EC: Calabria bus services company Simet SpA is not entitled to public service compensation under EU state aid rules

Brussels, Belgium, 02-10-2013 — /EuropaWire/ — The European Commission has concluded that a planned monetary compensation in favour of Simet SpA, which provides bus services to and from Calabria, is incompatible with EU state aid rules. By a judgment of March 2010, the Consiglio di Stato (Italian Supreme Court for administrative matters) recognised Simet’s right to obtain compensation retroactively for its inter-regional scheduled bus services between 1987 and 2003. The Italian authorities then notified the measure to the Commission, who opened an in-depth investigation in May 2012 (see IP/12/518). The Commission found no justification for any such monetary compensation.

“High quality public services are essential for citizens. However, public money should be used in a transparent way and make a real difference. In this case, we found no justification for the subsidies requested.” said Joaquín Almunia, Commission Vice-President in charge of competition policy.

The Commission found that the envisaged compensation does not fall under the Public Service Transport Regulation, because no public service obligation had been unilaterally imposed on Simet. The Commissiontherefore analysed the issue under the state aid rules for public passenger transport services (Regulation (EC) No 1370/2007).

These rules set out how Member States can support the provision of high quality services of general economic interest for public passenger transport. They are aimed at avoiding over-compensation, cross-subsidisation and favouring particular companies. They require, in particular, that the way to determine the amount of compensation is clearly spelled out in the public service contract before a company starts operating. Also, a company that carries out public service activities as well as other economic activities is required to keep separate accounts, so that public money is not used to squeeze out competitors that receive no state aid.

These requirements were not met in the case of Simet. In particular, the parameters for paying the compensation were not established in advance and it was not possible to establish the net cost related to the services provided because Simet did not implement proper account separation.

Moreover, it could not be established that any alleged public service obligation was not already offset by Simet’s exclusive right to provide bus transport services on specified routes and would require an additional monetary compensation. Indeed, every year Simet asked the Italian authorities to prolong concessions for the operation of the relevant transport services. Simet failed to prove that the provision of these services was not in the company’s commercial interest.

Background

Simet SpA is a private company operating a network of inter-regional scheduled bus connections between Calabria and other Italian regions based on concessions granted by the Italian State. In addition, Simet also carries out other activities, including international travel and tourism services and bus rental.

In 1999, Simet requested retroactive public service compensation for its inter-regional scheduled bus service starting from 1987. Since the Italian authorities refused this request, Simet brought legal action before the Italian administrative courts. By a judgment of March 2010, the Consiglio di Stato recognised Simet’s right to compensation from 1987 to 2003.

The non-confidential version of the decision will be made available under the case number SA.33037 in theState Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.