Italy's beach concessions: the need for urgent reform

The Italian government is guilty of repeatedly delaying the process of assigning beach concessions by tender, continuing a protectionist policy that goes against the principles of the Bolkestein Directive.¹

The Bolkestein Directive is an EU law aiming to create a single market for services within the EU. The directive requires EU countries to ensure fair competition and transparency in order to avoid any kind of discriminatory practices that could undermine the single market principle. The aim of the directive is to make it easier for service providers to operate across the EU, creating more opportunities for service providers, more choice for consumers and more efficient service provision.

Although the Bolkestein Directive requires that Italian state-owned beaches be allocated through an international auction procedure, the current practice is to renew concessions indefinitely to existing operators. Moreover, the taxes collected by the Italian government in recent years have been low compared to the revenue of the beach resorts, which has led to calls for reform and better revenue collection.

Meanwhile, incumbents oppose the liberalisation of the sector, fearing the loss of their commercial privileges and protection. In light of this, the time has come to liberalise beach concessions in Italy, with fair competition and transparency in the allocation process. The implementation of the directive would eliminate automatic renewal of concessions and position rents, leading to greater competition and more revenue for the state.

In Italy, concessions for beach resorts are often renewed to the same operator for decades,² creating a lack of competition and hindering the entry of new operators into the market. This is the result of an unwritten pact made decades ago with the Italian government to boost tourism, but today the situation must change. In recent years, the European Commission has repeatedly warned Italy to reform the sector, on pain of opening an infringement procedure with a fine to pay.³

In addition, the small levels of fees currently collected by the Italian state compared to the revenue of bathing establishments highlights the need for appropriate redevelopment and reforms.

For example, one of the most famous luxury bathing establishments in Italy, entrepreneur Flavio Briatore's "Twiga," recorded revenues of about 4 million euros in 2020, compared with an expenditure on fees of about 17,000 euros.⁴ Overall, state revenues from concessions are around 100 million a year, compared with total industry revenues of around 15 billion, according to some estimates.⁵ Awarding beach concessions by European auction would lead to a better valuation of state assets.

Not surprisingly, incumbents oppose the liberalisation of beach concessions, eager to protect their longstanding privileges and benefit from indefinite extensions of concessions. They usually argue that liberalisation would lead to foreign companies entering the market to the detriment of Italian ones, which is similar reasoning to that used when discussing the Italian taxi industry.

This is a common concern among advocates of protectionist policies, but it is important to understand that protectionism is detrimental to consumers, in this case bathers. As a result, beach operators do not feel compelled to invest and improve because their business is protected from competition. This can harm bathers because resorts may have higher prices or lower quality of service.

Allowing foreign companies to compete with domestic ones will lead to more companies and services to choose from, and thus more value for money for consumers. ATM, the Italian company that runs public transport in Milan, also runs it in Copenhagen, having won several tenders in recent years. The management of Copenhagen's public transport did not automatically go to a Danish railway company, but to the European company that submitted an advantageous proposal in terms of quality and cost. There’s no reason Italy couldn’t do the same.

This article was written by Nicholas Della Valle. Nicholas is an Italian freelance writer and an engineering Master's student at the Polytechnic University of Milan, studying topics including renewable energy, energy planning and economics.