EU shipping law & State aid - COVID-19: Italian State aid for coastal shipping

On 5 May 2022, the European Commission announced that it had authorised Italy, under EU State aid law, to operate a €119m scheme to support cabotage and other maritime services because of the impact of COVID-19.

Cabotage is domestic traffic between two points in the same country. So, for example, a service from a port from mainland Italy to Sardinia would be covered as would a service between two ports on the Italian mainland.

The Commission has authorised the aid on the basis of its own Temporary Framework to support the economy in the context of the 2019 novel coronavirus disease (COVID-19) outbreak. This Temporary Framework was adopted on 19 March 2020. The Temporary Framework is an evolving document – having been amended six times so far (i.e. on 3 April 2020, 8 May 2020, 29 June 2020, 13 October 2020, 28 January 2021 and 18 November 2021). It has been amended to extend its scope (e.g. new types of support measure) and/or to extend its period of application. It is not a legislative instrument (such as a regulation, directive or decision) but is instead a memorandum or note of the Commission's thinking on a topic. The Commission adopted it on the basis of Article 107(3)(b) of the TFEU. 

Italy wanted to assist ship-owning companies active in the cabotage sector and other maritime services. So it notified the European Commission of the proposed aid under the Temporary Framework.

Interestingly, the scheme will take the form of an exemption from the payment of social security and welfare contributions due for the period between 1 August 2020 and 31 December 2021. The measure aims to reduce the labour costs of the beneficiaries so as to help them address their liquidity needs and continue their activities during and after the pandemic. It is, in effect, an operating subsidy.

The Commission has said that the scheme complies with the Temporary Framework as the aid will not exceed €2.3m per beneficiary and will be granted no later than 30 June 2022. 

For more information on this post please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 10 May 2022