2006/948/EC: Commission Decision of 4 July 2006 on State aid which Italy is planning to implement for Cantieri Navali Termoli S.p.A (No C 48/2004 (ex 595/2003)) (notified under document number C(2006) 2972) Text with EEA relevance
Date: 2006-07-04
Institutions: European Commission
Subjects: Italy, State aid, carriage of goods, chemical product, control of State aid, shipbuilding

28.12.2006

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Official Journal of the European Union

L 383/53

COMMISSION DECISION

of 4 July 2006

on State aid which Italy is planning to implement for Cantieri Navali Termoli S.p.A (No C 48/2004 (ex
595/2003))

(notified under document number C(2006) 2972)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2006/948/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(5)

Having regard to the Treaty establishing the European Commu-
nity, 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 regard to Council Regulation (EC) No1540/98 establish-
ing new rules on aid to shipbuilding (1)
the
‘Shipbuilding Regulation’), and in particular Article 3(2) thereof,

(hereinafter

Italy submitted its comments by letter dated 26 July 2005,
registered as received on 29 July 2005. By letter dated
6 January 2006,
the Commission requested additional
information. The Italian authorities replied by letters dated
23 January 2006 and 2 February 2006, asking for
extensions of the deadline, which the Commission granted
by letters dated 27 January 2006 and 9 February 2006. By
letter dated 6 March 2006, registered as received on the
same day, the Italian authorities submitted the additional
information requested and completed their submission by
letter dated 6 April 2006.

Having called on interested parties to submit their comments (2)
and having regard to their comments,

(6)

The Commission received no comments from interested
parties.

Whereas:

PROCEDURE

DETAILED DESCRIPTION OF THE AID

(1)

(2)

(3)

(4)

By letter dated 22 December 2003, registered as received
the Italian authorities notified the
on the same day,
Commission under Article 3(2) of
shipbuilding
Regulation (1) of a request to extend the three-year delivery
date for a vessel named C.180, for which operating aid has
been granted. The ship is being built by Cantieri Navali
Termoli SpA. (‘the shipyard’).

the

By letter dated 30 December 2004,
the Commission
notified Italy of its decision to initiate the procedure laid
down in Article 88(2) of the EC Treaty in respect of the
notified measure.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (2).
The Commission invited interested parties to submit their
comments on the measures.

By letters dated 28 January 2005, 1 April 2005, 1 June
2005 and 6 July 2006, registered as received on 2 February
2005, 6 April 2005, 6 June 2005 and 7 July 2005
respectively, Italy requested extensions of the deadline for
submitting its comments on the Commission’s decision to
initiate proceedings. The Commission replied by letters
dated 4 February 2005, 8 April 2005, 29 June 2005 and
17 July 2005 respectively.

(1) OJ L 202, 18.7.1998, p. 1.
(2) OJ C 42, 18.2.2005, p. 15.

(7)

(8)

Italy asked the Commission to agree to an extension of the
delivery limit of 31 December 2003, which is laid down in
the Shipbuilding Regulation as a condition for receiving
contract-related operating aid for ships. The extension
requested concerned the delivery of a vessel named C.180,
which was being built by Cantieri Navali Termoli SpA., a
shipyard located in the Molise region of Italy. The extension
originally requested was until 31 October 2004 (10
months).

The shipbuilding contract was signed on 30 December
2000, and delivery was originally scheduled for 30 June
2003. The ship had been ordered by Marnavi SpA., an
Italian shipowner,
the transport of chemical and
petroleum products. In accordance with Article 3(1) of
the Shipbuilding Regulation, the shipowner was promised
operating aid of 9 % for this vessel, equivalent to some EUR
3,9 million.

for

(9) However, according to the Italian authorities, construction
took longer than anticipated because of a combination of
factors, namely the impact of the events of 11 December
2001, the subsequent need to modify the ship to meet the
changed market demands, and two natural disasters — an
earthquake and floods. The shipyard therefore had to

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request an extension of the delivery limit for ship C.180 to a
date 10 months over the 31 December 2003 limit laid
down in the Shipbuilding Regulation.

changes were then set out formally in an addendum to
the original construction contract on 10 December
2003.

(10)

In their notification, the Italian authorities refer to the
Commission decision of 5 June 2002 authorising a similar
extension of the 31 December 2003 delivery limit for
cruise ships under construction at Meyer Werft, Papenburg,
Germany (the ‘Meyer Werft decision’). Specifically, they
emphasise several basic similarities between the two cases
in terms of: (i) the reason invoked for the extension (i.e. the
impact of the 11 September 2001 terrorist attack); (ii) the
market concerned (i.e. maritime transport of petroleum and
chemical products); and (iii) the consolidated commercial
relations between the shipyard and the shipowner (3). In
short, they claim that the Meyer Werft decision sets a clear
precedent for an exceptional authorisation in this case.
Furthermore, they note that on 13 November 2002 the
Commission took another decision granting, for similar
reasons, an extension of the delivery limit for a cruise ship
under construction at Kvaerner Masa yard, Finland (the
‘Kvaerner Masa decision’).

they describe as exceptional

(11) The Italian authorities justify their request by referring to
factors which were
what
unforeseeable and external
to the shipyard and which
resulted in unexpected, substantial and defensible disrup-
tions to the shipyard’s work programme. More specifically,
these delays were attributable to the following events (see
overview in Table 1):

(i)

Impact of the 11 September 2001 events

On 1 October 2001, before construction started, the
shipowner asked Cantieri Navali Termoli to suspend
execution of the contract until 30 September 2003
rather
it. The shipowner eventually
withdrew its request for suspension of the contract
on 29 September 2003.

than cancel

(ii) Need to modify the ship to meet changed market demands

In addition to these events, the shipowner, when
revoking the suspension order, requested changes to
the original contract specifications in order to modify
the ship to meet changed market demands. These
changes concerned the size and number of the tanks
length and width of the ship: the
and the overall
designs for these changes were submitted to RINA, the
for approval. The
Italian naval certification body,

(3) Between 2000 and 2004 Marnavi accounted for about 43 % of
Cantieri Navali Termoli's turnover whereas, during the earlier period
from 1995 to 1999, its share was close to zero.

(iii)

Impact of natural disasters

On 31 October 2002 an earthquake hit the Molise
region, affecting the shipyard, its employees and its
suppliers. Subsequently, between 23 and 25 January
2003 the region was hit by floods which had further
devastating consequences for the shipyard, its employ-
ees and its suppliers. Those two natural disasters
caused the shipyard direct injury on account of the
inactivity of
injury
following the unilateral revoking of contracts by local
undertakings subcontracted for the work on ship
C.180 because of the damage caused by the natural
disasters to the production infrastructure of
their
suppliers. In particular, the Italian authorities argued
that those events adversely affected the engineering
work preparatory to the actual construction work on
the ship.

the labour force and indirect

The Italian authorities acknowledge that both events
took place during the contract-suspension period but
affirm that they still disrupted the shipyard’s work
programme and emphasise that, for both events, the
state of emergency declared by decree of the President
of the Council of Ministers lasted until 1 February
2004.

the

emphasise

Moreover,
the
Italian authorities
urgency of the aid in light of the shipyard’s limited
financial and industrial resources (4) and the fact that
the contract price of the vessel was established on the
basis of
the aid provided for by law. The Italian
authorities also affirm that, if the delivery limit is not
extended (execution stood at 25,65 % at 16 December
2003) with the result that aid is not granted, the ship
cannot be completed without enormous economic
damage to the yard, together with job losses at both
the yard and the undertakings working for it. The
Italian authorities add that the shipowner Marnavi and
the shipyard have agreed to cancel the contract for the
construction of another ship, C.173, whose construc-
tion had been disrupted by the events referred to
above, and to transfer the supplies available for that
ship to ship C.180.

(4) The shipyard is a very small company employing 51 people.

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Table 1

Overview of the delays incurred for the delivery of ship C.180

Ship

Cause of delay

Responsibility

Problems

Marnavi
(shipowner)

Marnavi
(shipowner)

Force majeure

Suspension of the contract from
1.10.2001 to 30.9.2003
Suspension revoked on 29.9.2003

Modification of tanks’ size and
number, ship length and width

Impact of natural disasters on the
shipyard, its employees and its sub-
contractors

Delay
(months)

Additional months
required

24

Not specified

Not specified

Not specified

> 2

> 2

C.180

(i) Events of 11.9.2001:

— suspension and late reac-

tivation of order

(ii) Technical modifications

(iii) Delays due to natural disasters
affecting the Molise region:
— Earthquake on
31.10.2002

— Floods 23 to 25.1.2003

Extension requested

GROUNDS FOR INITIATING THE PROCEDURE

(12)

the Commission
In deciding to initiate the procedure,
thought it doubtful that any of the causes of delay invoked
in this case complied with Article 3(2), second subpara-
graph, of the Shipbuilding Regulation and so doubted that
the measure was compatible with the common market
under Article 87(3)(e) of the EC Treaty.

COMMENTS OF THE ITALIAN AUTHORITIES

(13)

In order to allay the doubts expressed by the Commission
the Italian
in the decision to initiate the procedure,
authorities submitted additional explanations and data
supporting their views concerning the eligibility of the
grounds for extending the delivery limit and the compat-
ibility of the measure in question.

(i)

Concerning the impact of the events of 11 September 2001

Total

More than 26
months

More than 2
months

10 months

In particular, they support their case by arguing that
the Commission’s appraisal was based on a report
drawn up in the autumn of 2003 (5) i.e. two years
after the events, whereas these events had an impact
on the commercial strategies of economic operators
who had to take decisions at the time the events
occurred,
in September 2001 or the months
immediately after.

i.e.

According to the Italian authorities, it was generally
known and further confirmed by the Clarkson
reports (6) that these events had an impact on the
entire maritime goods transportation market, and not
just on one type of vessel, i.e. cruise ships. In support
of their case, they supplied new information support-
ing their opinion that the above events affected the
building of the vessel in the form of copies of the
contracts between the
and
Novamar, a charter company based in Houston (US),
for the chartering of two chemical tankers ordered by
the shipowner from Cantieri Navali Termoli (7) and
the revoking of the contracts by Novamar in the wake

shipowner Marnavi

state that

the events of
The Italian authorities
11 September 2001 were exceptional
factors that
were unforeseen and external to the shipyard and
maintain that, contrary to the Commission’s view,
these resulted in unexpected, substantial and defen-
sible disruptions to the shipyard’s work programme.

(5) The Italian authorities state that the Commission's reference to the
Clarkson report
the decision to initiate the
procedure is incorrect because it refers to a report of November
2003 instead of October 2003.

in footnote 11 of

(6) The Clarkson Shipping Review & Outlook, autumn 2003, pp 7-44
and 127; Clarkson: ‘Review of Tanker/Chemical/Small LPG Markets
and Newbuilding Investment over 2001 and onwards’, October
2003, pp.17-20.

(7) The tankers in question are the C.173 and C.180, discussed below.

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the events of 11 September 2001. The Italian
of
authorities thus maintain that these tragic events had a
similar effect on the ship in question, and that
contrary to the Commission’s view, the impact of
these events is not confined to cruise ships. Accord-
ingly, they reiterate their view that the impact of the
above events satisfies the provisions of Article 3(2),
second subparagraph, third sentence, of the Shipbuild-
ing Regulation.

(ii) Need to modify the ship to meet changed market demands

The Italian authorities supplied information concern-
ing the changes made to ship C.180.

In particular,
in 2000 the
they explained that
shipowner had signed contracts with the yard for
two chemical tankers, C.173 and C.180, whose initial
contract delivery dates were 31 March 2002 and
30 June 2003 respectively. These dates were subse-
quently postponed to 31 March 2003 and 31 Decem-
ber 2003. The Italian authorities further explained
that the impact on the shipyard’s work programme of
the events of 11 September 2001 and of the two
natural disasters described below was such that only
these vessels could be delivered before
one of
31 December 2003.

Thus, in November 2002 the shipowner decided to
abandon construction of one of the ships at the yard
so that
the yard could focus its efforts on the
completion of a single ship. In practice, this was done
firstly by rebaptising C.173 as C.180, the larger of the
vessels ordered by the shipowner, secondly by asking
for substantial changes to C.180’s basic structural
specifications (8) , (9) , (10) and, finally, by revoking the
contract for C.173. As a result, ship C.180 (ex C.173) is
now larger and faster and has an increased capacity
and a higher contract price compared with the
original C.173, but
specifications are
inferior to the original C.180 contract. However, the
Italian authorities point out that these changes have
the
indirectly
contributed

its overall

delaying

only

to

construction of the ship and that the delay is, in fact,
attributable to the impact of the natural disasters,
which led to revocation of
the contract by the
consulting firm that had been hired to design the
modifications to C.180 (ex C.173).

(iii)

Impact of natural disasters (earthquake of 31 October
2002 and floods of 23 to 25 January 2003)

The Italian authorities underline the importance and
impact of the disasters which struck the region where
the shipyard is located.

Generally, they recall that, in view of the scale of the
natural disasters that had occurred and the high risk to
private and public welfare, a state of emergency was
declared in the region until 30 June 2003 by the
decree of the President of the Council of Ministers of
31 October 2002, which was subsequently extended
until 1 February 2004 by the decree of the President
of the Council of Ministers of 31 January 2003. The
Italian authorities also draw the Commission’s atten-
the
tion to the fact
Commission authorised, as part of the revision of the
regional aid maps, (11) the extension of these maps in
view of the impact of the natural disasters on the
region of Molise and on Termoli, the area where the
yard is located.

following these events,

that

the

Italian authorities
Concerning the shipyard,
in the wake of
supplied information showing that,
the above natural disasters,
the yard’s work pro-
gramme suffered delays between November 2002 and
February 2003 owing to the initial delay and
subsequent cancellation of numerous contracts by
several contractors supplying the yard with essential
services (12) and supplies for the construction of the
vessel C.180 (ex C.173) (13).

(iv) Suspension of the work on C.180 (ex C.173) in 2004

(8) These concern mainly the ship's size and number of tanks, and its

length and width.

(9) The Italian authorities say that theses changes concerned both the
original C.173 and C.180 (ex C.173) and had been agreed between
the yard and the shipowner before suspension of the contract in
2001 following the letter from Novamar of February 2001, which
indicated that both ships could be subject to changes. They further
state that work on the modified C.180 (ex C.173) was already under
way before being formalised in a contract addendum in December
2003.

(10) According to the Italian authorities’ interpretation of Commission
Decisions 691/2003 of 9 July 2003 and 727/1993 of 21 December
1993, the type of ship and the changes in question would qualify for
the ‘technical complexity’ exemption accepted by the Commission.

In July 2005, responding to the opening of
investigation,

the
the Italian authorities informed the

(11) Commission decision C(2004)3344 fin. cor. of 8 September 2004

concerning Case No 147/2004.

(12) These subsystems of the hull, the carpentry and outfitting services
for the vessel, the supply of stainless steel plate, the supply and
fittings, and the supply of consultancy
installation of electrical
services for the modification of
the vessel C.173 subsequently
rebaptised C.180 to increase its capacity and power.

(13) As a result of these contract cancellations, the yard was obliged to
invoke the ‘force majeure’ clause with respect to the shipowner; this
eventually prompted the latter’s decision to abandon the construc-
tion of one of the two vessels it had ordered at the yard.

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Commission that approximately 66 % of the con-
struction work on the vessel had been completed but
that work had been suspended by the yard and that
the vessel had been launched in August 2004 pending
the Commission’s authorisation of the extension of
the delivery limit. Accordingly, in line with the request
of the shipowner and the yard, it is argued that the 10
months’ extension should start from the Commis-
sion’s decision to authorise the requested extension.

(14) The Italian authorities conclude that the causes of the delays
in this case comply with Article 3(2), second subparagraph,
of the Shipbuilding Regulation and that the 10-month
extension of the three-year delivery limit as from the date of
adoption of the Commission’s final decision is compatible
with the common market within the meaning Article 87(3)
(e) of the EC Treaty.

ASSESSMENT

(15) 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 competi-
tion by favouring certain undertakings or the production of
in so far as it affects trade between
certain goods is,
Member States,
incompatible with the common market.
Pursuant to the established case-law of the European Court
of Justice, the criterion of trade being affected is met if the
recipient firm carries out an economic activity involving
trade between Member States.

is an economic activity involving trade between Member
States. Therefore, the aid in question falls within the scope
of Article 87(1) of the Treaty.

(18) According to the Shipbuilding Regulation,

‘shipbuilding’
means the building of self-propelled seagoing commercial
vessels. The vessel built by Cantieri Navali Termoli, a
chemical tanker, is a self-propelled seagoing vessel provid-
ing specialised maritime services, namely the transportation
of chemical and petroleum products, and thus falls within
the scope of Article 1(a) of the Regulation.

(19) Article 3(1) of the Shipbuilding Regulation provides for a
ceiling of 9 % for contract-related operating aid for ships
until 31 December 2000. According to Article 3(2), the aid
ceiling applicable to the contract is that in force on the date
on which the final contract is signed. However, this does
not apply to ships delivered more than three years after the
signing of the contract. In such cases, the ceiling applicable
is that in force three years before the date of delivery of the
ship. Therefore, the last delivery date for a vessel still to
qualify for operating aid was, in principle, 31 December
2003.

(20) The proposed aid for the vessel

in question would be
granted under Article 3 of Law No 88 of 16 March 2001,
authorised by the Commission, as state aid No 502/00. It
amounts to some EUR 3,9 million for ship C.180, which is
no more than 9 % of the contract value.

(16) According to 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 this basis on 29 June 1998. Although the
Shipbuilding Regulation expired on 31 December 2003, its
provisions must still be applied in assessing requests for an
extension of the delivery limit since the matter concerns aid
granted under that Regulation and since the Shipbuilding
Framework does not provide any guidance for
such
requests (14).

is

(21) Article 3(2), second subparagraph, third sentence, of the
Shipbuilding Regulation stipulates that:
‘the Commission
may, however, grant an extension of the three-year delivery
found justified by the technical
limit when this
complexity of the individual shipbuilding project concerned
or by delays resulting from unexpected disruptions of a
substantial and defensible nature in the working pro-
gramme of a yard due to exceptional circumstances,
unforeseeable and external to the company.’ The Commis-
sion notes that the extension is sought because Cantieri
Navali Termoli could not finish the vessel referred to above
on account of unexpected delays external to the company.

(17) The Commission notes that the issue of the extension of
the delivery limit is decisive for establishing the admissi-
bility of the contract in question for operating aid under
Article 3 of the Shipbuilding Regulation. The operating aid
in question consists of financing from state resources for
some of the costs that the yard in question would normally
have to bear when building a vessel. Moreover, shipbuilding

(14) OJ C 317, 30.12.2003, p. 11.

(22) The Shipbuilding Regulation requires that

(b) unforeseeable and (c) external

the circum-
stances justifying the extension of the delivery limit be (a)
exceptional,
to the
company. What must also be established is (d) causality
between these events and the unforeseen disruptions which
caused the delay, (e) their duration and (f) the substantial
and defensible nature of these disruptions. The following

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paragraphs set out
invoked by the Italian authorities.

the assessment of

the arguments

(i)

Impact of the events of 11 September 2001

the impact of

The Commission has here acknowledged that these
events were unforeseeable and external
to the
in line with past Commission's
shipyard. However,
decisions,
these events cannot be
accepted in this case since, according to settled
Commission decision-making practice,
‘reduced eco-
nomic growth, or a worsening of the market situation
for a type of ship, cannot be considered an exceptional
circumstance in the sense of Article 3(2) of
the
Shipbuilding Regulation’ (15). This argument was
admitted only for cruise vessels because of the direct
effect of these events on such vessels, but not for other
types of vessel, where such events are considered to
have an indirect impact and a more general effect.

In fact, the Commission noted in the decision to
initiate the procedure that, according to a report by
Clarkson Research of November 2003,
‘The 9/11
event certainly added problems in an already slowing
world economy’ (16). Furthermore, concerning invest-
ment in chemical tankers of less than 20 000 dwt
such as ship C.180, the same Clarkson Research report
states that ‘Activity was fairly low over the period
1998 to 2000 and, despite a recovery in early 2001,
levels did fall back in the final quarter of 2001 in line
with the rest of the industry. However, the level of
contracting picked up significantly in early 2002 and
has been fairly strong since.’

relied on a report

As regards the argument of the Italian authorities
which questions the relevance of the Commission’s
appraisal of the impact of such events on the basis of
an ex post report, the Commission notes above all that
submitted by the Italian
it
authorities themselves. Secondly,
it emphasises that
in this procedure the Italian authorities themselves
rely on reports dating from late 2003. Finally, the
Commission notes that none of the additional reports
to which the Italian authorities refer contradict the
Commission’s assessment of this point.

The Commission notes that its assessment of this
argument is in line with other decisions in similar
cases notified by Italy concerning extensions of the
three-year delivery limit for chemical tankers and LPG
tankers.

As to the second argument, it is initially noted that the
technical modifications were made at the shipowner’s
request in order to meet changed market demands.
Also, as stated in the addendum of 10 December
the
2003 to the original
for a
shipyard intended to ask the shipowner
postponement of the delivery date for ship C.180,
shouldering all the costs and risks in relation to the
awarding/granting of state aid for the latter.

shipbuilding contract,

The Commission observes that a shipowner may
always demand changes to the shipbuilding contract
and that such changes are not uncommon in the
shipbuilding sector. Such events are part of
the
normal
the yard. This
argument cannot,
therefore, be accepted in this
instance.

commercial

activity of

investigation the

that during this

For the sake of completeness, the Commission also
notes
Italian
authorities explained that the changes in question
(concerning both ships C.173 and C.180) had already
been flagged by the US charter company Novamar in
its letter to the shipowner of February 2001 and were
agreed between the yard and the shipowner before the
contract’s suspension in 2001. It further notes that, as
ship C.173,
explained by the Italian authorities,
according to its original specification, should have
been built long before by another shipyard that got
into difficulties in the 1990s; and so this ship
belonged to an older generation of
ships now
superseded by a new generation of larger vessels with
enhanced capacity.

it

is

the above,

In light of
the
modifications were neither exceptional nor unforesee-
able events. Accordingly, the Commission considers
invoked by Italy here is not
that
admissible.

the argument

evident

that

(iii)

Impact of the natural disasters which hit the Molise region,
where the yard is located

(ii) Need to modify the ship to meet changed market demands

(15) See Case No 99/02 (OJ C 262, 29/10/2002), Odense shipyard —
Prolongation of three-year delivery limits for two ships (Denmark).
(16) ‘Review of Tanker/Chemical/Small LPG Markets & Newbuilding
Investment over 2001 and onwards’, Clarkson Research, November
2003, pp. 19 and 20.

It is acknowledged that earthquakes, floods and other
acts of ‘force majeure’ normally constitute admissible
grounds. Similarly, it is acknowledged that such events
have had an impact on activity in the Molise region, as
confirmed by the declaration of
state of
emergency by decree of the President of the Council
of Ministers, and potentially on the yard’s overall
activity.

the

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Nonetheless, under the Shipbuilding Regulation, an
extension of the three-year delivery limit derogates
from the normal provisions authorizing the granting
of contract-related operating aid, which in turn
constitute an exemption from Community state aid
rules. Accordingly, the principle that rules governing
exemptions are to be interpreted narrowly means that
a direct causal link must be established between the
circumstances allegedly causing the delay and the
delay in the construction of the vessel. However, the
information made available to the Commission,
including the information submitted by the Italian
authorities after the opening of the formal investiga-
tion, is rather vague, referring in only general terms to
fails to
the disruptive effects of
demonstrate or quantify the exact impact of those
events on the yard’s work programme or on the
construction of the vessel in question.

the disasters;

it

The Commission notes
that, despite its explicit
requests for information and the lengthy extensions
of the reply deadlines, no detailed information has
been supplied concerning the disruptions caused by
these disasters on the
shipyard’s overall work
programme and the precise causal effect on the
specific work programme for ship C.180 (ex C.173).
The Italian authorities have submitted copies of the
letters by which suppliers of components and services
to the yard revoked their contracts with the yard.
However, they have failed to document in detail the
causal link and have not quantified with precision the
consequent delay in the yard’s work programme and
in the construction of ship C.180 (ex C.173) in order
to justify the request to extend the delivery limit by 10
months.

(23) Consequently, the Commission considers that the excep-
tional circumstances described above have not had an
impact on the specific programme of work on the ship in
question that would justify the requested 10-month
extension to the delivery limit. Therefore, the arguments
set out in (i) to (iii) cannot be accepted.

(25)

launched in August 2004; therefore, in their opinion,
the 10-month extension should now start from the
Commission’s decision to authorise the requested
extension.

First, the Italian authorities' request that the 10-month
extension start from the date of the Commission
decision cannot be regarded as being in conformity
with the Shipbuilding Regulation as it would lead to
further unjustified delays. The decision to suspend
construction of the vessel was made by the yard under
its own responsibility and it generated an additional
delay that finds no justification in the Shipbuilding
Regulation.

that

Second, the Commission notes that, according to the
notification, ship C.180 (ex C.173) should have been
delivered by 31 October 2004. However, considering
the Italian authorities’ request
the 10-month
extension should start
from the Commission’s
decision to authorise the requested extension, taken
in conjunction with the fact the yard launched the
unfinished ship C.180 (ex C.173) in August 2004, it is
clear that the yard would not have been able to deliver
the vessel even within the original 10-month exten-
sion requested to the delivery limit.

Accordingly Italy’s request must,
in any event, be
rejected because of the unwarranted suspension of
work in 2004.

CONCLUSIONS

In the light of the above, the Commission finds that the
measure under examination constitutes state aid within the
meaning of Article 87(1) of the Treaty. The information
submitted by the Italian authorities, including that provided
during the
confirmed the
Commission’s doubts as to whether the causes of delays
invoked in this
second
subparagraph, of the Shipbuilding Regulation, and so the
measure under examination is not compatible with the
common market under Article 87(3)(e) of the Treaty.

satisfied Article 3(2),

investigation, has

formal

case

(24) Given the lack of substantial evidence, the extension cannot

be authorised on these grounds.

In view of these conclusions, the Commission

(iv) Suspension of work on C.180 (ex C.173) in 2004

HAS ADOPTED THIS DECISION:

In addition, the Commission observes that the Italian
authorities informed it that construction of vessel
C.180 (ex C.173) was approximately 66 %-complete,
but that the work had been suspended and the vessel

The three-year delivery limit
laid down in Article 3(2) of
Regulation (EC) No 1540/98 may not be extended for ship C.180
(ex C.173) built by Cantieri Navali Termoli SpA.

Article 1

L 383/60

EN

Official Journal of the European Union

28.12.2006

The contract-related operating aid for
therefore, be implemented.

that ship may not,

This Decision is addressed to the Italian Republic.

Article 3

Article 2

Done at Brussels, 4 July 2006.

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

For the Commission
Nelly KROES
Member of the Commission