Italy: Ship Waste Collection And Barge Bunkering Services: Major Steps Towards Market Opening

In a recent judgement ¹, the Consiglio di Stato [Italian Higher Administrative Court] has set out some important principles regarding the entrustment of waste collection services on board ships, but also - more generally - regarding the value of the entries in the registers under Article 68 of the Italian Navigation Code ² and the procedures for selection of the operators who are called on to provide public port services.

The case on which the judgment at hand was based is quite complex but can be summarised - very briefly - as follows.

Two companies providing waste collection services - under expired licences - on board ships moored in certain ports in Sardinia challenged the refusal by the competent Port System Authority ("AdSP") of their application for extension of their concessions. Said refusal was grounded - on the one hand - on the need to award such concessions through a public tender and - on the other hand - on the decision to have the service provided by companies registered under Article 68 of the Italian Navigation Code (pending the launch of the tender).

In the proceedings of first instance, the Sardinian Regional Administrative Court granted the applicant companies the right to challenge the decision of the AdSP, though not with a view to obtaining an extension of their concessions, but rather to actually launching a call for tenders to select a new concessionaire. On such occasion, the Sardinian Regional Administrative Court also argued that entry in the registers under Article 68 of the Italian Navigation Code does not allow checking whether the requirements for the provision of ship waste collection services be met (consequently alleging the unlawfulness of allowing companies entered in those registers to provide such services, albeit pending a tender).

The AdSP challenged the first-instance judgment before the Consiglio di Stato for having deemed the refusal unlawful due to the alleged inappropriateness of the register under Article 68 of the Italian Navigation Code to verify compliance by the operators entered in the register with the necessary requirements for the provision of public port services. The AdSP more precisely alleged that all the necessary checks had been carried out on all the companies authorised under Article 68 of the Italian Navigation Code, by selecting operators meeting the specific statutory requirements for the provision of the service at hand. The Consiglio di Stato considered such objection to be well-founded.

The most relevant objection raised by the AdSP and deemed valid by the Consiglio di Stato is, however, in our opinion, another. The AdSP indeed also alleged that the relationship established with the companies entered in the Register under Article 68 of the Italian Navigation Code does not involve, as a matter of fact, the award of the waste collection service "by the party entitled", as the choice to select the operator is, on the contrary, left "to the person who will benefit from the service and to whom costs will be charged", in the framework of a competitive regime. Such considerations were, as mentioned, shared by the Consiglio di Stato.

So, in conclusion, the AdSP alleged that the extension of the expired concessions was unlawful due to breach of the obligation to award the service by an ad hoc tender, as established by a previous ruling of the Sardinian Regional Administrative Court relating to the matter at issue.

As mentioned, the Consiglio di Stato deemed the objections made by the AdSP well-founded, though pointing out that - on the one hand - the applicants were, in fact, in no way entitled to claim the extension of the expired concessions and - on the other hand - that any assessment as to the possibility of granting a specific extension according to the circumstances of the case (pending the launch of the tender ³) should be left to the AdSP's discretion.

The decision of "addressing" the operators entered in the registers under Article 68 of the Italian Navigation Code - according to the Consiglio di Stato - was likewise at the discretion of the AdSP. In this regard, the Consiglio di Stato clarified that resorting to such operators does not prevent the verification of the technical skills required for the provision of the service, when actually entrusted to them.

The above-discussed judgment would therefore seem to be a clear push towards opening up the market and, therefore, competition, which in our opinion correctly reflects the principles set out by Regulation (EU) 2017/352 of 15 February 2017 ⁴ .

We like to think that the same trend can be seen in the position taken in the first instance by the Italian Antitrust Authority ("AGCM") and then endorsed by the Lazio Regional Administrative Court as to the barge-based bunkering service in the port of Civitavecchia.

The AGCM ⁵ first, and then the Lazio Regional Administrative Court ⁶ immediately thereafter - each within the limits of its competence - indeed challenged certain provisions contained in Order No. 14 of 31 March 2003 of the Civitavecchia Harbour Master's Office (Regulations for Security, Port Police and Maritime Services of the port and roadstead of Civitavecchia), namely, Articles 24 and 71 thereof, which provide as follows:

• the supply to merchant ships (excluding oil tankers) of water and bunkers by means of barges must be carried out exclusively by concessionaire companies "using the existing fixed installations under concession" (Article 24);
• bunkering in port areas for ships and smaller units can be done by means of a barge "by transfer operations from fixed installations under concession [...]" (Article 71).

Such provisions - evidently - prevent any party whose fuel supply comes from depots other than those in the Civitavecchia port area from operating.

Without going into detail here, it is worth noting that the rules on bunkering in Italy ⁷ does not provides for any obligation - for the concessionaire-operator of the activity in question - to obtain supplies exclusively from local coastal depots.

Both the AGCM and the Lazio Regional Administrative Court therefore deemed the provisions of the aforementioned regulation unlawful as involving a restriction of competition in the marketing of fuel, which - in the AGCM's view - " might lead to confer market power upon a single sales operator, to the detriment of the activity of competitors as well as of the possibility for customers to purchase the product on better conditions by means of a competitive process that is basically precluded, ultimately damaging final consumers".

The case regarding bunkering by barge in the port of Civitavecchia is, of course, different from the case regarding ship waste collection services, though they have in common a distinctive feature.

Such distinctive feature - which is welcomed - is the particular attention paid to the need to fully ensure the competitive struggle among operators, by opening up to the market (see tenders for the awarding of services) and by providing a legislative/regulatory framework capable of ensuring actual competition between the different providers of a given service.

All the above is in the interest of "final consumers", i.e. those who need to use the services concerned, without forgetting, however, that competition between operators can - in prospect - only increase the attractiveness and competitiveness of the port in which it is properly ensured.

Footnotes

1. Consiglio di Stato, ruling No. 3049 of 14 May 2020.

2. Article 68 of the Navigation Code reads: "Those who carry out activities within ports and, in general, within the maritime domain are subject, in the performance of such activities, to the supervision of the master of the port. The head of the maritime district, after consulting the trade-union associations concerned, may require those who carry out the aforesaid activities to be entered in special registers with a limited number of members and to be subject to other specific restrictions".

3. To make the scenario even more uncertain, there was the circumstance that the investigation for the updating of the four-year waste management plan was underway too.

4. Regulation which - as is known - established a regulatory framework for the provision of port services, as well as common rules on the financial transparency of ports.

5. Bulletin No. 23 of 8 June 2020.

6. Lazio Regional Administrative Court, decision No. 4322 of 15 June 2020.

7. Rules laid down in the Ministry of Transport's circular No. 16 of 19 July 2002 (Ref. No. DEM3/1823).

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