Although   strongly   backed   by   Italian    politicians, the  new  regime  of   financial   support   to stevedoring companies and port  employment agencies -­‐ as  introduced  by  article  108  of  the  Law of Stability of 2014 -­‐  is  causing  some  legal concerns.

The law sets forth that if such companies find themselves «in a state of serious economic crisis due to unfavourable business conditions”, the Port Authority «may designate a sum for the purpose, never more than 15 per cent of its own income from fees on goods loaded or unloaded, thus placing no further burden on government budgets».

The port fee to which the law refers is charged for all goods loaded and unloaded in Italy’s ports, the proceeds from which constitute a significant part of the Port Authorities’ income. Our legislators seem to have forgotten that only than ten years ago, the European Court of Justice literally beheaded an analogous form of subsidy to mechanical equipment companies, which also served as employment agencies in the previous organization of the ports, as many readers will surely recall. The case then decided by the European Court of Justice (v. sent. 27.11.2003 in proceedings C-­‐34/01 to C-­‐38/01 -­‐ Enirisorse) has elements that are quite analogous to those of the law recently approved by the Italian Parliament.

This allows us to affirm with a reasonable degree of certainty that payments to a company that is active in the port operations industry (a company pursuant to art. 16 or an agency pursuant to art.

17 of Law 84/94) of a significant sum from fees (the port  fee for  loading and unloading goods) paid to the State by operators who do not benefit from any service or provision on the part of that same company or agency, is considered state aid, in accordance with art. 107 of the TFEU [i.e. Treaty on the Functioning of the European Union].

In fact, the various conditions which define forbidden state aid in art. 107, n. 1, of the TFEU seem to be satisfied. In the first place, there has never been any doubt that this was a State intervention paid for with State funds. In the case in question, the sums paid to the companies represent a significant portion of the port fees which come from the State budget, therefore constitute State funding.

Secondly, the government intervention affects commerce between European Union member States. Based on the European Court of Justice’s ruling, it seems even more likely that this financial support will be declared an unfair influence on commerce, since port fees are being redirected to a company that is active in the port and these are paid by the owners of the goods regardless of their country of origin. Thirdly, the support may be considered an advantage granted to the company receiving it, and fourthly, such an advantage certainly distorts or could threaten to distort free competition. With this in mind, one must remember that interventions which in any way directly or indirectly favour particular companies, or economic advantages which the supported company would not have obtained under normal market conditions, are considered illegal state aid (v. sent. 24.7.2003, Case C-­‐280/00, Altmark, point 84). Legislators justified the support in question because it was intended to protect employment in the port, promote the industrial reconversion process, and avoid any serious halt in the port’s activities.

None of these justifications will save this law from the European Commission’s hatchet. The socially driven reasoning behind this law does not exclude it from being considered forbidden state aid. A government intervention in the economy must be justified in commercial terms unrelated to any industrial, economic or social policy goal. (v. sent. 24.9.2008, Case T-­‐20/03, point 242). Finally, the European Commission does  not  seem  to  have been notified in advance about this state aid plan, in accordance with the well-­‐known principle established by art. 108 n. 3 of the TFEU, which prevents it from being granted.

The measure seems therefore to be preferential, to distort competition in the market where the companies receiving government support operate, and furthermore, given the particular context in which the support was provided (i.e. a port in which goods are moved), to represent a measure that affects trade between European community member states.

What will  the consequences  be? First, the Port Authority in question may oppose the measure, which among other things, affects its own budget considerably. Second, whoever pays the port fee may wonder whether it is lawful to be charged the fee (or at least the percentage destined for the publicly supported companies). In fact the Court of Justice has ruled that both the allocation of a portion of the tax income to the benefitted company and the collection from users of the corresponding amount that is allocated can constitute a state aid that’s incompatible with the common market. (v. also from the Enirisorse EJC award, cit. point 45).