Certain Italian Port Authorities have recently launched calls for tenders for the construction of new container terminals and the management of new docks in the ports under their jurisdiction. Such projects should be examined from a global perspective, taking into account all the other pro- jects of an equivalent nature that are currently underway in several Italian ports.
An aspect of particular relevance is that such tenders and projects should be implemented through public funds. Such resources must, of course, be huge.
EU membership involves Member States having to pursue and comply with the EU’s objectives such as the creation of a single market where competition is ensured and not distorted, inter alia, by Member States through public investment in favour of certain entities or productive sectors.
In order not to leave this goal unachieved, there is a specific provision in the Treaties, namely Arti- cle 108 of the TFEU2, which requires Member States to promptly notify the Commission, i.e. the body exclusively responsible for assessing the conformity of «State aids» with European law, of any plan to grant significant public funds.
Article 108 of TFEU specifies that Member States shall not be authorised to put their proposed measures into effect without prior notification to, and formal approval by, the Commission.
And if, following such notice, the Commission has doubts about the compatibility of an aid with the Treaties, it shall open a formal investigation procedure aimed at verifying whether the incom- patibility between any proposed measure and EU law is such as to require the State concerned to be prevented from providing the aid or, alternatively, whether the negative effects on competition caused by the State aid may bring a positive effect on the common interest of the Union, in such a way as to substantially heal the «imbalance» caused to the internal market. In such case, the Member State concerned might be allowed to grant the aid.
It should also be recalled that any aid granted by a Member State without prior notification to the Commission is automatically deemed «unlawful», with two different consequences. At the level of the relationship between the State concerned and the EU, the Commission may immediately take action and order the State concerned to «recover» the aid; at domestic level, anyone who claims to have been damaged by any unauthorised State aid will be entitled to apply to national courts, seeking not only the recovery of the State aid, but also economic compensation.
This long introduction is important – in connection with some tenders and projects launched by certain Italian Port Authorities – in light of the special attention paid by European Institutions to the compatibility with the internal market of State aids aimed at implementing infrastructure and superstructure in European ports3
Attention is primarily focused on Member States whose ports are part of State-owned land and are managed by institutions – like Port Authorities – having, at least originally, a typical public na- ture.
An example of this approach, and concerning Italy, is, first and foremost, the formal investigation of the Commission on the State aid planned to be granted to the port of Augusta (Salerno)4. The decision of the Commission, which authorised such aid, is a clear indication of how deep is the analysis carried out by the Commission on applications for authorisation submitted by Member States. Indeed, that decision specifies all the parameters applied for assessing an application for authorisation for the grant of State aids, namely, the actual and concrete pursuit of a public inter- est, the feasibility of the project in the absence of State aid, the economic exposure of the Mem- ber State to the extent strictly necessary for the implementation of the project and the limited dis- tortive effects of the State aid on the common market.
Definitely more recent is the decision of the Commission to initiate a formal investigation on the two major container terminal operators of the port of Antwerp (Belgium). In that case, the suspi- cion of unlawful State aid has arisen from the anti-competitive conduct of the Port Authority of Antwerp. Said Authority should indeed have imposed the payment of a penalty on the two termi- nal operators for not having met the minimum tonnage requirements under their operational plans. On the contrary, the Port Authority retrospectively revised the operational plans, reducing the minimum tonnage requirements and consequently reducing the amount of the penalty paya- ble by the terminal operators by approximately 80%.
This is the first time that the Commission opens a formal investigation on a conduct like the one under examination. According to the Institution, the unlawful State aid can be identified not only in the fact that the terminal operators concerned got a «discount» on the penalty to which they were liable under the law, but also in the fact that, as a direct consequence, they unlawfully bene- fited from the proceeds deriving from their activity as concession - holders in the port of Antwerp.
Also with respect to the entities responsible under the law for the management of ports and port infrastructure – i.e. Port Authorities -, the European Institutions have taken a specific position.
Having regard to the well-known judgment of the EU Court of Justice known as Liezpig Halle5 on State aids to the airport of Leipzig, the Commission, in its decisions relating to State aids to the port of Augusta and the port of Salerno6, clearly expressed its view regarding the legal classifica- tion of the activity of entities managing State-owned land. Such activity should indeed be consid- ered as an «economic activity» in all respects and, therefore, subject to European antitrust law. Consequently, any conduct of said entities amounting to abuse of dominant position and unlawful State aid must be deemed banned.
But there is more. The EU Court of Justice, through an obiter dictum to the Haralambidis judg- ment7, specifically recognised the «purely economic nature of the grant of concessions for termi- nals and port infrastructure», in consideration of the exchange of economically relevant perfor- mances involved in the grant of a concession.
In the light of that ruling, of greater significance is the «test» usually conducted by the Commis- sion when verifying the compatibility of State aids with the common market rules, i.e. the so- called «market economy investor test». Any State applying for an authorisation for the grant of aids to national entities or market sectors will be required to demonstrate to the Commission that the planned State aid will bring an economic advantage, so that even a private investor operating under free market conditions –and thus driven only by the logics of profit – would regard such in- vestment as profitable.
The decisions made by the European Institutions on State aids for the construction of infrastruc- ture and port superstructure lead to some considerations on the tender procedures recently launched by certain Italian Port Authorities.
In a context in which the activity of Port Authorities and the economic action of States seem in- creasingly aimed at achieving the best possible performance and economic development of ports, any plan to build new container terminals and docks will certainly be thoroughly investigated by the Commission.
As seen above, the parameters applied, at European level, when examining the applications for authorisation for the grant of State aids are particularly stringent and the Commission’s activity of monitoring public action in ports is in recent times particularly targeted.
In respect of tender procedures, therefore, the Italian State will have to demonstrate: that the construction of a new terminal meets public needs and public interest; that the proposed State aid will not involve a significant distortion of the common market; the reasonableness of the invest- ment of public money; and, finally, that the construction of new terminals and docks will bring such a general economic advantage that a private operator acting in a free market would deem such investment profitable.
If the Commission – where requested to authorise the grant of State aid in respect of tender pro- jects – were to consider the aid in question to be incompatible with the common market rules, Ita- ly might be prevented from using the economic resources on which Port Authorities are currently relying for developing the new port infrastructures to be granted in concession to private compa- nies.