ECLI:EU:C:2026:119•Opinion of Advocate General Spielmann delivered on 26 February 2026.#Trenitalia SpA v Regione Liguria.#Request for a preliminary ruling from the Consiglio di Stato.#Reference for a preliminary ruling – Transport – Regulation (EC) No 1370/2007 – Public passenger transport services by rail – Article 4(1)(b) – Mandatory content of public service contracts – Public service compensation – Calculation method – Article 6(1) – Obligation to comply with the provisions set out in the annex to that regulation in case of direct award of the public service contract – Points 2, 5 and 6 of that annex – Concept of ‘reasonable profit’ – Waiver by the regional public rail transport service operator of a reasonable profit during a transitional period – Coverage of all the costs incurred by that operator.#Case C-809/24.
Opinion of Advocate General Spielmann delivered on 26 February 2026.#Trenitalia SpA v Regione Liguria.#Request for a preliminary ruling from the Consiglio di Stato.#Reference for a preliminary ruling – Transport – Regulation (EC) No 1370/2007 – Public passenger transport services by rail – Article 4(1)(b) – Mandatory content of public service contracts – Public service compensation – Calculation method – Article 6(1) – Obligation to comply with the provisions set out in the annex to that regulation in case of direct award of the public service contract – Points 2, 5 and 6 of that annex – Concept of ‘reasonable profit’ – Waiver by the regional public rail transport service operator of a reasonable profit during a transitional period – Coverage of all the costs incurred by that operator.#Case C-809/24.
ECLI:EU:C:2026:119Eu CjeuFeb 26, 2026
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OPINION OF ADVOCATE GENERAL
SPIELMANN
delivered on 26 February 2026 (1)
Case C‑809/24
Trenitalia SpA
v
Regione Liguria
(Request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy))
( Reference for a preliminary ruling – Transport – Regional public rail transport service – Regulation (EC) No 1370/2007 – Failure to allow the public service operator to make a reasonable profit – Short-term public service contract – Total absence of risk for that operator – Article 6 – Point 5 of the annex to Regulation No 1370/2007 – Obligation to keep separate accounts )
Introduction
1. In the present case, the Consiglio di Stato (Council of State, Italy) has referred a request for a preliminary ruling to the Court of Justice on the interpretation of certain provisions of Regulation (EC) No 1370/2007 on public passenger transport services by rail and by road. (2)
2. For the first time, the Court is asked the question – which has major economic implications – of whether the competent national authorities are required, within the framework of a public service contract, to include, in the compensation paid to the operator responsible for discharging the public service obligations provided for in that contract, an amount as a ‘reasonable profit’.
Legal context
European Union law
3. Article 1 of Regulation No 1370/2007, entitled ‘Purpose and scope’, states, in paragraph 1:
‘The purpose of this Regulation is to define how, in accordance with the rules of Community law, competent authorities may act in the field of public passenger transport to guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed.
To this end, this Regulation lays down the conditions under which competent authorities, when imposing or contracting for public service obligations, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations.’
4. Article 3 of that regulation, entitled ‘Public service contracts and general rules’, provides, in paragraph 1:
‘Where a competent authority decides to grant the operator of its choice an exclusive right and/or compensation, of whatever nature, in return for the discharge of public service obligations, it shall do so within the framework of a public service contract.’
5. Article 5 of that regulation, ‘Award of public service contracts’, states, in paragraph 6:
‘Unless prohibited by national law, competent authorities may decide to make direct awards of public service contracts where they concern transport by rail, with the exception of other track-based modes such as metro or tramways. In derogation from Article 4(3), such contracts shall not exceed 10 years, except where Article 4(4) applies.’
6. Article 6 of that regulation, entitled ‘Public service compensation’, provides, in paragraph 1:
‘All compensation connected with a general rule or a public service contract shall comply with the provisions laid down in Article 4, irrespective of how the contract was awarded. All compensation, of whatever nature, connected with a public service contract awarded directly in accordance with Article 5(2), (4), (5) or (6) or connected with a general rule shall also comply with the provisions laid down in the Annex.’
7. The annex to Regulation No 1370/2007, entitled ‘Rules applicable to compensation in the cases referred to in Article 6(1)’, is worded as follows:
‘1. The compensation connected with public service contracts awarded directly in accordance with Article 5(2), (4), (5) or (6) or with a general rule must be calculated in accordance with the rules laid down in this Annex.
2. The compensation may not exceed an amount corresponding to the net financial effect equivalent to the total of the effects, positive or negative, of compliance with the public service obligation on the costs and revenue of the public service operator. The effects shall be assessed by comparing the situation where the public service obligation is met with the situation which would have existed if the obligation had not been met. In order to calculate the net financial effect, the competent authority shall be guided by the following scheme:
costs incurred in relation to a public service obligation or a bundle of public service obligations imposed by the competent authority/authorities, contained in a public service contract and/or in a general rule,
minus any positive financial effects generated within the network operated under the public service obligation(s) in question,
minus receipts from tariff or any other revenue generated while fulfilling the public service obligation(s) in question,
plus a reasonable profit,
equals net financial effect.
…
5. In order to increase transparency and avoid cross-subsidies, where a public service operator not only operates compensated services subject to public transport service obligations, but also engages in other activities, the accounts of the said public services must be separated so as to meet at least the following conditions:
– the operating accounts corresponding to each of these activities must be separate and the proportion of the corresponding assets and the fixed costs must be allocated in accordance with the accounting and tax rules in force,
…
6. “Reasonable profit” must be taken to mean a rate of return on capital that is normal for the sector in a given Member State and that takes account of the risk, or absence of risk, incurred by the public service operator by virtue of public authority intervention.
7. The method of compensation must promote the maintenance or development of:
– effective management by the public service operator, which can be the subject of an objective assessment, and
– the provision of passenger transport services of a sufficiently high standard.’
The dispute in the main proceedings, the questions referred and the procedure before the Court
8. On 10 March 2010, the Regione Liguria (Region of Liguria, Italy) and Trenitalia concluded, within the framework of a direct award, a contract for the provision of public passenger transport services by rail for the years 2009 to 2014 (‘the 2009-2014 contract’), renewable for a further six years.
9. At the end of that contract, the Region of Liguria rejected Trenitalia’s proposal to renew it, on the ground that insufficient investments had been planned for the modernisation of the rolling stock. According to the Region of Liguria, that modernisation was a prerequisite for the conclusion of a new six-year contract and essential for improving the quality and reliability of the service.
10. On 10 December 2016, to ensure the continuity of the public transport services covered by the 2009-2014 contract, the Region of Liguria and Trenitalia concluded, still within the framework of a direct award, a 3-year ‘bridging’ contract (‘the 2015-2017 contract’), for the transitional period between the expiry of the 2009-2014 contract and the award of a new 15-year service contract starting from 2018.
11. The 2015-2017 contract maintained the contractual terms of the 2009-2014 period, except for the method of calculating the compensation granted to Trenitalia, which was set out in a three-year statement annexed to that contract. That document provided that the overall net result, calculated as the algebraic sum of the results for each year, should be zero, thereby ensuring an economic and financial balance (revenue = costs + financial expenses) and full coverage of the costs incurred by Trenitalia over the three-year period. Accordingly, any reduction in costs or increase in revenues necessarily entailed a reduction in the public compensation paid by the Region of Liguria in order to maintain an economic and financial balance (overall net result of zero).
12. In 2018, a difference of opinion arose between the parties as to which items should be included in the calculation of the overall net result for the period 2015-2017. Specifically, the Region of Liguria was opposed to the inclusion of a return on net invested capital, which would benefit Trenitalia.
13. On 25 May 2021, deliberazione della Giunta regionale No 444/2021 (Regional Executive Decision No 444/2021) (‘Decision No 444/2021’) was adopted which determined, without taking into account the return on net invested capital, that the accounting balance for the period 2015-2017 was EUR 10 702 543.18. After deducting the outstanding amount of EUR 3 955 613.73 due from the Region of Liguria, Trenitalia was required, under that decision, to pay EUR 6 746 929.45, on the ground that the latter was not entitled to retain the positive balance for the period 2015-2017 since it was not exposed to the risk of a potential negative balance.
14. Trenitalia challenged the legality of Decision No 444/2021 before the Tribunale amministrativo regionale per la Liguria (Regional Administrative Court, Liguria, Italy). That court dismissed the appeal by judgment of 27 June 2022, finding that the waiver of a reasonable profit, on the part of Trenitalia, was justified, first, by the transitional nature of the 2015-2017 contract, second, by the fact that it was not exposed to the risk of potential losses, and third, by a new direct award of the transport services in question for a 15-year period.
15. That court also found that the surplus revenue earned by Trenitalia resulted from the operation of the commercial service ‘Cinque Terre Express’. It rejected the interpretation that Trenitalia was entitled to retain that surplus, since it would mean that the compensation paid in return for discharging a public service obligation had been used to subsidise highly profitable commercial activities.
16. Trenitalia challenged that judgment before the Consiglio di Stato (Council of State), which is the referring court.
17. The referring court notes that the 2015-2017 contract guarantees Trenitalia full coverage of the costs, without entitling it to a reasonable profit. Thus, a decrease in costs or an increase in revenues, compared with the initial estimates, should reduce the compensation due from the Region of Liguria in order to maintain a zero economic and financial balance at the end of the three-year period, as agreed in the contract.
18. The referring court questions the compatibility of the 2015-2017 contract with Regulation No 1370/2007, in so far as that contract provides for the waiver of a reasonable profit on the part of the transport service operator and does not require separate accounting of the costs and revenues relating to the ‘Cinque Terre Express’ service, which is commercial in part.
19. In those circumstances, the Consiglio di Stato (Council of State) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Do Regulation [No 1370/2007] – in particular, the second part of recital 27, [Article] 1(2), [Article] 4(1) and [Article] 6(1), and [points] 2 and 6 of the annex to that regulation – and the principles and objectives of EU law laid down in the relevant provisions of the [FEU Treaty] (Articles 14, 93 and 106 in particular) preclude – rendering the relevant provisions ineffective – a service contract, such as the one at issue in the present proceedings, that, in exchange for a total absence of risk on the part of the economic operator, entails a freely and knowingly accepted waiver of the right to a reasonable profit, where that waiver covers a limited period of time (three years), with a view to the direct award of a subsequent service contract for the maximum duration laid down in Article 5(6), read in conjunction with Article 4(4), of Regulation [No 1370/2007]?
(2) If the answer to that first question is in the affirmative, do Regulation [No 1370/2007] – in particular, the first part of recital 27, recital 28, [Article] 4(1) and [Article] 6(1), and [point] 5 of the annex to that regulation – and the principles and objectives of EU law laid down in the relevant provisions of the [FEU Treaty] (Articles 14, 93 and 106 in particular) preclude a service contract, such as the one at issue in the present proceedings, that does not provide for separate accounting of the costs and revenue of a service that is in part of a commercial nature, in so far as it is characterised by increased tariffs, in order to avoid the risk of overcompensation, rendering the contract ineffective and unenforceable in that respect?’
20. Written observations have been submitted by Trenitalia, the Region of Liguria and the European Commission. Those parties also submitted oral argument at the hearing on 27 November 2025.
Analysis
The first question
21. By its first question, the referring court asks, in essence, whether Regulation No 1370/2007 must be interpreted as precluding the conclusion of a contract for rail transport services that, given the absence of risk assumed by the operator responsible for discharging the public service obligations, provides that the amount of compensation due to that operator covers all the costs incurred by it, without, however, including a reasonable profit, for a transitional period preceding the conclusion of a new long-term contract for the same public service obligation. (3)
22. First, it should be recalled that Regulation No 1370/2007, the interpretation of which is requested by the referring court, was adopted both on the basis of the provisions of the Treaty relating to State aid and those relating to the common transport policy.
23. Recital 4 of Regulation No 1370/2007 states that the latter has the objective of eliminating the disparities between transport undertakings from different Member States. As is apparent from the first subparagraph of Article 1(1) and recital 4 of that regulation, that objective is additional to that of guaranteeing through regulated competition the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost than those that market forces alone would have allowed. (4)
24. Accordingly, Regulation No 1370/2007 defines, in accordance with the second subparagraph of Article 1(1) thereof, the conditions under which competent authorities, where they impose public service obligations or entrust the performance of such obligations to an undertaking, compensate public service operators for costs incurred and/or grant exclusive rights in return for the discharge of public service obligations.
25. As regards the concept of ‘public service compensation’, this is defined in Article 2(g) of that regulation as ‘any benefit, particularly financial, granted directly or indirectly by a competent authority from public funds during the period of implementation of a public service obligation or in connection with that period’.
26. According to the first sentence of Article 6(1) of Regulation No 1370/2007, all compensation connected with a public service contract must comply with the provisions laid down in Article 4, irrespective of how the contract was awarded. Where the contract is awarded directly, as in the present case, that compensation, whatever its nature, must also comply with the provisions laid down in the annex to that regulation.
27. Article 4(1)(b)(i) of Regulation No 1370/2007 provides that public service contracts must, on the one hand, establish in advance, in an objective and transparent manner, the parameters on the basis of which the compensation payment, if any, is to be calculated, and, on the other hand, determine the arrangements for the allocation of costs connected with the provision of services, in accordance with subparagraph (c) of that provision. Those costs may include in particular the costs of staff, energy, infrastructure charges, maintenance and repair of public transport vehicles, rolling stock and installations necessary for the operation of the passenger transport services, fixed costs and a suitable return on capital.
28. According to the recent case-law of the Court, it follows from the wording of that provision that the competent authorities enjoy, in the context of a public service contract, a margin of discretion in devising the mechanism for the compensation due to the public service operator. (5) However, that margin is strictly regulated by the requirement, set out in the second sentence of Article 4(1)(b) of Regulation No 1370/2007 and in point 2 of the annex to that regulation, to avoid any excessive compensation (‘overcompensation’). (6) In the case of a direct award of a public service contract, the parameters on the basis of which the compensation is to be calculated must be determined in such a way that no compensation payment may exceed the amount required to cover the net financial effect on costs incurred and revenues generated in discharging the public service obligations, taking account of revenue relating thereto kept by the public service operator and a ‘reasonable profit’. (7) This is defined in point 6 of the annex to Regulation No 1370/2007 as ‘a rate of return on capital that is normal for the sector in a given Member State and that takes account of the risk, or absence of risk, incurred by the public service operator by virtue of public authority intervention’.
29. In other words, public service contracts must provide for a mechanism to ensure that the compensation remains less than or equal to the maximum amount corresponding to the net financial effect, in order to avoid any unjustified distortion of competition, as is apparent from recital 34 of Regulation No 1370/2007. (8)
30. Article 4(1) of that regulation thus requires a reasonable profit to be taken into account when calculating such a financial effect, when it appears in the public service contract.
31. One interpretation, according to which a reasonable profit is the subject of the requirements of Regulation No 1370/2007 only in so far as such a benefit is provided for by the public service contract, is corroborated by two contextual elements.
32. First, Article 4(1)(c) of Regulation No 1370/2007 provides that costs connected with the provision of services, the arrangements for the allocation of which must be defined in public service contracts, ‘may include’, in particular, ‘a suitable return on capital’ (or in other words, a reasonable profit). That wording reveals that the EU legislature did not wish to identify the costs that must be included in the public service contract.
33. Second, point 2 of the annex to Regulation No 1370/2007 sets out a formula according to which the amount of the net financial effect corresponds to the costs incurred, minus revenues generated by the public service operations and potential revenues induced by network effects, plus a reasonable profit. According to that paragraph, the competent authority ‘is guided’ by that formula (‘shall be guided by the following scheme’ in the English-language version, ‘se guiará por el siguiente esquema’ in the Spanish-language version, and ‘deve tomar como referencial as seguintes regras’ in the Portuguese-language version). In my opinion, the use of that verb is explained precisely by the fact that the net financial effect, on the basis of which the maximum amount of compensation is calculated, includes potential revenues induced by network effects, if they exist, and a reasonable profit, if the public service contract so provides. (9)
34. Therefore, an obligation for the competent authorities to grant the public service operator compensation including a reasonable profit cannot be inferred from the provisions of Regulation No 1370/2007 examined thus far.
35. Nor may Article 1(1) of and point 7 of the annex to Regulation No 1370/2007, read in conjunction with recital 27 of that regulation, be interpreted as imposing such an obligation on the competent authorities, contrary to Trenitalia’s assertions in both its written observations and at the hearing.
36. It is worth considering the content of those provisions. The first subparagraph of Article 1(1) of that regulation states that the objective of the latter is to ‘guarantee the provision of services of general interest which are among other things more numerous, safer, of a higher quality or provided at lower cost’. (10) Recital 27 of that regulation states that, where a competent authority plans to award a public service contract without putting it out to competitive tender, that authority should also respect detailed rules ensuring that the amount of compensation is appropriate and reflecting a desire for efficiency and quality of service. Point 7 of the annex states that the method of compensation must promote the maintenance or development of effective management by the public service operator, which can be the subject of an objective assessment, and the provision of passenger transport services of a sufficiently high standard.
37. In its 2014 guidelines, (11) concerning the version of Regulation No 1370/2007 applicable ratione temporis to the facts of the case, the Commission stated, in point 2.4.8, that, in accordance with Article 1 and point 7 of the annex, not only do the rules of that regulation ‘aim to prevent any possible overcompensation for public service obligations, but also that they aim to ensure that the offer of public services defined in the public service contract is financially sustainable to reach and maintain a high level of service quality’. It follows, according to the Commission, that ‘the public service obligation should … be appropriately compensated so that the operator’s own funds under a public service contract are not eroded in the long run, preventing the efficient fulfilment of its obligations under the contract and the maintenance of the provision of passenger transport services of a high standard’. (12) Indeed, ‘if the competent authority does not pay appropriate compensation, it risks … creating serious financial difficulties for the operator if the public service contract is awarded directly and/or reducing the overall level and quality of the public services provided during the lifetime of the contract’. (13)
38. The following may be inferred from this.
39. Article 1 of, and point 7 of the annex to, Regulation No 1370/2007 do not set a minimum compensation threshold (14) and do not expressly oblige the competent authorities to recognise a level of compensation greater than the net financial effect of the public service obligations, thus including a reasonable profit. Therefore, they cannot be understood as imposing on the competent authorities an obligation in principle to grant such a benefit to public service operators.
40. Those provisions nevertheless set a general limit on the contractual freedom of the competent authorities. More specifically, the margin of discretion available to those authorities in setting the parameters for calculating compensation is also circumscribed by the aim of ensuring the provision of an efficient and financially profitable passenger transport service with a view to achieving a high standard of service. Thus, as the Court held in the judgment in DOBELES, the competent national authorities cannot impose any conditions on providers of transport services entrusted with the discharge of public service obligations, such as those relating to the compensation arrangements, that are excessive or unreasonable. (15) Such would be the case, inter alia, of a contractual clause imposing terms that clearly do not ensure sufficient compensation for that operator and thus risk compromising the maintenance of the provision of public services of a sufficiently high standard in the long term.
41. It is therefore not out of the question that the failure to grant a reasonable profit, and consequently the return on invested capital, may result in a public service operator receiving manifestly insufficient compensation. In such a case, it would be an ‘excessive or unreasonable’ condition, within the meaning given in the previous point, which is incompatible with Regulation No 1370/2007. (16)
42. That assessment, which is a matter for the referring court, is governed by the principle of proportionality. (17) In order to determine whether that principle has been complied with, it is necessary to consider all the relevant factors surrounding the public service contract at issue in the main proceedings – that is to say, the 2015-2017 contract. I am thinking in particular of the two factors mentioned by that court, namely the transitional nature of that contract and the absence of any economic and financial risk for Trenitalia in the provision of the public service covered by the contract.
43. In order to give a useful answer to the referring court, I consider it necessary to make a number of points concerning those two factors.
44. As regards the first factor, I note, to begin with, that the contract was concluded in a situation in which the Region of Liguria considered it necessary to ensure the continuity of the provision of the public rail passenger transport service at issue. Therefore, its limited duration (three years) was explained by the need to address a transitional situation, with a view to concluding a further contract for a considerably longer period. It is clear that the terms of a short-term contract are, in general, less likely to have a negative impact on the long-term financial viability of the service than a long-term contract.
45. As for the second factor, it seems to me that, in order to maintain the financial viability of a public service, the amount of compensation must vary according to the risk that the operator is willing to assume. (18) As stated by the Commission in its written observations, the failure to grant a reasonable profit could constitute a breach of Regulation No 1370/2007 where the operator concerned has to face major investment or operational risks. However, it is clear from the order for reference that the 2015-2017 contract made no provision for Trenitalia to be bound by an investment obligation, since investments in the modernisation of rolling stock were deferred until the subsequent contract. In addition, the contractual terms required full coverage of the operational risks that might jeopardise Trenitalia’s provision of the public service in question. It appears therefore that, under the contract at issue, the company was protected against any risk related to the provision of the public service.
46. In that regard, it should also be noted that a compensation mechanism based on full coverage of the costs incurred by the public service operator, such as that in the present case, is unlikely to encourage effective public service management, as required by the first indent of point 7 of the annex to Regulation No 1370/2007. Indeed, as the Commission explained in point 2.4.3 of its 2014 guidelines, ‘compensation schemes which simply cover actual costs as they occur provide few incentives for the transport company to contain costs or to become more efficient over time’ and ‘their use is therefore better confined to instances where uncertainty about costs is large and the transport provider needs a high degree of protection against uncertainty’. Although this factor must be taken into account in the examination of proportionality, it is still necessary to place it in a context where the competent authority has decided, on the one hand, to conclude a public service contract providing for coverage of all the actual costs of the operator concerned in order to promote the maintenance of the provision of that service, and, on the other hand, to initiate a procedure for the direct award to the same operator of a 15-year contract.
47. In the light of the foregoing, I propose that the Court answer the first question that Regulation No 1370/2007 must be interpreted as meaning that it does not preclude the conclusion of a contract for rail transport services which, given the absence of risk assumed by the operator responsible for discharging the public service obligations, provides that the amount of compensation due to that operator covers all the costs incurred by the latter, but without including a reasonable profit, for a transitional period preceding the conclusion of a new long-term contract for the same public service obligation, provided that the failure to grant a reasonable profit does not lead to insufficient compensation, preventing the proper performance of the obligations provided for in the contract and the maintenance of the provision of passenger transport services of a sufficiently high standard, which is for the referring court to ascertain.
The second question
48. By its second question, the referring court asks, in essence, whether Article 6(1) of Regulation No 1370/2007 and point 5 of the annex to that regulation must be interpreted as precluding the conclusion of a service contract that does not provide for separate accounting of the costs and revenues of a transport service covered by that contract and whose tariff terms ensure that the service is commercially profitable. (19)
49. That question only arises if the first question is answered in the affirmative – that is to say, if the authority is required, under Regulation No 1370/2007, to grant a reasonable profit to the public service operator. As I explained earlier in this Opinion, I am convinced that that is not the case. I suggest therefore that the Court need not answer the second question. However, in the event that the Court does not share my opinion, I will examine the substance of the question below.
50. It should be recalled at the outset that the service referred to in that question, known as ‘Cinque Terre Express’, had enabled Trenitalia to earn higher tariff revenue than would normally be earned from an ordinary public service, owing to the higher fares charged to tourists.
51. In the main proceedings, Trenitalia argued that it was entitled to retain, as a reasonable profit, the surplus revenue earned from providing that service. The Region of Liguria objected, arguing that the legal interpretation advanced by Trenitalia would have entailed that that company would use the compensation received in return for a public service obligation to subsidise a commercial activity, namely the provision of the ‘Cinque Terre Express’ service.
52. According to the second sentence of Article 6(1) of Regulation No 1370/2007, any compensation related to a public service contract awarded directly, in accordance with Article 5(6) of that regulation, must comply with the provisions set out in the annex to that regulation. The case in the main proceedings relates precisely to the direct award of a public service contract for rail transport.
53. It should be recalled that, according to the first sentence of point 5 of that annex, ‘in order to increase transparency and avoid cross-subsidies, where a public service operator not only operates compensated services subject to public transport service obligations, but also engages in other activities, the accounts of the said public services must be separated’. In that regard, point 2.4.4 of the 2014 guidelines states that the aim of that obligation for the separation of accounts is to ensure that the compensation received by the public service provider is not used to strengthen its competitive position in its commercial activities, which would amount to cross-subsidisation of those activities.
54. Regulation No 1370/2007 therefore requires accounting separation between transport services subject to compensation for public service obligations and those not subject to such compensation. (20)
55. As is clear from the definition of ‘public service contract’ in Article 2(i) of Regulation No 1370/2007, (21) the services covered by that contract are subject to the public service obligations provided for therein.
56. It follows, in my opinion, that the ‘Cinque Terre Express’ rail transport service, expressly provided for in the 2015-2017 contract, falls under ‘compensated services subject to public transport service obligations’ within the meaning of point 5 of the annex to Regulation No 1370/2007. Consequently, the obligation to keep separate accounts does not seem applicable in the circumstances of the case in the main proceedings.
57. That finding is not called into question by the fact that the ‘Cinque Terre Express’ rail transport service is commercially profitable owing to the possibility provided for in the 2015-2017 contract to charge a higher fare for tourists. Indeed, it is in no way apparent from point 5 of the annex to Regulation No 1370/2007 that the commercial profitability of one of the ‘compensated services subject to public transport service obligations’ entails the need for separate accounting treatment of the costs and revenues relating to the transport service in question. Moreover, it is important to emphasise, as Trenitalia did in its written observations, that point 2.2.5 of the 2014 guidelines states that the geographical scope of public service contracts should enable competent authorities to reap the local, regional and sub-national network effects of public transport services. To that end, that point expressly considers the possibility of cost-effective provision of such services through cross-financing between cost-effective and other loss-making services covered by the same public service contract.
58. In the light of the above considerations, I suggest that the Court answer the second question that Article 6(1) of Regulation No 1370/2007, read in conjunction with point 5 of the annex to that regulation, must be interpreted as not precluding the conclusion of a service contract that does not provide for separate accounting of the costs and revenues of a transport service covered by that contract and whose tariff terms ensure that the service is commercially profitable.
Conclusion
59. In the light of the foregoing considerations, I suggest that the Court’s answer to the questions referred by the Consiglio di Stato (Council of State, Italy) for a preliminary ruling should be as follows:
(1) Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70
must be interpreted as meaning that it does not preclude the conclusion of a contract for rail transport services which, given the absence of risk assumed by the operator responsible for discharging the public service obligations, provides that the amount of compensation due to that operator covers all the costs incurred by the latter, but without including a reasonable profit, for a transitional period preceding the conclusion of a new long-term contract for the same public service obligation, provided that the failure to grant a reasonable profit does not lead to insufficient compensation, preventing the proper performance of the obligations provided for in the contract and the maintenance of the provision of passenger transport services of a sufficiently high standard, which is for the referring court to ascertain.
(2) Article 6(1) of Regulation No 1370/2007, read in conjunction with point 5 of the annex to that regulation,
must be interpreted as meaning that it does not preclude the conclusion of a service contract that does not provide for separate accounting of the costs and revenues of a transport service covered by that contract and whose tariff terms ensure that the service is commercially profitable.
1 Original language: French.
2 Regulation of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regulations (EEC) Nos 1191/69 and 1107/70 (OJ 2007 L 315, p. 1).
3 In addition to various provisions of Regulation No 1370/2007, the referring court refers, in its question, to Articles 14, 93 and 106 TFEU, without, however, explaining why it considers those articles to be relevant in the present case. I am of the opinion that the Court should reformulate the question, omitting those provisions. It should be recalled, in that regard, that, according to settled case-law, the Court may reformulate the questions referred to it, limiting, where appropriate, its interpretation only to the relevant provisions among those which are the subject of the reference for a preliminary ruling (see judgment of 26 January 2023, Ministerstvo na vatreshnite raboti (Recording of biometric and genetic data by the police) (C‑205/21, EU:C:2023:49, paragraph 77), in which the Court reformulates the third question referred for a preliminary ruling by the referring court).
4 See, also, judgment of 8 September 2022, Lux Express Estonia (C‑614/20, EU:C:2022:641, paragraphs 67 to 69).
5 See judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others (C‑421/22, ‘the judgment in DOBELES’, EU:C:2023:1028, paragraph 42).
6 See judgment of 25 January 2024, Obshtina Pomorie (C‑390/22, EU:C:2024:75, paragraph 39).
7 That provision codifies the third condition to be fulfilled for public service compensation to escape classification as ‘State aid’ within the meaning of Article 107(1) TFEU (see judgment of 24 July 2003, Altmark Trans and Regierungspräsidium Magdeburg (C‑280/00, EU:C:2003:415, paragraph 92)). In that regard, it should be recalled that, under Article 9(1) of Regulation No 1370/2007, public service compensation for the operation of public passenger transport services paid in accordance with that regulation, is to be compatible with the common market and is thus exempt from the prior notification requirement laid down in Article 88(3) EC (now Article 108(3) TFEU).
8 According to recital 34 of that regulation, ‘such compensation may be compatible with the Treaty pursuant to Article 73 under certain conditions. Firstly, it must be granted to ensure the provision of services which are services of general interest within the meaning of the Treaty. Secondly, in order to avoid unjustified distortions of competition, it may not exceed what is necessary to cover the net costs incurred through discharging the public service obligations, taking account of the revenue generated thereby and a reasonable profit.’
9 By contrast, the wording of the Italian-language version (‘segue il seguente schema’) might suggest that that formula is binding on the competent authorities. However, that linguistic choice does not seem to be shared by the other language versions that I understand.
10 Emphasis added.
11 Communication from the Commission on interpretative guidelines concerning Regulation (EC) No 1370/2007 on public passenger transport services by rail and by road (OJ 2014 C 92, p. 1) (‘the 2014 guidelines’). In point 1 of that text (‘Introduction’), it is stated that ‘the Commission sheds light on its understanding of a number of provisions of the Regulation, inspired by best practices, to help Member States reap the full benefits of the internal market’.
12 Emphasis added.
13 Emphasis added.
14 See European Parliament draft legislative resolution on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail (COM(2013)0028 – C7‑0024/2013 – 2013/0028(COD)), Document A7‑0034/2014 of 16 January 2014, amendments 10 and 40, available at the following address: https://www.europarl.europa.eu/doceo/document/A-7-2014-0034_EN.html#_section5.
15 The judgment in DOBELES (paragraph 54).
16 It should be recalled that Member States, when exercising the discretion conferred on them by a regulation, must use that discretion within the limits of the provisions of that regulation, in order not to undermine the content and objectives of that regulation (see, with regard to Regulation No 1370/2007, judgment of 25 January 2024, Obshtina Pomorie (C‑390/22, EU:C:2024:75, paragraph 40)).
17 Admittedly this principle is enshrined only in the consolidated version of Regulation No 1370/2007, and not in the version applicable in this case. It is, however, a general principle of EU law, which applies irrespective of whether it is formally enshrined in an act of secondary legislation.
18 See the judgment in DOBELES (paragraph 55).
19 In accordance with the case-law cited in footnote 3 to this Opinion, I propose that the Court reformulate that question by omitting recitals 27 and 28 and Article 4(1) of Regulation No 1370/2007.
20 See judgment of 28 June 2017, Commission v Germany (C‑482/14, EU:C:2017:499, paragraphs 127 to 129), in which the Court held that it is not apparent from Article 6(1) of Regulation No 1370/2007, read in conjunction with point 5 of the annex to that regulation, that ‘operators of passenger rail transport services operating both compensated activities subject to public service obligations and other activities would be required to identify, in their annual accounts, individually, contract by contract, the public funds received in respect of their public service activity’. On the contrary, according to the Court, those provisions impose on such operators ‘only an obligation to keep separate accounts of their various areas of activity’.
21 According to that provision, this means ‘one or more legally binding acts confirming the agreement between a competent authority and a public service operator to entrust to that public service operator the management and operation of public passenger transport services subject to public service obligations’.
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