By means of judgment n. 1784/2015, published on 22 May 2015, the Court of Venice rejected the application of a well-known undertaking, entrusted with local transport services in the Province of Padua, accepting the defence arguments brought by the Firm, in the person of Stefano Zunarelli and of the Antitrust Competition and State aid Department, regarding compensation for public service obligations and public service contracts according to Reg. (CEE) n. 1191/69, as amended (repealed and replaced by Reg. (CE) n. 1370/2007). In particular, the Court confirmed the non-compliance with EU Law of retroactive funding of deficits not connected to previously fixed criteria.
The dispute started in 2008 with an action brought before the TAR (i.e. the Administrative Court) of Veneto by the transport undertaking, mainly in order to retroactively obtain compensation for public service obligations to which the undertaking was allegedly entitled, both during the service period granted through concession and during the one entrusted through a public service contract, and concretely aimed at fully covering the deficit that plaintiff claimed to have suffered as a result of operating those local public transport services. The claim was based on the direct application of Reg. (EEC) n. 1191/69, as amended, even though the required retroactive funding found no grounds in the specification of the concession or in the public service contract pursuant to Legislative Decree n. 422/1997, as amended, and to regional law n. 25/1998, and without any distinction between the two separate titles and related regimes.
Following the proceeding to determine jurisdiction filed by the Veneto Region, the United Sections of the Supreme Court declared the Ordinary Judge’s jurisdiction over the dispute, and the case was then reinstated by plaintiff before the Court of Venice. The Court first of all stated the lack of entitlement of the Province, by virtue of the division of functions and powers provided for in the national legislation.
The most interesting legal issue is, however, the one concerning the compensation system of costs resulting from the imposition of public service obligations. In accordance with the provisions of the mentioned EC Regulation and with the judgements of the European Court of Justice, in particular the one of the leading case, the so called Altmark, the Court stated that public service obligations should be clearly defined and imposed (as well as proven by the undertaking) and that “The calculation of the compensation should be based on objective parameters fixed preventively in order to avoid that the compensations result in an economic advantage favouring the recipient undertaking over competitors”. To this regard, it was stressed that “neither the European nor the domestic legislation state that any possible operational deficit must be necessarily and fully recovered”. This is to avoid the granting of unlawful state aid which would distort competition within the internal market of the European Union.
Therefore, the groundlessness of the recent decisions of the Consiglio di Stato (see Judgments n. 5043/2006, 4683 and 4684/09, no. 1405/2010) has been confirmed. According to those decisions transport undertakings which had been entrusted with local public transport services under concession, were entitled to receive compensation for those services – in addition to the already received yearly contributions and public funds- in order to retroactively set off the year’s deficit, based on data taken from the accounts of the undertaking. Said groundlessness has always been asserted by Prof. Zunarelli in all the disputes entrusted to him and has also been confirmed by the decision of the European Commission of 2 October 2013 on State aid SA.33037 (2012 / C) – Italy. Compensation of Simet SpA for the performance of public transport services from 1987 to 2003, which refers precisely to the last of the abovementioned judgments of the Consiglio di Stato.
The judgment then confirmed that public funding is subject to the limit of annually available financial resources, which are connected to the available regional funds, which in turn result from the assignment made by the National Fund.
The issue concerning the clear difference in regime pursuant to and for the purposes of Reg. (EEC) n. 1191/69, as amended, between imposition of public service obligations and public service contracts was instead not mentioned.
(Bologna Office – Stefano Zunarelli and Antitrust, Competition and State Aid Department – 0039(0)51 2750020)
