State Aid to Saremar Ruled Illegal

MarineLink.com
Thursday, January 23, 2014

After an in-depth investigation, the European Commission has concluded that part of the support measures that Sardinia had granted to the maritime company Saremar in 2011 and 2012 was incompatible with EU state aid rules. In particular, a capital injection not approved on market conditions and the compensation for carrying out certain maritime services have provided an undue economic advantage to Saremar that its competitors did not have. Saremar needs to pay back this undue advantage of around €10.8 million in total, to remedy the distortion of competition this has created.

At the same time the Commission concluded that two letters of comfort issued by the Region did not guarantee any financial obligation of the company and did not therefore constitute State aid to Saremar. The Commission also concluded that the promotional activities carried out by Saremar were priced at market value.

Commission Vice President Joaquín Almunia, in charge of competition policy, said, "Member States and regional authorities are of course free to finance services of general economic interest. However, as foreseen by EU rules, this should be done in a transparent way, on the basis of clearly defined public service obligations."

In 2012 Saremar received capital injection from Sardinia for an announced amount of €6.1 million. The Commission concluded that no private investor operating under market conditions would have accepted to invest on these conditions in similar circumstances. The capital injection therefore constitutes state aid, as it conferred an economic advantage to Saremar as compared to its competitors, who have to operate without public money. Moreover, this state aid is incompatible with EU rules because it was not accompanied by the implementation of a restructuring plan fulfilling the requirements of the guidelines on state aid for the rescue and restructuring of companies in difficulty. The Commission has therefore ordered Italy to recover from Saremar the part of the capital injection already implemented.

Lastly, the Commission found that a €10 million compensation granted to Saremar for the operation in 2011 and 2012 of two maritime routes linking Sardinia to mainland Italy was not in line with EU rules on services of general economic interest (SGEI) (see IP/11/1571). These rules provide that public service providers can receive compensation for the net costs of the delivery of their public service obligations, where the parameters to calculate the compensation are established in advance and the public service obligations are clearly defined. However, when Saremar was entrusted with the operation of the two maritime routes, no compensation mechanism was set up for this activity. Moreover, the entrustment acts did not clearly define the public service obligations imposed on Saremar. The Commission therefore concluded that Saremar was not entitled to compensation and needed to pay back the sums it received.

Background

Saremar is one of the regional companies of the former Tirrenia Group. The company traditionally operated maritime services under a public service contract with the Italian State, in force until end 2008 but subsequently prolonged. In 2009, Saremar was transferred from Tirrenia to the Sardinian Region.

In October 2011 the Commission launched an in-depth investigation into public support measures in favor of companies of the former Tirrenia Group, namely Tirrenia di Navigazione, Caremar, Laziomar, Saremar, Siremar and Toremar (see IP/11/1157).

The Commission extended the scope of this investigation in November 2012 and amended it in December 2012, to take account of an additional aid measure notified by Italy.

Under the EU guidelines on rescue and restructuring aid, companies in difficulty may receive state aid under certain conditions. Such aid has a high potential of distorting competition in the EU internal market, as it artificially keeps companies alive that would have otherwise exited the market. Aid may be granted for a period of six months ("rescue aid"). Beyond this period, the aid must either be reimbursed or a restructuring plan must be notified to the Commission for the aid to be approved ("restructuring aid"). The plan must ensure that the long-term viability of a company is restored without further state support, that distortions of competition induced by the state support are addressed through compensatory measures and that the company contributes to the costs of restructuring. Finally, restructuring aid may be granted only once over a period of ten years ('one time, last time' principle).

The non-confidential version of the decision will be made available in the State Aid Register under the case numbers SA.32014, SA.32015 and SA.32016 (all concerning follow-on companies of the Tirrenia group) 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.

europa.eu
 


People & Company News

STX to Slash Jobs, Sell Yard

To stat above water by restructuring, South Korean Shipbuilder STX Offshore & Shipbuilding Co. plans to lay off about a third of its workforce and sell a yard in France, says a report in WSJ.

Kongsberg Performs Well in Q2

Norwegian defence and marine technology company Kongsberg Gruppen's second quarter 2016 (Q2) financial results shows sales performance broadly in line with recent trends,

Rickmers Holding, E.R. Capital Drop Merger Plan

Rickmers Holding AG and E.R. Capital Holding have jointly decided not to pursue the merger of their ship management activities.   For many years the companies

Finance

SOS from Hanjin Shipping

The creditors' extended help is crucial for survival of Hanjin Shipping Co as its negotiations with owners of chartered ships over a cut in leasing rates and to

NParks, Keppel in S$2.08 mln Partnership for Restoring Singapore Forest Wetlands

The National Parks Board (NParks) and Keppel Corporation today unveiled plans for a partnership to restore the freshwater forest wetland ecosystem historically

Skaugen Goes to Red Again

Norwegian Marine Transportation Service Company I.M. Skaugen SE reported interim losses but cautiously positive and expecting a gradual recovery of trading opportunities

News

Coast Guard Foundation Awarded 128 Scholarships

The Coast Guard Foundation, a non-profit organization committed to the education and welfare of all Coast Guard members and their families, announced today that

Keppel to Deliver First North Sea FPSO

Keppel Offshore & Marine (Keppel O&M)'s wholly-owned subsidiary Keppel Shipyard Ltd (Keppel Shipyard) is on track to deliver a Floating Production Storage and Offloading

NASA May Send Submarine to Titan

NASA has unveiled plans to send a submarine into the depths of the largest ocean of Saturn's biggest moon, Titan in a bid to explore the depths of its largest ocean.

Government Update

White House: Iranian Ships' Actions in Gulf Increase Risk of Miscalculation

Actions by Iranian vessels in several encounters with U.S. warships in the Gulf this week are cause for concern and increase risks of miscalculation, the White House said on Friday.

Cochin Port Gets a Little 'Breathing Space'

The Cabinet Committee on Economic Affairs of India, chaired by the Prime Minister Narendra Modi, has given its approval for waiver of penal interest on Government

Iran Vessels Make 'High Speed Intercept' of US Ship

Four of Iran's Islamic Revolutionary Guard Corps (IRGC) vessels "harassed" a U.S. warship on Tuesday near the Strait of Hormuz, a U.S. defense official said, amid

 
 
Maritime Contracts Offshore Oil Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1366 sec (7 req/sec)