1. Introduction

On 11 May 2023, the regional administrative Court of Lecce (“TAR Lecce”) referred a question to the Court of Justice (“ECJ”) on the interpretation and on the validity of the Directive 2006/123/EC (the so-called “Bolkestein Directive”) (on the order, see C. Burelli on this blog). The Court finally delivered its judgment on 20 April 2023 in Case C-348/22 Autorità Garante della Concorrenza e del Mercato (Comune de Ginosa), which had already been analyzed by D. Diverio and C. Curti Gialdino.

In its judgment, the ECJ ruled on a crucial issue for the correct application of Directive 2006/123/EC (at least in Italy). Indeed, the judges have provided their own interpretation – about the possibility of recognizing direct effect to Article 12 (1)(2) of the Directive. This issue was sensitive in view of the (serious) discrepancy of voices recorded on the matter among national courts (primarily administrative ones). Indeed, although the direct effect of Article 12 had been expressly admitted by Advocate General Maciej Szpunar in his Opinion in the Promoimpresa case (paragraph 110), the ECJ had never expressly ruled on the point. This justified divergent national case-law positions. Therefore, the solution offered by the Court in the present case, clearly recognizing the direct effect, seems to have solved the problem once and for all.

However, the judgment, in addition to having set out some widely known principles on the applicability of Article 12 to purely internal situations (paras 39-42, and on the obligation of administrative authorities to refrain from applying provisions which are inconsistent with EU law (paras 77-79), has opened a significant interpretative issue on the requirement of “scarcity of natural resources”, which is the condition of applicability of Article 12.

For clarity’s sake, Article 12 states that: “Where the number of authorisations available for a given activity is limited because of the scarcity of available natural resources or technical capacity, Member States shall apply a selection procedure to potential candidates, which provides full guarantees of impartiality and transparency, including, in particular, adequate publicity about the launch, conduct and completion of the procedure” (emphasis added). The rationale, which can be derived from recital No. 62, is to “develop, through open competition, the quality and conditions for supply of services available to users”. After all, if the number of available authorisations is limited, the competition between potential candidates requires a transparent selection procedure for their allocation. The reason for the limit can come from the scarcity of natural resources or technical capacity (the relevant reason for coastal zones is obviously natural scarcity).

The “scarcity of natural resources” has even more importance considering that the ECJ has repeatedly affirmed that Article 12 also applies to purely internal situations (see, for example, Visser Vastgoed Beleggingen, paras 99-110; Cali Apartments, para 56; and, lastly, AGCM v. Comune di Ginosa, para 40). This means that the only condition of applicability of Article 12 of the Bolkestein Directive is the assessment of the scarcity of natural resources, regardless of whether there is a certain cross-border interest in the authorisation.

This post, therefore, aims to analyze this specific aspect of the judgment, to highlight its critical issues and to outline, at the same time, a possible alternative approach. To this end, the (scarce) previous case law on the matter will be briefly reviewed, and especially the AGCM v. Comune di Ginosa case and the solution it offers.

2. The “scarcity of natural resources” in Promoimpresa case

Until the AGCM v. Comune di Ginosa judgment, the first and only occasion on which the ECJ (briefly) ruled on the requirement of “scarcity of natural resources” was the Promoimpresa case. In that case, the ECJ ruled that it is for the referring court to determine whether that condition of scarcity is satisfied. To do so, the national court must take into account the fact that main proceedings are granted at municipal rather than national level (para 43 Promoimpresa). In other words, the Court has affirmed that, in order to assess scarcity’s existence, it is necessary to verify the level of government to which the legal system gives the power to grant new authorisations. Indeed, the volume of scarcity could potentially change if the whole national territory is taken into account rather than a single municipal territory. Please note that, in Italy, following the entry into force of Legislative Decree No. 85/2010, the procedure typically takes place at the municipal level, as a series of assets including the coastline have been transferred to the territorial authorities (regions, metropolitan cities and municipalities). Therefore, where the number of authorisations available is limited because of the scarcity of natural resources, Article 12 of the Directive must be applied. The problem is that the “hermeneutical criterion” offered by the CJEU did not clarify concrete ways to ascertain the scarcity and what “scarcity” really means. The most recent decision AGCM v. Comune di Ginosa does not seem to have solved this either.

3. The “scarcity of natural resources” in AGCM v. Comune di Ginosa case

The Court, in AGCM v. Comune di Ginosa, has made the situation even more complex, by establishing that the scarcity of natural resources can be assessed (also) “by combining an abstract and general approach at national level with a case-by-case approach based on an analysis of the coastal territory [at a municipal level]” (para 49). This combined assessment  must be carried out in a “balanced” manner, that is, “capable of ensuring compliance with objectives regarding the economic exploitation of the coastline that may be defined at national level, while ensuring that the actual implementation of those objectives in the coastal territory of a municipality remains relevant” (paragraph 47).

The TAR Lecce had expressly asked whether a national ruling (i.e. by the Council of State) according to which the requirement of scarcity of resources had to be assessed with reference to the whole national territory was consistent with the purposes pursued by the Service Directive and Article 49 TFEU. The question arose from the Council of State’s “twin” judgments of 9 November 2021– No. 17 and No. 18, commented by R. Mastroianni – where the judges have recognized the existence of the requirement of the scarcity in a general and abstract way on the whole Italian coastal territory, with the effect of considering applicable, without exception, Article 12 of the Directive.

In summary, the Council of State has affirmed that the concept of scarcity must be interpreted by taking into account not only the “quantity” of the available resource for a given activity, but also its qualitative aspects and, consequently, “the demand it is capable of generating from other potential competitors, as well as from the consumers of the activity that is placed on the market through it” (para 25). The idea is that not all beach concessions are equal in terms of “economic function” and, therefore, the “most attractive” areas from an economic point of view would be scarce regardless of the quantitative profile. The Council of State, however, also included a quantitative dimension: “In Italy almost 50% of the sandy coasts are occupied by beach concessions, with peaks in some regions (such as Liguria, Emilia-Romagna and Campania) reaching almost 70%” (para 25). Therefore, considering the attractiveness of Italian coasts and the very high demand throughout the summer period, the Council of State ruled that scarcity characterizes the entire national territory.

From a certain angle, therefore, the TAR Lecce’s question was understandable: on the one hand, the CJEU had ruled that the referring court should assess the element of scarcity taking into account that the allocation would take place at the municipal level, but on the other hand, the highest Administrative Court declared, once and for all, that the scarcity extends to the entire national territory, regardless of the assessment relating to the specific municipality.

The CJEU, as anticipated, answered the question by establishing that both approaches are admissible: the “municipal” one, which it highlighted in the Promoimpresa judgment, and the “national” one, endorsed by the Council of State. Moreover, the Court even established (in a rather “cryptic” way) that the two approaches can also be “combined” (para 43). In this way the CJEU has not overturned Promoimpresa case law, but clarified it (thus C. Curti Gialdino, p. 464). However, as already mentioned, this “clarification”, far from clearly determining the scope of the requirement, seems to have muddled things more.  

The absence of a clear, univocal and unambiguous criterion for the assessment of the scarcity of natural resources (the definition of which remains uncertain), which stems from the difficulty of applying concretely the solution offered by the CJEU, could lead to potentially inconsistent outcomes.

4. Some issues and a possible alternative solution

In this context, the mapping of the Italian coast is crucial. It was first ordered by Article 1(676)(a) of Law No. 145/2018, and subsequently partially confirmed by Article 2 of Law No. 118/2022. The latter had conferred a delegation to the Government to establish an information system to “map” the (only) existing authorisations, by February 2023. The deadline was extended by five months by Law-Decree No. 198/2022 and the decree was definitively adopted by the Council of Ministers last 14 July 2023. However, the mapping work, from which it will be possible to determine whether and to what extent the Italian coast is scarce, should cover not only the existing concessions but also and mostly the “free” areas.

On this aspect, it has been recalled (by C. Curti Gialdino, p. 471) that, in reality, a “mapping” system of the Italian coasts has been in existence for more than thirty years: the State Property Information System (SID), provided for by Law No. 44/1991, which constantly updates the registry of the maritime State property. However, this system is not sufficient to assess the scarcity, both because it refers only to maritime State property (excluding river and lake areas), and because, above all, it records only the existing authorisations and not the free areas.

It is worth noting that the correct measurement of the availability of a resource cannot be resolved by a mere arithmetic calculation (i.e. total free areas – total existing authorisations), mostly because it is difficult to identify the actual “usable areas”. For example: are protected nature reserves “usable areas”? can a very high cliff be considered “usable area”? is an area to be considered “usable” only if it is currently or even if it can become usable thanks to the investments guaranteed by the project of the concession holder? These are questions (and choices) of a political as well as technical nature that the mere numerical data on the amount of existing authorisations do not answer.

In addition, the same natural resource – a beach, for example – can potentially be allocated for different uses. Art. 03 (4-bis), of Law-Decree No. 400/1993 provides that authorisations may be issued for, inter alia: (i) beach resorts; (ii) catering and supply of beverages and ready-to-eat foods; (iii) rental of boats; (iv) sports facilities; (v) shops.

Moreover, the maritime State property must be used also for military defense, peach, harbour activity and production (see Article 36 Navigation Code). That the same natural resource can be used for different purposes means that a “scarcity of destination” can at least exist. This “scarcity of destination” is closely linked to the issue that the calculation of the number of available authorisations (and, therefore, the assessment on the scarcity of natural resources) does not depend solely on quantitative considerations, but also on qualitative-economic considerations. As highlighted in the literature, “the size of a natural resource does not itself imply the size of the number of authorisations” (J. Wolswinkel, “The Allocation of a Limited Number of Authorisations”, Review of European Administrative Law, 2009, p. 61 ff., p. 84).

These brief reflections raise the question as to whether the solution offered by the CJEU, in the judgment in AGCM v. Comune di Ginosa, is fully embraceable. Indeed, the proposal of a combination of a general and abstract approach with a case-by-case approach to assess the scarcity of resources, in the absence of a reference to the meaning of scarcity and without further consideration on how this “combination” should take place, seems to conflict with the need for legal certainty imposed by the Italian case of “beach concessions”.

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Posted by Camilla Burelli (Postdoctoral research fellow in EU Law – University of Milan)

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Suggested citation: Camilla Burelli, “The requirement of ‘scarcity of natural resources’ pursuant to Article 12 of Bolkestein Directive in the recent AGCM v. Comune di Ginosa Case: some critical reflections”, REALaw.blog, available at https://realaw.blog/?p=2941