S.E. On. Luigi di Maio

Ministro degli Affari Esteri

P.le della Farnesina 1

I – 00194 Roma

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111

EUROPEAN COMMISSION

Brussels, 10.10.2019

C(2019) 7371 final

PUBLIC VERSION

This document is made available for information purposes only.

Subject: State Aid SA.54990 (2019/N) – Italy

Aid in favour of rail freight transport in Emilia-Romagna region

Excellency,

1. PROCEDURE

(1) Following pre-notification contacts, pursuant to Article 108(3) of the Treaty on

the Functioning of the European Union (hereafter "TFEU" or the "Treaty"), on 19

July 2019 Italy notified an aid scheme in support of rail freight transport in the

Emilia-Romagna Region (hereinafter “the Region”). The case was registered in

the register of notified aid under number SA.54990.

(2) On 20 September 2019, the Commission requested additional information from

the Italian authorities on the notified scheme. On 24 September 2019, the Italian

authorities submitted additional information to complement their notification.

2. DESCRIPTION OF THE MEASURE

2.1. Objectives and scope of application.

(3) Under the notified scheme, logistics companies1 and multimodal transport

operators2 (hereinafter “MTOs”) are granted a subsidy to compensate the

1 In the present scheme, a logistics company is defined as any undertaking, which manages traditional or

intermodal rail transport services for its own account or on behalf of a third party, with the exclusive

2

difference in additional external costs of road transport to the benefit of their

customers. The purpose of the notified scheme is to rebalance the division of

freight transport in the Region, promoting conventional,3 intermodal4 and

transhipped5 rail freight transport. The scheme ultimately aims to reduce

environmental pollution and improve road safety and security. Subsidies are not

intended for rolling highways.6

(4) The expected benefits are a modal shift, namely the removal from the Region's

roads, over a three-year period, of approximately 220,000 28-tonne diesel heavy

goods vehicles (HGVs), corresponding to approximately 6,150,000 tonnes of

goods over 26,400,000 kilometres.

(5) This is integral part of the 2025 Regional Integrated Transport Plan,7 where the

Region, consistently with the goals set out by the Ministry of Transport at

national level, aims to achieve an increase in rail freight transport of 30% by 2025

and a modal share of around 13%. Based on the achievements over the last years,

namely an increase in rail freight traffic of around 7% from 2015 to 2016, up to

the highest total volume of 19.6 million tonnes ever reached in the Region, the

2025 Regional Integrated Transport Plan considers that the intended goals can be

achieved, provided an effective system of support actions is set up.

(6) The expected benefits are also in line with the aim of the Region to reduce

substantially the level of air pollution and to implement the Regional Integrated

Air Quality Plan,8 which is designed to meet the Air Quality Standards set out at

EU level.

use of the means of transport for at least one of the transport modes, organizes complete transport

packages and acquires the necessary logistics services.

2 In the present scheme, a multimodal transport operator is defined as a legal person who concludes a

multimodal transport agreement on its own behalf. It does not act as a designated clerk or agent of the

sender or of the carriers participating in multimodal transport operations and is responsible for the

implementation of the agreement.

3 In the present scheme, conventional rail transport is defined as freight transport that makes use of

traditional wagons (covered wagons, platforms, with high banks, with hopper and other common usage

types) for rail transport.

4 In the present scheme, intermodal rail transport is defined as freight transport, which makes use of

multiple modes for one shipping operation and which includes the dispatching of intermodal

containment units (containers, semi-trailers, swap) on rail transport.

5 In the present scheme, transhipped rail transport is defined as freight transport, in which the initial or

final leg of the journey is by road and the other leg is by rail, with a loading break.

6 In the present scheme, rolling highways are defined as rail transport of full-road vehicles and tractors

with driver, with the use of low-floor wagons.

7 Piano Regionale Integrato dei Trasporti (PRIT), approved by the regional Government with resolution

No 2045 of 3 December 2018.

8 Piano Aria Integrato Regionale (PAIR), approved by the regional Legislative Council with resolution

No 115 of 11 April 2017.

3

2.2. Legal basis and granting authority

(7) The notified measure is based on the draft resolution of the regional Government

of Emilia-Romagna region approving the draft Regional Law that provides

support for rebalancing freight transport and repeals Regional Law No 10/2014.

The draft resolution includes the draft notice inviting applications for subsidies

laying down the criteria and rules for the granting of aid (hereinafter “the

implementing rules”) as well as the reports on the results obtained by the support

measures under Regional Law No 10/2014.

(8) The legal basis also provides for support to inland waterway transport, to be

granted in compliance with the de minimis rule as laid down in Regulation (EU)

No 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of

the Treaty on the Functioning of the European Union to de minimis aid.9

Accordingly, it is not part of the notified measures and falls out of the scope of

the present decision.

(9) The responsible granting authority is the regional Directorate of the Environment

and Territorial Protection (hereinafter “the granting authority”).

(10) Article 11 of the draft regional law makes the implementation of the measure

subject to authorisation by the Commission.

2.3. Beneficiaries

(11) The direct beneficiaries of the scheme are logistics undertakings and MTOs

including consortia and cooperatives, lawfully constituted, with their registered

office in one of the member states of the European Union.

(12) The indirect beneficiaries are the end users of the rail transport services, i.e.

shippers and undertakings, since the logistics companies and the MTOs are

obliged to use the entire amount of aid to reduce the tariffs actually charged to

end users of the transport services.

(13) According to estimates provided by Italy, the number of beneficiaries range

between 10 and 50.

2.4. Duration and budget

(14) The aid measure extends from 1 January 2020 until 31 December 2022.

(15) The notified budget amounts to EUR 6,000,000 that the Region allocated to

support both rail and inland waterway transport services. The earmarked amount

of support for rail freight transport is EUR 1,800,000 per annum for three years

(2020, 2021, 2022), i.e. EUR 5,400,000 in total. Any residual resources

earmarked under the inland waterway transport measure may be used to support

additional rail services eligible for aid and placed on the reserve list.

9 OJ L 352, 24.12.2013, p. 1.

4

2.5. Eligible costs, aid amount and support conditions

(16) The subsidy will be granted to compensate for the external costs10 related to

freight transportation. Therefore, the eligible costs under the aid scheme

correspond to the part of the external costs which rail transport makes it possible

to avoid when compared to road.

(17) The quantification of the eligible costs and of the total cost of rail transport under

the present scheme is based on the results of the calculation of the external cost

differential between rail transport and alternative modes provided in the Study of

Price Waterhouse Coopers Advisory Spa dated 5 November 2015 and updated in

March and September 2016 (hereinafter ‘the PWC study’). The PWC study was

commissioned by the Italian authorities in the context of preparation of measures

in support of rail freight transport in Italy.11

(18) The aid amounts to EUR 0.007 per tonne per kilometre. Based on the PWC study

conclusions, the aid amount falls below both relevant thresholds, i.e. 50% of the

eligible costs and 30% of the total cost of rail transport.

(19) The highest aid amount that may be awarded to each undertaking is EUR 150,000

per annum. The subsidy will be granted only in respect to the kilometres run

within the regional territory and will be limited to maximum 120 km.

(20) The aid scheme will provide support only to new rail transport services12 that are

initiated as from 1 January of the year of publication of the notice inviting

applications for subsidies and that represent additional services as compared to

the reference period indicated in the notice. Each new service shall have its origin

and/or destination in a railway junction located in the territory of the Region.

(21) To qualify for the subsidy under the scheme, the beneficiaries must organise

services with at least 30 trains per annum each or transport at least 20,000 tonnes

per annum each. The service must be maintained, at least at the minimum

volumes, for the two years following the end of the required incentive period. The

contribution for each additional service may be requested for a minimum duration

of one year up to a maximum of 3 years.

10 ‘External cost’ is an economic term, referring to the cost that certain activities, e.g. transport, impose

upon society. It is expressed in monetary terms. The external costs of transport, in particular those

related to the environment, are generally not borne by transport users and hence not taken into account

when they make a transport decision. The internalisation of these costs means including such effects in

the decision making process of the transport users. For instance, this can be done directly, through

providing the right incentives to transport users.

11 See Commission decision of 24 November 2016, SA.44627 (2016/N), Italy, ‘Ferrobonus’ - incentive

for rail transport, OJ C 83 of 17.3.2017, p.3, recitals 23 to 27 and Commission decision of 19

December 2016, SA.45482 (2016/N), Italy – Rail freight transport support scheme, OJ C 145,

09.05.2017, p.2, recitals 22 to 24.

12 New rail transport services on new sections and new rail transport services on existing sections in

relation to the reference period indicated in the notice.

5

(22) Undertakings in difficulty, as defined in the Guidelines on the State aid for

rescuing and restructuring non-financial undertakings in difficulty,13 are not

eligible for the aid. Similarly, undertakings with outstanding recovery orders

following a Commission decision cannot apply for support.

(23) Support will be granted within the limits of available financing to the projects

having obtained the highest number of points under the below ranking

methodology:

(a) consistence with regional planning in the sector (score from 0 to 8), which

represents the decisive criterion in case of equal scoring;

(b) focus on short compared to the medium-to long haul domestic and

international transport (score from 0 to 10), with priority given to intra-

regional services (i.e. with origin and destination in the Region);

(c) quality of the proposal in terms of effectiveness and efficiency of the

transport service (score from 0 to 8 points);

(d) connections with ports and with regional target areas (score from 0 to 8);

(e) credibility of the bid in terms of long-term sustainability of the service (score

from 0 to 6);

(f) use of alternative routes to those suffering from bottlenecks (score from 0 to

5);

(g) frequency of connections (score from 0 to 5).

2.6. Procedure for granting the aid

(24) The granting authority will publish a notice for aid applications relating to the

notified scheme on a yearly basis.

(25) The MTOs and the logistics undertakings providing rail freight transport services

in the territory of the Region shall submit to the granting authority the aid

application together with the breakdown of all new services planned over each

calendar year (from 1 January to 31 December). The applications shall be

accompanied by a report laying down a detailed description of the service. Any

amendment shall be notified to the granting authority in order to be duly

authorised.

(26) The aid will be granted by the granting authority on the basis of the final rank

order list as drawn up by the Evaluation Board and published on the website of

the Region within 120 days following the closing date for the submission of

applications. The granting authority can grant the aid only after the Commission

has authorised the scheme.

(27) The aid will be paid out on a yearly basis against the submission of a detailed

report and description of the services provided, corresponding invoices and

declaration concerning the maintenance of the service. In particular, the payment

13 OJ C 249, 31.07.2014, p.1.

6

of the aid is conditional upon submission of standard record sheets highlighting

the amount of aid received per service and showing its correspondence with the

linked invoice issued by the beneficiary. The aid will be paid out in two

instalments: 95% upfront and the remaining 5% at the end of the two years

following the termination of the incentive period, upon condition that the

subsidised services have been effectively kept active over the relevant period.

(28) The aid will be granted within the limits of the available budget. Any residual

resources earmarked under the inland waterway transport measure may be used to

support additional rail services eligible for aid and placed on the reserve list.

2.7. Rules on cumulation

(29) Article 7 of the draft Regional Law provides that cumulation with other EU, State

or regional grants, including similar contributions, granted on the basis of external

cost savings is possible, provided the cumulated amounts do not exceed 50% of

the eligible costs and 30% of the total transport cost.14

(30) In calculating the maximum grantable aid amount, the Region committed to take

into account the tax exemption applicable in Italy to the consumption of

electricity for rail traction since 1924. Article 52(3)(c) of the current Consolidated

Law on the taxation of energy consumption15, as amended by Legislative Decree

No 26 of 2 February 2007, maintains the exemption from excise duty on

electricity "used for the installation and operation of railway lines for the transport

of freight and passengers", in line with Article 15(1)(e) of Council Directive

2003/96/EC of 27 October 2003 restructuring the Community framework for the

taxation of energy products and electricity16 that allows Member States to apply

total or partial exemption in the level of taxation to electricity used notably for the

carriage of goods by rail. The corresponding value of the tax exemption is EUR

3.1 per MWh, which represents a saving of approximately EUR 0.0002 per tonne-

kilometre.

(31) In any case, the Region committed to respect the thresholds set out in point 107 of

the Community guidelines on State aid for railway undertakings17 (hereinafter

‘Railway Guidelines’) in each individual grant. Moreover, according to Article 52

of Law No 234/2012,18 before granting the aid, the Region shall verify the

14 The Italian authorities confirmed that the cumulation of the aid under the present scheme with the

maximum grantable aid under the national “Ferrobonus” scheme (SA.44627), including the tax

exemption applicable in Italy to the consumption of electricity for rail traction, does not in any event

exceed the relevant ceilings set out in the Railway guidelines.

15 Legislative Decree No 504 of 26 October 1995.

16 OJ L283 of 31.10.2003, p.51.

17 Communication from the Commission - Community guidelines on State aid for railway undertakings

(OJ C 184, 22.7.2008, p. 13).

18 Law December 24 December 2012, No 234 ‘General rules on Italy's participation in the EU policy-

making and EU law-making process and in their implementation, Italian Official Gazette No 3 of 4

January 2013.

7

compliance with the rules on cumulation through the national State Aid

Registry.19

2.8. Repayment mechanism and monitoring

(32) Sample checks will be carried out on the eligible applications. The granting

authority shall order the forfeiture of the aid if the beneficiary fails to comply

with the implementing rules.

(33) Pursuant to Article 9 of the draft Regional Law, the Regional government shall

submit to the Legislative Council a yearly report on the implementation of the

scheme and the results obtained.

2.9. Continuity vis-à-vis previously undertaken actions

(34) The notified measure is the continuation of the regional action of modal shift of

heavy traffic from the road to less polluting transport modes that was initiated in

2009 to tackle the sharp decrease in rail freight traffic volumes as of 2008

following the crisis. It builds on the achievements obtained thanks to the

incentives provided by Regional Law No 15/2009 over 2010-2012 and by

Regional Law No 10/2014 over 2014-2016, approved by Commission decisions

of 30 September 2009 on case N 483/200920 and 13 June 2014 on case SA.38152

respectively.21

(35) In particular, the new support scheme is largely based on the experience gained

with the most recent support scheme SA.38152 (hereinafter “the previous

scheme”). The main differences are as follows:

(a) railway undertakings are not eligible. This change has been proposed because

the implementing experience has shown little to no interest from railway

undertakings to apply for aid;

(b) the maximum amount of grant per tonne-kilometre (tkm) decreased from

EUR 0.008/tkm to EUR 0.007/tkm. This change has been proposed because

the gap in external costs between road and rail decreased over time, due to

the increase in the number of HGVs with higher environmental standards;22

19 The obligations and sanctions laid down in article 52 of Law No 234/2012 are in force as of 12 August

2017, pursuant to decree No 115 of the Ministry of Economic Development of 31 May 2017.

20 Commission decision of 30 September 2009 on case N483/2009 - Italy, Emilia-Romagna Region – Aid

in favour of rail freight transport, OJ C 280, 20.11.2009, p.1.

21 Commission decision of 13 June 2014 on case SA.38152 (2014/N) - Italy, Emilia-Romagna Region –

Aid in favour of rail freight transport, OJ C 280, 22.08.2014, p.24.

22 A study based on pilot surveys conducted on regional traffic during the first months of 2019 shows a

progressive increase in the number of HGVs meeting the Euro 5 and Euro 6 standards, which are

expected to be the majority (60%) in 2020, the first year of incentives. The study was procured by the

Region in order to define the actions needed to promote intermodality and to make the freight transport

more efficient in the Region. The study was carried out by REDAS Enginering S.r.l. beginning of

2019. Its findings upheld the conclusions of the Regional Agency for Prevention, Environment and

Energy (ARPAE) underpinning the 2025 Regional Integrated Transport Plan on the basis of the Italian

automobile Club (ACI)’s database.

8

(c) the ability to ensure full-train services is not a priority criterion any more. This

change moved from the consultation of stakeholders and from the

observation that full train services tend to be economically viable.

Accordingly, those services which are not able to reach the load needed to

make full-trains would be penalised and risk the exclusion from the aid, thus

increasing the likelihood of their diversion to the road transport mode.

2.10. Impact assessment of the previous scheme

(36) The Regional authorities submitted the report on the results obtained23 and the

environmental report24 of the previous scheme.

(37) Both reports highlight that total volume of rail freight traffic in the Region has

grown steadily since the adoption of the two main previous support measures, as

highlighted in Figure 1 below.

Figure 1: Rail flows in Emilia-Romagna (million tonnes — Years 2002-2017). Source:

Regional database based on data provided by operators of regional railway terminals and sidings.

(38) The Regional authorities explain that the slight drop recorded in 2017 was due to

a temporary disruption of the railway in Rastatt, Germany, during the third

quarter of 2017, which caused a decrease by 6.4% in the rail freight traffic along

the Rhine-Alpine Corridor (strategic link Genoa-Rotterdam) that was mainly

diverted to the road. Negative spillovers also affected North Italy’s manufacturing

system, which lost approximately 60% of its freight traffic with Germany. The

slight decrease in traffic involved some regional nodes in Emilia-Romagna

region,25 which were penalized because their traffic flows converge in the Genoa-

23 Final report of the Regional government to the Legislative Council pursuant to article 9 of Regional

Law No 10/2014 (see recital 15 of Commission decision in case SA.38152).

24 Drafted by the the regional Directorate of the Environment and Territorial Protection, dated 20

September 2018.

25 In particular, the intermodal nodes of Fiorenzuola, Interporto Parma, Dinazzano, Interporto Bologna,

which lost rail freight traffic volumes in 2017 as compared to 2016 by 23.47%, 8.18%, 7.81% and

9

Rotterdam corridor. However, based on the recorded positive trend of the first

half of 2017, in line with the general positive trend shown in Figure 1, the Region

considers that rail freight traffic in Emilia-Romagna would have increased also in

the second half of 2017 if the Rastatt disruption did not occur.

(39) The reports also point out that the Rastatt exceptional case showed that the major

European rail freight corridors do not have sufficient lines of diversion to be used

immediately in case of disruption, thus increasing the risk for rail transport to

loose competiveness vis à vis road transport. Although the disruption affected

only a few rail nodes in the Emilia-Romagna region, it prompted the Regional

Government to continue investing in measures aimed to support the modal shift as

a priority. This is well reflected in both the 2025 Regional Integrated Transport

Plan and in the Regional Integrated Air Quality Plan (see recital (5)).

2.10.1. Impact assessment on the modal shift of freight traffic

(40) The Regional authorities confirm that the previous scheme was successful as the

expected reduction of road traffic by 80,000 HGVs was largely exceeded with

140,931 HGVs taken from the road over the incentive period. As reported in

December 2017, 11 new rail services were provided by 10 undertakings,26 which

were selected based on the published notices and transported overall 3,875,587

additional tonnes of freight compared to 2013. The subsidised services in the

framework of Regional Law No 10/2014 mostly concerned intra-regional

transport, with relatively limited distances outside the Region and no service to or

from third countries. In accordance with the award criteria, intra-regional short

haul services and hinterland connections were given priority in the allocation of

resources. The majority of the subsidised services had their origin/destination in a

port (Genoa, La Spezia, Livorno, Ravenna), thus confirming the importance of

such links for the export of finished goods manufactured in the Emilian

manufacturing district.

2.10.2. Environmental impact assessment

(41) The Regional authorities also confirm the positive performance of the previous

scheme in respect to its environmental goals. The environmental report on the

previous incentive period shows a positive balance in that the achievements

exceeded the initial forecasts not only in terms of HGVs taken from the road

(140,931 against approximately 80,000 planned) and tonnes transported

(3,875,586 against approximately 2,200,000), but also in terms of reduction of

their emissions.

(42) The environmental report quantifies the different impact of rail and road transport

at the end of the three-year subsidy period and compares the consumption and

emission levels of the additional rail services (compared to 2013) with those that

4.4% respectively (source: Annual Monitoring Report on Mobility and Transport in Emilia-Romagna,

September 2019, chapter 9, Table 78, p. 356).

26 Eight MTOs, one production company using railroads for the processing of products between its

production facilities, one railway undertaking.

10

would have been obtained by transporting the same quantities of goods by road.27

For the calculation of consumption and emissions and for the comparison

between the two alternative modes of transport, the Region used the online tool

EcoTransIt.28 The database used to assess the environmental impact was based on

the reports submitted by the beneficiary companies to the Region and

crosschecked with the data records of terminals and facilities used by the

subsidised services.

(43) The report concludes that over the three-year period 2014-2016 the aid provided

by Regional Law No 10/2014 allowed savings in terms of primary energy by

approximately 60%, amounting to more than 86.4 GWh. Whereas the cost of

electricity is about EUR 0.176/kWh, the total savings due to the aid scheme

would exceed EUR 15.2 million, against a state aid expenditure of approximately

EUR 1.9 million. Similarly, the financed modal shift allowed significant savings

in terms of emissions by more than 70% as compared to the expected impact of

the Regional Law No 10/2014 at the beginning of the incentive period.29

(44) Finally, the report highlights that the values of the emission savings as a

percentage of the total emissions of HGVs are almost the same as the same values

as a percentage of the total emissions of the entire regional transport sector.

Despite the relatively low share of HGVs out of the total traffic (ranging between

10% and 30% depending on the type of roads), these data conclude for the utmost

importance of modal shift of freight traffic from road to rail.

(45) Based on the positive results obtained by the previous measure in terms of modal

shift and environmental benefits as described above, and in light of the new

policy objectives set out in the regional transport and environmental strategic

planning for the period from 2020 onwards, the regional authorities concluded on

the need to continue supporting rail freight transport along the same lines of the

successful previous measures.

3. ASSESSMENT OF THE AID MEASURE

3.1. Existence of aid

(46) Pursuant to Article 107 (1) TFEU, "any aid granted by a Member State or through

State resources in any form whatsoever which distorts or threatens to distort

competition by favouring certain undertakings or the production of certain goods

shall, in so far as it affects trade between Member States, be incompatible with

the internal market".

27 The underlying methodological assumption is that in the counterfactual scenario without the subsidies

provided by Regional Law No 10/2014, the freight traffic would have been fully diverted to the road.

28 EcoTransTt (https://www.ecotransit.org/) is a model commissioned by national railway undertakings

with the aim of comparing emissions and energy consumption between the different modes of

transport: rail, lorry, ship, air. The methodology of EcoTransIt was developed by the German Energy

Research Institute (IFU) on energy and the environment at the initiative of the leading European

Railway Undertakings.

29 The report tracks savings of emissions of fine particulates by 1,308 kg, of carbon dioxide by 25,300

tonnes, of sulphur dioxide by more than 5,300 kg and of nitrogen oxides by 54,200 kg.

11

(47) The criteria laid down in Article 107(1) TFEU are cumulative. Therefore, in order

to determine whether the notified measure constitutes State aid within the

meaning of Article 107(1) TFEU all of the following conditions need to be

fulfilled. The financial support must:

(a) be granted by the State or through State resources;

(b) favour certain undertakings or the production of certain goods;

(c) distort or threaten to distort competition; and

(d) affect trade between Member States.

(48) The notified measure fulfils all the four cumulative conditions for the following

reasons:

(a) State resources and imputability: Since the notified measure involves

financing granted by the Italian authorities to the beneficiaries as defined in

recitals (11) and (12) above, it involves the use of State resources. Besides,

the decision to set up the scheme has been taken by the regional authorities

on the basis of a draft Regional Law of the Regional Council and draft

implementing provisions of the Regional Government as described in recital

(7). The Commission concludes therefore that the measure is imputable to the

State;

(b) Economic advantage: The measure reduces the costs that the beneficiaries

would normally have to bear. The Commission concludes therefore that the

measure confers an economic advantage;

(c) Selectivity: The public financing is directed at certain eligible undertakings,

i.e. logistics undertakings and MTOs organising new freight transport

services in the Region. The Commission concludes therefore that the measure

is selective in nature;

(d) Distortion of competition and impact on trade: When aid granted by a

Member State strengthens the position of an undertaking compared with

other undertakings competing in intra-Union trade, the latter must be

regarded as affected by that aid. It is sufficient that the recipient of the aid

competes with other undertakings on markets open to competition. In the

present case, the notified measure strengthens the position of the beneficiary

undertakings in relation to other undertakings active in the rail freight market,

which is open to competition. The Commission concludes therefore that the

measure is liable to distort competition and to affect trade between Member

States.

(49) On the basis of the above considerations, the Commission concludes that the

notified aid scheme constitutes State aid within the meaning of Article 107(1)

TFEU.

3.2. Lawfulness of the aid

(50) As described in recital (7), the Italian authorities notified the legal basis in the

form of a draft, which will become a final text following the decision of the

12

Commission. In addition, as described in recitals (10) and (26), the draft law and

the draft implementing provisions contain a stand-still clause whereby the aid

granting body can only grant the aid after the Commission has authorised the aid.

(51) The Commission therefore concludes that Italy complied with the obligation laid

down in Article 108(3) TFEU.

3.3. Compatibility of the aid

3.3.1. Relevant EU legal basis

(52) The notified measure falls within the scope of Article 93 TFEU and has therefore

to be assessed on that basis.

(53) Article 93 TFEU states that State aid shall be compatible with the Treaty if it

meets the needs of coordination of transport. The concept of "aid meeting the

needs of coordination of transport" refers to the need for public intervention

arising notably in the presence of market failure. In this regard, the Commission

notes that measures of coordination of transport may be needed when certain

modes of transport do not bear the costs of the negative externalities, which they

impose on society.

(54) As expressed in the Commission’s White Paper on Transport Policy,30 the

fundamental charging principle for infrastructure use is that charges must cover

not only infrastructure costs, but also external costs, namely costs connected to

accidents, air pollution, noise and congestion. This approach reflects also the fact

that, in view of Article 3 TEU and Articles 6 and 191 TFEU, the environmental

objectives of the Treaty have to be pursued inter alia through the Common

Transport Policy. Rail transport generates lower negative externalities than road

transport in terms of accident and pollution costs, noise, climate costs or

congestion costs. In general, this transport mode also has considerable spare

capacity and can therefore play a role in shifting traffic away from the congested

parts of the road networks. At the same time, wider socioeconomic benefits and

positive externalities justify some level of public funding through correct and

consistent monetary incentives also to transport operators. This approach has been

applied in a number of the Commission State aid decisions over the years.31

30 Roadmap to a Single European Transport Area – Towards a competitive and resource efficient

transport system, COM(2011)144 of 28.03.2011.

31 For the most recent and relevant decision-making practise – see, e.g., Commission decision of 20

December 2018, SA.50115 (2018/N) – Italy - Intermodal rail transport of iron slabs in the FVG

region, OJ C 90 of 08.03.2019, p.2; Commission decision of 10 December 2018, SA.51956 (2018/N) –

Germany - Partial financing of rail infrastructure charges, OJ C 14 of 11.01.2019, p.7; Commission

decision of 26 July 2018, SA.50165 – Germany - Support for the promotion of energy efficiency in rail

transport, OJ C 127 of 05.04.2019, p.6; Commission decision of 27 March 2018, SA.50395 (2017/N)

– Germany - Offshore-surcharge reduction for railway undertakings in Germany, OJ C 317 of

07.09.2018, p.6; Commission decision of 6 December 2017, SA.48858 (2017/N), Italy - Aid scheme

supporting combined transport in the Province of Bolzano, OJ C 158 of 04.05.2018, p.6; Commission

decision of 6 November 2017, SA.47429 (2017/N) – Croatia - Incentives for Combined Transport in

Croatia, OJ C 20 of 19.01.2018, p.4; Commission decision of 25 October 2017, SA.48390 (2017/N) –

Austria - Aid scheme supporting rail freight transport in certain production forms 2018 – 2022, OJ C

13

(55) Rules for the application of Article 93 TFEU (aid for the coordination of

transport) have been set out in Section 6 of the Railway Guidelines.

(56) According to point 95 of the Railway Guidelines, aid that meets the needs of

transport coordination is in principle considered compatible with the Treaty. Point

96 of the Railway Guidelines provides that for a given aid measure to be

considered to “meet the needs” of transport coordination it has to be necessary

and proportionate to the intended objective. Furthermore, the distortion of

competition, which is inherent in aid, must not jeopardise the general interests of

the European Union.

(57) According to point 98 of the Railway Guidelines, aid for the needs of transport

coordination can take several forms including aid for reducing external costs, that

is designed to encourage a modal shift to rail because it generates lower external

costs than other modes such as road transport.

(58) As already indicated in recital (11), the beneficiaries of the scheme under

assessment are logistic companies and MTOs. In accordance with the

Commission's previous decision-making practice,32 the principles set out in the

Railway Guidelines concerning aid for reducing external costs apply also when

the direct beneficiaries of the scheme are not railway undertakings. The

compatibility assessment of the present scheme will therefore be carried out on

the basis of Section 6 of the Railway Guidelines and of its subsection 6.3

concerning aid for reducing external costs (in particular points 101 to 112).

158 of 04.05.2018, p.5; Commission decision of 25 July 2017, SA.46806 (2016/N), Italy – Aid to

combined transport in the Province of Trento, OJ C 442 of 22.12.2017, p.2; Commission decision of

19 December 2016, SA.45482 (2016/N) – Italy - Rail freight transport scheme, OJ C 145 of

09.05.2018, p.2; Commission decision of 24 November 2016, SA.44627 (2016/N), Italy -

‘Ferrobonus’ - incentive for rail transport, OJ C 83 of 17.3.2017, p.3; Commission decision of 22

August 2016, SA.43666 (2015/N) – Germany - Reduction of the KWKG surcharge for railways, OJ C

406 of 04.11.2016, p.12; Commission decision of 29 April 2016, SA.41033 (2016/N), Italy -

Integrated transport scheme in the Province of Trento, OJ C 220, 17.06.2016, p.2; Commission

decision of 18 April 2016, SA.42476 – The Netherlands - Betuweroute - compensation to rail during

construction works 2016 – 2020, OJ C 406 of 04.11.2016, p.10; Commission decision of 26 May

2015, SA.40404 (2014/N), France and SA.39606 (2015/N), Italy - Régime d'aide au service transitoire

d'autoroute ferroviaire alpine, OJ 66 of 19.2.2016, p.2; Commission decision of 22 April 2015,

SA.39883 (2014/N) – Romania - State aid scheme for Ro-La combined transport, OJ C 219 of

03.07.2015, p.5; Commission decision of 13 June 2014, SA.38152 (2014/N), Italy - Aid in favour of

rail freight transport in Emilia Romagna region, OJ C 280 of 22.8.2014, p.23; Commission decision

of 6 January 2014, SA.36758 (2013/N), Denmark - Prolongation of environmental aid scheme for the

transport of goods by rail for the period 2014-2017, OJ C 280 of 22.8.2014, p.10.

32 Commission decision of 20 December 2018, SA.50115 (2018/N) – Italy - Intermodal rail transport of

iron slabs in the FVG region, OJ C 90 of 08.03.2019, p.2; Commission decision of 6 December 2017,

SA.48858 (2017/N), Italy - Aid scheme supporting combined transport in the Province of Bolzano, OJ

C 158 of 04.05.2018, p.6; Commission decision of 25 July 2017, SA.46806 (2016/N), Italy – Aid to

combined transport in the Province of Trento, OJ C 442 of 22.12.2017, p.2; Commission's decision of

29 April 2016 SA.41033 (2016/N), Italy - Integrated transport scheme in the Province of Trento, OJ C

220, 17.06.2016, p.2, Commission's decision of 26 May 2015, SA.40404 (2014/N), France &

SA.39606 (2015/N), Italy - Régime d'aide au service transitoire d'autoroute ferroviaire alpine, OJ 66

of 19.2.2016, p.2-3; Commission's decision of 13 June 2014, SA.38152 (2014/N), Italy - Aid in favour

of rail freight transport in Emilia Romagna region, OJ C 282 of 22.8.2014, p.23; Commission's

14

3.3.2. Eligible costs

(59) According to point 103 of the Railway Guidelines, the eligible costs as regards

aid for reducing external costs are the part of the external costs which rail

transport makes it possible to avoid compared to competing transport modes.

(60) It is well acknowledged that electrified rail freight transportation produces lower

negative externalities than road transport in terms of accident and pollution costs.

This transport mode also has considerable spare capacity and can therefore play a

role in shifting traffic away from the congested parts of the road networks.

(61) Point 104 of the Railway Guidelines states that "Member States may put in place

a time-limited compensation scheme for the use of railway infrastructure for the

demonstrably unpaid environmental, accident and infrastructure costs of

competing transport modes in so far as these costs exceed the equivalent costs of

rail".

(62) Point 105 of the Railway Guidelines requires a transparent, reasoned and

quantified comparative cost analysis between the supported transport mode and

the alternative options. The methodology used and calculations performed must

be made publicly available.

(63) As explained in recital (17), the regional authorities quantified the eligible costs

on the basis of the PWC study commissioned by the Italian authorities in the

context of preparation of measures in support of rail freight transport in Italy. The

PWC study identifies the eligible costs on the basis of a comparative ex-ante

analysis of the externalities, specific to the rail sector in Italy, and follows a

reasoned and transparent methodology to establish quantitative data for the

differential of external costs related to road and rail freight transport. The PWC

study was made publicly available and last updated in 2016.

(64) The Commission has already concluded in previous decisions that the data,

methodology and calculations in the PWC study are in line with point 105 of the

Railway Guidelines.33 The Commission takes note that the methodology used by

Italy has not changed.

(65) Accordingly, the part of the external costs, which rail transport makes it possible

to avoid compared with road transport can be considered in this case to

correspond to the eligible costs of the scheme in line with points 103 to 105 of the

Railway Guidelines.

decision of 16 December 2011, SA.32603 (2011/N), Italy - Subsidy scheme "Ferrobonus" for

combined transport, OJ C 88 of 24.3.2012, p.1.

33 See recitals (61) and (62) of Commission decision of 24 November 2016, SA.44627 (2016/N), Italy -

‘Ferrobonus’ - incentive for rail transport, OJ C 83 of 17.3.2017, p.3; recitals (81) and (82) of

Commission decision of 19 December 2016, SA.45482 (2016/N) – Italy - Rail freight transport

scheme, OJ C 145 of 09.05.2018, p.2.

15

3.3.3. Necessity and proportionality of the aid measures

(66) According to points 107 (b) and 109 of the Railway Guidelines, there is a

presumption of necessity, proportionality and absence of overcompensation of the

aid for reducing external costs when the intensity of the aid stays below the

following values: 50% of the eligible costs and up to 30% of the total cost of rail

transport.

(67) The Emilia-Romagna region adopted a subsidy system based on EUR per tonne-

kilometre. The notified scheme foresees a grant of EUR 0.007 for each tonne per

kilometre (see recital (18) above). As explained in recital (30), the Commission

notes that each tonne per kilometre travelled by rail generates a tax exemption for

electricity consumption for electrified traction of EUR 0.0002 per tonne per

kilometre. Accordingly, the total subsidy under the present scheme amounts to

EUR 0.0072 per tonne-kilometre.

3.3.3.1. The aid does not exceed 50% of the eligible costs

(68) As described in recital (17), the quantification of the eligible costs under the

present scheme is based on the PWC study commissioned by the Italian

authorities in the context of preparation of measures in support of rail freight

transport in Italy. The PWC study quantified the eligible costs at the level of EUR

15.04 EUR/train-km, corresponding to EUR 0.0350/tonne-kilometre on the basis

of an average trainload in Italy of 430 tonnes.

(69) Taking into account the cost differentials as quantified in the PWC study, the

Commission concludes that even considering the benefits deriving from the tax

exemption for electricity consumption for electrified traction, the aid intensity

does not exceed 50% of the eligible costs.34 The Commission further notes that

the results of the calculations under the PWC study are consistent with the results

of the calculations based on the Commission’s 2019 Handbook on External Costs

of Transport.35

(70) Furthermore, the Commission observes that the most recent developments of the

rail freight market in Italy have been monitored and published in the latest

National Statistic Survey on Infrastructures and Transport on years 2017-2018.36

As regards rail freight traffic in Italy, the average trainload recorded in 2017

34 The maximum aid allowed, i.e. 50% of the eligible costs, is equal to EUR 0.0175/tonne-kilometre

(50%*0.0350). Therefore, the aid amount of EUR 0.0072/tonne-kilometre under the present scheme is

around 40% of the maximum aid allowed pursuant to point 107 of the Railway Guidelines.

35 https://ec.europa.eu/transport/themes/sustainable/studies/sustainable_en. Based on the average external

costs of freight transport 2016 for EU28 (Table 71, p.136), the eligible costs would amount to EUR

0.031/tonne-kilometre. The maximum aid allowed, i.e. 50% of the eligible costs, would equal to EUR

0.0155 /tonne-kilometre. Accordingly, the aid amount of EUR 0.0072/tonne-kilometre under the

present scheme would be less than half of the maximum aid allowed pursuant to point 107 of the

Railway Guidelines.

36 Conto Nazionale delle Infrastrutture e dei Trasporti (CNIT), Anni 2017-2018,

http://www.mit.gov.it/node/10877.

16

equals to 451 tonnes.37 The Commission notes that the conclusions of the PWC

study on the respect of the maximum aid intensity of 50% of the eligible costs do

not change even if a heavier trainload is taken into account.38

3.3.3.2. The aid does not exceed 30% of the costs of rail transport

(71) The Commission refers to the past experience and information obtained in other

State aid cases with respect to the estimate for the total cost of rail transport in

Italy.39 The Commission notes that in the present case the assessment of the aid

intensity in relation to the total rail transport is based on the same nationwide

value as provided in the PWC study.

(72) The PWC study quantified the cost of rail freight transport in Italy at the level of

average EUR 20.20/train-km, corresponding to EUR 0.0470/tonne-kilometre on

the basis on an assumed average trainload in Italy of 430 tonnes.

(73) The Commission notes that the maximum aid allowed under the present measure

does not exceed 30% of the total cost of rail transport.40

(74) Finally, the Commission records that, as pointed out in recitals (29) and (31), the

Region committed to respect the thresholds set out in the Railway Guidelines in

each individual grant, as also provided by the national legislation.

(75) On the basis of the above, the Commission concludes that the maximum aid

amount that will be granted under the notified scheme will not exceed 50% of the

eligible costs and 30% of the costs of rail transport.

(76) Against this background, the Commission concludes that the scheme complies

with the requirements set out in points 107(b) and 109 of the Railway Guidelines.

37 Table IV.1.6, p.136.

38 The eligible costs would amount to EUR 15.04/451 = 0.033. The maximum aid allowed, i.e. 50% of

the eligible costs, would be equal to EUR 0.0165/tonne-kilometre (50%*0.033). Therefore, aid amount

of EUR 0.0072/tonne-kilometre under the present scheme would be still less than half of the maximum

aid allowed pursuant to point 107 of the Railway Guidelines.

39 Commission decision of 16 December 2011 on SA.32603 (2011/N), Italy - Subsidy scheme

"Ferrobonus" for combined transport, OJ C 88 of 24.3.2012, p. 1; Commission decision of 29 April

2016, SA.41033 (2016/N), Italy – Integrated transport scheme in the Province of Trento, OJ C 220,

17.06.2016, p.2; Commission decision of 24 November 2016, SA.44627 (2016/N), Italy -

‘Ferrobonus’ - incentive for rail transport, OJ C 83 of 17.3.2017, p.3; Commission decision of 19

December 2016, SA.45482 (2016/N) – Italy - Rail freight transport scheme, OJ C 145 of 09.05.2018,

p.2.

40 The maximum aid allowed, i.e. 30% of the total cost of rail transport, is equal to EUR 0.0141/tonne-

kilometre (30%*0.0470). Therefore, the aid amount of EUR 0.0072/tonne-kilometre under the present

scheme is around half of the maximum aid allowed pursuant to point 107 of the Railway Guidelines.

The threshold would be respected even if an average trainload of 451 tonnes were to be assumed in the

calculations. The maximum aid allowed would be 30%*(20.20/451) = 0.0134, i.e. around twice the aid

intensity under the present scheme.

17

3.3.4. Other conditions related to the necessity and proportionality of the

aid

(77) According to point 111 of the Railway Guidelines, in case of aid for reducing

external costs, there must be realistic prospects of keeping the traffic transferred

to rail so that aid leads to a sustainable transfer of traffic.

(78) The Regional authorities submitted two detailed reports on the results obtained in

terms of modal shift and environmental benefits, which are summarised in

paragraph 2.10 above. The Commission notes that the reports show a general

positive and steady growth trend of the total volumes of freight traffic shifted

from road to rail following the adoption of state aid support measures. The

Commission further notes that based on the positive results achieved, the Emilia-

Romagna region decided to continue investing in measures aimed to support the

modal shift as a priority and to reflect this policy in the 2025 Regional Integrated

Transport Plan and in the Regional Integrated Air Quality Plan.

(79) In the light of all criteria examined above, the Commission concludes that the

conditions related to the necessity and proportionality of the aid are met.

3.3.5. The aid scheme is granted on non-discriminatory terms, the aid

scheme is transparent and time-limited

(80) The notified scheme does not set out any restrictive conditions based on the

nationality of the undertaking or other characteristics. The aid is therefore granted

on non-discriminatory terms.

(81) The notified scheme is transparent, as the conditions for benefiting from it are

clearly stipulated in the relevant legal acts.

(82) Finally, as described in recital (14), the aid scheme is limited in time: it will apply

for a period of three years, until 31 December 2022. This duration is in line with

the time limits laid down in point 97 of the Railway Guidelines.

3.3.6. No effect on competition and trade contrary to the common interest

(83) Point 96 of the Railway Guidelines stipulates, "Distortion of competition which is

inherent in aid must not jeopardise the general interests of the [Union]. By way of

illustration, aid likely to shift traffic flows from short sea shipping to rail would

fail to meet these criteria".

(84) The notified scheme is designed to reduce imbalances between railway transport

and road transport on the sole territory of the Emilia-Romagna region.

(85) This area is characterised by a net preponderance of the road transport over rail,

as described in paragraph 2.1 above, and by the absence of alternative transport

modes less polluting than rail.

18

(86) Therefore, the Commission concludes that the present aid scheme does not give

rise to a distortion of competition to an extent contrary to the common interest

according to point 96 of the Railway Guidelines.

3.3.7. Transparency

(87) The Regional authorities confirmed that they will ensure the publication of the

relevant information on the notified scheme through the national State aid

Registry41 and therefore comply with the Transparency communication.42

(88) It is important that Member States provide the Commission with the relevant

information on the impact on the transport policy and environment of the aid

schemes supporting combined transport, thus allowing a proper description of the

market developments in the combined transport sector. As described in recital

(33), the aid scheme will be subject to a yearly report on its implementation

results obtained, in line with the good practice in respect to the previous measure

(see paragraph 2.10).

3.3.8. Conclusion on the compatibility of the aid

(89) The present aid scheme fulfils the criteria of section 6 of the Railway Guidelines

and of its subsection 6.3 concerning aid for reducing external costs. The

Commission therefore concludes that the scheme meets the needs of coordination

of transport and is therefore compatible with the internal market pursuant to

Article 93 TFEU.

4. CONCLUSION

The Commission has accordingly decided not to raise objections to the aid scheme on the

grounds that it is compatible with the internal market pursuant to Article 93 of the Treaty

on the Functioning of the European Union.

If this letter contains confidential information, which should not be disclosed to third

parties, please inform the Commission within fifteen working days of the date of receipt.

If the Commission does not receive a reasoned request by that deadline, you will be

deemed to agree to the disclosure to third parties and to the publication of the full text of

the letter in the authentic language on the Internet site:

http://ec.europa.eu/competition/elojade/isef/index.cfm.

41 https://www.rna.gov.it/sites/PortaleRNA/it_IT/home

42 Communication from the Commission amending the Communications from the Commission on EU

Guidelines for the application of State aid rules in relation to the rapid deployment of broadband

networks, on Guidelines on regional State aid for 2014-2020, on State aid for films and other audio

visual works, on Guidelines on State aid to promote risk finance investments and on Guidelines on

State aid to airports and airlines, OJ C 198, 27.06.2014, p.2.

19

Your request should be sent electronically to the following address:

European Commission,

Directorate-General Competition

State Aid Greffe

B-1049 Brussels

Stateaidgreffe@ec.europa.eu

Yours faithfully,

For the Commission

Margrethe VESTAGER

Member of the Commission