The Importance of Precise Definition of Public Service Obligations* Main points The imposition of a public service obligation must be preceded by market analysis that shows that the market underprovides. For compensation of public service obligations to be compatible aid, it must satisfy the first three Altmark criteria. Surprisingly, the first three Altmark criteria must also be satisfied [in addition to the 4th criterion] for public service compensation in order not to constitute State aid. Introduction This is a classic case of what can go wrong if public service obligations (PSO) are not defined precisely and after establishing that the market fails to provide the desired service. The Italian Region of Sardinia wanted a ferry company to provide maritime transport services
The EU Commission decides that the compensation for the operation of the two additional routes linking Sardinia to the mainland and the recapitalisation measure constituted illegal State aid and orders recovery (Saremar)
* Article published on Lexxion State Aid Blog (click here), republished in e-Competitions with the courtesy of the author. The original title of this article appears below the e-Competitions title. Authors are welcome to write an alternative article on this case/text, provided they have no relationships with a party or related third party. Article will need e-Competitions Board approval before publication.
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