A recent administrative order of the Genoa Port Authority focuses our attention on the boundaries of the Authority’s administrative discretion in relation to port concessions and services provided by terminal operators.
The case at issue involves a terminal operator, holding a concession for cargo handling and a regular authorisation under Article 16 Law 84/94 (authorisation for port operations), primarily engaged in the repairing, storing and handling of empty containers and, to a minor extent, in the handling of loaded containers.
The Genoa Port Authority at some point allowed for the renewal of the said concession, while excluding cargo handling from its scope and revoking the authorisation under Article 16 of Law 84/94 for port operations, on the following grounds: i) the repairing, storing and handling of empty containers should not be regarded as an activity forming part of the port operations’ cycle; ii) in the case under examination, loaded containers were handled by the terminal operator to a minor extent and/or were not handled at all; iii) the handling of “empty” containers should not be considered as “cargo” handling within the meaning of Article 16 of Law 84/94.
The administrative order of the Genoa Port Authority is unique and unprecedented.
Indeed, it should first be noted that it is the first time in our memory that a Port Authority considers that operations involving “empty” containers are not part of the port operations’ cycle. Moreover, in Italian ports, the activities of repairing, handling and storing empty containers are done by companies which are terminal operators. They, among other activities, handle “empty” containers. On the other hand, one can immediately understand the close functional link between, on the one hand, a port and, on the other, operations involving “loaded” containers and activities related to “empty” containers, which are functionally and closely linked to the former ones.
That being said, we should take note of the approach of the Genoa Port Authority, which is likely to have a considerable impact on the port services market. Indeed, if activities related to empty containers are no longer considered to be part of the port operations’ cycle, this means that they are no longer reserved for port operators and, therefore, that any other undertaking, even not being a port operator, will be able to carry out such activities, entering in competition with authorised port operators.
Second, the Genoa Port Authority, in its order, entered into the merits of the specific activity carried out by the terminal operator under its port concession. Indeed, in the case at issue, the Genoa Port Authority, on the assumption that the operator concerned was not engaged in handling loaded containers (or was so only marginally), opted for revoking the authorisation for port operations (authorisation under Article 16 of Law 84/94).
In such respect too, the Port Authority's order is peculiar. This can be said all the more so when considering that the port operator concerned was apparently carrying out operations with “empty” container as its core business, while also starting to carry out operations with “loaded” containers (albeit with some slow down due to certain restrictions imposed by the Port Authority itself, e.g. stacking height). Furthermore, the Genoa Port Authority found that the operations related to empty containers should not be considered as “cargo handling” within the meaning Article 16 of Law 84/94.
By revoking the authorisation for port operations under Article 16 of Law 84/94 and excluding cargo handling from the scope of the concession, the Port Authority basically limited the scope of the terminal services which the undertaking was planning to offer to the market.
The order of the Genoa Port Authority is evidence of how certain Port Authorities, going beyond their typical function as a port regulator, as indeed was the rationale under the Law 84/94, feel they can go into the substance of port operators’ activities. From such perspective, a port concession is not unchangeable but can be amended by a Port Authority, including in terms of the scope of the port operator’s services.
This clearly raises issues of concern, bearing in mind Italian and EU rules on freedom of enterprise and, especially, antitrust laws and regulations. Indeed, as a supervisor of an essential facility, a Port Authority typically has the task of regulating the proper operation and functioning of a port, taking due account of the investments and activities needed for its efficiency. So the question arises of whether, in order to pursue port efficiency, a Port Authority is or not allowed to enter into the merits of the activities of port operators. The Genoa Port Authority answered in the affirmative. Conversely, a “strict” interpretation of the meaning of the right to freedom of enterprise might give grounds for arguing that port operators, after having obtained a port concession, should be allowed to carry out their activities as they think fit, based on their commercial skills and the market’s demand for port services. The EU Treaty protects such interests and, under European principles of competition law, access by an undertaking to the market can in no way be limited or excluded, even when such access is merely potential and not actual (that is to say where, as in our case, a port operator is not carrying out a certain activity but is arranging for it to be developed and expanded).
The administrative order at issue was challenged and legal proceedings are currently pending. We will keep you updated.