ADVISORY OPINION ON THE REORGANIZATION OF THE FINMARE GROUP
PRESS RELEASE
In compliance with article 22 of Law no. 287/90, the Italian Competition Authority has submitted an advisory opinion to the Ministry of Transport and Navigation on the Finmare Group reorganization programme (the Finmare Group is a State-owned company and the most important Italian operator in the sea transport, especially in the coastal trade services).
The advisory opinion highlights that the programme, on the basis of which the Finmare Group companies will be acquired by the Ferrovie dello Stato (FS), establishes conditions that are detrimental to consumers and may reduce competition on the markets involved.
First of all, even though the acquisition of the Finmare Group by FS, can lead to a more efficient functioning of the Italian transport service industry, it also can extend the dominant position held by FS in the rail transport sector to adjacent markets in such a way as to restrict seriously competition in the whole national transport system.
The acquisition of the management of the shipping lines must be accompanied by the imposition of specific obligations on FS, as regard to the equity of commercial conditions to apply in the rail services to customers, whether they use the FS-owned shipping lines or they use competing companies' shipping services. This provision would allow for the development of inter-modal transport services, without discriminatory effects on competitors.
Furthermore, the merger between Tirrenia and Fs will bring about the permanence of a single operator on the Olbia-Civitavecchia route. In such a scenario, the Authority inevitably will have to take action aimed at reestablishing effective competition on the relevant market.
In addition, in its advisory opinion, the Authority considers it necessary that the acquisition of the Finmare Group must be accompanied by a reform of the current government subsidy system which distorts competition. This reform is very urgent in view of the fact that the FS-owned shipping lines already enjoy the subsidies. As such, the Authority proposes to reform the government subsidies programme to the Finmare Group in order to separate the essential services which ensure connections to the islands, from the services also supplied by other shipping lines in competitive regime. In fact, at the present, both these services are supported by subsidies. Furthermore, it is deemed opportune that the subsidy programme incorporate appropriate measures aimed at assigning the essential services subsidies, in such a way as not to exclude from the programme the private shipping lines that are in possession of the necessary technical requirements. In this way it would be possible to minimize the cost of the subsidies for the community as a whole and to maximise the degree of competition.
The Authority considers it necessary to cease immediately and definitively any public contributions for the unessential services, both as subsidies and as capital increases undersigned by the Government, since the consolidated presence of private competitors demonstrates the possibility to offer the services and to guarantee adequate traffic flows on important national routes.
In addition, the Authority deems that, in many cases, the agreements between public firms and private shipping companies, as proposed in the reorganization plan, might be in violation of the Law no. 287/90, in that they might lead to the elimination of effective competition on a substantial part of the market, without there being an adequate source of potential competition. The Authority underlines that only the free play of supply and demand in a regime of effective competition can determine a reorganization of the services that will be more efficient and advantageous for consumers in terms of frequencies, fares and quality of service. Indeed, this alternative approach could also further the Italian firms' ability to compete, especially in view of the liberalisation of the coastal trade services within the European Community which will take place starting in January 1st 1999, as opposed to a policy of agreements between competitors.
The Authority maintains the right to investigate the effects on competition deriving from the eventual sale of Lloyd Triestino and Italia di Navigazione when the relative mergers are notificated to the Authority, in compliance with section 16 of the Law n. 287/90.
Finally, the Authority hopes that the Finmare Group reorganization programme will be a useful occasion for eliminating distortions to competition, which are determined by the current regulation of national shipping transport, and for fostering competition and protecting consumers.