Public transport: the Commission finds illegal the State aid granted to Arfea

On 29 November, the decision regarding the State aid on the additional compensation granted to the company Aziende Riunite Filovie ed Autolinee (“Arfea”), as adopted earlier in the year on June 10th, was published on the Official Journal of the European Union.

The transport company Arfea operates as private and public carrier in the Region Piedmont and in this capacity offers services of local public transport. Between 1997 and 1998, Arfea obtained 28 annual concessions on local routes, renewable upon request by the transport company. Following the judgement of the Italian State Council (number 5043/2006), assigning a transport company a retroactive compensation for the public service undertaken, Arfea appealed to the Regional Administrative Court in order to benefit itself from the additional compensation for the public services offered between 1997 and 1998. The Administrative Court granted the additional compensation, with judgements 976 and 977 of 2010, and later appointed an expert in order to verify that the sums requested by Arfea were rightly calculated based on Regulation CE 1191/69 on public transport, since the facts took place under its regime. What had to be calculated was how much the public service obligation (“PSO”) had affected the company’s costs. The expert determined that through the rules of the “base model” provided by the Region, it was possible to make the calculation. The expert then determined the sums to be remitted. Therefore, on 9 January 2014, the Italian Government communicated to the Commission the grant of the additional compensation, and on 7 February 2014, the Region paid the amount established. Considering that the payment was done after the notification of the measure, the measure is to be considered as non-notified.

The Commission, in its evaluation of the additional compensation, determined that, in first place, for there to be a PSO the conditions imposed on an operator have to be clearly defined and have to be of an obligatory character. In casu, neither the conditions were so clearly disposed nor there was a true obligation, considering also that Arfea could renew the concession agreements at will. Regarding Arfea’s costs, the Commission determined that it was not possible to separate the costs stemming from the public service activities from those of private services. Moreover, the Administration did not previously determine the amount of a potential compensation in relation to the costs undertaken in the exercise of PSO activities. The Commission further determined that the applicable law regarding services of public transport was not Regulation 1191/69, as sustained by Arfea, but Regulation 1370/07, as the compensation was remitted under the regime of the latter. The content requirements laid down by the Regulation on public services contracts and the instructions on the calculation of the compensation were also not followed. The Commissions hence determined that the measure at hand constitutes a State Aid, not dispensed from the obligation of prior notification and that the compensation was not in conformity with the requirements of Regulation 1370/07. Consequently, the State aid has been considered illegal and subject to recovery.


Pietro Michea