under Article 30(4) of Regulation No 1260/1999 must relate not only to the stage of performance, but also to the conditions under which the completed work is managed and used.

40. I therefore disagree with the view expressed in that regard by the Commission at the hearing.

41. Even if the European funding were to cover only the carrying out of works, I think that the prohibition laid down in Article 30(4) of Regulation No 1260/1999 is much broader in scope and extends to the conditions of management and use of the infrastructure item in question.

42. That interpretation is dictated by the principle of durability, which, in itself, would be rendered ineffective if its application were limited to the stage of carrying out works.

43. It is also dictated by the objectives pursued by the EU legislature.

44. The European Union does not fund only the building of a structure, even the most ambitious; it subsidises an operation on the basis of a defined long‑term objective. The management of that operation must serve to remedy a territory’s structural socioeconomic problems by creating, for example, jobs where the unemployment rate is higher than the EU average, by helping bring about innovation in sectors undergoing restructuring or by contributing to the protection of the environment in particularly damaged areas. However, those objectives are attainable only if the European funding and the supervision attaching to it cover all of the measures and expenditure connected with implementation of the operation, which necessarily includes the arrangements for its implementation and management. It is also the only way to ensure the effectiveness of funding by preventing diversion of the funds for the benefit of a project which would no longer be contributing to the ERDF’s objectives because of modifications affecting its implementation or management, such as sale to a private operator.

45. What is more, the wording of Article 30(4) of Regulation No 1260/1999 bears out the accuracy of that interpretation.

46. First, the EU legislature refers to modifications that an operation may undergo ‘within five years’ of the date of the decision to grant funding. The necessary inference is that the modifications intended apply not only to the stage of building the structure, but also to the subsequent implementing and management arrangements. Secondly, the EU legislature expressly refers, in Article 30(4)(a) of Regulation No 1260/1999, to modifications liable to affect the ‘nature’ or ‘implementation conditions’ of the operation, which implies an extremely broad material scope.

47. In those circumstances, the supervision to be exercised by the competent national authority under Article 30(4) of Regulation No 1260/1999 must cover not only the reality and physical conformity of the operation in relation to the project, but also the compliance with the implementing and management arrangements as described in the funding agreement.

48. In line with that reasoning, I take the view that the EU legislature therefore does not intend to refer only to physical or technical modifications affecting, for example, the construction of an item of infrastructure, but also to all modifications relating to its functioning. ( 15 )

49. The concept of modification must be construed in the wide sense and cover all types of modification to which an operation may be subject in the course of its implementation.

50. Accordingly, the modifications may be of a physical or technical nature: where, for example, the beneficiary follows a timetable other than that originally envisaged when carrying out the operation or chooses different materials or services from those envisaged under the funding agreement. The modifications may also be of a financial nature: where the beneficiary does not commit the expenditure provided for or reduces the number of jobs created or the related staff costs. They may also be of a functional nature: where the beneficiary uses the structure for purposes other than those originally envisaged, as in the case before the referring court.

51. Lastly, the wording and conceptual structure of Article 30(4) of Regulation No 1260/1999 make it possible to answer the last question referred.

52. That question seeks to ascertain whether, before examining whether the grant of the concession generates undue advantages for the concession-granting authority or the concessionaire, the competent national authority is first required to establish that the operation in question has undergone a substantial modification.

53. The conferring of undue advantage may indeed result from a substantial modification of the operation, arising, for example, from an enlargement of the scope of the activities offered by the beneficiary. None the less, for the purposes of Article 30(4) of Regulation No 1260/1999, checking for the existence of an undue advantage does not depend on a prior finding that there has been a substantial modification of the operation. On the contrary, the existence of such an advantage is a constituent element of the substantial modification of the operation.

54. The national supervisory authority is not required, therefore, to establish whether the operation has undergone a substantial modification in order to determine whether an undue advantage has been created for the concession-granting authority or the concessionaire. Accordingly, it is sufficient for it to find that there is such an advantage and to establish that it has its origin in one of the reasons set out in Article 30(4)(b) of Regulation No 1260/1999 in order to conclude that a substantial modification of the operation has occurred.

55. The application of the principles which I have just identified to the case before the referring court gives rise to a number of difficulties at this level, given the little evidence at my disposal. Moreover, the hearing raised a number of doubts which I am not in a position to dispel. It will therefore be for the competent national court to ascertain, in accordance with the principles identified and in the light of all the evidence before it, whether or not the beneficiary of the funds – namely, the Comune di Ancona – modified, in a manner contrary to Article 30(4) of Regulation No 1260/1999, the nature and implementation conditions of the operation co-financed by the ERDF.

56. In the main proceedings, it is common ground that the Comune di Ancona granted the concession for management of the slipway to an external service provider in circumstances which not only remain vague, but also seem contrary to law. I know that that form of management was not provided for under the funding agreement, but that the Regione Marche, as managing authority for the SPD, gave its agreement. I also know that the concession for that management was granted to the Pescatori cooperative on a provisional basis (12 months) and in the absence of any competitive tendering procedure. At the time, the Comune di Ancona justified that decision on grounds of special urgency, owing to the risk of deterioration of the infrastructure. I nevertheless note that what was provisional has become permanent, since, after eight years of operation, the management of the slipway is still the responsibility of the Pescatori cooperative.

57. It is also accepted that the slipway built by the Comune di Ancona is used by pleasure craft, accounting for an estimated 18% of usage, whereas such use was not envisaged under the 2006 funding agreement.

58. It will be for the competent national court to address the question whether those modifications are of an intensity such that they have affected the eligibility of the operation for European funding for the purposes of Article 30(4) of Regulation No 1260/1999.

59. I would, nevertheless, make the following observations.

60. With regard to the conditions laid down in Article 30(4)(a) of Regulation No 1260/1999, it seems to me that the contract concluded between the Comune di Ancona and the Pescatori cooperative limits the impact of the concession on the conditions of implementation and use of the slipway as well as on the revenue obtained in connection with it.

61. According to the order for reference, the concession contract is designed in such a way that neither the Comune di Ancona nor the concessionaire can derive substantial revenue from the management of the slipway. So far as concerns the charges for the service, these seem to be adjusted in line with the lowest charges applied in the ports of the Regione Marche and cover only the costs of operating the slipway. As regards the annual fee paid by the concessionaire, this is proportionate to the costs incurred by the Comune di Ancona for the construction of the slipway and is calculated in such a way as to avoid substantial net revenue being generated for either the concession-granting authority or the concessionaire. ( 16 ) In addition, under the concession contract, the concessionaire is required to comply with the applicable EU legislation, to maintain the public character and intended use of the structure and to allow it to be used by all fishing boats which request to do so and must submit, at six-monthly intervals, a detailed management report demonstrating compliance with Articles 29 and 30 of Regulation No 1260/1999. Moreover, the concessionaire is forbidden to alter the implementing conditions of the operation or to engage in profit-making activity.

62. That said, I nevertheless think that the national court will need to pay attention to the advantages which may have been indirectly received by the Pescatori cooperative owing to the lack of a competitive tendering procedure and to the tacit renewal of the concession for more than eight years.

63. With regard, now, to the opening of the slipway to pleasure boats, it is possible that such an initiative may meet a concern for sound financial management. The national court will nevertheless need to satisfy itself that that activity is the subject of separate accounts and remains within reasonable proportions. Indeed, it is conceivable that the expansion of that field of activity could affect both the nature and the implementing arrangements of the operation. It may also generate revenue which was not originally envisaged under the funding agreement. In that regard, it is interesting to note that, under the 2006 call for projects, ( 17 ) measures and expenditure relating to the use of the slipway for pleasure craft were excluded from European funding. The 2006 call for projects expressly provides that, where the financed item of infrastructure is used by other sectors, the beneficiary of the funds is required to distinguish between costs chargeable to the fisheries sector and those relating to other sectors, since only expenditure incurred in connection with the fisheries sector, which must represent at least 50% of the activity, is funded.

64. With regard to the conditions laid down in Article 30(4)(b) of Regulation No 1260/1999, only the reason relating to a change in the nature of ownership is likely to raise difficulties, since it is possible to rule out from the outset reasons relating to a cessation or change of location of a productive activity. Admittedly, the concession contract appears to stipulate that the structure is to remain in the ownership of the Comune di Ancona. None the less, there are different ways of exercising the prerogatives attaching to the right of ownership. However, if the Comune di Ancona acquired ownership of the infrastructure in question thanks, in part, to European funding, the right attaching to that ownership must, in my view, be exercised in a manner consistent with the social benefit sought by the ERDF. It therefore seems to me that the national court will need to assess the manner in which the Comune di Ancona exercises the prerogatives attaching to its right of ownership by satisfying itself that the objectives pursued are indeed the same as those envisaged under the funding agreement.

65. In the light of all of those considerations, I am therefore of the view that Article 30(4) of Regulation No 1260/1999 must be interpreted as meaning that: — the checks relating to the existence of a substantial modification of the operation cover all measures connected with the implementation of the operation, which necessarily include the carrying out of the works and the arrangements for the implementation and management of that operation; — ‘modification’ of the operation covers all modifications to which an operation may be subject in the course of its implementation, whether they be of a physical, technical, financial or functional nature; and — the national control authority is not required to check whether the operation has undergone a substantial modification in order to determine the existence of an undue advantage for the public body or the firm, since the existence of such an advantage is a constituent element of a substantial modification.

C – Questions 2 and 3: the implications of the principle of compatibility of the operation with EU law

66. By its second and third questions, the referring court asks the Court, in essence, whether the principle, laid down in Article 12 of Regulation No 1260/1999, of compatibility of the operation with EU law and, in particular, the obligation to comply with the rules on competitive tendering imply that the beneficiary of the funds, acting as a contracting authority, must comply with the consequent obligation of transparency when awarding a concession contract for the management of a service co-financed by the Structural Funds.

67. To answer those questions, it is necessary, first, to determine, in the context of Regulation No 1260/1999, the purport of the principle of compatibility of the operation with EU law and, in particular, the implications of the consequent obligation of transparency.

68. It must first be recalled that the principle of compatibility of the operation with EU law is a fundamental principle governing the eligibility of the operation for European funding.

69. That principle is laid down in Article 12 of Regulation No 1260/1999, which appears in Title I of that regulation, entitled ‘General principles’.

70. The principle is restated in Article 11 of the ERDF standard agreement for grants ( 18 ) and, in so far as it constitutes a key element of a grant application, in all information handbooks for project organisers, ( 19 ) as well as in all funding agreements concluded with the final beneficiary of the funds. It is also referred to in the national and, where appropriate, regional legislation, as is apparent from Article 5 of Regional Law No 14 (legge regionale n. 14) of 2 October 2006. ( 20 )

71. Under Article 12 of Regulation No 1260/1999, ( 21 ) every operation financed by the Structural Funds, and in consequence every item of expenditure relating to it, must be in conformity with EU legislation and be compatible with the policies and actions undertaken by the EU legislature. That principle of compatibility is intended to prevent the European Union from funding projects which contravene the provisions of the Treaties and the policies supported by the EU legislature.

72. The EU legislature lays emphasis, in particular, on compliance with the rules on competition, the rules on the award of public contracts and on those intended to ensure the promotion of equality between men and women, and environmental protection.

73. I believe that the EU legislature requires the beneficiary of the funds to comply with those obligations throughout the life of the operation. Tellingly, in referring to the conformity with EU law, it uses a very broad expression: ‘[o]perations financed by the Funds’. The design of the structure, the carrying out of construction or renovation works, the purchase of materials or supplies, the organisation and management of the service relating to it, the recruitment or even the qualifications of the personnel form part of the same operation benefiting from co-financing.

74. That interpretation is dictated by the need to ensure the effectiveness of Article 12 of Regulation No 1260/1999.

75. How, indeed, is the promotion of equality between men and women, as referred to in Article 23 of the Charter of Fundamental Rights of the European Union, to be ensured if the principle of compatibility does not apply to the employment and working conditions and rates of pay laid down in the context of the operation? Furthermore, how is environmental protection for the purposes of Article 191 TFEU to be ensured if the provisions relating to the firm’s waste treatment or production methods are excluded from the scope of Article 12 of Regulation No 1260/1999?

76. I am therefore of the view that the final beneficiary of the funds, acting as a contracting authority, is required to comply with the rules on competition and with the rules on the award of public contracts when it decides to use an external service provider, be it for the carrying out of works, for the purchase of supplies or for the management of a service. ( 22 )

77. What is the position when the final beneficiary of the funds decides to award a concession for the management of a co-financed service?

78. Although Article 12 of Regulation No 1260/1999 expressly refers to compliance with the rules on the award of public contracts, this does not mean that that provision does not also cover compliance with the rules on the award of concession contracts.

79. First, Article 12 expressly requires compliance with the rules on competition, which implies that the contracting authority must hold a competitive tendering procedure, whether for public contracts or for the award of a service concession.

80. Secondly, although it is true that, as EU law currently stands, service concession contracts are not governed by any secondary legislation, ( 23 ) the fact remains that, as with any State measure laying down the conditions governing the provision of economic activities, concession awards must comply with the principles enshrined in the Treaty and be subject to the consequent requirements as clarified by the case-law of the Court of Justice.

81. Thus, according to settled case-law, the public authorities concluding such contracts are bound to observe the principles of freedom of establishment and the freedom to provide services, laid down in Article 49 TFEU and Article 56 TFEU respectively, together with the attendant obligation of transparency. ( 24 )

82. The obligation of transparency constitutes a specific expression of the principle of equal treatment. That principle is a fundamental principle of EU law, ( 25 ) which the Member States must observe when acting within the scope of EU law. ( 26 )

83. The obligation of transparency to be complied with by public authorities concluding service concession contracts consists in ensuring, for the benefit of any potential tenderer, a sufficient degree of advertising of the award procedure. ( 27 ) This must enable the service concession to be opened up to competition, whether at local, national or European level, since firms located in other Member States will then be in a position to express their interest. That obligation must also serve to ensure equal treatment of all tenderers and, in particular, a transparent selection of the candidate, the objective being to prevent not only favouritism, but also corruption and arbitrariness in the award of the concession.

84. In the light of those considerations, I am therefore of the view that the principle, laid down in Article 12 of Regulation No 1260/1999, of compatibility of the operation with EU law implies that the beneficiary of the funds, acting as contracting authority, must comply with the obligation of transparency and with the consequent obligations to advertise and to hold a competitive selection procedure prior to the award of a concession contract for the management of a service co‑financed by the Structural Funds.

85. In the case before the referring court, I am therefore inclined to think that, in directly awarding the concession to the Pescatori cooperative, without publishing a call for tenders or organising a competitive selection procedure, the Comune di Ancona acted in breach of the above rules and principles.

86. In its order for reference, the referring court nevertheless asks the Court whether the Comune di Ancona may legitimately dispense with a call for tenders, since the slipway concession does not permit any substantial revenue to be obtained and since, in the sector concerned, only one economic operator has expressed an interest and is likely to take over the responsibility of managing the service.

87. In order to answer that last question, it is important to examine the situations in which the Court and the EU legislature have introduced some qualifications to compliance with the obligation of transparency.

88. In the first place, it is settled case‑law that the obligation of transparency applies where the service concession in question may be of interest to an undertaking located in a Member State other that in which the concession is awarded. ( 28 ) The obligation of transparency therefore does not necessarily entail an obligation to call for tenders where it is demonstrated, on the basis of objective circumstances, that the concession is not likely to be of interest to undertakings located in another Member State, those undertakings having nevertheless been informed and given an opportunity to express their interest. In such a situation, the Court holds that the effects on the fundamental freedoms concerned would be too uncertain and indirect to warrant the conclusion that the Treaty may have been infringed. ( 29 )

89. Under that case-law, it is therefore for the competent national authorities to ensure that the award procedure in question, without necessarily entailing an obligation to call for tenders, is of such a kind as to ensure that undertakings in the sector concerned have access to appropriate information regarding the concession and to express their interest if they so wish. In accordance with that case‑law, those authorities must also consider whether there are objective circumstances – such as the fact that the operation is only of modest commercial interest – in the light of which it could be maintained that an undertaking located in another Member State would have no interest.

90. In the second place, it is necessary to mention the provisions which the EU legislature has adopted in the field of public contracts and service concessions.

91. As regards public service contracts, the contracting authority may, under Article 31(1) of Directive 2004/18, award a contract without prior publication of a contract notice and without prior competitive tendering if no tenders or no suitable tenders or no applications have been submitted in response to an open procedure or a restricted procedure or when, for technical reasons, the contract may be awarded only to a particular operator. ( 30 )

92. As regards service concessions, the Commission allows a derogation from the obligation of prior publication and competitive selection in its abovementioned proposal for a directive. Thus, under Article 26(5)(b) of that proposal, the contracting authority is not required to publish a concession notice where the services can be supplied only by a particular economic operator owing to the absence of competition for technical reasons and where no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of the concession award.

93. As can be seen from recital 19 in the preamble to that proposal, the Commission has in view situations where it is clear from the outset that a publication of the concession notice would not trigger more competition, notably because there is objectively only one economic operator who can perform the concession. None the less, the Commission makes it clear that only situations of objective exclusivity can justify the award of a concession to an economic operator without advertisement, where the situation of exclusivity has not been created by the contracting authority itself in view of the future award procedure, and where there are no adequate substitutes, the availability of which should be assessed thoroughly.

94. In the context of the case before the referring court, I think that those provisions must be read in the light of the constraints arising from the provision of assistance by the Structural Funds. In so far as the concession at issue relates to a service co-financed by the ERDF, account must be taken of the contracting authority’s obligations regarding the choice of concessionaire.

95. It is apparent from the documents before the Court ( 31 ) that the funding in question must contribute to the attainment of Objective 2, which is intended to support the economic and social conversion of areas facing structural difficulties, and in particular depressed areas dependent on fisheries, such as the port area of the Comune di Ancona. ( 32 ) Such areas are defined as coastal areas in which the number of jobs in the fisheries industry as a percentage of total employment is significant and which are facing structural socio-economic problems relating to the restructuring of the fisheries sector which result in a significant reduction in the number of jobs in that sector. ( 33 )

96. In the case before the referring court, the funding in question must therefore make it possible not only to modernise the port infrastructure and to develop the activities of producing and marketing products of the sea, but also to stimulate the local economy and regional competitiveness by emphasising employment in the region. Indeed, it is clear from the wording of the 2006 call for projects that priority was given to projects offering the best ratio between the investments implemented and the new jobs created in the region. ( 34 ) The area covered by the operation co-financed by the ERDF is therefore situated at a local and regional level. In those circumstances, I think that the circle of undertakings likely to take over responsibility for the management of the slipway therefore narrows accordingly and must be concentrated at the level of the region in order to meet the priorities and eligibility criteria laid down in the operational programme and the SPD. Consequently, the concession notice must take account of that specific consideration and the choice of the concessionaire must depend on the local particularities of the market concerned so as to maintain the objectives pursued by the ERDF.

97. In the light of those considerations, I would call upon the competent national court to determine whether, having regard to the circumstances of the case before it, the Comune di Ancona was properly entitled to dispense with the holding of an invitation to tender before awarding the concession at issue. In so far as that exemption constitutes a derogation from the obligation of transparency which the EU legislature has not yet circumscribed, its application must be the subject of a particularly strict review by the national court.

98. First, the national court must satisfy itself that the procedure met a minimum level of transparency which, while not necessarily entailing an obligation to call for tenders, was of such a kind as to enable the undertakings in the sector concerned to acquaint themselves with the concession project and to express their interest had they so wished.

99. Secondly, the national court must examine whether the lack of a call for tenders can be justified on the basis of objective circumstances related to the nature of the concession and the requisite technical abilities; the number and location of the service providers likely to reply to it; or the circumstances surrounding the management of the service and, in particular, the constraints arising from the provision of assistance by the ERDF.

100. So far as the transparency of the procedure is concerned, my view is that it did not meet the minimum level required. The factual evidence in the file points to the relatively vague circumstances in which that concession was granted. That evidence calls for a particularly rigorous review by the national court if local practices, such as that at issue in the main proceedings, are to be prevented from jeopardising European funding.

101. In this case, there is nothing in the file to demonstrate that that award by negotiated procedure was the outcome of a prior consultation of the various economic operators in the sector. In fact, it seems that no steps were taken, whether at a local, regional or national level, to gauge the number of undertakings likely to be interested in the management of the facility and to provide them with information. Moreover, the grounds relied on by the Comune di Ancona to justify the lack of a competitive tendering procedure and the provisional nature of the concession differ. In its resolution No 192 of 19 April 2005, the Comune di Ancona invokes urgency arising from the risk of deterioration of infrastructure. ( 35 ) At the hearing, it bases its case on the absence of a directory of the undertakings in the sector concerned. That being so, it is obviously difficult – it seems to me – to agree with the assertion that there was no other economic operator interested in and capable of managing the slipway and to consider this to be an objective circumstance of such kind as to exempt the Comune di Ancona from organising a competitive tendering procedure.

102. Admittedly, management of the slipway requires particular technical abilities, since the Comune di Ancona does indeed place emphasis on the experience required to manage that facility effectively and safely. ( 36 ) It is also true that the sector concerned is characterised by a low degree of competition, since almost all the undertakings engaged in fishing in the maritime district of Ancona are grouped together in the Pescatori cooperative. None the less, that does not exempt the Comune di Ancona from contacting the few undertakings which are not members of the Pescatori cooperative to inform them of its intention to award a concession and to enable them, where appropriate, to submit their tenders.

103. So far as the existence of objective circumstances is concerned, I do not think that the fact that the concession does not generate profit is a sound reason for exempting the contracting authority from calling for tenders before awarding the concession.

104. Indeed, a service concession inherently implies limited revenue. Such a contract is a form of delegated management of a public service, by which the legal person governed by public law entrusts to an external service provider the management of a general interest activity. Admittedly, the service for which the concession is granted must be organised in such a way as to enable its real costs to be covered, the concessionaire collecting a charge paid by service users. Nevertheless, the concessionaire exploits the service at its own expense and bears the related operating risks. Since general interest activities are liable to give rise to difficulties as regards management and profitability, a concession always implies the transfer to the concessionaire of an economic risk involving the possibility that it will not recoup the investments made or the costs incurred in exploiting the works carried out or services provided. ( 37 )

105. Furthermore, it seems to me that the economic interest involved in the concession contract is not confined to the revenue obtained in connection with the service for which the concession is granted. Although the revenue is limited, the fact remains that the concession contract may present a substantial economic opportunity in view of the nature and content of the concession. The concession at issue, for example, relates to the management of an infrastructural facility vital to port activities, located in a relatively important port on the Adriatic Sea. Consequently, the grant of such a concession may, to my mind, represent a major economic opportunity likely to be of interest to undertakings established in other Member States.

106. In those circumstances, it seems to me that the fact that the concession does not generate profit cannot, on its own, justify the lack of a competitive tendering procedure.

107. In the light of all those considerations and in view of the particularly vague circumstances in which the slipway concession was granted, I have the feeling that the direct award of the concession by the Comune di Ancona to the Pescatori cooperative is not in compliance with the requirements of transparency.

108. If the competent national court shares that view, a finding should then be made that the Comune di Ancona failed to fulfil its obligations under Article 12 of Regulation No 1260/1999 by failing to comply with the applicable EU legislation.

109. It would then be a matter for the national control authority to make the financial corrections required under Article 39(1) of Regulation No 1260/1999. ( 38 )

110. I would reiterate that, under Article 39(1) of Regulation No 1260/1999, the Member States are required to bear the responsibility for investigating irregularities established in the course of their supervision if they find evidence of any major change affecting the nature or implementation conditions or supervision of European funding. The objective of financial corrections is to put an end to ‘subsidy shopping’ by ‘[restoring] a situation where 100% of the expenditure declared for co‑financing from the Structural Funds is in line with the applicable national and Community rules and regulations’. ( 39 ) The Member States are therefore required to cancel all or part of the European funding where they find an irregularity in the application of the EU rules, ( 40 ) since, as we have seen, the compatibility of the operation with EU law is a condition for the eligibility of the operation for funding. Although, as EU law currently stands, service concession contracts are not governed by any secondary legislation, we have nevertheless seen that the public authorities concluding such contracts are under a duty to comply with the fundamental rules of the FEU Treaty, including Articles 49 TFEU and 56 TFEU, and with the attendant obligation of transparency. ( 41 )

V – Conclusion

111. In view of the foregoing considerations, I propose that the Court reply as follows to the Tribunale amministrativo regionale per le Marche: (1) Article 30(4) of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds must be interpreted as meaning that: — checks as to the existence of a substantial modification of the operation cover all measures connected with the implementation of the operation, which necessarily include the carrying out of the works and the arrangements for the implementation and management of that operation; — ‘modification’ of the operation covers all modifications that an operation may undergo in the course of its implementation, whether physical, technical, financial or functional in nature; and — the national control authority is not required to establish whether the operation has undergone a substantial modification in order to determine whether there is an undue advantage for the public body or the firm, since the existence of such an advantage is a constituent element of a substantial modification. (2) The principle of compatibility of the operation with European Union law, laid down in Article 12 of Regulation No 1260/1999, implies that the final beneficiary of the funds, acting as a contracting authority, must comply with the obligation of transparency and with the attendant obligations of advertising and competitive selection when awarding a concession for the management of a service co-financed by the Structural Funds. (3) In circumstances such as those of the case before the referring court, where the beneficiary of the funds, acting as a contracting authority, has granted the concession for the management of a service co-financed by the Structural Funds without first calling for tenders, it is for the competent national court to determine, first, whether that procedure was of such a kind as to enable the undertakings in the sector concerned to be informed of the proposed concession and, secondly, whether the lack of a call for tenders was justified on the basis of objective circumstances related to the nature of the concession and of the requisite technical abilities, to the number and location of the service providers likely to respond to it and to the constraints arising from the provision of assistance by the European Regional Development Fund.

( 1 ) Original language: French.

( 2 ) OJ 1999 L 161, p. 1.

( 3 ) A slipway refers to a sloping surface on to which a boat is hauled up for maintenance or repair.

( 4 ) Recital 1 in the preamble to Regulation No 1260/1999.

( 5 ) As defined in Article 9(k) of Regulation No 1260/1999, ‘operation’ means ‘any project or action carried out by the final beneficiaries of assistance’.

( 6 ) See also recital 30 in the preamble to Regulation No 1260/1999.

( 7 ) See also recital 41 in the preamble to Regulation No 1260/1999, in which the EU legislature states that, ‘in order to ensure the efficiency and durable impact of the Funds’ assistance, all or part of the assistance from a Fund should remain attached to an operation only where its nature or its implementation conditions do not undergo a substantial modification which would result in diverting the assisted operation from its original objectives’.

( 8 ) Article 1(4) of Directive 2004/18/EC of the European Parliament and of the Council of 31 March on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114) defines ‘service concession’. Under that provision, it is a ‘contract of the same type as a public service contract except for the fact that the consideration for the provision of services consists either solely in the right to exploit the service or in this right together with payment’.

( 9 ) I would point out that it is settled case‑law that, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. To that end, the Court may reformulate the question referred. It may also take into consideration rules of EU law to which the national court has not referred in its questions, in so far as they are necessary for the purposes of examining the dispute in the main proceedings (see, inter alia, Case C-157/10 Banco Bilbao Vizcaya Argentaria [2011] ECR I-13023, paragraphs 18 to 20 and the case‑law cited).

( 10 ) Question 3 is worded ambiguously. My understanding is that it is composed of two questions, the second being more closely connected, in my view, with Question 4.

( 11 ) It is interesting to note that the rules set out in Article 30(4) of Regulation No 1260/1999 are now laid down in Article 57(1) of Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (OJ 2006 L 210, p. 25), as amended by Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 2010 (OJ 2010 L 158, p. 1), the title of Article 57 being ‘Durability of operations’. That provision is worded as follows (emphasis added):

‘The Member State or managing authority shall ensure that an operation comprising investment in infrastructure or productive investment retains the contribution from the Funds only if it does not, within five years from its completion, undergo a substantial modification which is caused by a change in the nature of ownership of an item of infrastructure or the cessation of a productive activity and which affects the nature or the implementation conditions of the operation or gives to a firm or a public body an undue advantage.

…’

( 12 ) See recital 41 in the preamble to Regulation No 1260/1999.

( 13 ) By signing the funding agreement, the final beneficiary undertakes to implement the project as it is described in the technical and financial annexes to that agreement. It is on that basis that the national and EU authorities assessed the eligibility of the project and adopted the funding decision. Consequently, any item of expenditure declared by the project organiser in its applications for reimbursement which does not comply with the conditions of that agreement cannot be reimbursed.

( 14 ) The material and geographical eligibility of the project means that the operation must be related to an operational programme covering specific territorial areas; that it has been selected on the basis of a validated procedure; and that it contributes to the objectives of economic and social cohesion.

( 15 ) In this regard, it should be noted that, in some circumstances, certain modifications relating to function will be possible only after physical modifications have been carried out.

( 16 ) It also emerges from the order for reference that the Comune di Ancona receives from the Pescatori cooperative a fee which is adjusted in line with the fee which the Comune di Ancona must itself pay to the port authority for the occupation of public State property.

( 17 ) Point 3 of Resolution No 44 of the Giunta regionale (deliberazione n. 44 della Giunta regionale) of 13 February 2006.

( 18 ) Article 11 of that agreement mentions the irregularities that can lead to recovery of all or part of the grant as a result of controls, including breach of European obligations.

( 19 ) See, for example, Guide de renseignement d’un dossier de demande de subvention FEDER, available on the website of the Région Centre (France) at the following address: http://www.europe-centre.eu/fr/53/PO_FEDER_Centre.html.

( 20 ) Disposizioni sulla partecipazione della Regione Marche al processo normativo comunitario e sulle procedure relative all’attuazione della politiche comunitarie (Bollettino ufficiale della Regione Marche No 99 of 12 October 2006).

( 21 ) See also recital 30 in the preamble to Regulation No 1260/1999.

( 22 ) As regards the required compliance with competitive tendering procedures, this is also laid down in Chapter 8.5, entitled ‘Compliance with Community policies’, of the SPD for Community structural assistance in the Marches region falling under Objective 2 in Italy, for the years 2000 to 2006.

( 23 ) On 20 December 2011, the Commission put forward a Proposal for a Directive of the European Parliament and of the Council on the award of concession contracts (COM(2011) 897 final). See also the Commission Interpretative Communication on concessions under Community law (OJ 2000 C 121, p. 2).

( 24 ) Case C-91/08 Wall [2010] ECR I-2815, paragraph 33 and the case‑law cited.

( 25 ) Joined Cases 117/76 and 16/77 Ruckdeschel and Others [1977] ECR 1753, paragraph 7.

( 26 ) In accordance with that principle, similar situations must not be treated differently unless differentiation is objectively justified (see, inter alia, Joined Cases 201/85 and 202/85 Klensch and Others [1986] ECR 3477, paragraph 9, and Case C-442/00 Rodríguez Caballero [2002] ECR I-11915, paragraph 32 and case‑law cited). The Court has had occasion to clarify the implications of the principle of equal treatment in the context of public contracts in Case C-243/89 Commission v Denmark [1993] ECR I-3353, paragraphs 37 to 39, and Case C-87/94 Commission v Belgium [1996] ECR I-2043, paragraphs 51 to 56, and the implications of the obligation of transparency in Case C-324/98 Telaustria and Telefonadress [2000] ECR I-10745. That case‑law was subsequently transposed to public service concessions in Case C-458/03 Parking Brixen [2005] ECR I-8585, paragraph 48.

( 27 ) Wall, paragraph 36 and the case-law cited.

( 28 ) Ibid., paragraph 34 and the case-law cited.

( 29 ) Case C-231/03 Coname [2005] ECR I-7287, paragraphs 19 to 21 and the case-law cited.

( 30 ) It seems to me appropriate to be guided by the rules laid down by the EU legislature in the field of public contracts, since those rules were drawn up on the basis of the actual principles of the Treaty.

( 31 ) Letter from the Ministero dello Sviluppo economico (Ministry of Economic Development) of 21 February 2011.

( 32 ) Articles 1(2) and 4(1) of Regulation No 1260/1999.

( 33 ) Article 4(8) of Regulation No 1260/1999.

( 34 ) Point 8 of the abovementioned Resolution No 44 of the Giunta regionale of 13 February 2006.

( 35 ) Pages 2 and 3.

( 36 ) Resolution No 192 of the Comune di Ancona of 19 April 2005.

( 37 ) Case C-272/91 Commission v Italy [1994] ECR I-1409.

( 38 ) In point 3.2 of its order for reference, the referring court raises the question of the nature of the penalty applicable to the Comune di Ancona for irregularities found to exist.

( 39 ) See Guidelines on the principles, criteria and indicative scales to be applied by Commission departments in determining financial corrections under Article 39(3) of Regulation (EC) No 1260/1999 (C(2001) 476).

( 40 ) See also Article 38(1)(c) and (e) of Regulation No 1260/1999.

( 41 ) To help them in that task, the Commission has drawn up Guidelines for determining financial corrections to be made to expenditure co-financed by the Structural Funds or the Cohesion Fund for non-compliance with the rules on public procurement (COCOF 07/0037/03).