European Commission launches the shield to protect our ports from non-EU takeovers

By ASLA - Associazione degli Studi Legali Associati

di Beatrice Settanni*

Rome - On May 5 this year the European Commission has presented a proposal for a regulation aimed at limiting or even blocking the acquisitions and operations of non-EU companies supported by public subsidies from their home states, the so-called "Distorting foreign subsidies". Specifically, the proposal of the European Commissioner for Competition Margrethe Vestager provides that companies receiving over 50 million euros of foreign grants and interested in acquiring activities in the European Union for over 500 million euros or to participate in tenders for at least 250 million euro must notify the transaction in Brussels in advance and obtain its approval in the event of a positive outcome of the investigation opened by the Antitrust.

This investigation, which can be launched ex officio by the Commission in the event of failure to notify by the company concerned, will have as its object the qualification of the financial contribution obtained by the government of a non-EU country as a foreign subsidy pursuant to the regulation capable of distorting the market single, as well as the possible presence of positive effects capable of balancing the aforementioned distorting effects of the market (the so-called "balancing test"). In the event of a negative outcome of the balancing test, the Commission will be able to impose remedial measures or accept commitments to remedy the distortion, with the consequence that, pending the review, the acquisition operations cannot be finalized, nor the contracts awarded to the 'bidder. In the event of non-compliance with these obligations, the Commission may impose penalties of up to 10% of turnover on these companies.

The rationale of the regulation in question is certainly that of guaranteeing equal access to the single market avoiding distortion of competition through competitive advantages deriving from the support received rather than from the innovation and quality of products and / or services, especially taking into account the strict controls in place. state aid to which European companies are subjected. This initiative, actually long overdue, is nowadays even more necessary in light of the serious crisis and instability caused by the Covid-19 health emergency, especially in consideration of the well-known case relating to the privatization of the Port of Piraeus, one and perhaps the most important strategic asset used by Greece to settle its debts and avoid default with the associated risk of exit from the Eurozone during the heavy economic crisis of 2008. 

It should be remembered, in fact, that Piraeus was acquired by the China Ocean Shipping Company (Cosco), a Chinese state company that deals with the transport of containers by sea, now third in the world, through a process that began in 2008, when the group obtained a concession from the Greek government to operate on piers II and III of the Port of Piraeus for 35 years in exchange for 4.3 billion euros. The "climb" then continued in 2013, when the company decided to make a new investment of 230 million euros to expand Pier III in order to further increase the production volume which from 2009 to 2014 had already gone from 0.7 million. TEU to 3.6 million TEU thanks to Cosco management. The acquisition of the majority stake in the port of Piraeus by the Chinese company was finalized on 10 August 2016, the date on which COSCO acquired 51% of the Port Authority of Piraeus (PPA), listed on the Athens Stock Exchange. for 280.5 million euros, with a further 16% that should be added in August 2021 with an investment of another 88 million euros provided, however, that the planned public investments are made. In this way, in addition to the acquisition of all three piers of Piraeus, the company also acquired the ferry port, the cruise ship port, the automobile terminal, the ship repair facilities and all real estate adjacent to the port, operating not only as a terminal operator, but also as a concessionaire, customer and supplier.

This has allowed China to play an increasingly important role in trade in Europe, also strengthening its role as a commercial partner and its influence in international affairs, especially following the signing of the memorandum of understanding on 27 August 2018 between China and Greece. relating to the latter's adhesion to the Belt and Road Initiative (BRI) which will make Athens the "gateway" to the New Silk Road in Europe. 

In the context of this project, Cosco also acquired stakes in other European Union airports, such as in the container terminals of Rotterdam, Antwerp, Zeebrugge, Bilbao, Valencia as well as in the railway stations of Madrid and Zaragoza, while China Merchant, another Chinese public giant , holds a minority stake in the port of Marseille. The Italian port infrastructures have also been the subject of important Chinese investments inesi, just think of Cosco's acquisition of 40% of the Vado Ligure platform, an automated container terminal, for 53 million euros in 2016.

Leaving aside the considerable and complex geopolitical implications of the aforementioned operations, it is evident that European port infrastructures are now particularly exposed to the risk of no longer being national strategic assets, especially in light of the regulatory vacuum in the single market due to which subsidies granted by governments third countries are not largely controlled, while the subsidies granted by Member States are subject to careful and inflexible control by the European Commission.

In addition, the exponential growth of 600% of container traffic in Piraeus, now the first port in the Mediterranean, arrived alone to handle more than 5 million TEUs, has certainly had a strong impact on Italian ports which have had almost no growth between 2016 and 2020, reaching a national level of just under 10.7 million TEU.

The decline of Italian ports in transshipment is mostly linked to the weakness of the retroport and intermodal infrastructures of some ports such as Cagliari and Taranto, the latter closed to container traffic since 2015 after the farewell of the Evergreen company and only recently reopened thanks the arrival of CMA CGM and Yilport in the multi-sectoral dock, the lack of investments, as well as, perhaps more importantly, a national and European strategy capable of enhancing our assets and stemming unfair competition from non-EU countries in the sector. The hope is that the adoption of the regulation against foreign takeovers, currently the subject of the ordinary legislative procedure, is only the beginning of a more careful and far-sighted European policy for the relaunch of our strategic infrastructures.

* Gianni & Origoni Law Firm