2002/868/EC: Commission decision of 17 July 2002 on the aid scheme implemented by Italy in order to reduce the number of single-hull tankers older than 20 years in the Italian tanker fleet (Text with EEA relevance.) (notified under document number C(2002) 2437)
Date: 2002-07-17
Institutions: European Commission
Subjects: Italy, State aid, aid system, cessation of trading, control of State aid, tanker

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COMMISSION DECISION

of 17 July 2002

on the aid scheme implemented by Italy in order to reduce the number of single-hull tankers
older than 20 years in the Italian tanker fleet

(notified under document number C(2002) 2437)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2002/868/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Com-
munity, and in particular the first subparagraph of Article 88(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 and having regard to
their comments (1),

Whereas:

1. PROCEDURE

(1)

By letter No 542 of 15 January 2001, registered on
18 January 2001 as SG(2001)A/787, Italy notified, in
accordance with Article 88(3) of the EC Treaty, a draft
aid scheme to speed up the elimination of single-hull
tankers 20 years of age or older. By letter of 23 February
2001, registered on the same day, Italy sent details of
the current status of the draft law. By letter of 6 March
2001, the Commission asked the Italian Government to
supply further information, which was received by letter
No 5786 of 4 May 2001, registered on 7 May 2001 as
SG(2001)A/5870. Thereafter, Italy provided additional
information by letter No 8665 of 5 July 2001, registered
on 10 July 2001, by letter of 19 July 2001, registered
on 23 July 2001, by letter of 3 September 2001,
registered on 4 September 2001, by letter of 25 Septem-
ber 2001, registered on 9 October 2001 (as SG(2001)A/
11100), by letter of 24 October 2001, registered on
24 October 2001 (as SG(2001)A/11814), and by letter
of 22 November 2001, registered on 27 November
2001 as No 14632.

(2)

(3)

(4)

By Decision of 20 December 2001, notified to the
Italian Government by letter dated 28 December 2001
(SG(2001) D/293162), the Commission initiated the
procedure laid down in Article 88(2) of the Treaty in
respect of the present aid. The procedure has been
registered under C 97/2001.

The Commission Decision to initiate the formal investi-
gation procedure has been published in the Official
Journal of the European Communities (2). The Commission
invited interested parties to submit their comments on
the aid.

Italy forwarded comments to the Commission by letter
of 25 January 2002, registered on 31 January 2002. A
further letter with additional information and commit-
ments was sent on 3 May 2002.

(5) Within the time frame indicated in the publication, the
Commission received comments from the following
interested parties: the Comité Central des Armateurs de
France by letter of 21 March 2002,
the Swedish
shipowners’ association by letter of 21 March 2002, the
Chamber of Shipping by letter of 21 March 2002,
Norges Rederiforbund by letter of 21 March 2002, the
Norwegian Royal Ministry of Trade and Industry by
letter of 22 March 2002, Danmarks Rederiforening
by letter of 21 March, and finally Mediterranea di
Navigazione by letter of 4 March 2002. The Commission
also received comments from Ermewa Maritime by letter
of 4 April and Confitarma by letter of 25 March, sent
after the expiry of the formal deadline for reaction of
22 March 2002.

( 1) OJ C 50, 23.2.2002, p. 7.

(2) See footnote 1.

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2. DETAILED DESCRIPTION OF THE AID

2.1. The aid scheme

(6)

(7)

(8)

(9)

The aid scheme is intended to promote and expedite the
ban on single-hull ships in Italy and is targeted at owners
of oil and chemical tankers. It is based on Articles 3, 4
and 5 of Law 51/2001 (Disposizioni per la prevenzione
dell’inquinamento derivante dal trasporto marittimo di idrocar-
buri) designed to prevent accidents at sea involving
tankers, which was published on 7 March 2001 and
entered into force on the same day. The Italian auth-
orities have, however, undertaken not to pay any aid
before obtaining authorisation from the Commission.

2.2. Background

The sinking on 12 December 1999 of the oil tanker
Erika, a 25 year-old single hull, aroused great public
concern about the safety of maritime transport. The
disaster highlighted the potential environmental and
safety risks inherent in old, poorly maintained vessels
and the consequent need to strengthen and harmonise
maritime safety standards and rules on the inspection
of vessels in ports. In the circumstances, the Italian
authorities, like the Commission, took the view that they
should, if necessary, go beyond the international rules
existing or planned at that time.

Italy regarded the ships used for cabotage services
between Italian ports as representing the greatest source
of risk to the environment and to safety. The situation
in Italy at that time gave grounds for particular concern
as 54 % of oil or oil products were not shipped either in
double-hull tankers or in single-hull tankers complying
with the highest standards (3). Moreover,
Italy was
particularly involved in the Erika case as the company
operating the wrecked tanker was Italian, even though it
was sailing under the flag of a third country, and, having
taken its cargo on board in Dunkirk, France, the vessel
was heading for the Italian port of Milazzo.

Following the sinking of the Erika, the Italian Minister
for the Environment announced his intention to ban
single-hull ships from the majority of Italian ports,
taking up the measures applied in the port of Venice
since December 1999. Debates on improving safety and
on the present aid scheme, which was formally brought

( 3) SBT/PL: double-hull tanker, segregated ballast tanks in protective

locations.

before the Italian Parliament in March 2000, enabled the
Italian Government to come up with a solution more
flexible than the total ban, to which there were objections
at international level. The International Maritime Organ-
isation (IMO) and Community later both passed legis-
lation which went further, in some respects, than the
Italian measures.

2.3. The environmental and safety context

S a f e t y l e g i s l a t i o n

(10)

In March 2000, the Commission presented a Communi-
cation on the safety of the seaborne oil trade (4). The
Commission presented a second Communication with
an additional set of proposals in December 2000 (5). In
the Communication of March 2000, the Commission
proposed three measures to be adopted in the short
term:

— more stringent in-port inspections of ships calling

at Community ports,

— closer supervision of classification societies, and

— accelerating the timetable, which had previously
been agreed at the IMO, for banning single-hull oil
tankers from EU waters.

(11) The third measure was motivated by the statistical
evidence of increased accident rates for older ships and
by the need to align with the American Oil Pollution
Act of 1990 in order to prevent the single hull tankers
banned from American waters after 2005 starting to
operate in European waters.

(12)

It is in the Community’s interest to adopt measures to
ensure that oil tankers entering ports and offshore
terminals under Member State jurisdiction and, oil
tankers flying the flags of Member States comply with
Community legislation. Such measures are aimed at
reducing the risk of accidental oil pollution in European
waters.

(4) Erika I: Communication from the Commission to the European
Parliament and the Council on the safety of the seaborne oil trade,
COM(2000) 142 final, 21 March 2000.

(5) Erika II: Communication from the Commission to the European
Parliament and the Council on a second set of Community
measures on maritime safety following the sinking of the oil
tanker Erika, COM(2000) 802 final, 6 December 2000.

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(13) The final accelerated schedule (hereinafter referred to as
‘the IMO compromise’) (6) was agreed at the International
Maritime Organisation (IMO) in April 2001.

— Category 3 oil

tankers, with deadweights of
5 000 tons and above but less than the tonnage
specified for Category 1 and 2 tankers, will be
gradually phased out between 2003 and 2015.

(14) Although, on an exceptional basis, the IMO compromise
allows newer single-hull ships complying with certain
technical specifications to continue operating until the
25th anniversary of their delivery, EU Member States
formally announced that after 2015 they would not
allow single-hull tankers to enter their ports.

(15) As a result, the Community adopted Regulation (EC)
No 417/2002 of the European Parliament and of the
Council of 18 February 2002 on the accelerated phasing-
in of double-hull or equivalent design requirements for
single-hull oil tankers and repealing Council Regulation
(EC) No 2978/94 (7). The regulation applies as of
1 September 2002 and transposes Community objec-
tives to prevent major biological and environmental
damage caused by shipping accidents involving old ships
and in particular in relation to those carrying dangerous
and potentially polluting goods.

(16) Regulation (EC) No 417/2002 prevents single-hull oil
tankers from entering EU ports and operating under EU
flags (8). It covers three categories of tankers:

— Category 1 oil tankers, commonly known as pre-
MARPOL tankers (9), are to be gradually phased out
between 2003 and 2007 (vessels without CAS will
be banned from 2005),

— Category 2 oil tankers, commonly known as MAR-
POL tankers (10), will be gradually phased out
between 2003 and 2015 (vessels without CAS will
be banned from 2010),

(6) Regulation 13G of Annex I of MARPOL 73/78, as amended in

2001 by Resolution MEPC.95(46).

(7) OJ C 64, 7.3.2002, p. 1.
(8) Category 1 and 2 oil tankers may only continue to operate after
to compliance with a
2005 and 2010 respectively subject
condition assessment scheme (CAS) introducing a more stringent
inspection procedure. The Italian authorities have announced
that they will not use the CAS procedure for oil tankers flying
the Italian flag. Nonetheless, the three categories will be subject
to the 2005, 2010 and 2015 deadlines.

(9) Oil tankers of 20 000 tons deadweight and above, equipped to
carry crude oil, fuel oil, heavy diesel oil or lubricating oil as
cargo, and of 30 000 tons deadweight and above, equipped to
carry oil other than the above, which DO NOT COMPLY with
the requirements for tankers with regard to protectively located
segregated ballast tanks.

( 10) Oil tankers of 20 000 tons deadweight and above, equipped to
carry crude oil, fuel oil, heavy diesel oil or lubricating oil as
cargo, and of 30 000 tons deadweight and above, equipped to
carry oil other than the above, which COMPLY with the
requirements for tankers with regard to protectively located
segregated ballast tanks.

E n v i r o n m e n t a l c o n s i d e r a t i o n s

(17) Article 6 of the EC Treaty stipulates that environmental
protection requirements must be integrated into the
definition and implementation of Community policy,
including Community transport policies and activities.

(18) The Communication from the Commission to the
Council and the European Parliament ‘Enhancing Euro-
Mediterranean cooperation on transport and energy’ (11)
highlights the need to improve the safety of shipping. It
particularly mentions the transportation of oil and
chemicals, and notes that this is ‘all the more acute in the
Mediterranean, an enclosed sea with a fragile ecological
balance’.

2.4. Objective of the aid

(19) The objective of the aid scheme is to ensure that
maritime transport
in Italy complies with the most
stringent safety and environmental protection standards.
The aid scheme promotes the scrapping of Italian-
flagged single-hull tankers more than 20 years old
well
in advance of the IMO timetable confirmed by
Regulation (EC) No 417/2002. It will cover all tankers
older than 20 years on 31 December 1999 and thus
considerably brings forward the legislative timeframe of
In addition, of the total
the Community legislation.
67 tankers eligible under the aid scheme, it will eliminate
26 which are not covered by either Community or
international legislation on the phasing-out of tankers.

(20) The aid measure forms an integral part of a law aimed
at preventing incidents at sea involving tankers and
limiting the consequences of accidents, which can cause
enormous harm to the marine environment. The law
moreover steps up inspections of oil tanker shipping,
bearing in mind the delicate ecological balance of the
Mediterranean Sea. The incentive scheme is clearly
targeted at reducing the numbers of older single-hull
tankers, the category which poses the greatest potential
risk of environmental damage in Italian waters and
elsewhere. The scheme is aimed at, and to a large extent
succeeds in, reducing the number of these generally low-
cost tankers, in particular those with deadweight tonnage
of less than 30 000 tons used for traffic between Italian
ports.

(11) COM(2001) 126 final, 7 March 2001, with particular reference

to point 2.3.3.

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(21) There is no doubt but that single-hull tankers pose the
greatest risks of pollution if involved in accidents at sea
and that they are more worn out than other vessels
because of their relative age. Italy considers that speeding
up the phasing out of single-hull tankers helps to achieve
the objective of rendering Community waters safer.

(22)

(23)

(24)

Italian Law 51/2001 on the aid scheme is one of several
measures designed to improve safety and protection of
the marine environment. In addition to the scrapping of
obsolete tankers, it introduces other safety measures,
including measures relating to the increased use of
maritime traffic systems (VTS) and delegating powers to
the Minister for Transport and Shipping in order to, if
necessary, prevent merchant vessels shown to pose a
risk to the safety of shipping and the marine environ-
ment from transiting via or remaining in Italian terri-
torial waters. In addition, an agreement was signed on
1 June 2001 between the Italian Government and
industrial and environmental associations on voluntary
restrictions upon the use of single-hull tankers.

2.5. Budget

Italy is setting aside a maximum EUR 5,16 million (ITL
10 000 million) per year for a period of 15 years,
amounting to a total budget of EUR 77,4 million
including interest.

Ship owners will
receive EUR 129,11 (ITL 0,25
million) (12) per deadweight ton (13) up to a maximum
deadweight tonnage of 30 000 tons. The maximum
possible aid for a single ship would therefore be
EUR 3 873 427 (ITL 7 500 million). The maximum aid
that a single ship owner may receive depends on the
number of ships owned which fulfil the qualifying
criteria.

(25) The Ministry of Infrastructure and Transport administers
the aid. The aid will be granted in form of loans from
Italian or European credit institutions in the amount of
the aid direct to the beneficiaries. Once the aid is granted,
recipients have no further obligations to the banks, as
the loans will be redeemed by the State using resources
from the general State budget (14).

( 12) Fixed exchange rate: EUR 1 = ITL 1 936,27.
( 13) Deadweight tonnage: the authorised carrying capacity of a ship
when fully loaded. The maximum weight of cargo, stores, fuel
and water that may be loaded on a vessel to bring it to its
summer marks.

( 14) The relevant payments are to be made at six-monthly intervals
on 30 June and 31 December of each year. The loan contracts
must provide for a payment plan of at most 15 years, at a rate of
interest fixed by decree of the Treasury Minister and published in
the Official Gazette of the Italian Republic, pursuant to Law 431
of 31 December 1991 as amended by Law 413 of 30 November
1998. This arrangement is designed to spread the financial
burden of the aid scheme over a period longer than a few
financial years.

2.6. Duration

(26) The scrapping of the ship needs to start between
1 January 2000 and 31 December 2002, and has to be
completed within six months thereafter.

(27) The aid will be payable as of 2001. Shipowners benefit
immediately once the demolition has been completed
and the administrative procedure authorising the raising
of loans has been finalised. Thereafter, as described
above, the individual loan contracts are binding upon
the State. The Italian Government confirms that, due to
its commitment to the Commission to suspend any
payment, it has not as yet taken on any such loans.

2.7. Beneficiaries

(28) The aid scheme is limited to shipping companies which
own single-hull tankers with deadweight tonnage of
more than 1 000 tons, equipped to transport crude oil
or oil or chemical products. Such vessels must have
become the property of the company prior to 30 Sep-
tember 2000, and must have been entered in the Italian
shipping registers before that date (15). The aid scheme
also applies to vessels which have been in service for
more than 20 years on 31 December 1999, and which
are sold for scrap or whose scrapping is arranged in
accordance with the time constraints.

(29) At

the end of 1999 and the beginning of 2000,
immediately after the Erika disaster, the Italian auth-
orities working with industry initially identified 72 ships,
belonging to 35 companies, which may be eligible for
aid, provided that they are scrapped in line with the
stipulated conditions. The ships can be classified by age
and size as follows:

(b)

(15) Article 143 of the Italian Shipping Code (Requisiti di nazionalità
dei proprietari di navi italiane) stipulates that, in order to be entered
in the Italian shipping registers, vessels must either:
(a)

be more than 50 % owned by natural or legal persons or
entities from Italy or other EU Member States; or
if owned by non-Community natural or legal persons or
entities who are directly responsible for operating a vessel
via a permanent organisation located on Italian territory,
management must be delegated to a natural or legal person
of Italian or other EU nationality, domiciled at the ship’s
place of registration, who directly controls and assumes
full responsibility for the operation of the vessel with
regard to the administration and to third parties.

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Deadweight tonnage

Age of the vessel (in years)

25 to 30

25 to 30

More than
30

1 000 < DWT < 5 000

5 000 < DWT < 30 000

30 000 < DWT

Total

8

9

14

31

11

11

5

27

12

3

0

15

(30) Of the 72 tankers originally identified as eligible for aid,
59 were registered in the Italian national shipping
register and were engaged in cabotage (they represent
51 % of the total 115 tankers entered in the Italian
shipping register). Twenty of the oil tankers identified as
eligible for the aid are registered in the Italian Inter-
national Register and are mainly engaged in international
traffic from and to Italian ports, although some are
also engaged in cabotage services. These internationally
operating ships represent less than 7 % of the total
Italian tanker fleet of 205 ships and around 1 % of the
total Communit tanker fleet of 1 211 ships.

(31) The latest information provided by the Italian authorities
on the situation in 2002 was that 28 of these tankers
had already been scrapped by 30 March 2002 (16), thus
eliminating nearly half of the high-risk ships from the
market. Another two tankers are currently in the process
of being scrapped. In the meantime, five tankers have
been sold and are therefore no longer eligible for the aid.
There have been delays in the scrapping of the remaining
37 ships in view of uncertainties regarding the legal
status of the scheme and pending the outcome of the
Commission’s assessment.

(32) There is no requirement for a ship to be scrapped in any

specific shipyard.

2.8. Expected effect of the aid

(33)

Single-hull tankers more than 20 years old will be and
have been removed from the Italian cabotage market
in advance of obligations to do so under IMO and
Community legislation. At least 28 tankers have already
been scrapped, effectively reducing environmental risks
and increasing the safety of shipping and, there are plans
to scrap more in the near future. IMO and Community
legislation require only 14 of the 67 tankers to be taken
out of operation by 1 January 2003. Twenty-one tankers
had already been scrapped before the Commission
decision to open the formal investigation procedure (in
December 2001), which brought operations to a virtual
standstill.

(34) The vast majority of the remaining 37 tankers eligible
for the aid have a deadweight tonnage of less than
10 000 tons. There is no requirement for more than half
of the vessels in this category to be removed from the
market before 2015. This is due to the fact that the aid
measure also promotes the removal of smaller tankers,
of less than 5 000 deadweight tonnage, whose continued
operation is not regulated by either Community legis-
lation or any of the aforementioned international rules.

2.9. Conditions, eligible costs, aid intensity, etc.

(35) The aid amounts are intended as compensation for the
revenue lost by a shipping company due to the early
withdrawal of a tanker from service. Since the objective
of the law is to reduce the risks inherent in the carriage
of polluting and dangerous goods in single-hull tankers,
the aid amount is directly proportional to deadweight
tonnage, which represents the loading capacity of a ship.
The Italian authorities maintain that a link is thus
established between the amount of the aid and the
amount of high-risk products carried in single-hull
tankers (and thus any potential damage deriving from
that) thereby avoided. The Italian authorities also main-
tain that the amount of aid has to be enough to
discourage shipowners from seeking possible alternative
revenue by selling the vessels to other markets in or
outside the European Community. The Italian aid
scheme in question consistently insists that the ship be
withdrawn definitively from service, without fail.

C a l c u l a t i o n o f t h e a i d

be

expected

(36) The amount of the aid is calculated on the basis of the
revenue that might be derived from an eligible single-
hull tanker over a period of one year (17). For example,
a single-hull
tonnage of
tanker with a deadweight
30 000 tons aged between 25 and 28 years could
currently
approximately
EUR 17 765 (USD 15 500) (18) per day based on its
operating approximately 330 days a year. The cost,
principally the costs of crew, maintenance and repairs,
fuel and other minor expenses such as insurance (since
the full cost of a ship more than 20 years old would
already have been written off), are currently estimated at
approximately EUR 5 157 (USD 4 500) a day, 365 days
a year. Therefore:

earn

to

(17) Further information from the Italian authorities indicates that
the intention was to make the amount of aid proportional to the
cost of the potential damage that had been avoided.

(18) Rate of exchange as at the second quarter of 2001: EUR 1

( 16) 12 vessels in 2000, 11 in 2001 and 5 in 2002.

= USD 0,872518.

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— revenue: EUR 17 765 × 330 days = EUR 5 862 450,

— costs: EUR 5 157 × 365 days = EUR 1 882 305.

the Italian-flagged ships already owned or operated by
these companies. If this provision is not respected, the
aid must be paid back plus interest and penalties.

is

return

therefore

Annual
approximately
EUR 3 980 145, or ITL 7 706 million (19). Around
20 tankers are currently eligible for the maximum aid
theoretically possible for a single vessel, EUR 3 873 427
(ITL 7 500 million).

(37) The Italian authorities have preferred to base the calcu-
lation on deadweight tonnage rather than on a sliding
scale according to the age of the vessel, since age is
not the sole criterion determining a ship’s safety and
environmental credentials. The Italian authorities regard
as equally important to consider criteria such as the type
and technical specification of the vessel, and its state of
repair.

(38) The aid amount thus calculated is not subject to any

preferential fiscal treatment.

C o n d i t i o n s g o v e r n i n g t h e s c r a p p i n g o f
v e s s e l s

(39)

(40)

In order be eligible for aid, the shipowners whose ship(s)
were originally identified as potential beneficiaries must
apply to the Ministry of Infrastructure and Transport
within three months of the date on which the demolition
works begin. The application must identify the ship
concerned, provide documentary proof of ownership
and of the scrapping of the vessel (for instance, the
contract of sale for demolition or simply for demolition,
and certification from the competent maritime or consu-
lar authority authorising the demolition).

In order to obtain definitive payment of
the aid,
shipowners must, within six months of the date on
which the demolition began, submit to the Ministry of
Infrastructure and Transport a certificate from the
maritime or consular authority confirming the dates
when the demolition began and was completed. The six-
month period runs from the date when the law enters
into force in the case of initiatives launched prior to that
date.

A c c o m p a n y i n g o b l i g a t i o n s

(41) Under Article 4 of Law 51/2001, as of the date on which
the aid is awarded, shipping companies benefiting from
the aid scheme are barred from using single-hull tankers
more than 20 years old for national cabotage, except for

( 19) Rate of exchange as at the second quarter of 2001: USD 1 =

ITL 2 219.

(42)

Law No 51/2001 also requires that, as of the date when
Articles 3, 4 and 5 are applied, no single-hull tankers
equipped to transport crude oil, oil or chemical products
may be entered in the Italian national shipping registers
if they are more than 20 years old.

(43) The aid is also subject to compliance with conditions on
future investment. The aid measure stipulates that the
recipient company must reinvest an amount equivalent
to the scrapping premium in its maritime business
activities. This
investment must be made within
18 months of the demolition being completed or of the
date when the relevant articles of Law 51/2001 entered
into force, whichever comes first. However, the scrap-
ping premium is not related to this new investment,
being merely compensation for the loss of revenue
suffered by the beneficiary for the period during which
the scrapped tanker could have continued to operate.

(44) The above conditions contained in the aid measure as
originally notified already placed restrictions upon the
recipients’ future use of single-hull tankers more than
20 years old, quite apart from the tankers actually
scrapped. However,
in the aid measure as originally
notified, the purchase of single-hull tankers of less than
20 years of age as replacement capacity was still an
option. In the course of these proceedings, however,
Italy has proposed that it undertakes to impose a further
condition, ruling out single-hull tankers of any age as
replacement capacity. Thus, Italy intends to require that
any replacement capacity purchased by the beneficiaries
of the aid measure may consist of double hull tankers
only. Italy has further confirmed that the investment
the beneficiary
benefiting the maritime business of
which is foreseen in the law may also be for specific
training or any other projects or assets meeting that
objective.
the aforementioned conditions are not
fulfilled, the aid must be paid back plus interest and
penalties.

If

(45) These conditions attached to the granting of the aid
incorporate the terms agreed between the Italian auth-
orities and the shipping industry immediately after the
sinking of the Erika.

(46) Beneficiaries of

the aid have to inform the Italian
administration of the details of the investment. The
Italian administration further reserves the right to carry
the necessary administrative checks, by means
out
of inspections, to ensure that the recipient company
complies with these conditions.

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2.10. Market analysis

(47) The Italian tanker fleet of 205 ships with a total
deadweight tonnage of 3 715 073 tons represents, in
terms of dwt, 9,2 % of the tankers entered in EU
Member State registers (as defined in the Annex to
the Community guidelines on State aid to maritime
transport (20), hereinafter referred to as the ‘relevant
Community guidelines’) and, specifically, 5 % of the
Community’s crude oil tankers, approximately 30 % of
its tankers carrying oil products and 20 % of its chemical
tankers (21). The Community tanker fleet represents
some 13 % of the world tanker fleet.

(48) The official statistics for 1999 (the latest available) show
that 30,1 of the 31 million tons of petrochemicals
transported in the Italian cabotage market were carried
by Italian-flagged vessels, a market share of 97 % in a
market that has been opened to competition since
1 January 1997 pursuant to Council Regulation (EEC)
No 3577/92 of 7 December 1992 applying the principle
of freedom to provide services to maritime transport
within Member States (maritime cabotage) (22). The
scheme also applies to a limited number of Italian-
registered tankers operating on international markets
but which entered or could enter Italian ports, an activity
that has clearly been open to European as well as global
competition for a long time.

3. THE FORMAL INVESTIGATION PROCEDURE

3.1. Grounds for initiating the procedure

(49) The Commission decision to initiate the procedure laid
down in Article 88(2) of the EC Treaty and to request
clarification from the Italian authorities was the outcome
of an initial examination of the notified aid scheme
embodied in Law 51/2001. The law itself does not
specify the type of projects,
training, or assets in
which the beneficiary of the aid must invest under the
requirement to invest in the maritime business.

(50)

Furthermore, concern was expressed at the fact that
97 % of the ships operating in the relevant, recently
opened market were Italian flagged tankers.

(51) The Commission expressed doubts regarding the follow-

ing issues in particular:

— the limitation of the aid scheme to single-hull

tankers at least 20 years of age,

( 20) OJ C 205, 7.7.1997, p. 5.
( 21) Source: World Fleet Statistics 2000, Lloyd’s Register.
( 22) OJ L 364, 12.12.1992, p. 7.

— the option of purchasing single-hull tankers, even
if they must be less than 20 years old, as replace-
ments, and

— the lack of clarity as to the type of investment

required of the beneficiaries.

(52) The Italian authorities were therefore asked to provide
the necessary information to enable the Commission to
assess whether the aid scheme was compatible with the
EC Treaty. Nevertheless, the Commission did accept (see
recitals 65 to 67 of that Decision) that the objectives of
the aid scheme as such are in line with Community
maritime policy and implement important policy guide-
lines intended to raise safety standards in maritime
shipping.

3.2. Comments from interested parties

(53) According to Mediterranea di Navigazione, Danmarks
Rederiforening, the Norwegian Royal Ministry of Trade
and Industry, Norges Rederiforbund, the Chamber of
Shipping, the Swedish shipowners’ association, Comité
Central des Armateurs de France, and Ermewa Maritime:

the measure does not seem to meet the requirements for
any of the exceptions provided for in the EC Treaty
or in the guidelines on State aid for environmental
protection. In terms of State aid policy, it constitutes a
net direct subsidy to companies owning ships under the
national flags of a single Member State. Such net direct
subsidies are not deemed admissible under either the EC
Treaty or the guidelines on State aid, except in very
limited circumstances, which may include the one-off
restructuring of a company or its involvement in an
important project of common European interest. On the
oil tanker market, however, there is overcapacity, and
the aid will encourage shipbuilding, which may inflate
the market;

(54) moreover, the aid scheme distorts competition in the
European and international shipping market, as benefici-
aries will be able to buy new ships at a price 12 % to
15 % lower than that of their competitors. Some Member
States have given advance notice of the renewal of their
tanker fleets so as to comply with new international and
European safety standards without the use of public
funding. Because of the method used to calculate the
it could even benefit ships not usually used for
aid,
cabotage services (30 000 dwt and more) and penalise
those which are (3 000 to 15 000 tons deadweight);

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(55)

the measure may also lead to a race for scrapping
subsidies, which would seriously distort competition.
Furthermore, it may stand in the way of international
solutions designed to boost safety or prevent pollution
in the future;

probably lead to ‘insufficient double-hull tonnage’ caus-
ing ‘increased demand arising from this proposal’ which
would circumvent the objection to reduce supply regard-
ing the reduction of capacity offered;

(56)

(57)

(58)

the comments also stress the danger that the aid might
bring costs down substantially, potentially placing rival
shipowning companies at a commercial disadvantage.
The scheme may lead to artificially low freight rates in
the Italian tanker cabotage market, creating an entry
barrier for non-Italian EEA ships to the Italian cabotage
market. In addition, the subsidised replacement ships
(tankers or other types of vessels) may operate in other
EU markets, causing distortions of competition there;

the aid is not proportionate. In particular, the owners of
a 30 000 ton tanker more than 20 years old will receive
ten times as much as the owners of a 3 000 ton tanker,
even though the ratio of their relative construction cost
is approximately 3:1. Reinvestment in ships between
15 and 19 years old may lead to extremely high aid
intensity, with the value of the ships actually less than
the amount of the aid;

alternative, more efficient and less distortive solutions to
promote safe seas should have been envisaged,
for
example a long-term commitment to investment in
crew training or technical improvement going beyond
existing legislation or international agreements. One
alternative would have been to increase the resources
available for Italian flag and port State control activities,
benefiting all tankers operating in Italian waters.

According to Confitarma:

(59)

the aid measure is non-selective and is unlikely to affect
trade between Member States or to distort competition
between EU shipping companies. Instead, the aid scheme
will considerably reduce the risk stemming from the use
of older ships;

(60)

in its proposal for a regulation on the accelerated
phasing-in of double hull standards, the Commission
stated that the replacement of single-hull ships would

(61)

the aid measure pursues the same objectives as Com-
munity legislation (Regulation (EC) No 417/2002) and
therefore clearly has to be deemed compatible with
the, less stringent, Community standards, which were
adopted after the aid measure entered into force;

(62) Confitarma also pointed out that, with regard to public
service, Member States should be entitled to establish
new safety regulations when they perceive a shortcoming
in European or international rules.

3.3. Comments from Italy

(63) The Italian authorities stress that there is no contradic-
tion between the proposed aid scheme and the IMO
timetable, since the latter gives the latest possible
deadline by which the ships in question should be
removed. There is no reason why ships cannot be
scrapped ahead of schedule. This does not constitute
failure to comply with IMO commitments. The objective
of environmental protection is achieved all the more
effectively if ships presenting increased risk are scrapped
ahead of schedule.

(64) The purpose of the aid measure is to eliminate potential
risk and not to provide incentives to invest in ships.
The Commission, misguided by the condition that
beneficiaries must invest an amount equivalent to the
aid received in their maritime business, was wrong
to conclude that the aid would cause unacceptable
distortions of competition.

(65)

Law No 51/2001 already promotes the use of double-
hull tankers since Article 4(3) stipulates that recipients
of aid may not thereafter enter single-hull tankers in the
national shipping registers if they are more than 20 years
old.

(66) Concerning the aid intensity, the system may be regarded
as sufficiently fair and in line with the environmental
and safety objectives stated in the law. It is inaccurate to
describe the aid as a form of operating aid because the
motives of safeguarding the safety of shipping and the
marine environment preclude the possibility that the aid
is intended as operating aid.

(67) The aid should be considered a ‘one-off’ measure not
likely to alter the commercial policy of a maritime
shipping company. The economic effects of the aid are
very short-term and will not make a company able to
offer anything other than the standard commercial rates
without compromising the profitability of its activities.

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(68)

Italy has stated its intention of promoting the opening
up of the cabotage market in accordance with Council
Regulation (EEC) 3577/92 of 7 December 1992. There
are, in any case, no barriers to the use of EU-owned
ships on the Italian cabotage market. Any advantage for
the beneficiaries deriving from the aid is very limited
and cannot affect the common market to an extent
contrary to the common interest.

an advantage in relation to companies established in
other Member States. Since the entry into force of all the
provisions of Regulation (EEC) No 3577/92 allowing
free market access to almost all national markets within
the EU, shipping companies compete in a liberalised
market in Europe. The measure may have an effect on
competition in a liberalised market.

4. ASSESSMENT OF THE AID

4.1. Existence of aid within the meaning of Article 87(1)
of the EC Treaty

(69) According to Article 87(1) of the EC Treaty, ‘any aid
granted by a Member State or through State resources in
any form whatsoever which distorts or threatens to
distort competition by favouring certain undertakings
or the production of certain goods shall, insofar as it
affects trade between the Member States, be incompat-
ible with the common market.’

(70) Transfer of State resources: the concept of State aid applies
to any advantage granted directly or indirectly, financed
out of State resources, granted by the State itself or by
an intermediary body acting by virtue of powers con-
ferred on it. Under this aid scheme, the amounts paid
immediately and directly to the shipowners are raised
by means of loans which the Italian administration
undertakes to pay back over a 15-year period. The loan
arrangement is thus simply an instrument by means of
which the State may grant a lump sum payment to
the aid beneficiary while meeting specific budgetary
constraints.

(71) Advantage:

the aid measure in question confers an
advantage upon Italian owners of single hull oil tankers
20 years of age or older operating in the Italian cabotage
market as well as internationally. Shipping companies
operating more recent ships in the same markets do not
benefit.

(72)

Selectivity: the aid measure favours the shipping sector,
in particular the maritime carriage of oil and chemicals,
and is therefore selective in nature.

(73)

Effects on trade and distortion of competition: it strengthens
the position of a limited number of shipping companies
in the Italian market. The possibility of scrapping
essential assets while continuing to receive compen-
sation for the revenue lost as a result of the elimination
of the scrapped tonnage could place the beneficiaries at

is State-financed,

(74) The measure in question confers an advantage upon
selective in
certain undertakings,
character, affects trade between Member States and
affects competition. As such, it constitutes State aid
within the meaning of Article 87(1) of the EC Treaty and
is incompatible with the common market, unless it can
meet the requirements of the exemptions provided for
in the Treaty.

4.2.

Legal basis for the assessment

(75) Article 87(2) of the EC Treaty, which provides for aid
having a social character, aid making good the damage
caused by natural disasters or exceptional occurrences
and aid granted to the economy of certain areas of the
Federal Republic of Germany is not applicable in the
present case.

(76) Nor is Article 87(3)(a) of the EC Treaty applicable, which
provides for aid to promote the economic development
of areas where the standard of living is abnormally low
or where there is serious underemployment, because
the measure under consideration affects the maritime
industry and is not focussed on a particular region or
regions.

(77) Article 87(3)(b) of the EC Treaty, which provides for aid
to promote the execution of an important project of
common European interest or to remedy a serious
disturbance in the economy of a Member State, and
Article 87(3)(d) of the EC Treaty, which provides for aid
to promote cultural and heritage conservation, are not
applicable to aid to the maritime transport sector.

(78) Under Article 87(3)(c) of the Treaty, aid to facilitate the
development of certain economic activities or of certain
economic areas may be considered compatible with the
common market, where such aid does not adversely
affect trading conditions to an extent contrary to the
common interest. In the case in point, the Commission
considers Article 87(3)(c) of the Treaty as the legal
instrument which may provide an exemption.

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4.3. Appraisal of the compatibility of the aid

4.3.1. Compatibility in the light of the Community guide-

lines on State aid to maritime transport

(79) The relevant Community guidelines set out the arrange-
ments and criteria according to which State aid may be
authorised in this sector. In general terms, aid schemes
should not be at the expense of other Member States’
economies and must be shown not to risk distortion of
competition between Member States to an extent con-
trary to the common interest. State aid must always be
restricted to the minimum necessary to achieve its
purpose and must be granted in a transparent manner.
In addition, the cumulative effect of all aid granted by
State authorities (including national, regional and local
authorities) must always be taken into account.

(80) The relevant Community guidelines define the State aid
schemes which may be introduced to support
the
maritime interests of the Community. Such aid should
have the following objectives:

— safeguarding employment within the Community

(for on-board and on-shore staff),

— preserving maritime know-how in the Community

and developing maritime skills,

— improving safety.

(81) With respect to safety, the fourth paragraph of sec-
tion 1.1 of the relevant Community guidelines points
out that, ‘There is also at present cyclical and structural
overcapacity which means that the industry is demand-
led and that shippers can drive down freight rates; this,
combined with high fixed costs for shipowners, means
that the incentive to cut costs and possibly corners
increases and the pursuit of high quality in operations
may not be commercially attractive. This may then
undermine the long-term interests of the Community in
safe, efficient, environmentally friendly transport.’

(82) The second paragraph of Chapter 5 of the guidelines
states the Commission’s reluctance to approve subsidies
for fleet renewal, except where such aid is part of a
structural reform leading to reductions in overall fleet
capacity. However, the Italian scheme does not explicitly
require reduction of capacity.

(83) However, according to the fourth paragraph of Chapter 5
of the guidelines, ‘aid may however be permitted, in the
line with the Community safe-seas policy (23), in certain
restricted circumstances (...) to promote the use of safe
and clean ships.’ Incentives may be permitted ‘to upgrade

( 23) A common policy on Safe Seas, COM(93) 66 final.

Community-registered ships to standards, which exceed
the mandatory safety and environmental standards laid
down in international conventions and anticipating
agreed higher standards.’

(84) The Italian aid scheme is not specifically targeted at
renewing the tanker fleet but rather at launching a
process that will improve levels of safety and environ-
mental protection by removing a great number of high-
risk tankers from the market. The objective of the
aid scheme, expediting the phasing-out of single-hull
tankers, particularly older ones, is in line with Com-
munity objectives following the Erika disaster. The
Italian aid scheme promotes, and anticipates,
the
achievement of Community objectives by increasing and
anticipating protection against the risks stemming from
the use of older ships which meet lower technical
standards.

(85)

In addition, by bringing forward the timescales and
encouraging the scrapping of single-hull tankers more
than 20 years old in preference to selling them to other
Member States or to third countries, the scheme helps
to make seas outside Community waters safer too. It
thus definitively removes 67 of
the most high-risk
tankers from operation anywhere in the world.

(86) The Commission notes, furthermore, that the scrapping
of tankers under the Italian aid scheme goes further than
the IMO compromise and the Community standards set
out in the Commission Communication on the safety of
the seaborne oil trade and in Regulation (EC) No 417/
2002, with respect to single hull tankers.

tankers with deadweight

The Italian scheme promotes the scrapping of single-
hull
tonnages of less than
5 000 tons (some 31 single-hull tankers) and gives
incentives for scrapping other (larger) single-hull tankers
that were at least 20 years old on 31 December 1999.
This anticipates the IMO and Community timetable by a
considerable period of time, as the first tankers were
scrapped as early as January 2000.

(87) The aid scheme was devised, discussed with potential
beneficiaries, presented to and adopted by the Italian
Parliament before Regulation (EC) No 417/2002 came
into force, even if, as has been reported above, no aid
has been awarded pending the Commission’s approval.
It can thus be regarded as a one-off interim arrangement
to regulate a situation of legal uncertainty, in a period
during which, however, the potential risk and the effects
of a catastrophe similar to the Erika disaster were already
well known. The aid was, and is, necessary in order to
achieve the objective of phasing out single-hull tankers
ahead of schedule since, without compensation for the
loss of revenue, shipping companies would have no
incentive for removing dangerous and polluting tankers
from operation. The additional conditions agreed to by
the Italian authorities and ordered by the Commission
in this decision will further restrict the use of single-hull
tankers.

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from operation tonnage

(88) The aid in question is a scrapping premium necessary to
remove
representing the
greatest risks to safety and to the maritime environment.
Thanks to the conditions attached to the scheme, the aid
reduces risky and polluting capacity and ultimately
encourages the use of safer tankers. Negotiations at
Community and international level had precisely that
objective. It can therefore be confirmed that the objec-
tives pursued by the Italian aid scheme are in line with
the common transport policy.

(93) The aid is aimed exclusively at offsetting the loss of
revenue (and any additional costs incurred) by the
shipowner as a result of ceasing to use the single-hull
vessel which has been scrapped. It should also be noted
that the Commission imposes certain conditions in
this decision in order to prevent overcompensation.
Moreover, Italy has stated that it will consider any
spillover of the scrapping aid (limited to compensation
for lost revenue) to the shipbuilding market as automati-
cally ineligible under the present aid scheme.

(89)

It is in the Community’s interest to adopt measures to
reduce risky and polluting capacity. Although the pre-
sent aid scheme concerns only a limited number of the
oldest of such tankers in a single Member State, and
although the beneficiaries which own several single-hull
tankers more than 20 years old may continue to use
those for which they do not receive the aid (at least,
until their use is banned by IMO and/or Community
regulations), it is clear that every single demolition of
unsafe vessels ahead of the schedule laid out in Com-
munity legislation counts towards achieving the final
objective of safer seas.

(90) Beneficiaries are free to use the aid on expenditure
related to their maritime business. By imposing con-
ditions limiting the use of single-hull tankers, the Italian
authorities are influencing the financial decisions of the
shipping company with regard to future investment and,
potentially, replacement capacity, thereby improving
environmental and safety conditions in Italian and,
indeed, in international waters. Other forms of expendi-
ture (crew training, for example) are regarded as meeting
the criterion of a maritime business investment.

(91)

In view of the above and since the granting of aid will
be made subject to the application of a number of strict
conditions imposed by the Commission through the
present decision, which will in particular prevent any
overcompensation, the Commission considers that the
aid measure favours the development of a specific sector
(safer maritime transport) without being contrary to the
common interest
complies with
Article 87(3)c and also with the Community guidelines
on State aid.

therefore

and

4.3.2. Compatibility with legislation on shipbuilding

(92) The third paragraph of Chapter 5 of

the relevant
Community guidelines requires that aid approved under
it must comply with the provisions of Council Regu-
lation (EC) No 1540/98 of 29 June 1998 on aid to
shipbuilding (24). In that respect, the following obser-
vations can be made, taking account also of the infor-
mation provided by the Italian authorities during the
procedure under Article 88(2).

( 24) OJ L 202, 18.7.1998, p. 1.

(94)

In the light of the conditions imposed in this decision it
cannot be concluded that the aid qualifies as indirect
aid to shipbuilding within the meaning of Council
Regulation (EC) No 1540/98/EC.

4.4. Description of the measures to be taken
by Italy and the conditions imposed
in this decision to make the aid compatible

(95)

In its decision to open the formal investigation pro-
cedure, the Commission expressed doubts about the
compatibility of the aid because there were no clear
conditions regarding the potential use of the aid. The
amounts of aid awarded under such schemes must be
strictly monitored to ensure that they are spent in
compliance with Community policies and rules on State
aid. The amounts of aid must be limited to the strict
minimum necessary to achieve the desired effect.

4.4.1.

Proportionality of the aid amount

(96) The aid is calculated on the basis of deadweight tonnage,
since this correlates best to the potential pollution risk.
The Commission may agree to this method of calculation
provided that it is applied in a proportional way. At the
time of the decision to open the formal investigation
procedure, the Commission expressed concerns on this
point, which were confirmed by the comments from the
interested parties.

(97) The Commission acknowledges that a scrapping pre-
mium should provide sufficient incentive to accomplish
the scrapping as early as possible, and that the aid in
question is necessary in order to achieve the scrapping
of tonnage considered to be high-risk before the ship-
owner has replaced it with less risky, environmentally
safer capacity. However, the Commission insists that
the basis for calculating the aid must be limited to
compensation for loss of revenue during the actual time
period during which such loss is suffered. Without
such a link, the aid amount may not be considered
proportional to the actual compensation of the losses
suffered because it could spill over to other economic
interests of the shipping company perhaps not in line
with the objective of Community policy.

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(98) Accordingly,

should be
the present aid scheme
implemented in a way which eliminates the risk of an
aid recipient benefiting from aid despite the fact that
compensation for loss of revenue is no longer necessary,
either because the shipping company had already
arranged for replacement capacity within a period of less
than a year, or because the scrapped tanker would have
anyhow had to cease operating before the end of one full
year in accordance with Regulation (EC) No 417/2002 of
8 February 2002. A report must be presented to the
Commission setting out in detail, for each beneficiary and
vessel, the method used to calculate the amount of aid.
The Commission reserves the right to submit the infor-
mation regarding individual aid amounts to third parties,
in particular, experts, for their opinion. This report, and
further reports which the Commission may request from
Italy on the implementation of the aid, must also include
information on the total tonnage owned by the benefici-
ary before the granting of the aid and throughout the year
following the granting of the aid.

4.4.2. Non-discriminatory and transparent application

(99)

Further conditions should be added in order to guarantee
greater transparency and non-discrimination, and to pro-
vide for the possibility of appealing against the decision
on the amount of the aid. The Commission is aware that
the aid scheme appears to allow the Italian authorities a
certain margin of discretion with regard to taking into
consideration the technical standards of the tanker to
be scrapped. Accordingly, further conditions must be
complied with when applying the aid scheme in order to
ensure the necessary transparency, non-discrimination
and legal certainty.

4.4.3. Compliance with objectives of maritime policy

(100) With regard to the conditions on the subsequent invest-
ment of the aid in the maritime business of the shipping
companies concerned, the latter are free to choose the
form of investment they think necessary, so long as it is
considered in line with the Community’s maritime policy.
This may be deemed acceptable, but it is however indis-
pensable that aid recipients are restricted in their choice
concerning the purchase of
replacement capacity,
whether by new or second-hand tankers. In view of the
Community’s maritime policy and legislation on the
phasing-out of single-hull tankers, the Commission con-
siders it important to insist that the condition governing
investment does not permit any purchase of single-hull
tankers by beneficiaries.

(101) In the course of these proceedings, the Italian authorities
already committed themselves to specifying further con-
ditions regarding the purchase of single-hull tankers as
indicated above, offering to make it a condition that, in
relation to the obligation of aid recipients to furtherinvest
in their maritime business, the purchase of single-hull
ships would not be considered an admissible investment
under the aid scheme. It offered to impose that in relation
to the obligation of aid recipients to further invest in the
maritime business that the purchase of single-hull ships
would not be considered an admissible investment under
the aid scheme.

4.4.4. Cumulation requirements

(102) Italy is also reminded of the cumulation rule contained
in paragraph 2 of Chapter 10 of the guidelines on State
aid to maritime transport, which states: ‘A reduction to
zero of taxation and social charges for seafarers and of
corporate taxation of shipping activities is the maximum
level of aid which may be permitted. To avoid distortion
of competition, other systems of aid may not provide
greater benefit than this. Consequently, although each
aid scheme notified by a Member State will be examined
on its own merits, it is considered that the total amount
of aid in the form of direct payments in the framework
of Chapters 3, 4, 5 and 6 should not exceed the total
amount of taxes and social contributions collected from
shipping activities and seafarers; to do so would, it is
considered, affect trading conditions to an extent con-
trary to the Treaty provisions, as the aid would be
disproportionate to the objective.’

4.4.5. Cabotage market

(103) Although Italy confirms that its cabotage market is open
in compliance with Council Regulation (EEC) No 3577/
92, the exceptionally high number of Italian ships in this
market gives cause for concern. A certain imbalance also
derives from restricting access to ships in the registers of
other Member States, whereas ships registered in the
second Italian register may not only operate in this
market but may also benefit from the aid. The Com-
mission therefore considers it necessary to monitor this
issue closely with the help of detailed information
provided to it by the Italian authorities during the
coming five years.

4.5. Legal application of the aid scheme

(104) Prior to introducing a formal proposal for what later
became Law 51/2001 to the Italian Parliament on
16 March 2000, the Italian Government and industry
had already agreed on the conditions for the granting of
the aid and had already identified eligible tankers. The
aid measure based on a political agreement in substance
was therefore already being applied. It is however true
that no loan obligations seem to have been transferred
to the Italian government, which would constitute the
actual granting of the aid. On account of the large
expectations raised and the actual reaction of the market
to it, the Commission considers that the aid measure
was however being applied prior to its authorisation,
already in January 2000 and prior to its adoption in
March 2001. However, the Commission accepts that
this course of action by the Italian authorities was
probably inevitable in the wake of the Erika disaster and
in order to induce the beneficiaries to scrap the vessels
as early as possible.

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5. CONCLUSION

(105) The Commission finds

that

Italy has unlawfully
implemented the aid for the scrapping and renewal of
the Italian oil tanker fleet in breach of Article 88(3) of
the Treaty. However, assessment of the measure has
shown that the aid may be declared compatible with
Article 87(3)(c) of the EC Treaty provided that it is
adapted in line with the conditions established by the
Commission,

HAS ADOPTED THIS DECISION:

Article 1

The aid, provided for under Law 51/2001, which Italy has
implemented for the benefit of the Italian oil tanker fleet,
amounting to EUR 77,4 million as a total budget including
interest, is compatible with the common market, subject to
the conditions set out in Articles 2 and 3 of this Decision.

Article 2

1.
In addition to the procedures proposed by Italy, individ-
ual aid amounts must be calculated in a transparent way based
on objective criteria, as specified in particular in paragraphs 2
to 6.

4.
Before the scheme may be implemented fully, any margin
of discretion concerning the choice of eligible vessels and the
extent to which they may benefit from this scheme has to be
eliminated.

The calculation of the individual aid amounts has to be

5.
made public to all aid recipients.

Individual aid recipients and companies which have

6.
applied for aid need to be granted the possibility to appeal.

Article 3

The obligation regarding investment in maritime busi-
1.
ness has to comply with maritime policy objectives.
In
particular, therefore, beneficiaries are not permitted to pur-
chase single-hull tankers.

2.
The overall aid received by a company benefiting from
the present aid may not exceed the limit imposed by para-
graph 2 of Chapter 10 of the guidelines on State aid to
maritime transport.

3.
During a period of five years as of 2003, Italy has
to inform the Commission on a yearly basis of detailed
developments in the Italian tanker cabotage market for the
transport of oil, oil products and chemicals.

Article 4

Aid already granted but which does not comply with the
conditions referred to in Articles 2 and 3 has to be recovered.

The calculation of the aid amount must to be limited to

2.
the minimum necessary.

Article 5

Account is to be taken, in line with the conditions of this aid
scheme of the actual period during which an aid recipient has
suffered loss of revenue due to the scrapping of a tanker.

3.
The Italian authorities must provide the Commission in
particular with detailed reports for each beneficiary and vessel,
regarding the method of calculation and the amount of
tonnage in the beneficiary’s possession during a period of at
least one year after the granting of the aid.

The first report is to be forwarded within two months of the
notification of this Decision.

The Italian authorities shall inform the Commission, within
two months of notification of this Decision, of the measures
taken to comply with it.

Article 6

This Decision is addressed to the Italian Republic.

Done at Brussels, 17 July 2002.

For the Commission

Loyola DE PALACIO

Vice-President