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Sample translations submitted: 23 English to Italian: An general overview of state aid General field: Marketing Detailed field: Economics. Source text - English An general overview of state aid The European Commission has been exercising and documenting its actions in favour of competition and the construction of the internal market for more than forty years. The control of state aid has become a key element within these policies to ensure fair competition. Member states sometimes use public resources to promote or protect certain economic activities.
Despite state aid being prohibited by the Treaty of the Functioning of the European Union, there are certain exceptions that are justified by objectives of common interest European Union, The state aid system has been developed gradually from a situation in which a series of complex national regimes existed Mayhew, In , the Court of Justice gave the Commission legal authority to ask member states, and specifically the recipient companies, to pay back any aid that was received unlawfully according to the Treaty.
The subsequent decade saw the structured application of this principle within an effective and articulated policy framework and the Report on Competition Policy reaffirmed the notion that, although being tolerated in the past, state aid would be reviewed in order to evaluate its compatibility with the common market. The rules on state aid in Europe are very complex Friederiszick, et al.
One of the consequences of the increased focus on regulation in the field of state aid, is the evolution of the aid itself, from being widely distributed to being reduced and allocated strictly since the total amount of aid given reduced from 1. Following the reforms mentioned, national competition authorities along with national courts were authorised to apply all EU antitrust rules, becoming equivalent to the Commission of the European Competition Network. While the above refers to the internal market, it should be emphasized that, since the nineties, the Commission has sought to encourage major trading partners to implement similar policies through bilateral negotiations.
Article states that any aid granted by a Member State, namely any State resources in any form, that favours specific enterprises or the production of certain goods falsifying or threatening to falsify competition, are incompatible with the internal market as they can affect trade between Member States. Article , paragraph 1 of the TFUE in particular, provides a general definition of state aid that consists of the four cumulative factors given below : - The aid must be granted by the state or through state resources; - The aid must confer a selective advantage i. With regards to state aid in the railway sector, it is evident that even if it assumes a monopolistic structure, which is gradually being overcome as a result of the development of the EU community rules, it is at least able to confer a selective advantage for rail transport to the detriment of competing modes, such as air transport.
This aid can be justified, however, as the re-balancing of means of transport, dictated by the more favourable environmental impact of rail transport. The risks of competition distortion are much more significant when the monopolistic structure of the railway sector is overcome as a result of EU rules that are applied to the community as in the case of freight transport, or as a result of voluntary choices of the nation, such as those adopted in Italy and in other countries for passenger transport. In such cases, aid granted to individual railway companies requires deep insight and specific assessment of fairness and proportionality, while aid granted to network operators is less problematic, provided that they are adequately separated from transport companies and thus unable to offer cross-subsidies.
The EEA attempts to define the structure and the amount of subsidies paid to the different modes of transport. In the previously outlined general framework, aid of a social nature granted to individual consumers, provided that they are given without discrimination related to the origin of the products , aid to cover costs arising from natural disasters or exceptional occurrences, and aid granted to the economy of certain regions, are all considered compatible.
The following can also be considered compatible: aid to promote the economic development of areas where the standard of living is relatively low or there is high unemployment or underemployment; aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State; aid to facilitate economic activities in certain regions that do not adversely affect trading conditions; aid to promote heritage conservation; other categories of aid determined by Council decisions on EU Commission proposals.
Article outlines that the Commission examines, along with the Member States, the existing aid systems in the same Member States. In the event that the Commission finds that aid granted by a State is not compatible with the internal market or it has been given unlawfully, it states that the country concerned must abolish or change it within the specified period of time. The regulation EC no. Services of general economic interest SIEG The concept of services of general economic interest can be deduced from the glossary of terms used in EU competition policy: antitrust and merger control according to which the SIEG are economic services, the provision of which can be considered in public interest, such as, for example, the basic supply, accessible by the public, of energy, telecommunications, postal services, transport, water and waste disposal services.
Their definitions are, however, subject to controls by the Commission for any manifested errors in cases where Member States have specifically instructed some companies, in accordance with Article 86, paragraph 2, of the EC Treaty, to supply services of general economic interest. The precise definition of the tasks assigned to the company in charge of the public services is an important element in assessing whether and to what extent the state granting the company exclusive rights or funds to ensure the fulfilment of the assigned task is justified.
Aid available for railway transport Although Article says that aid granted by a Member State or through state resources is incompatible with the internal market due to the extent to which it affects trade of any kind between Member States by favouring specific companies or certain production and distorting or threatening to distort competition, the examination of the compatibility of aid is carried out in accordance with the objective of common interest at which the aid aimed.
In principle, when assessing the compatibility of aid, the Commission will apply specific criteria defined for each of the categories of aid related to the rail sector, such as, aid related to the needs of transport coordination, aid for the restructuring of railway companies, aid for small and medium-sized companies, aid for the protection of the environment, aid given to offset the costs of certain public service obligations and, in the context of public service contracts, regional aid.
In a recent article, Wellings highlights that railway sector aid has risen significantly in recent years in several countries, and supports the need for further structural reforms in order to ease the burden for taxpayers. Following are the criteria used for the evaluation of each typology. Support and funding of infrastructure Paragraph 2.
Public funding for infrastructure development may constitute state aid.
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According to the Court of Justice, it must be assessed whether the provision in favour of the infrastructure is able to generate a reduction in costs that burden the balance sheet of railway companies. In order for this to happen, the beneficiary companies must derive a selective advantage from the financing of infrastructure. The purchase and renewal of rolling stock The paragraph concerning aid for the purchase and renewal of rolling stock is based on the consideration of the type and, in particular in Europe, the age of the fleet that is particularly dated in many countries.
Therefore, under certain conditions, aid classified as aid for the purchase and renewal of rolling stock, is compatible with Community rules on competition. Even if, in terms of regional aid for initial investments, expenditure on the purchase of rolling stock in the transport sector is not eligible for aid, this rule may be waived in the case of rail passenger transport.
This is due to the fact that rolling stock in this sector can be permanently assigned to specific lines or services. Therefore, whilst subject to certain conditions, expenses for the purchase of rolling stock are deemed eligible for assistance. This exemption applies to all types of investment, both for the initial purchase and the replacement of the material, provided it is used for services on lines that regularly serve a region that benefits from aid under Article 87 of the Treaty, an outermost region or a region with a low population density.
Finally, if the recipient company is entrusted with the provision of SIEG involving, either or both, the buying or renewal of rolling stock and already in receipt of compensation, this must be taken into account when granting regional aid to the company, in order to avoid over compensation.
Cancellation of Debt This typology is based on the historical consideration that railway companies have often experienced phases of heavy indebtedness due to investments, a phenomenon that still affects a number of network operators.linfirocve.gq
Following this Directive, the restructuring of debts is carried out using different instruments. The restructuration of a freight branch State aid for the restructuring of a freight branch in economic difficulty is a special case, of minor interest for this paper. Generally, compatibility is assessed based on the guidelines in force on aid for restructuration, which do not foresee exemptions for railway companies.
Additionally, restructuration aid is usually intended for economic entities with a legal personality, while railway companies do not normally separate the freight transport branch from the passenger branch. Despite these difficulties, some aid given to railways companies that allowed them to resolve critical situations of a freight segment may be deemed legitimate, in certain circumstances, in a transitional period that included restructurings carried out before the 1st of January Transport Coordination Aid requested for transport coordination needs is considered compatible with the Treaty provided that it does not harm the general interests of the Community.
However, following the pro liberalisation measures, the need for coordination has lessened. In fact, in a liberalised and efficient market, coordination is carried out by the operators. Despite this, in many cases investments for the development of infrastructure continue to be given by the public sector and, even after liberalisation, there may be failures that justify state intervention.
Again, in this case aid may be in various forms: - Infrastructure use, given to railway companies that shall bear the costs of the infrastructure used; - Aimed at reducing external costs; - In favour of interoperability, security, the elimination of technical barriers, the reduction of noise pollution; - For research and development.
Ultimately, aid for these purposes, when necessary and proportionate, is considered compatible. Guarantees granted by the state Communication by the Commission on the application of Articles 87 and 88 of the Treaty to state aid given in the form of guarantees, defines the rules applicable to guarantees from the state in the rail transport sector.
The communication of the Commission GU C 71 of the In general, guarantees granted in relatively competitive sectors are incompatible with the EC Treaty.
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These guarantees represent effective aid and the interested Member States have to tell the Commission how they will grant this type of aid and the measures that they intend to take to remove it. Dimensions and trends of state aid in the EU and Italy Over a long period of time, the three decades since the eighties until today, the level of state aid in the European economies shows a clear downward trend. In , the latest year available , EU states guaranteed financial coverage of just less than 64,3 billion euros the previous year was 74 billion euros of aid, classed as aid not related to crisis situations non-crisis aid , equal to approximately 0.
This data however, which can be distinguished based on the recipient sector manufacturing, financial and non-financial services, agriculture, fisheries and transport companies , excludes rail transport aid, a sector that seems to benefit from a special regime even from a statistical point of view. In fact, while data on all other sectors is regularly updated and offers complete coverage, in the railway sector, there are many shortcomings and delays in reporting, and consequently as you will see in the second part of this paper the data cannot be integrated with that of others without altering its completeness and significance.
For these reasons, the data is traditionally accounted for and published by the Commission separately.
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In , state aid for the railway sector submitted to the Commission amounted to Thus, the total amount of aid granted to the railway sector was more than 47 billion, and the total general state aid in Europe more than billion. The rail sector is therefore the number one beneficiary of state aid in the EU.
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A second consideration is the fact that railway aid, as a share of GDP, does not appear to have reduced sharply over time unlike it has for state aid in all other sectors. As Graph 2 illustrates, aid has gone from 1. As for aid given to the railway sector however, the decline was much less pronounced and was only seen in the 90s: from 0. For the rest of the decade, the share instead remained stationary, except for its growth in the recession perhaps demonstrating a substantial inability to reduce public railway expenditure. The different dynamic of state aid in the railway sector compared to other sectors in the EU is made particularly evident by the different inclination of the two trend lines drawn in Graph 2 in relation to the two variables.
They highlight a convergence between the two values, with subsidies to rail transport supposedly destined, in the absence of interventions, to overtake all of the rest in a few years. The previous analysis on the trends of EU state aid to the rail sector compared to the other sectors produces equivalent, if not more, interesting results when looking at Italy. In this case, it is necessary to point out that while it was easy to reconstruct absolute values of Italian aid excluding the rail sector and its weight on GDP, not much more can be said for this sector before the year Graph 3 shows the fastest reduction path regarding state aid excluding the rail sector in Italy compared to the EU: at the beginning of 90s, its weight on GDP was almost double compared to that of the European Union, but throughout the course of the decade, probably as a result of the public finance constraints that affected our country, it reduced by around three-quarters bringing it below the EU average.
This virtuous path of reduction has not yet extended to state aid for the Italian rail sector. As verified by Graph 4, there was a reduction in aid as a share of GDP in the second half of the 90s, but this was recuperated in early Additionally, from onwards, aid for railways was steadily more consistent compared to the total aid granted to all other economic sectors. It therefore seems necessary to try to identify which dimensional factors of rail transport or specific objectives of transport policy justify such a consistent and stable financial commitment for public coffers.
State aid for the railway sector in individual EU countries After having given an overview of the institutional framework for the regulation of state aid to the railway sector in the European Union and the general dimensions of the phenomenon, we will now look in depth at each of the individual countries in an attempt to identify benchmarks with which to compare the Italian situation. The EU Commission annually renews a summary table, the latest version of which can be seen in Table 1, showing the total aid for each country, as reported by the states, that are awarded to the actors of rail transport: network operators and transport operators.
Includes all public subsidies communicated to the Commission as well as subsidies that have been notified and authorized by the Commission under relevant State aid rules.
The figures exclude compensation for services of general economic interest.