THE European Commission (EC) has approved under EU state aid rules an Italian government initiative to provide up to €374m to compensate freight operators for revenue lost due to lockdown measures imposed during the Covid-19 pandemic.

The scheme applies to the period from March 12 to May 31 2020 when the Italian government put in place a range of measures intended to limit the spread of the Covid-19 virus, including a ban on production and trade activities, movement restrictions and more stringent measures to protect the health and safety of employees.

These measures had in particular a direct and negative impact on the demand for rail freight services, as industrial production fell and the volume of freight moved by rail declined.

Freight operators experienced a significant drop in traffic and revenue when compared with the same period in 2019, while additional expenditure on enhanced workplace hygiene measures added to their costs.

Under the scheme that the EC has now approved, eligible companies will be entitled to receive compensation in the form of direct grants to cover losses suffered between March 12 and May 31 2020.

The scheme will be open to companies active in the rail freight and logistics chain, including freight operators, wagon leasing companies, and freight forwarders and intermodal operators that organise transport and logistics on behalf of shippers.

In reaching its decision, the EC assessed the compensation scheme under Article 107(2)(b) of the Treaty on the Functioning of the European Union, which enables it to approve state aid measures implemented by member states to compensate specific companies or sectors for damages directly caused by exceptional occurrences.

The EC considers that the Covid-19 pandemic qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional measures taken by member states to compensate for damages linked to the outbreak are justified.

The commission found that the Italian aid scheme will provide compensation for damages that are directly linked to the pandemic and is also proportionate, as the expected compensation does not exceed what is necessary to make good the damages suffered.

“This €374m measure will enable Italy to compensate rail freight transport companies for the damage suffered as a result of the Coronavirus pandemic and the related restrictions,” says Ms Margrethe Vestager, EC executive vice-president in charge of competition policy.

“We continue working closely with all member states to ensure that national measures to support all sectors that were hit by the crisis, including the rail sector, can be implemented as quickly as possible, in line with EU rules.”