First reflections on the implementation of the new guidelines on the award of concessions for port towage

On the pages of our Shipping&Transport Bulletin [1] we have already dealt extensively with the new guidelines on the award of concessions for port towage issued by the Ministry of Infrastructure and Transport (now renamed “Ministry of Infrastructure and Sustainable Mobility”).

Said guidelines (contained, in particular, in circular of the Ministry of Infrastructure and Transport No. 11 of 19.03.2019) were first applied in the context of the call for tenders published in February of this year by the Harbour Master’s Office of Savona for the assignment of the service in question in the port and roadstead of Savona and Vado Ligure for the next fifteen years.

In light of the call for tenders in Savona and pending the publication of calls for tenders for the other Italian ports where towage service concessions are due to expire (or have already expired, unless they have been extended until a new concessionaire is found), we think it is worth reflecting further on the issue of port towage.

In this article, in particular, we will examine the consequences deriving from the amendment of Article 14 of Law no. 84 of 28 January 1994 (the “Port Law”), which has in fact broadened the notion of port towage, while in the article that follows in this issue of our Shipping&Transport Bulletin we will go into greater detail on the applicability of EU rules on state aid to the towage service.

Law No. 230 of 1 December 2016 amended Article 14 of the Port Law by adding paragraph 1-quarter. Pursuant to this paragraph, “For the purposes of the provision of the technical-and nautical services referred to in paragraph 1-bis [2], ports or other places of berthing or transit of ships means also the mooring facilities at which operations of embarkation or disembarkation of goods and passengers are carried out, such as quays, piers, wharves, platforms, buoys, towers, temporary storage vessels or floats and mooring points, in any way constructed also within water surfaces outside the port protection works”.

This amendment is not of little importance - at a practical level - if we take into account the provisions of Article 101 of the Code of Navigation, according to which “Towing services in ports and in other places of berthing or transit of ships assigned to maritime navigation cannot be  provided without a concession, made by the head of the department, according to the rules of the regulation”.

A clear fact emerges from the combination of the two above-mentioned provisions: given that even - for example - offshore platforms or buoy fields are to be considered as places where ships berth or transit and that, in such places, the towing service cannot be performed without a concession, it is clear that only concessionaries can regularly provide the service in question at offshore platforms or buoy fields.

The provision of the towing service by a non-concessionaire would probably amount to an abuse of such service (provided for and punished by Article 1171 of the Code of Navigation).

Therefore, the towing service at a given point of berthing or transit of ships may well not be compulsory, but - should it be compulsory or, in any case, should it be necessary to resort to such a service - it could only be carried out by a concessionaire [3] (as such - we may say - “known” to the State and already deemed fit  by the State for carrying out such a service in order to guarantee the public interest in safety of navigation).

In our opinion, the foregoing will inevitably affect the territorial scope (or rather,  the structure) of the towage service that Harbour Master’s Office will put out to tender in ports near which there are, for example, offshore platforms or buoy fields.

This means that, since the law stipulates that only the concessionaire of the service can operate at the above-mentioned berthing or transit points for ships, such points must be included in the territorial scope of the concession put out to tender.

This would seem to us to be the simplest solution and also the one most in line with the aforementioned guidelines governing the award of concessions, which identify the award of concessions to a single entity as the most efficient solution (also, moreover, in the light of the principle of cost effectiveness of the service).

Otherwise - without taking into account the icto oculi unlawful case of a non-concessionaire  who therefore performs the service sine titulo - there would be at the very least distortion of competition. A scenario could arise where, for example, an undertaking already licensed to provide a service in a given port also provides a towage service to a nearby offshore platform on the basis of a private contract concluded with the operator of that platform. If the service to the off-shore platform was not to be included in the scope of the concession put out to tender (and the abovementioned private contract were therefore to “survive”), the outgoing concessionaire would find itself in a clear advantageous position vis-à-vis its competitors (for example, in terms of possible economies of scale).

For this reason, in a nutshell, we believe that (i) the scope of the concessions put out to tender should include any berthing or transit points for ships (such as offshore platforms or buoy fields) in the vicinity of the port to which the tender refers and (ii) the existing private contracts relating to the service provided at such berths - even if already signed - should not (rectius: cannot) survive the procedure for selecting the new concessionaire in the light of the rules underlying that procedure and the exercise of the service in question (starting with the combined provisions of Articles 101 of the Code of Navigation and 14, paragraph 1-quater of the Port Law, which put such contracts “out of play” [4]).

For the sake of completeness, it should be noted that the above-mentioned advantageous position   would in all likelihood also arise if the incumbent were to provide assistance services at the offshore platform (to remain in the example) other than the specific towage service (see the transport of equipment and personnel).

In the latter case, we believe the Maritime Authority should - at least - adopt suitable measures to “neutralise” the competitive advantage in question, thus also complying with the principles established by case law on the subject of par condicio among prospective concessionaires [5]. The reference is to that case law which emphasises the importance of “purifying, as far as possible, the procedure from the advantageous factors arising to the concessionaire from holding a concession or from holding another concession functionally linked to the former one”.

Clearly, a private contract such as the one envisaged above would basically constitute, for the reasons set out above, an advantageous factor that would distort the level playing field between competitors.

A possible “remedy” - should it not be possible, for reasons that cannot be assumed here, to put out to tender a concession that includes any service to berthing places outside breakwaters - could be to provide for a separation of the companies and therefore a segregation of the activities: on the one hand, the activity relating to the concession and, on the other hand, that relating to the berthing place outside the port, but still “close” to it. This would probably neutralise the possible advantages and economies of scale which - in the event of non-segregation - might distort competition.

Finally, we would like to make one last comment on the new guidelines on the award of concessions for port-towage services and their concrete implementation. Such guidelines expressly provide that invitations to tender must stipulate “the obligation, at the time of entry into operation, to fly the Italian flag for the tugs used for the service”. The above-mentioned call for tenders for the port of Savona and Vado Ligure implemented this requirement, stipulating the obligation to register the tugs in the first Italian Register no later than the deadline for entering into the concession deed.

We are perplexed by the above provision, because any limitation on the use of vessels flying the flag of an EU Member State and operating within a Member State seems to be incompatible with the fundamental principles of the European Union and, in particular, with the principles of freedom of establishment and freedom to provide services.

This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Simone Gaggero.

[1] On this point see the three articles, “New guidelines on the award  of concessions for port-towage “, contained respectively in the June - July 2019, September - October 2019, November - December 2019 editions of our Shipping&Transport Bulletin.

[2] The reference is to technical-and-nautical services of pilotage, towing, mooring and buoyancy.

[3] In particular, we believe, by the concessionaire of the service in the port to which the port or transit point in question refers.

[4] Not to mention that it may have rendered them de facto “contra legem”.

[5] See ex multis: Council of State, Section VI, 25/01/2005 No. 168; Council of State, Section VI, 01/07/2008 No. 3326; Council of State, Section VI, 24/12/2009 No. 8716.