Background
Liguria directly awarded Trenitalia a three-year bridging contract for regional rail services from 2015 to 2017, pending a new 15-year contract. The contract guaranteed full coverage of Trenitalia’s costs but required its overall net result to be zero: cost savings or additional revenue reduced the public-service compensation.
A dispute arose over whether Trenitalia could include a return on net invested capital in the calculation. Liguria concluded that it could not and sought repayment after calculating the contract balance without that return. Trenitalia challenged the decision, arguing that Regulation No 1370/2007 guaranteed it a reasonable profit.
The Court’s Holding
The Court held that Regulation No 1370/2007 does not preclude a directly awarded, short-term rail public-service contract that fully covers the operator’s costs but excludes a reasonable profit, where the operator bears no economic or financial risk and has freely and knowingly accepted that term.
A reasonable profit is a return on capital that reflects the risk, or absence of risk, assumed by the operator. The Regulation does not require competent authorities always to include such a profit when calculating compensation. The Court also found the part of the first question concerning Treaty provisions inadmissible for lack of reasons in the reference, and did not answer the second question because it was conditional on the opposite answer.
Key Takeaways
- A directly awarded public-service rail contract may set compensation without a reasonable profit where the operator is insulated from risk.
- An operator may validly waive reasonable profit in an individually negotiated contract that it freely accepts with full knowledge of the facts.
- The national court must assess whether the contractual conditions remain proportionate and permit high-quality transport services.
Why It Matters
The ruling confirms that “reasonable profit” under Regulation No 1370/2007 is risk-sensitive, not an automatic entitlement. Public authorities may use cost-covering, zero-result arrangements for transitional contracts, particularly where they assume the operator’s financial risk.