In its judgment dating back to April 2023 (case C-348/22), the EU Court of Justice has been called againt to deal with the automatic renewal of the Italian beach concessions, by the Regional Administrative Court (TAR) of Puglia in the context of a dispute between the Italian Competition Authority (AGCM) and the Apulian municipality of Ginosa.

The dispute originated from a municipal resolution which announced the automatic renewal of the existing beach concessions in the Municipality in question until 2033. Faced with the reasoned opinion of the AGCM which believed that the renewal in question was contrary in particular to Article 12 of the Directive 2006/123 on the liberalization of the services in the internal market (the Directive), the Municipality of Ginosa resisted the proceedings brought by the AGCM in front of TAR Puglia.

As part of this judgment, the TAR formulated a series of preliminary questions to the Court of Justice which led the latter to provide some clarifications on the scope of the directive and on the obligation to guarantee transparent competition avoiding the automatic renewal of existing concessions.

As it is known, the matter is the result of a composite normativity in Italy which essentially tends to perpetuate the economic exploitation of the state-owned coastline in favor of the subjects that obtain the automatic renewal of the concession to exploit it over many decades. Following the adoption of this national legislation contrary to the Directive, the European Commission opened an infringement procedure against Italy which was then closed in 2012, following the assurances by the Italian authorities into conforming with Union law.

In summary, the Directive (Article 12) provides, as far as it is relevant here, that if the number of the available authorizations for a given activity is limited due to the scarcity of natural resources, Member States apply a proceeding of selections amongst potential candidates, which presents guarantees of impartiality and transparency. Provided that the concession (authorization in the generic language of the Directive) is issued for an adequate limited duration, the Directive prohibits the automatic renewal of procedure or favors to the outgoing entity. The Directive provides that, in establishing the rules of the selection proceedings must take in consideration: public health and social policy objectives, the health and safety of employees and self-employed workers, the protection of the environment, the safeguarding of cultural heritage and of other imperative reasons of general interest compliant with Community law.

In answering the questions of the national judge, the Court had the opportunity to clarify that the Directive also applies to situations of pure domestic law without being asked whether the concession in question has an element of transnationality.

The Court then essentially confirmed what had already been observed in a previous judgment in 2016 (Case C-458/14), namely that in the application of the Directive, a certain flexibility is to be respected to the extent that the aforementioned Article 12 must be interpreted in the sense that it does not preclude the scarcity of natural resources and available concessions from being assessed by combining a general and abstract approach, at a national level, and a case-by-case approach at local level, based on an analysis of the coastal territory of the municipality in question.

The Court therefore dispelled doubts about the invalidity of the procedure for adopting the Directive at a Community level by observing that its adoption with the qualified majority and not by unanimity is in accordance with the nature of the Directive services which aims to improve of the quality of services relating to self-employed activities provided within the EU internal market.

The Court then addressed the essential point at the origin of the preliminary question, i.e. whether the provisions of the aforementioned Article 12 of the Directive which provides on the one hand the obligation of an open and transparent tender procedure for the assignment of concessions and on the other the prohibition on the automatic renewal of the same are directly applicable within the Member States as they are sufficiently precise and unconditional.

The Court, in line with its consolidated jurisprudence, concluded that the provisions in question are directly applicable within the Member States and that they do not allow the automatic renewal of concessions. The fact that the Directive offers national authorities a certain flexibility in its implementation method does not mean that its relevant provisions lose their characteristic of being directly applicable within the Member States. Consequently, the provisions in question which prohibit the automatic renewal of concessions, must be observed by not only the judges, but also by the public authorities who are required to respect Article 12 of the Directive as interpreted by the EU Court.