European Union: The Competitive Distortions Of Tariffs For Technical-Nautical Services Under Regulation (EU) 2017/352 (… And Before National Courts)

Last Updated: 24 July 2019
Article by Franco Rossi

In the previous two issues of our Newsletter we dealt with the piloting service 1. In particular, we pointed out that, in 2013, the Italian Competition Authority (AGCM) had examined the methods of determining the tariffs currently in force, noting that they would not respond to any competitive principle. In fact, these mechanisms, rather than aiming at efficiency, would seem directed at ensuring first and foremost the coverage of costs and revenues of service providers.

As already highlighted, the piloting service is carried out on a legal exclusivity and compulsory basis due to the fact that it contributes to the achievement of high levels of safety in navigation. However, the Italian Competition Authority has stigmatized the binomial exclusivity – efficiency/safety. The "safety objective" cannot justify an arbitrary limitation of the number of operators. Indeed, opening to competition should not be seen as an obstacle in this respect. On the contrary, a competitive market would allow the achievement of economic efficiency in the provision of services without automatically compromising the full protection of safety.

The position of the Italian Competition Authority is in line with the European Union law. Indeed, there would seem to be a conflict between the current criteria for the formation of tariffs and the competitive principles laid down in art. 106 TFEU 2, inasmuch as the aforementioned criteria could determine a cost for users that is objectively disproportionate to the activities actually carried out (to be assessed also in relation to the actual traffic level).

In this regard, the European Court of Justice has expressly established – long ago – that the tariffs for technical-nautical services must be structured in such a way as to enable users to verify the incidence of individual cost items and, therefore, of the individual services rendered, on the total price of the service.

Regulation (EU) 2017/3523 fits in this context with its clear objective, which can be inferred from Recital no. 4: "facilitating access to the port services market and introducing financial transparency and autonomy of maritime ports will improve the quality and efficiency of the service provided to port users".

"Transparency" is certainly one of the "key words" of Regulation (EU) 2017/352 that is declined according to three different meanings:

  • (i) transparency in the access to port services;
  • (ii) transparency with respect to public funding;
  • (iii) transparency in the setting of port service charges.

By limiting our attention to charges for port services, we can immediately notice a concern that the European legislator does not hide, but rather makes explicit, in Recital no. 46 of Regulation (EU) 2017/352:

"Port service charges applied by providers of port services under public service obligations and the charges for pilotage services which are not exposed to effective competition might entail a higher risk of price abuse in cases where monopoly power exists. For those services, arrangements should be established to ensure that the charges are set in a transparent, objective and non-discriminatory way and are proportionate to the cost of the service provided".

So, this is the premise from which the European legislator has taken the cue to develop a European regulation on port service charges. The fact that this statement is placed within the so-called "Recitals" does not mean that it has a minor practical relevance than actual articles. It represents the "interpretative yardstick" through which the relevant rules are to be read and applied.

The rule at issue, which specifically regulates port service charges, is art. 12 of the Regulation 4.

According to this provision, in the event that the pilotage service is not exposed to effective competition, the setting of tariffs must be transparent, objective, non-discriminatory and proportional to the cost of the service provided. Furthermore, in the event that the payment of port service charges is supplemented with charges for the use of port infrastructures, the provider must ensure that the amount relating to port service charges is clearly identifiable by the user. In the event of a complaint, the provider of the pilotage service, in the terms set out above, shall make available to the authority all information about the elements underlying the structure and the level of the charges.

Therefore, in order to face the distortions caused by an unjustified tariff system deriving from a monopolistic context, the European legislator responds with four instruments to prevent the concrete realization of the risk indicated above: transparency, objectivity, non-discrimination and proportionality.

As can be seen from the aforementioned legislative provision, "transparency" is closely linked to "proportionality". Charges must always be proportionate to the actual way in which the service is provided and, at the same time, must be determined in a transparent way. In fact, it would not have been sufficient to provide for the proportionality of tariffs without enabling the user of the service to control their formation mechanism. In particular, as regards the pilotage service, the evaluation of these two parameters cannot be separated from a concrete evaluation of the actual methods of rendering the service, since – as we have seen in our December-January 2019 Marine and Transport Bulletin – the service in question can be carried out on board, remotely (VHF) or without the aid of the pilot in the event that the ship’s captain has a specific certification (PEC – Pilotage Exemption Certificates).

The Regulation explicitly states the need to ensure that port users are consulted on essential aspects relating to the healthy development of the port, including the charging policy. In essence, the aim is to ensure control by users both ex ante, through the consultation of the interested parties, and ex post, through an effective mechanism for filing complaints. Indeed, in order to ensure adequate and effective application of the Regulation, Member States must establish an effective procedure for handling complaints.

In the light of this brief analysis, many doubts seem to arise as to the compatibility between the current Italian tariff-setting system for technical-nautical services and European Union law. In this perspective, we wish to point out that European Union regulations are directly applicable in all Member States and, consequently, all those who consider themselves harmed by the current Italian system could enforce the content of the Regulation before their national courts, without having to wait for implementing measures by the legislator.

Footnotes

1 The piloting service is included in the so-called technical-nautical services regulated by art. 14 of Law 84/94, which identifies them as services of general interest.

2 "1. In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaties, in particular those rules provided for in Article 18 and 101 to 109 inclusive. 2. Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interests of the Union. 3. The Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States".

3 Regulation (EU) 2017/352 of the European Parliament and of the Council of 15 February 2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports.

4 "1. The charges for the services provided by an internal operator under a public service obligation, the charges for pilotage services that are not exposed to effective competition and the charges levied by providers of port services, referred to in point (b) of Article 6(1), shall be set in a transparent, objective and non-discriminatory way, and shall be proportionate to the cost of the service provided. 2. The payment of the port service charges may be integrated into other payments, such as the payment of the port infrastructure charges. In such a case, the provider of port services and, where appropriate, the managing body of the port shall make sure that the amount of the port service charge remains easily identifiable by the user of the port service. 3. The provider of port services shall, in the event of a formal complaint and upon request, make available to the relevant authority in the Member State concerned any relevant information on the elements that serve as the basis for determining the structure and the level of the port service charges that fall under paragraph 1".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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