{ "attribution": { "source": "legal.exploreworldai.com", "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-809-24", "cite_as": "NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-809-24)", "license": "https://legal.exploreworldai.com/revision", "version": "legal-2026-10-05", "fingerprint": "ewai:se:5aa9a2", "proof": "sha256:164038d2bff6eaba0835ef8a6a1a9817d2cdd3df0e7a6db60fc6bb55a829b90c", "jurisdiction": "se", "lang": "en", "publisher": "NovaCopilot by ExploreWorld Legal", "terms": "https://legal.exploreworldai.com/om" }, "brand_source": "Source: NovaCopilot", "brand": { "product": "NovaCopilot", "platform": "ExploreWorldAI", "infrastructure": "ExploreWorld Legal", "infrastructure_url": "legal.exploreworldai.com", "legal_entity": "Valkiv Ventures AB", "permanent_url": "https://legal.exploreworldai.com/novacopilot", "source": "Source: NovaCopilot", "powered_by": "Powered by NovaCopilot", "license": "https://legal.exploreworldai.com/licensvillkor", "contact": "stig@valkiv.com" }, "item": { "schema_version": "1.0.0", "id": "eu:c-809-24", "jurisdiction": "eu", "lang": "en", "brand_source": "Source: NovaCopilot", "brand": { "product": "NovaCopilot", "platform": "ExploreWorldAI", "infrastructure": "ExploreWorld Legal", "infrastructure_url": "legal.exploreworldai.com", "legal_entity": "Valkiv Ventures AB", "permanent_url": "https://legal.exploreworldai.com/novacopilot", "source": "Source: NovaCopilot", "powered_by": "Powered by NovaCopilot", "license": "https://legal.exploreworldai.com/licensvillkor", "contact": "stig@valkiv.com" }, "sections": [ { "title": "Provisional text", "paragraphs": [] }, { "title": "JUDGMENT OF THE COURT (Third Chamber)", "paragraphs": [] }, { "title": "10 September 2026 ( * )", "paragraphs": [ "para_4", "para_5", "para_6" ] }, { "title": "Trenitalia SpA", "paragraphs": [ "para_8", "para_9", "para_10", "para_11", "para_12", "para_13", "para_14", "para_15", "para_16", "para_17", "para_18", "para_19", "para_20" ] }, { "title": "Judgment", "paragraphs": [ "para_22", "para_23" ] }, { "title": "Legal context", "paragraphs": [] }, { "title": "3         Recitals 4, 7, 27 and 34 of Regulation No 1370/2007 state:", "paragraphs": [ "para_26", "para_27", "para_28", "para_29", "para_30", "para_31", "para_32", "para_33", "para_34", "para_35", "para_36", "para_37", "para_38", "para_39" ] }, { "title": "(b)      establish in advance, in an objective and transparent manner:", "paragraphs": [ "para_41", "para_42", "para_43", "para_44", "para_45", "para_46", "para_47", "para_48", "para_49", "para_50", "para_51", "para_52", "para_53", "para_54", "para_55", "para_56", "para_57", "para_58", "para_59", "para_60", "para_61" ] }, { "title": "7.      The method of compensation must promote the maintenance or development of:", "paragraphs": [ "para_63", "para_64" ] }, { "title": "The dispute in the main proceedings and the questions referred for a preliminary ruling", "paragraphs": [ "para_66", "para_67", "para_68", "para_69", "para_70", "para_71", "para_72", "para_73", "para_74", "para_75", "para_76", "para_77", "para_78", "para_79", "para_80", "para_81" ] }, { "title": "Consideration of the questions referred", "paragraphs": [] }, { "title": "The first question", "paragraphs": [ "para_84", "para_85", "para_86", "para_87", "para_88", "para_89", "para_90", "para_91", "para_92", "para_93", "para_94", "para_95", "para_96", "para_97", "para_98", "para_99", "para_100", "para_101", "para_102", "para_103", "para_104", "para_105", "para_106", "para_107", "para_108", "para_109", "para_110" ] }, { "title": "The second question", "paragraphs": [ "para_112" ] }, { "title": "Costs", "paragraphs": [ "para_114" ] }, { "title": "On those grounds, the Court (Third Chamber) hereby rules:", "paragraphs": [ "para_116", "para_117", "para_118", "para_119" ] } ], "paragraphs": [ { "text": "Provisional text", "paragraph_id": "para_1" }, { "text": "JUDGMENT OF THE COURT (Third Chamber)", "paragraph_id": "para_2" }, { "text": "10 September 2026 ( * )", "paragraph_id": "para_3" }, { "text": "( 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 )", "paragraph_id": "para_4" }, { "text": "In Case C‑809/24,", "paragraph_id": "para_5" }, { "text": "REQUEST for a preliminary ruling under Article 267 TFEU from the Consiglio di Stato (Council of State, Italy), made by decision of 22 November 2024, received at the Court on 26 November 2024, in the proceedings", "paragraph_id": "para_6" }, { "text": "Trenitalia SpA", "paragraph_id": "para_7" }, { "text": "v", "paragraph_id": "para_8" }, { "text": "Regione Liguria,", "paragraph_id": "para_9" }, { "text": "THE COURT (Third Chamber),", "paragraph_id": "para_10" }, { "text": "composed of C. Lycourgos, President of the Chamber, O. Spineanu-Matei, S. Rodin, N. Piçarra (Rapporteur) and N. Fenger, Judges,", "paragraph_id": "para_11" }, { "text": "Advocate General: D. Spielmann,", "paragraph_id": "para_12" }, { "text": "Registrar: C. Di Bella, Administrator,", "paragraph_id": "para_13" }, { "text": "having regard to the written procedure and further to the hearing on 27 November 2025,", "paragraph_id": "para_14" }, { "text": "after considering the observations submitted on behalf of:", "paragraph_id": "para_15" }, { "text": "–        Trenitalia SpA, by F.G. Albisinni, F. Caccioppoli and L. Torchia, avvocati,", "paragraph_id": "para_16" }, { "text": "–        the Regione Liguria, by A. Bozzini, avvocato,", "paragraph_id": "para_17" }, { "text": "–        the European Commission, by C. Faroghi, P.A. Messina and K. Walkerová, acting as Agents,", "paragraph_id": "para_18" }, { "text": "after hearing the Opinion of the Advocate General at the sitting on 26 February 2026,", "paragraph_id": "para_19" }, { "text": "gives the following", "paragraph_id": "para_20" }, { "text": "Judgment", "paragraph_id": "para_21" }, { "text": "1         This request for a preliminary ruling concerns the interpretation of recitals 27 and 28, Article 1(2), Article 4(1) and (4), Article 5(6) and Article 6(1) of 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 (OJ 2007 L 315, p. 1), as well as points 2, 5 and 6 of the annex to that regulation, read in the light of Articles 14, 93 and 106 TFEU.", "paragraph_id": "para_22" }, { "text": "2         The request has been made in the context of a dispute between Trenitalia SpA and the Regione Liguria (Region of Liguria, Italy) concerning the calculation of public service compensation for the provision, by Trenitalia, of public passenger transport services by rail.", "paragraph_id": "para_23" }, { "text": "Legal context", "paragraph_id": "para_24" }, { "text": "3         Recitals 4, 7, 27 and 34 of Regulation No 1370/2007 state:", "paragraph_id": "para_25" }, { "text": "‘(4)      The main objectives of the [European] Commission’s White Paper of 12 September 2001 “European transport policy for 2010: time to decide” are to guarantee safe, efficient and high-quality passenger transport services through regulated competition, guaranteeing also transparency and performance of public passenger transport services, having regard to social, environmental and regional development factors, or to offer specific tariff conditions to certain categories of traveller, such as pensioners, and to eliminate the disparities between transport undertakings from different Member States which may give rise to substantial distortions of competition.", "paragraph_id": "para_26" }, { "text": "…", "paragraph_id": "para_27" }, { "text": "(7)      Studies carried out and the experience of Member States where competition in the public transport sector has been in place for a number of years show that, with appropriate safeguards, the introduction of regulated competition between operators leads to more attractive and innovative services at lower cost and is not likely to obstruct the performance of the specific tasks assigned to public service operators. …", "paragraph_id": "para_28" }, { "text": "…", "paragraph_id": "para_29" }, { "text": "(27)      The compensation granted by competent authorities to cover the costs incurred in discharging public service obligations should be calculated in a way that prevents overcompensation. Where a competent authority plans to award a public service contract without putting it out to competitive tender, it should also respect detailed rules ensuring that the amount of compensation is appropriate and reflecting a desire for efficiency and quality of service.", "paragraph_id": "para_30" }, { "text": "…", "paragraph_id": "para_31" }, { "text": "(34)      Compensation for public services may prove necessary in the inland passenger transport sector so that undertakings responsible for public services operate on the basis of principles and under conditions which allow them to carry out their tasks. Such compensation may be compatible with the [FEU] Treaty pursuant to Article [93] 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.’", "paragraph_id": "para_32" }, { "text": "4         Article 1 of that regulation, entitled ‘Purpose and scope’, provides, in paragraph 1 thereof:", "paragraph_id": "para_33" }, { "text": "‘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.", "paragraph_id": "para_34" }, { "text": "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.’", "paragraph_id": "para_35" }, { "text": "5         Article 2(g) of Regulation No 1370/2007 defines the concept of ‘public service compensation’ 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’.", "paragraph_id": "para_36" }, { "text": "6         Article 4 of that regulation, entitled ‘Mandatory content of public service contracts and general rules’, provides, in paragraph 1 thereof:", "paragraph_id": "para_37" }, { "text": "‘Public service contracts and general rules shall:", "paragraph_id": "para_38" }, { "text": "…", "paragraph_id": "para_39" }, { "text": "(b)      establish in advance, in an objective and transparent manner:", "paragraph_id": "para_40" }, { "text": "(i)      the parameters on the basis of which the compensation payment, if any, is to be calculated, and", "paragraph_id": "para_41" }, { "text": "(ii)      the nature and extent of any exclusive rights granted,", "paragraph_id": "para_42" }, { "text": "in a way that prevents overcompensation. In the case of public service contracts awarded in accordance with Article 5(2), (4), (5) and (6), these parameters shall 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;", "paragraph_id": "para_43" }, { "text": "(c)      determine the arrangements for the allocation of costs connected with the provision of services. These 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 operating the passenger transport services, fixed costs and a suitable return on capital.’", "paragraph_id": "para_44" }, { "text": "7         Article 5(2), (4), (5) and (6) of Regulation No 1370/2007 sets out certain rules applicable to the direct award of public service contracts.", "paragraph_id": "para_45" }, { "text": "8         Article 6 of that regulation, entitled ‘Public service compensation’, provides, in paragraph 1 thereof:", "paragraph_id": "para_46" }, { "text": "‘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.’", "paragraph_id": "para_47" }, { "text": "9         That annex, entitled ‘Rules applicable to compensation in the cases referred to in Article 6(1)’, is worded as follows:", "paragraph_id": "para_48" }, { "text": "‘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.", "paragraph_id": "para_49" }, { "text": "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:", "paragraph_id": "para_50" }, { "text": "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,", "paragraph_id": "para_51" }, { "text": "minus any positive financial effects generated within the network operated under the public service obligation(s) in question,", "paragraph_id": "para_52" }, { "text": "minus receipts from tariff or any other revenue generated while fulfilling the public service obligation(s) in question,", "paragraph_id": "para_53" }, { "text": "plus a reasonable profit,", "paragraph_id": "para_54" }, { "text": "equals net financial effect.", "paragraph_id": "para_55" }, { "text": "…", "paragraph_id": "para_56" }, { "text": "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:", "paragraph_id": "para_57" }, { "text": "…", "paragraph_id": "para_58" }, { "text": "–        all variable costs, an appropriate contribution to the fixed costs and a reasonable profit connected with any other activity of the public service operator may under no circumstances be charged to the public service in question,", "paragraph_id": "para_59" }, { "text": "…", "paragraph_id": "para_60" }, { "text": "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.", "paragraph_id": "para_61" }, { "text": "7.      The method of compensation must promote the maintenance or development of:", "paragraph_id": "para_62" }, { "text": "–        effective management by the public service operator, which can be the subject of an objective assessment, and", "paragraph_id": "para_63" }, { "text": "–        the provision of passenger transport services of a sufficiently high standard.’", "paragraph_id": "para_64" }, { "text": "The dispute in the main proceedings and the questions referred for a preliminary ruling", "paragraph_id": "para_65" }, { "text": "10       On 10 March 2010, the Region of Liguria 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.", "paragraph_id": "para_66" }, { "text": "11       Upon the expiry 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.", "paragraph_id": "para_67" }, { "text": "12       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 three-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.", "paragraph_id": "para_68" }, { "text": "13       The 2015-2017 contract maintained the terms laid down in the 2009-2014 contract, except for the method of calculating the public service compensation granted to Trenitalia, which was set out in a document annexed to the new contract. That document provided that Trenitalia’s overall net result had to be zero, thereby ensuring financial balance and full coverage of the costs incurred by Trenitalia over the three-year period from 2015 to 2017. Pursuant to that calculation method, any reduction in costs and any increase in revenue necessarily had to lead to a reduction in the public service compensation paid by the Region of Liguria.", "paragraph_id": "para_69" }, { "text": "14       In 2018, a difference of opinion arose as to which items should be included in the calculation of the overall net result for the period from 2015 to 2017. Specifically, the Region of Liguria was opposed to the inclusion, in favour of Trenitalia, of a return on net invested capital, arguing that Trenitalia, in accordance with the 2015-2017 contract, had waived that return.", "paragraph_id": "para_70" }, { "text": "15       On 25 May 2021, the Region of Liguria adopted a decision by which it determined that the accounting balance for the period from 2015 to 2017 was EUR 10 702 543.18, without taking into account the return on net invested capital. After deducting the outstanding amount of EUR 3 955 613.73 due to Trenitalia, the Region of Liguria demanded that Trenitalia pay a sum of EUR 6 746 929.45 in order to bring that balance to zero.", "paragraph_id": "para_71" }, { "text": "16       Trenitalia challenged the legality of that decision before the Tribunale Amministrativo Regionale per la Liguria (Regional Administrative Court, Liguria, Italy), claiming that the Region of Liguria’s interpretation of the 2015-2017 contract not only failed to correspond to the terms of that contract but also was contrary to Regulation No 1370/2007. Trenitalia claimed that it had in no way waived the return on net invested capital, that is to say, the grant of a reasonable profit that would be guaranteed by that regulation.", "paragraph_id": "para_72" }, { "text": "17       By a judgment of 27 June 2022, that court dismissed the action brought by Trenitalia, ruling, in the first place, that the failure to take into account the return on net invested capital or, in other words, the reasonable profit, that is to say, in the case at hand, the surplus resulting from the performance of the ‘Cinque Terre Express’ commercial service, was justified, first, by the transitional nature of the 2015-2017 contract, second, by the fact that Trenitalia did not bear the risk of possible losses, and, third, by the subsequent direct award of a new contract for a period of 15 years. In those circumstances, according to that court, Trenitalia’s waiver of that profit could not be regarded as constituting an excessively unbalanced solution in favour of the Region of Liguria.", "paragraph_id": "para_73" }, { "text": "18       In the second place, that court held that to grant Trenitalia the right to retain the surplus revenue resulting from the operation of the ‘Cinque Terre Express’ commercial service would amount to subsidising those highly profitable commercial activities through the compensation paid in return for the discharge of a public service obligation.", "paragraph_id": "para_74" }, { "text": "19       Trenitalia has challenged that judgment before the Consiglio di Stato (Council of State, Italy), which is the referring court, requesting that that court, should it consider that Trenitalia did waive a reasonable profit in connection with the 2015-2017 contract, question the Court of Justice about the compatibility of such a waiver – the reality of which Trenitalia disputes – with the provisions of Regulation No 1370/2007 and with the principles and objectives of EU law set out in the relevant provisions of the FEU Treaty, in particular Articles 14, 93 and 106 thereof.", "paragraph_id": "para_75" }, { "text": "20       The Region of Liguria, for its part, has contended that the additional revenue obtained by Trenitalia during the 2017 financial year came from the operation of the ‘Cinque Terre Express’ service. On account of its functional and economic characteristics, that service constitutes a commercial activity which does not fall within the concept of a public service and, therefore, cannot be the subject of compensation. Trenitalia’s waiver of a reasonable profit – consisting of the return on net invested capital – constitutes the consideration in exchange for the assumption by the Region of Liguria of all the risks incurred by Trenitalia and the guarantee of the financial balance of the 2015-2017 contract.", "paragraph_id": "para_76" }, { "text": "21       The referring court notes that the 2015-2017 contract guarantees Trenitalia full coverage of costs without providing for the taking into account of a ‘reasonable profit’, in favour of that public service operator, so that a reduction in costs or an increase in revenue, compared with the initial estimates, automatically leads to a reduction in the compensation granted to Trenitalia in order to maintain a zero accounting balance at the end of the three-year period from 2015 to 2017.", "paragraph_id": "para_77" }, { "text": "22       That court is uncertain as to the compatibility of the 2015-2017 contract with Regulation No 1370/2007, inasmuch as that contract, first, does not provide for the taking into account of a ‘reasonable profit’, within the meaning of point 6 of the annex to that regulation, in favour of the public transport service operator and, second, does not require separate accounting of the costs and revenue relating to the ‘Cinque Terre Express’ service, which is commercial in part.", "paragraph_id": "para_78" }, { "text": "23       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:", "paragraph_id": "para_79" }, { "text": "‘(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 [that regulation]?", "paragraph_id": "para_80" }, { "text": "(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?’", "paragraph_id": "para_81" }, { "text": "Consideration of the questions referred", "paragraph_id": "para_82" }, { "text": "The first question", "paragraph_id": "para_83" }, { "text": "24       As a preliminary point, it should be borne in mind that, under Article 94(c) of the Rules of Procedure of the Court of Justice, a request for a preliminary ruling must contain, inter alia, a statement of the reasons which prompted the referring court or tribunal to inquire about the interpretation or validity of the provisions of European Union law which it is including in its request for a preliminary ruling.", "paragraph_id": "para_84" }, { "text": "25       In the present case, the request for a preliminary ruling does not state the reasons which prompted the referring court to question the Court about the interpretation of the provisions of the FEU Treaty, in particular Articles 14, 93 and 106 thereof.", "paragraph_id": "para_85" }, { "text": "26       It follows that, to that extent, the first question must be declared inadmissible.", "paragraph_id": "para_86" }, { "text": "27       Having made that preliminary observation, it should be noted that, by that question, the referring court asks, in essence, whether Article 4(1)(b) and Article 6(1) of Regulation No 1370/2007, as well as points 2, 5 and 6 of the annex thereto, read in the light of recitals 27 and 34 thereof, are to be interpreted as precluding a public service contract for transport by rail covering in full the costs incurred by the public service operator, for a transitional period until the conclusion of a new long-term contract relating to the same public service obligation, under which that operator waives the taking into account of a ‘reasonable profit’, referred to in those provisions, for the purpose of calculating the amount of ‘public service compensation’ within the meaning of Article 2(g) of that regulation.", "paragraph_id": "para_87" }, { "text": "28       According to the settled case-law of the Court, when interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment of 26 March 2026, Isergartler , C‑618/24, EU:C:2026:251, paragraph 29).", "paragraph_id": "para_88" }, { "text": "29       As regards, in the first place, the wording of the first sentence of Article 4(1)(b) of Regulation No 1370/2007, that provision requires public service contracts, such as the one at issue in the main proceedings, to 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 in a way that prevents overcompensation. The second sentence of that provision specifies that, in the case of a direct award made in accordance with Article 5(2), (4), (5) and (6) of that regulation, those parameters are to 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’, a concept which is the subject of points 2, 5 and 6 of the annex to that regulation.", "paragraph_id": "para_89" }, { "text": "30       In that regard, it should be noted at the outset that, in accordance with the second sentence of Article 6(1) of Regulation No 1370/2007 and point 1 of the annex thereto, the provisions of the annex apply, in the case of public service contracts, to compensation connected with contracts which have been awarded directly, to the exclusion of contracts awarded following a competitive tendering procedure (see, to that effect, judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 48). In the present case, it is common ground that the 2015-2017 contract was awarded directly to Trenitalia, so that the provisions of that annex are applicable to the dispute in the main proceedings.", "paragraph_id": "para_90" }, { "text": "31       Like the first sentence of Article 4(1)(b) of Regulation No 1370/2007, point 2 of the annex to that regulation prohibits the granting of excessive public service compensation. To that end, the latter provision states that that compensation may not exceed an amount corresponding to the net financial effect, which is to be calculated in accordance with a scheme by which the competent authority must be guided and which includes a ‘reasonable profit’.", "paragraph_id": "para_91" }, { "text": "32       Furthermore, point 5 of that annex, which also refers to the concept of ‘reasonable profit’, lays down an obligation to maintain separate accounts where a public service operator carries out both compensated services subject to public transport service obligations and other activities. It is within this specific context that that provision states that under no circumstances may all variable costs, an appropriate contribution to the fixed costs and a reasonable profit connected with any other activity of the public service operator be charged to the public service in question. In other words, that provision, the scope of which is limited to the accounts of the operator concerned, does not refer to the reasonable profit that may be included in the public service compensation, but to the reasonable profit relating to that operator’s other activities.", "paragraph_id": "para_92" }, { "text": "33       The concept of ‘reasonable profit’ 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’. In accordance with that definition, the reasonable profit in favour of the public service operator may be calculated on the basis of a rate of return on net invested capital reduced to zero where the contract exempts that operator from any risk.", "paragraph_id": "para_93" }, { "text": "34       It follows from the wording of Article 4(1) and Article 6(1) of Regulation No 1370/2007 and of points 2, 5 and 6 of the annex to that regulation that, whilst a reasonable profit in favour of the public service operator is one of the parameters to be taken into account in determining the appropriate amount of public service compensation, such a profit must take into account the risk, or absence of risk, incurred by the public service operator by virtue of public authority intervention.", "paragraph_id": "para_94" }, { "text": "35       In the second place, that literal interpretation is borne out by the context in which the relevant provisions of Regulation No 1370/2007 are set.", "paragraph_id": "para_95" }, { "text": "36       In that regard, Article 4(1)(c) of that regulation provides that public service contracts must determine the arrangements for the allocation of costs connected with the provision of transport services, it being specified that those costs ‘may include in particular … a suitable return on capital’.", "paragraph_id": "para_96" }, { "text": "37       According to the definition set out in point 6 of the annex to Regulation No 1370/2007, reproduced in paragraph 33 of the present judgment, the concept of ‘reasonable profit’ must be understood, in the context of that regulation, as a rate of return on capital that is normal for the sector in the Member State concerned.", "paragraph_id": "para_97" }, { "text": "38       As the Commission has rightly asserted, it follows from a combined reading of those two provisions, and in particular from the use of the words ‘may include’ in Article 4(1)(c) of that regulation, that the competent authorities are not required, in all cases, to take into account a reasonable profit, within the meaning set out in the preceding paragraph, for the purpose of calculating public service compensation.", "paragraph_id": "para_98" }, { "text": "39       Furthermore, the Court has already had occasion to emphasise that the competent national authorities enjoy a margin of discretion in setting the parameters for calculating the compensation due to a public transport service operator and in determining the arrangements for the allocation of costs connected with the provision of that service, in accordance with Article 4(1) of Regulation No 1370/2007 (see, to that effect, judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 42).", "paragraph_id": "para_99" }, { "text": "40       The possibility of allocating those costs implies that the competent national authorities are not required to compensate for all costs, but may transfer to the public service operator the risks associated with changes to some of those costs, whatever their nature and, therefore, irrespective of whether or not that operator can fully control such changes, such as to energy or certain social costs, since those fall within circumstances outside of that operator’s control (judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 43).", "paragraph_id": "para_100" }, { "text": "41       The competent national authorities may thus, in the exercise of their margin of discretion, provide for a system of compensation which, by reason of the parameters for calculating such compensation and the arrangements for allocating costs defined by those authorities, does not guarantee, automatically, the public transport service operator full coverage of those costs (judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 44).", "paragraph_id": "para_101" }, { "text": "42       In the third place, as regards the objectives pursued by Regulation No 1370/2007, that regulation is intended, as is apparent from Article 1(1) thereof, to guarantee the provision of public passenger transport services 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. Point 7 of the annex to that regulation and recitals 4, 7, 27 and 34 thereof confirm the intention of the EU legislature to promote both efficiency in the provision of those services and a high level of quality.", "paragraph_id": "para_102" }, { "text": "43       It follows that any compensation scheme must aim not only to avoid overcompensation of costs but also to promote greater efficiency on the part of the operator of a public transport service. A compensation scheme that guarantees, in all circumstances, automatic coverage of all costs associated with the performance of a public service contract does not contain an incentive to greater efficiency where the operator in question is not required to limit its costs (judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 46). For the same reasons, the systematic inclusion of a reasonable profit in the calculation of the public service compensation is likely to remove, for that operator, the incentive to demonstrate greater efficiency in the provision of the transport services concerned.", "paragraph_id": "para_103" }, { "text": "44       That said, by virtue of the principle of proportionality, which is a general principle of EU law, those authorities cannot impose any conditions on transport service operators entrusted with the discharge of a public service obligation which are excessive or unreasonable, inter alia as regards the calculation of the compensation (see, to that effect, judgment of 21 December 2023, DOBELES AUTOBUSU PARKS and Others , C‑421/22, EU:C:2023:1028, paragraph 54), which would be liable to prevent the operator concerned from offering high-quality passenger transport services and, therefore, would run counter to one of the objectives pursued by Regulation No 1370/2007.", "paragraph_id": "para_104" }, { "text": "45       While it is for the national court, which has sole jurisdiction to assess the facts and interpret the national legislation, to determine whether those requirements are met in the case in point, the Court of Justice, which is called on to provide answers that are of use to the national court in the context of a reference for a preliminary ruling, may provide guidance, on the basis of the documents relating to the main proceedings and the written and oral observations which have been submitted to it, in order to enable the national court to give judgment (judgment of 22 September 2020, Cali Apartments , C‑724/18 and C‑727/18, EU:C:2020:743, paragraph 78).", "paragraph_id": "para_105" }, { "text": "46       In the present case, as the Advocate General stated, in essence, in points 40 to 47 of his Opinion, the fact that the method of calculating the public service compensation at issue in the main proceedings does not take into account a reasonable profit in favour of the operator concerned must be weighed against several factual circumstances raised by the referring court.", "paragraph_id": "para_106" }, { "text": "47       First, the fact that the method of calculating the compensation guaranteed full coverage of the costs incurred in performing the 2015-2017 contract, with the result that Trenitalia did not bear any economic or financial risk, is a circumstance capable, in principle, of enabling the Region of Liguria not to take into account a reasonable profit, within the meaning of point 6 of the annex to Regulation No 1370/2007, for the purpose of calculating the public service compensation which it would have to pay to Trenitalia.", "paragraph_id": "para_107" }, { "text": "48       Second, as the Advocate General noted in point 44 of his Opinion, the terms of a short-term contract are, as a general rule, less likely to have a negative impact on the economic viability of a public transport service, a fortiori where the contract in question is intended to ensure the continuity of the transport services concerned during the period between two long-term contracts. In the present case, as is apparent from the order for reference, the 2015-2017 contract, which was intended to ensure such continuity following the failure of the negotiations concerning the renewal of the 2009-2014 contract, remained in force until the conclusion of a new 15-year contract relating to the same public service obligation.", "paragraph_id": "para_108" }, { "text": "49       In any event, it must be pointed out that an economic operator may freely waive, in full knowledge of the facts, a reasonable profit under an individual contract. Such a waiver becomes binding on that operator, who cannot subsequently rely on the provisions of Regulation No 1370/2007 in order to amend the contract which it has individually negotiated and the terms of which it has freely accepted. In the present case, the referring court stated that Trenitalia had freely, in full knowledge of the facts, waived a reasonable profit under the 2015-2017 contract.", "paragraph_id": "para_109" }, { "text": "50       In the light of all the foregoing considerations, the answer to the first question is that Article 4(1)(b) and Article 6(1) of Regulation No 1370/2007, as well as points 2, 5 and 6 of the annex thereto, read in the light of recitals 27 and 34 thereof, must be interpreted as not precluding a public service contract for transport by rail covering in full the costs incurred by the public service operator, for a transitional period until the conclusion of a new long-term contract relating to the same public service obligation, under which that operator waives the taking into account of a ‘reasonable profit’, referred to in those provisions, for the purpose of calculating the amount of ‘public service compensation’ within the meaning of Article 2(g) of that regulation.", "paragraph_id": "para_110" }, { "text": "The second question", "paragraph_id": "para_111" }, { "text": "51       As the second question has been raised only in the event of the first question being answered in the affirmative, there is no need to answer it.", "paragraph_id": "para_112" }, { "text": "Costs", "paragraph_id": "para_113" }, { "text": "52       Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.", "paragraph_id": "para_114" }, { "text": "On those grounds, the Court (Third Chamber) hereby rules:", "paragraph_id": "para_115" }, { "text": "Article 4(1)(b) and Article 6(1) of 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, as well as points 2, 5 and 6 of the annex thereto, read in the light of recitals 27 and 34 thereof,", "paragraph_id": "para_116" }, { "text": "must be interpreted as not precluding a public service contract for transport by rail covering in full the costs incurred by the public service operator, for a transitional period until the conclusion of a new long-term contract relating to the same public service obligation, under which that operator waives the taking into account of a ‘reasonable profit’, referred to in those provisions, for the purpose of calculating the amount of ‘public service compensation’ within the meaning of Article 2(g) of that regulation.", "paragraph_id": "para_117" }, { "text": "[Signatures]", "paragraph_id": "para_118" }, { "text": "*       Language of the case: Italian.", "paragraph_id": "para_119" } ], "word_count": 5597, "cites": [ "C-809/24", "C-618/24", "C-421/22", "C-724/18", "C-727/18" ], "cited_by": [], "sha256": "229a45ed35bee509a4c3ad06798ad448832264761d64e859e0e2ddca1b1cf921", "source_url": "https://publications.europa.eu/resource/celex/62024CJ0809", "fetched_at": "2026-09-29T04:22:40.175+00:00", "canonical": "https://legal.exploreworldai.com/ai/judgments/eu/c-809-24", "risk_graph": "https://legal.exploreworldai.com/api/public/v1/risk?id=eu:c-809-24", "relations_graph": "https://legal.exploreworldai.com/api/public/v1/relations?id=eu:c-809-24", "changes": "https://legal.exploreworldai.com/api/public/v1/eu-praxis/changes", "agent": "https://legal.exploreworldai.com/api/public/v1/eu-praxis/agent?id=eu:c-809-24", "verification": { "stored_sha256": "229a45ed35bee509a4c3ad06798ad448832264761d64e859e0e2ddca1b1cf921", "recomputed_sha256": "229a45ed35bee509a4c3ad06798ad448832264761d64e859e0e2ddca1b1cf921", "intact": true, "checked_at": "2026-10-05T18:24:00.712Z" } }, "hash": "sha256:164038d2bff6eaba0835ef8a6a1a9817d2cdd3df0e7a6db60fc6bb55a829b90c", "version": "legal-2026-10-05", "expires": "2026-10-06T00:00:00.000Z", "dependency": { "index_version": "legal-2026-10-05+legal-2026-10-05+2026-10-05T17:44:48", "content_hash": "sha256:164038d2bff6eaba0835ef8a6a1a9817d2cdd3df0e7a6db60fc6bb55a829b90c", "revalidate_after": "2026-10-05T19:24:01.356Z", "max_copy_age_seconds": 3600, "policy": "revalidate-required; attribution-preferred", "changelog": "https://legal.exploreworldai.com/api/public/v1/dependency", "verify": "https://legal.exploreworldai.com/api/public/v1/verify", "stale_copy_invalid": true }, "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=eu:c-809-24", "disclaimer": "Source reference with official identifier. 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