The procedure adopted by member states for the selection of business operators of tourist and leisure activities on State-owned maritime and lakeside property must be at all times impartial and transparent, the Court of Justice of the European Union (CJEU) recently affirmed. Any automatic extension of such a concession is as a rule prohibited by EU law, particularly if no selection procedure was applied at the outset.

The EU’s services directive seeks to safeguard freedom of establishment, non-discrimination as well as competition. To this end, it provides that where due to the scarcity of available natural resources or technical capacity the number of authorisations for a given business activity is limited, member states may subject such activities to an authorisation scheme.

The facts of this particular case, which came before the CJEU, were briefly as follows. Italian law provides for an automatic extension of the date of termination of concessions which have been granted to particular operators for the use of State-owned maritime and lake-side property – especially beaches – for business purposes. No prior selection procedure is stipulated. Despite such legislation, some Italian private operators in the tourist industry had the extension of their concessions refused by the authorities. They filed legal proceedings against the national authorities alleging that such refusals were not in accordance with national law. The Italian courts of the case filed a preliminary reference before the CJEU, requesting guidance as to the compatibility of the Italian law in question with EU law.

The automatic extension of authorisations for tourist and leisure business activities on State-owned maritime and lakeside property is illegal

The CJEU primarily asserted that it is for the national courts to determine, whether as a matter of fact, and for the purposes of applying the EU’s services directive, the Italian concessions must be subject to a limited number of authorisations because of the scarcity of natural resources. If that is the case, the grant of authorisations relating to the economic exploitation of State-owned maritime and lakeside property must be subject to a selection procedure for potential candidates. The procedure laid down by the authorities must be both impartial and transparent whilst ensuring that there is adequate publicity. An automatic renewal of authorisations does not presuppose such a selection procedure.

The Court observed that EU law does allow member states to take into account, when establishing the selection procedure, overriding reasons relating to the public interest. One such reason could be the need to safeguard the legitimate expectations of the holders of authorisations so that they can recoup the cost of investments made.

However, such considerations cannot justify automatic renewal where no selection procedure was organised at the time of the initial grant of the authorisations. Therefore, the Court concluded that any national measure which, without any selection procedure for potential candidates, provides for the automatic extension of authorisations for tourist and leisure business activities on State-owned maritime and lakeside property is illegal in terms of EU law.

This ruling will leave its impact not only on the Italian authorities who were a party to the proceedings but the legal conclusions reached by the Court must serve as a guide to the authorities in all member States. The message of the Court is clear: beach concessions must be granted via impartial and transparent procedures where such concessions are subject to limited authorisations due to the scarcity of natural resources.

mariosa@vellacardona.com

Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.