EUROPEAN COMMISSION Brussels, 16.12.2019 C(2019) 9136 final PUBLIC VERSION This document is made available for information purposes only. Subject: State Aid SA.55606 (2019/N) – Italy Prolongation of the State aid scheme supporting combined transport in the Province of Bolzano Sir, 1. PROCEDURE (1) By electronic notification of 22 October 2019, registered at the European Commission (“Commission”) on 24 October 2019, the Italian authorities notified, pursuant to Article 108(3) of the Treaty on the Functioning of the European Union (“TFEU”), a prolongation of the existing state aid measure supporting combined transport in the Province of Bolzano ("existing scheme"). (2) The existing scheme was approved by the Commission decision of 6 December 2017 in State aid case SA.48858 (2017/N) ("2017 Decision")1. 2. DESCRIPTION OF THE EXISTING SCHEME 2.1. Description of the scheme (3) The existing scheme in force until 31 December 2019 aims at reducing the environmental, health and social impact of the road traffic by promoting the combined freight transport services along the Brenner-Salorno route (120 kilometres of railway part of the Trento-Wörgl route and 116 kilometres of highway). 1 Commission Decision of 6.12.2017 in State aid SA.48858, OJ C 158/6 of 4.05.2018. His Excellency Mr. Luigi Di Maio Minister of Foreign Affairs and International Cooperation Ministry of Foreign Affairs and International Cooperation Piazzale della Farnesina, 1 00135 Roma Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË - Tel. +32 22991111 (4) A detailed description of the scheme is provided in the 2017 Decision, in particular recitals in (3) to (40). 2.2. Legal basis (5) The legal basis for the scheme remains in majority unchanged and is described in recitals (8) to (10) of the 2017 Decision. (6) However, the autonomous Province of Bolzano has amended the existing implementing legal basis, namely article 17(2) of the Decision of the Provincial Council No 655 of 13 June 2017, in order to extend the duration of the scheme as described in paragraph (15) of the 2017 Decision. The amendment was adopted by a Decision of the Provincial Council No 865 of 22 October 2019. (7) The Italian authorities have indicated that no aid has been granted on the basis of the said decision so far. 2.3. Duration and budget (8) The existing scheme was approved by the Commission in the 2017 Decision with a duration until 31 December 2019 and included a possibility to extend the duration of the existing scheme by maximum 24 months subject to an authorisation of the Commission. Italy plans to extend the scheme by two years from 1 January 2020 to 31 December 2021. (9) The overall approved budget of the existing scheme amounted up to EUR 9 million over three years (EUR 3 million per annum). Italy submits that out of the total EUR 9 million, the Province of Bolzano has so far granted EUR 1.5 million in 2018 and allocated 1.5 million for the year 2019. Accordingly, the Province of Bolzano intends to use the remaining EUR 6 million in the years 2020 and 2021 and to keep the yearly EUR 3-million budget allocation. 3. ALTERATION TO THE EXISTING SCHEME (10) The Italian authorities intend to extend the duration of the existing scheme until 31 December 2021. (11) Accordingly, the Province of Bolzano intends to allocate the remaining EUR 6 million out of the total EUR 9 million budget authorised in the 2017 Decision for the years 2020 and 2021 and to keep the yearly EUR 3-million budget allocation. (12) Therefore, the Italian authorities have submitted no material alterations to the existing scheme, other than its prolongation. (13) According to the information provided by the Italian authorities, the Brenner Corridor accounts for almost 40% of the total volume of trans-Alpine goods. In 2017, the total volume of goods carried over the border was 49.4 million tonnes, of which 72% was transported by road and 28% by rail. Truck transit at the Brenner Corridor has increased by 5.3% in 2017. The continued modal shift is required for climate and environmental reasons, energy balance and the quality of life of the local population. 2 (14) The Italian authorities submit that the prolongation is necessary to improve the competitiveness of rail freight traffic and to support the modal shift from road to rail. Compared to road traffic, rail traffic would be burdened by additional external costs. In addition, continued support is necessary to reduce the negative externalities linked to road freight transport, thereby improving the environmental impact of the transport sector in the Province of Bolzano. 4. COMMITMENTS (15) As stated in the 2017 Decision (see recitals 40 and 94), the Italian authorities committed to transmit to the Commission annual reports on the implementation on results achieved through the scheme. (16) The Italian authorities explained that the timeframe to evaluate the effects of the existing scheme is too short to allow for a meaningful assessment of the results achieved so far through the existing scheme, which was approved on 6 December 2017 and thus has been running for less than 2 years. Therefore they commit to submit a complete report on the implementation of the scheme at the end of the period for which the aid is approved, namely after 31 December 2021 as soon as the relevant data to assess the impact of the aid measure will be processed. 5. CUMULATION (17) The Italian authorities confirm that rules on cumulation are being respected. With reference to the commitment to liaise closely with the authorities, which might have granted and/or intend to grant contributions for combined transport operations along the Brenner Corridor (see recital 38 of the 2017 Decision), the Province of Bolzano informed the Commission that the regions concerned (namely Tyrol, Trentino and South Tyrol) have set up an Euregio2 Working Group to ensure better cooperation between the relevant granting authorities. (18) In particular, a conservative approach is adopted in the calculation of the maximum grantable aid per beneficiary, in that the Province of Bolzano automatically deducts the maximum aid that could be granted by the Province of Trento ex ante. The Province of Bolzano further explained that the cumulation with aid granted by Austria is excluded, because Italy and Austria support internal routes only. 6. ASSESSMENT OF THE MEASURE 6.1. Applicability of the simplified notification procedure (19) The notified measure consists of a two-year prolongation of the existing scheme without increase in budget. Furthermore, the Commission takes note that Italy has duly submitted the yearly reports through the Commission’s State aid Reporting Interactive tool (SARI). Accordingly, the Commission concludes that the 2 Euregio Tyrol–South Tyrol–Trentino is a Euroregion formed by three different regional authorities in Austria and Italy: the Austrian region of Tyrol (i.e. North and East Tyrol) and the Italian autonomous provinces of Bolzano (South Tyrol or Alto Adige) and Trento (Trentino). Euroregions are cross-border territorial entities that brings together partners from two or more cross-border regions in different European countries to put in place common policies and projects in different areas in accordance with the specific features of each border area. 3 simplified notification procedure can be applied, as laid down in Article 4 of Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (“Procedural Regulation”).3 6.2. Existence of aid pursuant Article 107(1) TFEU (20) The Commission maintains the reasoning set out in recitals (41) to (44) of the 2017 Decision, which concluded that the scheme constitutes State aid within the meaning of Article 107(1) TFEU. 6.3. Lawfulness of the aid pursuant to Article 108(3) TFEU (21) By notifying the Decision of the Provincial Council No 865 of 22 October 2019, which authorises the extension of the aid measure, before the expiry of the existing scheme, the Italian authorities fulfilled their obligations under Article 108(3) TFEU. 6.4. Compatibility of the aid with the Internal Market (22) In the 2017 Decision, the Commission had assessed and approved the existing aid scheme on the basis of Article 93 TFEU and on the basis of Section 6 of the Community guidelines on State aid for railway undertakings4 (“Railway Guidelines”) and of its subsection 6.3 concerning aid for reducing external costs (see recitals (46) to (94) of the 2017 Decision). (23) Article 93 TFEU remains directly applicable as the legal basis for establishing the compatibility of aid not covered by Regulation (EC) No 1370/2007 and, in particular, of aid for the coordination of freight transport. (24) In accordance with the previous decision-making practice of the Commission5, the principles set out in the Railway Guidelines concerning aid for reducing external costs continue to apply also when the direct beneficiaries of the scheme are not railway undertakings. (25) Hence, the Commission will assess the compatibility of the present measure on the basis of Article 93 TFEU, in the light of the provisions 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 of the Railway Guidelines). (26) The Commission notes the following: first, the aid scheme will not be materially altered; second, the policy of the European Union in favour of multimodal transport, as described in recitals (48) and (49) of the 2017 Decision has not changed; 3 OJ L 140 of 30.4.2004, p. 1.