European Union: Regulation (EU) 2017/352 On Port Services And Financial Transparency: General Principles On Financial Transparency And Port Infrastructure Charges

Last Updated: 8 October 2018
Article by Barbara Gattorna

We will examine Regulation (EU) 2017/352 analyzing the recitals that reveal the general principles on financial transparency and port infrastructure charges1.

With reference to the first issue, we immediately notice how the European legislator apparently set itself the goal of “preventing unfair competition between ports in the Union2. This also considering that Regulation (EU) No. 1316/2013 “establishing the Connecting Europe Facility” provides, in particular, that the ports of the so-called “trans-European network3 can benefit from Union funding for the promotion of infrastructure projects of common interest in the field of telecommunications, energy and, as far as relevant for the purpose hereof, transport.

In light of the above, there is a real need to keep track of any form of financing coming (also) from the Union and to verify that no funding can compromise the necessary protection of free competition.

The legislator has then chosen to deal with the financial relations existing, at national level and in individual ports, among the players in the relevant market, namely national public authorities on the one hand and maritime ports in receipt of public fund on the other hand. These relations must be “made transparent, in order to ensure a level playing field and to avoid market distortions4.

To this aim, in recital 41, the European legislator stated that the possibility should be considered of extending, by means of the new regulation, the addressees of the specific financial transparency obligations set out in EC Directive No. 111/20065, now referring only to relations between Member States and public companies. In particular, said directive lays down the obligation for Member States to ensure transparency of financial relations between public authorities and public undertakings, for example: (i) public funds made available by the first in favor of the latter; (ii) the use to which these public funds are actually put.

The recitals of the regulation then deal with the case in which the managing body of the port, recipient of public funds, provides port services or dredging itself. In that eventuality, the managing body of the port has the obligation to keep accounts for publicly funded activities carried out in its capacity as managing body “separate from accounts for activities carried out on a competitive basis”6.

Precisely because the managing body of the port could operate on a market where free competition should be guaranteed, the European legislator does not miss the opportunity to observe that, with reference to port services and dredging possibly carried out by the managing body of the port, the competent national authorities should ensure an examination to verify compliance with State aid rules7.

With regard to port infrastructure charges, the regulation states in general that “in order to be efficient, the port infrastructure charges of each individual port should be set in a transparent way8 and should be consistent with the port's own commercial strategy and investment plans.

But the subsequent provisions, which leave a certain room for maneuver to the managing bodies of the ports, act as counterweight to a stringent general provision.

Firstly, the European legislator states that the provisions of the regulation should not affect the rights of managing bodies of ports and their customers to agree commercially confidential "discounts“. However, in this case, the managing body of the port should “at least publish standard charges before any price differentiation9.

This principle, certainly designed to protect positive practices that do not affect free competition, at first glance seems difficult to interpret and apply since no parameter is provided for assessing the legitimacy of the aforementioned “discounts” with respect to the necessary compliance with the free competition regime.

The regulation also establishes that “variations” (with respect to standard charges) of port infrastructures charges should be allowed where they pursue objectives of environmental policy and environmentally sustainable development of the surrounding areas, with the intention – therefore – to reduce the environmental footprint of the waterborne vessels calling and staying in the port. So, in these terms, it seems possible to realize a policy promoting short sea shipping as well as the objective to attract waterborne vessels which have an environmental performance, energy and carbon efficiency of transport operations that is better than average10.

The regulation then states that the variation in port infrastructure charges “may results in rates being set at zero for certain categories of users11. The users referred to are, among others, hospital ships, vessels in scientific, cultural or humanitarian missions, tugboats and floating service equipment of the port. These are therefore, on the one hand, hypotheses that we may consider as “exceptional” (see hospital ship), but on the other hand, “physiological” hypotheses (suffice it to think to the regulation reference to tugs).

Furthermore, in the recitals of the regulation, reference is made to the fees charged for port services operated under public service obligations and to charges for pilotage services. Since these are not “exposed to effective competition, they might entail a higher risk of price abuse in case where monopoly power exists“. Therefore, the regulation suggests (albeit generally) that arrangements should be established to ensure that charges are set “in a transparent, objective and non-discriminatory way and are proportionate to the cost of the service provided12.

We believe that this latter provision reflects an important and commonly accepted principle, in particular where it emphasizes the need that port infrastructure charges – in their transparency – be proportional to the actual cost of the service offered and do not discriminate the different ports operators.

As correctly noted in the regulation, an abusive conduct may “hide” precisely in the sphere of services provided under the public service obligation.

In conclusion, we deem it appropriate to stress once again that the regulation establishes that it is necessary to ensure that port users and other interested parties be consulted on “essential issues related to the sound development of the port, its charging, its performance and its capacity to attract and generate economic activities13. This recital recalls not only the principle of transparency, but first of all that of participation, involvement and, therefore, of the dialogue between managing bodies and port users from a collaboration perspective aimed at ensuring the pursuit of the general interest in the development of port activities.

After this summary examination of the recitals of the regulation, which is important to understand the principles that inspired it, in the next issue of our newsletter we will start "getting to the heart" of the rules dictated by the Regulation (EU) 2017/352.

Footnote

1 Port infrastructure charges meaning the fees owed by port users for the provision of port services.

2 Recital No. 42

3 A set of integrated transport infrastructures designed to support the single union market, to guarantee the free movement of goods and people and to strengthen the growth, employment and competitiveness of the European Union (Article 129b, Title XII of the Treaty of Maastricht of 1992).

4 Recital No. 41

5 Directive 2006/111/EC "on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings"

6 Recital no. 43 and 44

7 Recital no. 43

8 Recital no. 47

9 Recital no. 48

10 Recital no. 49

11 Recital no. 50

12 Recital no. 46

13 Recital no. 52

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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