Case T‑166/21

Autorità di sistema portuale del Mar Ligure occidentale and Others

v

European Commission

Judgment of the General Court (Tenth Chamber, Extended Composition) of 20 December 2023

(State aid – Taxation of port authorities in Italy – Exemption from corporate income tax – Decision declaring aid incompatible with the internal market – Existing aid – Concept of ‘undertaking’ – Concept of ‘economic activity’ – Advantage – Selectivity – Distortion of competition – Effect on trade between Member States – Equal treatment)

1. Action for annulment – Pleas in law – Lack of or inadequate statement of reasons – Separate plea in law from the one concerning substantive legality

   (Arts 263 and 296 TFEU)

   (see paragraphs 46, 47)

2. Competition – Application of the competition rules – Equal treatment of public and private undertakings – Public property system – Irrelevant

   (Arts 106(1), 107(1) and 345 TFEU)

   (see paragraphs 55-57)

3. Competition – EU rules – Undertaking – Concept – Exercise of an economic activity – Decisive criterion – Legal status and manner of financing of the entity – Irrelevant

   (Art. 107(1) TFEU)

   (see paragraphs 65, 67, 68)

4. Competition – EU rules – Undertaking – Concept – Exercise of an economic activity – Discretion of the Commission – Previous decision-making practice – Classification of activities similar to those examined previously in earlier decisions in accordance with that practice – Classification of an activity where there is no previous decision-making practice on the basis of investigations specific to the case – Breach of the principle of equal treatment – None

   (Charter of Fundamental Rights of the European Union, Arts 20 and 21)

   (see paragraphs 77-88)

5. Aid granted by a Member State – Effect on trade between Member States – Adverse effect on competition – Assessment criteria – Competition between certain Italian ports and certain ports of other Member States – Potential competition sufficient

   (Art. 107(1) TFEU)

   (see paragraphs 93, 94, 190, 191)

6. Competition – EU rules – Addressees – Undertakings – Concept – Exercise of an economic activity – Concept – Grant of authorisations for port operations – Service constituting a power of a public authority which is non-economic in nature – Service not provided on a given market – Not included

   (Art. 107(1) TFEU)

   (see paragraphs 96-101)

7. Competition – EU rules – Addressees – Undertakings – Concept – Exercise of an economic activity – Concept – Grant of access to ports and grant of concessions – Remunerative nature – Assessment criteria

   (Art. 107(1) TFEU)

   (see paragraphs 105-111)

8. Competition – EU rules – Addressees – Undertakings – Concept – Exercise of an economic activity – Concept – Grant of authorisations for port operations – Remunerative nature – Assessment criteria

   (Art. 107(1) TFEU)

   (see paragraphs 112-115)

9. Aid granted by a Member State – Concept – Aid from State resources – Grant attributable to the State of an advantage by means of State resources – Tax exemption provided for by national legislation – Included

   (Art. 107(1) TFEU)

   (see paragraphs 124-129)

10. Aid granted by a Member State – Concept – Selective nature of the measure – Distinction between the requirement for selectivity and the concomitant detection of an economic advantage, and between an aid scheme and individual aid

    (Art. 107(1) TFEU)

    (see paragraphs 134-139)

11. Aid granted by a Member State – Concept – Selective nature of the measure – Measure conferring a tax advantage – Reference framework for determining the existence of an advantage – Material scope – Criteria – Identification of the ordinary or normal tax system – Provision forming part of a wider tax system

    (Art. 107(1) TFEU)

    (see paragraphs 144-155)

12. Aid granted by a Member State – Concept – Selective nature of the measure – Derogation from the general tax system – Justification derived from the nature and general scheme of the system – Assessment criteria

    (Art. 107(1) TFEU)

    (see paragraphs 161-165, 169-173)

13. Aid granted by a Member State – Effect on trade between Member States – Adverse effect on competition – Assessment criteria – Absence of harmonisation in the field of direct taxation – Potential distortion of competition not to be examined solely at national level

    (Art. 107(1) TFEU)

    (see paragraph 195)

14. Action for annulment – Judgment annulling a measure – Scope – Partial annulment of an EU legal act – Condition – Severable nature of the annullable elements from the contested act

    (see paragraphs 199, 200)

Résumé

Ruling in extended composition of five judges, the General Court dismisses in part the action brought by a number of Italian port authorities seeking annulment of the European Commission decision of 4 December 2020 on the aid scheme ( 1 ) benefiting the autorità di sistema portuale (Port System Authorities, Italy; ‘PSA’). By that judgment, the Court sets out, in particular, the criteria on the basis of which the economic nature of the activities pursued by a not-for-profit public entity entrusted with the management of port infrastructures is to be assessed.

Adopted following a survey conducted in 2013 in all the Member States in order to obtain an overview of the functioning and tax treatment of their ports, the contested decision found that the measure exempting operators active in the port sector from corporate tax constitutes an existing State aid scheme that is incompatible with the internal market. Accordingly, it orders that that measure be abolished and that the income from the economic activities of the scheme’s beneficiaries be subject to corporate tax from the start of the tax year following the date of its adoption.

More specifically, the Italian corporate income tax legislation (‘IRES’) exempts therefrom a large number of State entities and public bodies, including bodies managing collective property. According to the Italian authorities, the latter include PSA.

PSA are public entities with legal personality established by law in order to ensure autonomous management of the port infrastructures for which they are responsible. To that end, PSA have various financial resources at their disposal, including the proceeds from fees they are entitled to charge in return for the grant of access to ports (‘port fees’), for the grant of authorisations for port operations (‘authorisation fees’) and for the grant of concessions for State-owned areas and docks (‘concession fees’).

In the contested decision, the Commission found that PSA engage in non-economic activities and economic activities, the latter of which come within the three categories of activities giving rise to the abovementioned fees. In those circumstances, the Commission found that the IRES exemption constitutes State aid within the meaning of Article 107(1) TFEU in so far as PSA engage in economic activities.

Findings of the Court

First of all, the Court examines the plea alleging infringement of Article 107(1) TFEU, by which the applicants complain, in essence, that the Commission found, incorrectly, that certain of the activities engaged in by PSA are economic in nature.

In that regard, the Court observes, first, that the Commission’s assessment cannot be criticised for having failed to take account of the legal status of the entities in question. According to settled case-law, Article 107(1) TFEU is applicable to any undertaking, understood as meaning an undertaking engaging in economic activity, irrespective of its legal status and how it is financed.

Next, there has been no breach of the principle of equal treatment in the light of the Commission’s previous decision-making practice relied on by the applicants on that point. In that regard, the Court considers that the Commission treated comparable situations equally as regards the activities subject to concession fees and port fees, since it had found that equivalent activities engaged in by Belgian and French port authorities referred to in earlier decisions were economic in nature. Authorisation fees, by contrast, have not yet been examined by the Commission.

Lastly, the Court examines, in turn, the complaints relating to the assessment of the economic nature of the activities engaged in by PSA and their classification as undertakings, based on the absence of market on which PSA offer their services and the nature of the fees charged by PSA. It should be borne in mind in that regard that the concept of undertaking encompasses any entity engaging in an economic activity, irrespective of its legal status and the manner in which it is financed, it being understood that any activity consisting in offering goods or services in a given market constitutes an economic activity.

In the present case, as regards, first, the alleged absence of market on which PSA offer their services, the Court notes at the outset that the applicants are incorrect in claiming that PSA are not exposed to any competition, given their legal monopoly. As observed, correctly, by the Commission, there is in fact competition between certain Italian ports and certain ports situated in other Member States, with the result that it was correct in finding that the grant of access to ports and the grant of concessions for State-owned areas and docks constituted services provided on a given market. However, as regards the grant of authorisations for port operations, the Court takes the view, in the light of the statements set out in the contested decision in that regard, that the tasks performed within that remit appear to constitute a supervisory function consisting in verifying compliance with statutory requirements forming part of a power of a public authority which is non-economic in nature. In those circumstances, the Court finds that the Commission has not established that the grant of authorisations constituted a service provided on a market.

Secondly, as regards the criticism of the Commission for having disregarded the fact that the fees charged by PSA were taxes and not remuneration for services of an economic nature, the Court finds that the Commission has demonstrated to the requisite legal standard that the concession fees and port fees constitute consideration for the activities of an economic nature carried out by PSA. However, as regards the authorisation fees, the Court observes that, according to settled case-law, the fact that a product or a service supplied by a public body and connected to the exercise by it of public powers in return for remuneration laid down by law is not sufficient for the activity carried out to be classified as an economic activity and the entity which carries it out as an undertaking. Moreover, in the present case, given that the Commission did not examine either the method of calculation, the amount of the authorisation fees or the level of supervision carried out by the State in that regard, it follows that the Commission has not demonstrated to the requisite legal standard that the authorisation fees constitute consideration for a service of an economic nature.

In the light of the foregoing considerations, the Court upholds the first plea concerning the grant of authorisations and dismisses the action as to the remainder, and examines the second to fourth pleas only in so far as they concern the concession fees and the port fees.

In a second stage, in so far as they concern concession fees and port fees, the Court examines in turn the pleas alleging infringement of Article 107(1) TFEU, contesting, in essence, the Commission’s findings that the IRES exemption gave rise to a transfer of State resources and conferred a selective advantage on PSA which was, furthermore, liable to distort competition and affect trade between Member States.

In that regard, the Court finds, in the first place, that the Commission was correct in finding that, by exempting PSA from IRES despite the fact that they are engaged in an economic activity, the Italian tax authorities forgo revenue which constitutes State resources, thereby giving rise to a transfer of State resources for the purposes of Article 107 TFEU. In that context, it does not matter that PSA are public undertakings and that the advantage conferred remains in the economic sphere of the State in the broad sense. Otherwise, such an approach could undermine the effectiveness of the State aid rules and introduce unjustified discrimination between public beneficiaries and private beneficiaries, contrary to the principle of neutrality laid down in Article 345 TFEU.

In the second place, the Court endorses the Commission’s finding that the IRES exemption confers a selective advantage on the entities benefiting from it.

In that regard, the Court considers, first, that the Commission determined the reference system correctly in finding that the provisions of the Italian legislation setting out the principle that all income, including income of commercial companies and other public or private entities, is subject to IRES, whether or not they have as their exclusive or principal object the exercise of commercial activities. Without such a principle, the exemption for the State and public entities in question would be devoid of any purpose.

Second, the Court finds that the IRES exemption derogates without any valid justification from the reference system, to the benefit of PSA. In the light of the principle underlying the abovementioned reference system, the factual and legal position of PSA, in so far as they engage in economic activities, is comparable, if not identical, to that of other entities subject to IRES.

In the third place, the Commission was also correct in finding that the IRES exemption is liable to distort competition by affecting trade between Member States, given the abovementioned existence of competition between certain Italian ports and certain ports of other Member States. In that context, the Court points out that the Commission’s assessment of the distortion of competition is not necessarily limited to undertakings or productions of the Member State concerned, even in the absence of harmonisation in the field of direct taxation. Hence, the fact that the port sector is characterised by cross-border exchanges is sufficient for the Commission to be able to include competition from certain ports of other Member States in its analysis.

In the light of the foregoing considerations, the Court annuls the contested decision in so far as it classifies the grant of authorisations for port operations as an economic activity, and dismisses the action as to the remainder.

( 1 ) Aid scheme SA.38399 – 2019/C (ex 2018/E) which Italy implemented – Corporate Taxation of Ports in Italy (OJ 2021 L 354, p. 1; ‘the contested decision’).