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REGULATION AND AUTONOMY OF LOCAL AUTHORITIES (Advisory opinion)


PRESS RELEASE



The Italian Competition Authority submitted to the Speakers of the Senate and the Chamber of Deputies, the Prime Minister, the Ministry of Home Affairs and the Department for the Public Function and Regional Affairs, an advisory opinion, in order to highlight certain difficulties, which might arise from the enforcement of the rules contained in the Decree-Law No. 1388 on regulation and autonomy of local authorities.

The Decree-Law provides to the special agencies the power to perform their services in a competitive regime, even outside of their local authorities'territory. Such a power, in general, could affect positively costs and quality of services. However, the Authority, deemed that the special agencies should not enjoy unjustified advantages compared to other operators. Therefore, the provisions supplied by the local authorities with such agencies should be given exclusively to incur the major costs related to the carrying out of non-profit services which are socially necessary within their territory. As such, the Authority considered essential to impose a strict tie on the allocation of public funds to perform non-profit services, as well as to ensure the most adequate guarantees to avoid the risk of crossing subsidies, which could favour such agencies unfairly compared to their competitors.

The above mentioned Decree-Law also regulates the cases in which a pluralism of municipalities or provinces ascertain the need to supply one or more public services within areas wider than their own territories and, therefore, decide to collaborate to perform such services. In this case, the Authority highlighted distortions on competition, which could derive from the law allowing the special agencies to operate outside of their territory without taking part in any bidding competition and, in particular, on the basis of a simple agreement by and between the local authority, which controlled the special agency, and the service-recipient.  

With regard to stock companies with mixed capital (state and private), the Authority, in order to avoid likely restrictions on competition, suggested to define more precisely terms and conditions of the private stockholder's access to such companies, and to require the use of bidding competition not only to identify the private majority stockholder, but also to choose minority stockholders.

Further, the Authority deemed it appropriate that local authorities would use competitive bidding to contract activities not strictly ancillary to the carrying out of the service, whose supply was the basis of the creation of a stock company with mixed capital, so that such a kind of company could not broaden its exclusive right extremely.

Taking into account the principles contained in the EEC Directive no. 50/92 on public bidding competitions, the Authority noted that services could be awarded to a stock company with mixed capital only by formal bidding, on condition that they were not included in one of the activities reserved to the local authority and were not strictly ancillary to the specific activity performed exclusively by the same stock company. Furthermore, in order to comply with the afore mentioned Directive, it is necessary that the local authority calls for new bids to select other private stockholders interested in taking part in the performance of new services - if and when new tasks would be contracted to the stock company with mixed capital to supply services relating to the activity carried out exclusively by the same local  authority.