2006/639/EC: Commission Decision of 23 November 2005 on the State Aid which Italy is planning to implement for Fincantieri (notified under document number C(2005) 4433)   (Text with EEA relevance)
Date: 2005-11-23
Institutions: European Commission
Subjects: Italy, State aid, control of State aid, delivery, shipbuilding, vessel

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COMMISSION DECISION

of 23 November 2005

on the State Aid which Italy is planning to implement for Fincantieri

(notified under document number C(2005) 4433)

(Only the Italian version is authentic)

(Text with EEA relevance)

(2006/639/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

II.

DETAILED DESCRIPTION OF THE AID

Having regard to the Treaty establishing the European Commu-
nity, and in particular the first subparagraph of Article 88(2)
thereof,

(6)

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

Having regard to Council Regulation (EC) No 1540/98 of
29 June 1998 establishing new rules on aid to shipbuilding (1),

Having called on interested parties to submit their comments
pursuant to the provisions cited above (2) and having regard to
their comments,

Whereas:

I.

PROCEDURE

(1)

(2)

(3)

(4)

By letter dated 31 July 2003, Italy notified the Commission
of the aid. By letters dated 16 September 2003, 6 November
2003, 1 December 2003, 4 February 2004, 12 February
2004, 26 February 2004, 5 April 2004, 25 May 2004,
23 June 2004 and 8 July 2004, it provided the Commission
with further information.

By letter dated 22 October 2004,
the Commission
informed Italy that it had decided to initiate the procedure
laid down in Article 88(2) of the EC Treaty in respect of the
aid.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (3).
The Commission invited interested parties to submit their
comments on the aid.

from interested
The Commission received comments
parties. It forwarded them to Italy, which was given the
opportunity to react; its comments were received by letter
dated 12 April 2005.

(5) Other letters were received from Italy dated 25 November

2005, 18 May 2005 and 12 October 2005.

(1) OJ L 202, 18.7.1998, p. 1.
(2) OJ C 30, 5.2.2005, p. 12.
(3) See footnote 2.

Italy requested the Commission to grant an extension of the
delivery limit of 31 December 2003 provided for in
Article 3 of Council Regulation (EC) No 1540/98 of
29 June 1998 establishing new rules on aid to shipbuilding
(‘the Shipbuilding Regulation’) as a condition for receiving
contract-related operating aid. The extension was requested
for Fincantieri, for the delivery of five cruise ships, for a
total contract value of € 2,1 billion and an aid amount of
€ 243 million.

is a state-owned company operating eight
Fincantieri
shipyards (Monfalcone, Marghera, Sestri Ponente, Ancona,
Palermo, Castellammare, Muggiano, Riva Trigoso) in Italy. It
is specialised in building cruise ships but also builds other
types of seagoing vessels and military ships.

the final contracts for

Italy explained that
the ships
concerned were signed in December 2000 and delivery,
according to the contracts, was planned for June and
December 2003. The ships were ordered by various
subsidiaries of Carnival Corporation (‘Carnival’), a US
cruise operator.
Italy promised, on this basis, contract-
related operating aid for the building of the ships.

Italy stated that the shipowner requested a postponement,
in the autumn of 2001, of the delivery dates to various
dates in 2004 and 2005. This request was motivated by the
severe impact on the cruise industry of the terrorist attacks
of 11 September 2001. Fincantieri agreed to this and Italy
requested an extension of the delivery limit so that the ships
could still qualify for operating aid.

In their notification the Italian authorities referred to the
Commission's decision of 5 June 2002 (4) authorising a
similar extension of the delivery date for a cruise ship under
construction at Meyer Werft, Germany. Italy emphasised
the similarities between the two cases in terms of (i) the
the
reason given for
11 September 2001 terrorist attacks),
the relevant
(ii)
market
the commercial dependency
existing between the shipyard and the shipowner (Carnival
is Fincantieri's largest customer).

the extension (the impact of

(cruises) and (iii)

(7)

(8)

(9)

(10)

(4) OJ C 238, 3.10.2002, p. 14 (state aid case N 843/01).

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(11) By decision dated 20 October 2004 the Commission
granted the extension of the delivery limit for four of the
ships, but expressed doubts that it could grant the extension
for the fifth. The doubts concerned ship 6079 with planned
delivery in October 2005. This ship was originally intended
to be delivered in 2005 but the delivery date was changed
to December 2003 in late 2000; otherwise the ship would
not have been eligible for operating aid.

(12) The aid amount that Italy would grant to Fincantieri if the
Commission were to extend the delivery limit for ship 6079
is approximately € 33 million (9 % of the contract value of
the ship).

the Ancona shipyard,

(13) There were chiefly two reasons for initiating the formal
procedure. One was doubts concerning the feasibility of the
plan, whereby one of the five ships (ship 6077) was to be
built at
involving a complex
production process in which hull sections had to be moved
for assembly to a second yard (ATSM Trieste) and back to
Ancona, since the length of Ancona's dock is shorter than
the ship. Furthermore, Ancona had never built a ship of
similar complexity before, casting doubts on the ability to
manage this operation, not least concerning outfitting.
Linked to this, the construction of ship 6077 at Ancona
would have implied an exceptionally high amount of
outfitting at the Palermo shipyard because of the shift of
production from Ancona to Palermo.

(14) The second reason for initiating the formal procedure was
doubts concerning the estimated amount of outfitting that
would have had to be done by Fincantieri if all five ships
had been delivered in 2003. This would have involved, in
twice as much outfitting
the Commission's estimation,
work in 2003 as Fincantieri had ever done in any other
year. Furthermore,
the
outfitting planned for 2003 would have amounted to
around 40 % more than the yard had ever done before. The
the
Commission therefore had doubts as to whether
production plan for Fincantieri in general, and for Marghera
in particular, was realistic.

the shipyard at Marghera,

for

(15) For these two reasons the Commission doubted that all five
ships could have been delivered in 2005. However, on the
basis of the same information and analysis, the Commis-
sion accepted that it could have been possible to deliver
four of the ships.

(16) The Commission considered that

the main doubts
concerned ship 6079, which is the third sister ship to
6077, built at the same yard, Marghera, with planned
delivery in October 2005. The delivery of this ship was
postponed in relation to the December 2000 production

plan owing to the decision to build ship 6077 at Marghera.
These doubts are also based on indications (letter of intent
signed before the final contracts were signed in December
2000) that the current production sequence, with a very
late delivery for ship 6079, was originally intended.

III.

COMMENTS FROM INTERESTED PARTIES

(17) Fincantieri submitted comments in a letter dated 3 March

2005.

(18)

(19)

It stated that any of the company's yards, irrespective of
whether they were part of the cruise ship or transport
vessel divisions, were in a position to build the same ship
components, without
any need to alter production
engineering choices or executive planning in the workshop,
as it would be possible to count on a network of
that could meet quality and quantity
subcontractors
requirements.

It also stated that the Ancona shipyard would have had no
problems building an entire cruise ship of the dimensions
and design characteristics of ship 6077 (the sister ship of
6079), including all fittings, using only its own production
if only the agreement
facilities,
between Fincantieri, the local and regional authorities, the
port authorities and the metalworkers’ unions set out in the
memorandum of intent of 6 December 1999 had been
implemented immediately. However, this did not take place.

infrastructure and plant,

(20) When the production engineering of ship 6077 was
examined it was decided to build the ship in two parts:
the larger section at Ancona and the smaller section at Riva
Trigoso. The same production plan had been devised for
building the aircraft carrier Conte di Cavour at the Riva
Trigoso and Muggiano yards, and had been employed for
the construction of the Disney Magic cruise ship at the
Ancona and Marghera shipyards in 1997. The so-called
jumboisation was planned at the ATSM dry dock in Trieste.
As the latter had a dock that was suitable for fitting out and
it could have overcome any production
finishing ships,
difficulties encountered at
the Ancona shipyard while
offering the significant advantage, which should not be
underestimated, of proximity to the industrial area around
the shipyard at Monfalcone.

(21)

In the final analysis,
in choosing to build the 6077 at
Ancona, at least for a large section of the hull and much of
the outfitting work, Fincantieri adopted an effective and far-
sighted strategy which, should problems arise, offered a
number of alternatives that would take advantage of the
integrated nature and flexibility of its yards to ensure that it
would be possible to deliver the ship by the end of 2003 as
required by the contract.

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IV.

COMMENTS FROM ITALY

(22) The comments from Italy following the initiation of the
formal procedure reflect the comments made by Fincan-
tieri, i.e. that the December 2000 plan was challenging but
realistic. Italy considers that the delivery dates could have
been kept thanks to Fincantieri's production flexibility, in
other words its ability to ‘pool’ the construction process by
outsourcing to other yards (including some not normally
through an
engaged in the building of cruise ships),
infrastructure and plant investment project dedicated to
that end and through advanced building techniques.

i.e.

(23) Concerning the planned involvement of ATSM in the
construction of one of the ships, Italy's comments reflected
those of Fincantieri,
that ATSM could easily have
combined the two outfitted sections of vessel 6077,
although this method of construction is an alternative,
and in some ways a less satisfactory one, to the ‘normal’
sequence of construction phases. In any event, the work of
joining sections has now become routine for Fincantieri. As
regards the Commission's doubts about Ancona's previous
experience in building ships of similar complexity, Italy
considers that
it had gained such experience with the
construction and outfitting of around half of the Disney
Magic and with the passenger ship Danielle Casanova.

(24)

Italy also argues that the Palermo yard has in the past
(1996-97) carried out much more demanding production
plans than the one envisaged in 2000. As regards the
Commission's estimation that the December 2000 produc-
tion plan would have involved, in 2003, twice as much
outfitting work as Fincantieri had ever done in any other
year, Italy refutes that statement and claims that in almost
all the yards the December 2000 production plan would
the yard in
have relied on the ‘standard capacity’ of
question, and only in certain cases would peak capacity
have been reached.

(25)

Italy states that

In reply to the Commission statement that for the Marghera
shipyard the outfitting planned for 2003 would have
amounted to around 40 % more than the yard had ever
done before,
the workload (including
outfitting) scheduled for the Marghera yard in the plan
dating from 2000 was absolutely consistent with the
capacities and capabilities actually demonstrated by the
yard since it had previously managed to deliver four ships
in 15 months, as was planned for 2003.

(26)

Italy was also offered the opportunity to comment on the
essential elements of the report by the independent expert
whom the Commission consulted when it assessed the
information provided by Italy prior to the launch of the
formal investigation procedure.

the production cycle, in other words the gradual increase in
compensated gross tonnage (cgt) that occurs throughout
the construction period. By not distributing, over the time-
span necessary for actual production, the tonnage relating
to the nine ships scheduled for delivery in 2003 (some of
which were at an advanced stage of construction by the end
of 2002), the expert had concluded by asserting that in
2003 Fincantieri would have had to produce twice the cgt it
had produced in the past. That finding was,
in Italy's
opinion,
for the purposes of assessing
Fincantieri's production capacities, the tonnage delivered in
2003 did not correspond to the tonnage actually produced
in that year. Italy claims that the production data were
consistent with capacities observed in the past and in any
event did not exceed the maximum capacity levels.

incorrect since,

(29) The production data demonstrate in Italy's view that even in
the years that would have been most busy, namely 2002
and 2003, the production volumes for the Monfalcone,
Marghera and Sestri Ponente shipyards would not have
diverged by more than 20 % from historical values. As
regards the payload (accommodation and air conditioning),
which is the significant and distinctive part of the work on
ships of this type, the difference is even more marked in the
case of the Sestri Ponente shipyard (which increased its
output from 1 863 tonnes in 1998 to 14 303 tonnes in
2003); such a steep increase was facilitated by using
subcontractors and extending the scope of their responsi-
bilities via turnkey contracts.

(30) The figures for output in terms of hours of labour (in-
house/outsourced) show that, in the years preceding the
ones covered by the production schedule, greater use was
made of subcontracting than was contemplated in the
December 2000 schedule.

is

(31) Finally, Italy claims that the fear that subcontractors might
have been insufficient or unavailable
completely
unfounded, also in view of the fact that the fitting-out of
the ‘hotel’ part of the ships (which coincides with the last
phase of production in the shipyard)
involves the very
long-term
subcontractors with whom Fincantieri has
cooperation relationships. Even in the unlikely event of a
shortage or unavailability of skilled workers, the problem
would easily be overcome through outsourcing the work to
the building sector, mainly firms involved in the construc-
tion of large hotels, given the similarity of the furnishings
and fittings in the ‘hotel’ part.

(32)

Italy concludes by fully endorsing the comments made by
Fincantieri.

(27)

In its reply dated 18 May 2005 Italy commented on three
main aspects of the expert's report.

(28) First, according to Italy, the expert based his assessments on
total delivery in the year 2003, without taking account of

(33) By letter dated 12 October 2005 Italy commented on the
conclusions reached by the second expert consulted by the
Commission in order to assess the arguments put forward
by Italy in its reply to the decision initiating the formal
procedure.

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V.

ASSESSMENT OF THE AID

Legal basis

more than three years from the signing of the contract; in
such cases, the ceiling applicable is the one in force three
years before the date of
the ship.
Consequently, the last delivery date for a vessel qualifying
for operating aid was, in principle, 31 December 2003.

the delivery of

(34) According to Article 87(1) of the Treaty, any aid granted by
a Member State or through state resources in any form
whatsoever which distorts or threatens to distort competi-
tion by favouring certain undertakings or the production of
certain goods shall,
insofar as it affects trade between
Member States, be incompatible with the common market.
The Court of Justice of the European Communities has
consistently held that the criterion of trade being affected is
met if the recipient firm carries out an economic activity
involving trade between Member States.

(35) The Commission notes that the question of extending the
delivery limit is decisive for determining whether the ship
in question qualifies for contract-related operating aid
the Shipbuilding Regulation. The
under Article 3 of
operating aid in question consists in financing from state
resources part of the costs that the yard in question would
normally have to bear when building a vessel. Moreover,
shipbuilding is an economic activity involving trade
between Member States. The aid in question therefore falls
within the scope of Article 87(1) of the Treaty.

(36) Under Article 87(3)(e) of

the Treaty, categories of aid
specified by a decision of the Council acting by a qualified
majority on a proposal from the Commission may be
considered compatible with the common market. The
Commission notes that the Council adopted the Shipbuild-
ing Regulation on that basis on 29 June 1998.

(37) The Commission notes that, according to the Shipbuilding
Regulation, ‘shipbuilding’ means building of self-propelled
seagoing commercial vessels. The Commission also notes
that Fincantieri builds ships of this type and that it is
consequently an undertaking covered by the Regulation.

(38)

the
Italy's request has to be assessed on the basis of
Shipbuilding Regulation, although it expired at the end of
2003. This is because the scheme under which Italy granted
the aid was approved in accordance with that Regulation,
the aid was granted when the Regulation was still in force,
and the rules linked to the three-year delivery limit are laid
down in that instrument.

(39) According to Article 3(1) of the Shipbuilding Regulation, a
maximum ceiling of 9 % for contract-related operating aid
was allowed until 31 December 2000. Under Article 3(2),
the aid ceiling applicable to the contract would normally be
the final
the one in force at the date of signature of
contract. However, this does not apply to ships delivered

(40) Article 3(2) stipulates, however, that the Commission may
grant an extension of the three-year delivery limit when this
the
is found justified by the technical complexity of
individual shipbuilding project concerned or by delays
resulting from unexpected disruptions of a substantial and
defensible nature in the working programme of a yard due
to exceptional circumstances, unforeseeable and external to
the company. It should be noted that Italy bases its request
for extension of the delivery limit on such exceptional and
unforeseeable circumstances.

(41) The Commission notes that the Court of First Instance
interpreted a similar provision in its judgment of 16 March
2000 (5), in which it stated that the provision in question
must be given a restrictive interpretation.

Appraisal of the compatibility of the aid in the light of
the doubts expressed by the Commission and the
comments submitted by Italy and Fincantieri

(42) The Commission first points out that the present Decision
concerns one ship, but the assessment is based on the entire
production planned by Fincantieri
in December 2000.
Delivery of all five notified ships in 2003, plus other ships
already scheduled for delivery in 2003, would have
imposed a very heavy workload on the Fincantieri yards.
The Commission therefore considered it necessary to verify
that Fincantieri would have been technically able to deliver
the ships in question by the end of 2003.

(43) The additional information provided by Italy and Fincan-
tieri in response to the doubts raised by the Commission in
its decision initiating the formal procedure was analysed by
the Commission and by an independent technical expert (6)
at the Commission's request. The report drawn up by this
expert was made available to Italy for comments by a letter
from the Commission dated 26 August 2005.
Italy
commented on this report in a letter dated 12 October
2005.

Production of a ship at the Ancona shipyard and
effects on the Palermo shipyard

(44) The first doubt raised by the Commission was the ability of
the Ancona shipyard to build,
in combination with the
ATSM shipyard in Trieste, one of the five cruise ships
(6077) covered by the notification.

(5) Case T-72/98 Astilleros Zamacona SA v Commission [2000] ECR II-

1683.

(6) For administrative reasons, a different one from the expert consulted

before the formal procedure was initiated.

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(45)

(46)

Italy claims that it would have been possible to build one of
the five ships at Ancona and ATSM even though the dry
dock at Ancona is shorter than the ship in question, thanks
to a special procedure used once before for a cruise ship, i.e.
combining two ship sections (jumboisation). The Commis-
sion did not state in the decision initiating the formal
procedure that such a method would be impossible, but
underlined its complexity;
Italy agrees with this and
acknowledges that it was a ‘less satisfactory method of
construction’.

the
In the decision initiating the formal procedure,
Commission noted in this context that Ancona had never
built ships of similar complexity before, to which Italy
replied that it had built a major section for three similar
ships, and a passenger ship approximately half the size of
the ship in question (44 000 grt as compared with
82 500 grt). The sections and the ship were thus
considerably smaller than the cruise ship 6077 planned
to be built. Since in cruise ship construction complexity is
closely linked to size,
the Commission in this respect
concludes that Italy has not successfully refuted the facts set
out in the decision initiating the formal procedure.

(47) The decision also stated that construction of one of the
cruise ships at Ancona and ATSM in Trieste would have
involved moving other planned construction to another
Fincantieri yard, Palermo, and that the Commission had
doubts that this yard could have coped with the resulting
increase in outfitting work. Italy argues that such work
would have been theoretically possible. However, no
evidence is provided and the reply focused on construction
in terms of cgt instead of the precise issue of outfitting. The
Commission nevertheless notes that production at Palermo
in 2003 was 33 000 cgt, which falls far short of the
maximum production claimed by Italy (63 000 cgt) and is
far less than the production according to the December
2000 plan (53 000 cgt).

(48) Furthermore, Italy informed the Commission that already
in June 2001 (less than six months after the contract for the
five cruise ships was signed) there was a production crisis at
Palermo, even without the extra work planned, which made
it necessary to delay deliveries. The Commission therefore
considers that the Palermo yard would not have been able
to fulfil the December 2000 plan as regards outfitting, and
Italy has not given any reply on this point.

(49) The Commission also notes that the information provided
by Italy and Fincantieri shows that it was not clear in
December 2000 whether the outfitting of ship 6077 was
intended to take place at ATSM or at Ancona. According to
the production plan dated December 2000 and exhibit 5 in
the letter dated 25 May 2005, the outfitting was to take
place at Ancona, but the letter from Fincantieri dated
3 March 2005 states that the outfitting was to take place at

ATSM to overcome any production difficulties encountered
at the Ancona shipyard.

(50) According to the expert consulted by the Commission, Italy
has not come forward with convincing information as
regards the organisation and resources to be set up at
ATSM's dry dock and he strongly doubts that a yard, mainly
used for ship repair and inexperienced in cruise vessels,
could be turned into a fully organised yard able to deliver a
cruise vessel within a tight deadline.

(51)

Italy commented on this aspect in its letter dated 12 October
2005. Italy considers that Fincantieri's organisational skills
were sufficient to put, at short notice, ATSM in a position
to perform its intended task. It also stresses that in its ship-
repair activities ATSM is currently working in synergy with
Fincantieri. However, the Commission is still not convinced
by Italy's arguments that ATSM could be transformed from
a dry-docking facility for
into a fully
functioning shipyard in a short period of time.

ship repairs

(52) The conclusion is thus that Fincantieri

itself doubted
Ancona's ability to outfit the ship; neither has it provided
any proof that ATSM was able to do so. Based on the above
observations, the Commission considers that the December
2000 plan was unrealistic and unspecific both as regards
the construction of a ship at Ancona/ATSM and as regards
the situation at Palermo, confirming its doubts on these
points.

Outfitting by the Fincantieri group

(53)

In the decision initiating the formal procedure,
the
Commission estimated that delivery of all five ships plus
all the other ships planned would have involved twice as
much outfitting work as Fincantieri had ever done before,
and that for the Marghera shipyard the outfitting planned
for 2003 would have amounted to around 40 % more than
the yard had ever done before.

(54)

Italy replied, for one thing, that the hull erection capacity
was sufficient. This argument is however not relevant, since
the Commission did not question the ability to construct
the hulls.

(55) Fincantieri and Italy also question the Commission's
estimates of the amount of outfitting in relation to previous
years and argue for example that the increase was not more
than 20 %. They also claim that it would have been possible
to accomplish the necessary outfitting within the deadline
with the help of the network of subcontractors.

(56) The Commission maintains, however, and is supported in
this by its technical expert, that the outfitting issue is as
pertinent as stated in the decision initiating the formal

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individual
procedure. Although Italy has indicated that
yards could have increased their production up to their
peak level by operating two shifts, to do so simultaneously
in all or most of its shipyards would, in the Commission's
opinion, involve a very high risk and cost and would place a
heavy strain on management capacities, particularly since
Italy underlines
structure of
Fincantieri's production process.

the central management

production times of 18 and 19 months were according to
the Commission's expert extremely short. In this respect the
expert questions the claims made by Italy in its letter dated
25 May 2005 that there would be a learning curve which
would reduce the time needed for the later ships in a series.
While this assumption is correct when ships are built in the
same yard and with the same methods, it is, according to
the expert, not correct when the same type of ship is built
in different locations, with different teams, as would have
been the case under the December 2000 plan.

(57) The outfitting work is particularly critical for hulls 6078
and 6079, which were both planned to be built at the
Marghera shipyard and delivered before the end of
December 2003, with an interval of only two months
between them. The Commission's view, supported by the
expert's assessment, is that Italy, although providing some
figures on how it had planned to accomplish all
the
outfitting, has not given a proper reply to this important
point.

(63)

(58)

In its letter dated 12 October 2005, Italy comments on this
point made by the expert, stating that delivery of two ships
within a period of two months was feasible, and that for
example nine months had been set aside for ship 6078,
compared with seven months for 6079, so as to be able to
work on 6079 if necessary. The Commission points out
here that the planned outfitting times for sister ships 6075,
6076 and 6077 were nine, eight and ten months
respectively. Nine months for 6078 therefore appeared to
be not particularly long, and seven months for 6079
extremely short, given that the outfitting work on that
vessel was planned to be carried out simultaneously with
ship 6078.

(59) The Commission takes note of Italy's statement that the
outfitting time for some previous ships was reduced to
seven or even six months. However, this took place in
shipyards that were able to work in the normal way,
outfitting one ship at a time.

(60) The fact that Marghera managed in the past to deliver four
ships in 15 months does not dispel the Commission's
doubts,
since they mainly concern the two planned
deliveries within two months. The Commission also notes
that real production at Marghera in 2003, which was still
considered a busy year for Fincantieri (7), was around
130 000 cgt,
far less than the planned production of
160 000 cgt for 2003 in the December 2000 plan.

(61) The delivery of four ships in a short timeframe would
furthermore, in the view of the expert consulted by the
Commission, have caused difficulties for the shipowner,
who would probably have had to overcome serious
organisational problems in order to be in a position to
take delivery of four vessels within two months.

(62) As for ships 6078 and 6079, which were planned to be
the planned

delivered from the Marghera

shipyard,

(7) According to Fincantieri's annual report for 2003,

‘2003 was a
particularly busy year for the Cruise Ship Business Unit, which was
engaged in delivering three ships in a brief period of time’.

In its letter dated 12 October 2005, Italy comments on this
point. It considers that there is a learning curve even when
ships are built in different locations. The Commission can
agree that a certain learning curve exists even when
production takes place at different yards, e.g. as regards
aspects linked to the central management structure and the
supply of major equipment. Nevertheless, when ships are
built
locations, and even with different
production methods, it is clear that this learning curve is
much less
repeated
production in the same yard.

than when there

in different

significant

is

(64) The Commission notes that the three sister ships 6077,
6078 and 6079 would not have been built at the same
yards and with the same production methods under the
December 2000 plan. It also notes that according to Italy
ship 6079 is in fact not the third in a series but the fifth,
and that labour savings of 16 % and 8 % for the first and
second sister ships had already been achieved. To expect
additional efficiency gains and time savings for each further
ship is even less plausible for the last two ships in a series of
three ships. The Commission
five than in a series of
in
the estimated reductions
that
therefore considers
production times for ships 6078 and 6079 in the plan
dating from 2000 were unrealistic.

Missing evidence

(65) The

expert

technical

consulted by the Commission
following the initiation of the formal procedure provided
the Commission with some examples of what kind of
information Italy/Fincantieri could have provided to show
that Fincantieri really had the intention and the capability to
deliver all five ships by the end of 2003.

(66) One such example is orders to suppliers for main items
such as propulsion systems or main power generators.
These have to be ordered at an early stage so as to be sure to
receive them in time. Another such example would be
contracts with subcontractors, which should have been
concluded before the end of July 2001 according to the
process description presented by Italy, and in any event
before September 2001. However, Italy has only presented a
list of subcontractors that potentially work for Fincantieri.
A third example of proof that could have been provided
would be actual dates of downpayments on contracts or

L 268/18

EN

Official Journal of the European Union

27.9.2006

the
performance bonds/bank guarantees arranged for
orders and normally produced against payment of the first
instalment for a new ship.

ships before the end of 2003, was unrealistic. The doubts
concerning the ability to deliver ship 6079 by the end of
2003 have therefore been confirmed.

(67)

Italy and Fincantieri did not provide any such evidence of
Fincantieri's intention and ability to deliver all the ships by
the end of 2003, including ship 6079, even though by
letter dated 26 August 2005 the Commission informed
Italy that precisely this type of information would have
been useful. The lack of such information further supports
the Commission's view that the December 2000 produc-
tion plan was unrealistic and that ship 6079 could not have
been delivered by the end of 2003.

Expected delivery of the ship

(68) The Commission finally notes that according to a press
release issued on 20 June 2005 by the ship operator
(Holland America Line), the vessel in question (ship 6079),
to be named MS Noordam, is to be delivered in January
2006. The Commission notes that if this information on
the delivery date is correct, the aid could not have been
granted by Italy even if the Commission had allowed an
extension of the delivery limit until the end of October
2005, as requested by Italy.

VI.

CONCLUSION

(69) The Commission has analysed the information provided by
Italy following the Commission decision to open a formal
investigation into the technical ability to deliver all the ships
that were scheduled for delivery in 2003 according to
Fincantieri's December 2000 plan, and in particular hull
6079. In the Commission's view the information that Italy
raised
has provided has not dispelled the doubts
concerning the feasibility of
the December 2000 plan
submitted by Italy. The original doubts were shared by an
independent expert. The new information was assessed by
another independent expert, who also came to the same
conclusion as the Commission. Italy had the opportunity to
comment on the conclusions set out in the reports by both
experts.

it

(70) Based on its assessment of all

the available facts the
Commission comes to the conclusion that the original
production plan, with delivery of all five notified cruise

in accordance with Article 3(2) of

(71) The Commission notes that it has already authorised an
extension of the delivery limit for four ships produced by
Fincantieri,
the
Shipbuilding Regulation. That provision applies only to
unexpected disruptions of a substantial and defensible
nature due to exceptional circumstances, unforeseeable and
external to the company, and the Court has already stated
that it should be given a restrictive interpretation.

(72) On the basis of the conclusion set out in paragraph 70, an
extension of the delivery limit is not defensible, and for this
reason the Commission cannot authorise an extension of
the delivery limit for hull 6079,

HAS ADOPTED THIS DECISION:

Article 1

The three-year delivery limit laid down in Article 3(2) of Council
Regulation No 1540/98 cannot be extended for ship 6079 built
by Fincantieri.

The contract-related operating aid for the ship may accordingly
not be implemented.

Article 2

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

Article 3

This Decision is addressed to the Italian Republic.

Done at Brussels, 23 November 2005.

For the Commission

Neelie KROES

Member of the Commission