Background
The six companies of the ferry group Tirrenia di Navigazione (Tirrenia, Adriatica, Caremar, Saremar, Siremar and Toremar) operate domestic ferry services within Italy. They are under a contractual obligation to provide maritime links all year round for both goods and people, irrespective of the fact that the market is highly seasonal and that the routes are therefore unprofitable in the low tourist season that runs from October to May. The Treaty allows Member States to compensate companies for fulfilling public service obligations (PSOs) providing the subsidy is to fulfil genuine public policy goals set exclusively by the State itself. Compensation must be limited to reimbursement of any operating loss incurred as a result of providing the service.

However, the Commission has serious doubts as to the way in which the PSOs have been entrusted to Tirrenia and other companies in the group. It appears it is not the State itself which sets the PSO requirements but the companies, even though the format must be approved by the State. Although the companies appear to have very significant market share on the routes they cover under these contracts, it appears that several of these routes are operated in competition with private operators who do not receive state subsidies.

The Commission is not opposed in principle to State subsidies to ferry companies which agree to carry out non-commercial services on behalf of the State. Nor is the Commission seeking, in any way, to impede the normal ferry service between Italy and its islands. Its only concern is to ensure that the subsidy is kept within reasonable limits and that the subsidy mechanism should not allow the group total material insulation from world market forces.