State aids and Public service obligations in the European Competition Law. The application of the PSO on islands.

This paper examines the complex issues regarding the relationship between the EU transport policy and its competition policy. In this context the public service obligations (PSO) – which in EU law are subject to detailed regulation, currently contained almost exclusively in EC Regulation n. 1008/2008 – meet the need to strike a balance between a general liberalization of air transport and a policy capable of ensuring compatibility with European aid Treaties, which are drawn up to guarantee the conduct of a public service. The PSO, in fact, involve a certain number of exceptions to the principle of free competition for disadvantaged or peripheral areas in order to avoid their progressive marginalization. Starting from a reconstruction of the principles which inspired the European transport policy, this paper focuses on the fundamental distinction between State aids (illegal) and the simple compensation of public service obligations (compatible with European regulations), by describing the legislation in force, the doctrine and the case law of the European Court of Justice. Finally, the article analyzes the issue of the application of the PSO on islands on the basis of the principles – although they are not always consistently applied – provided by the Treaties in order to ensure for these regions the territorial continuity they richly deserve.