The ruling handed down in Luxembourg by the Ninth Chamber of the General Court of the European Union not only rewrote the rules of the game in the La Isleta strait, but also exposed the fault lines in the EU’s regulatory diplomacy. Case T-108/16, resolved after years of friction before the continent’s courts, contains the story of a business rivalry that shaped the connectivity of the Canary Islands for decades. It has been a decade since the EU’s strangest ruling with an impact on the Canary Islands.
A two-decade monopoly on the Agaete crossing
For almost two decades, the route between Puerto de Las Nieves in Agaete and Tenerife’s capital operated under a de facto monopoly. The shipping company Fred Olsen, controlled by the Norwegian Bonheur group — the Olsen dynasty’s investment vehicle — operated the strategic corridor exclusively from late 1994 onward. The Gran Canaria port, a former fishing dock adapted with public funds for commercial traffic, became the stronghold of the Nordic company’s yellow fast ferries and berths. Competitors that sought to operate at the same facility repeatedly encountered opposition from the Directorate-General for Canary Islands Ports, which cited capacity and maneuvering-safety concerns.
This dominance was challenged by Naviera Armas. The family-owned company founded by Antonio Armas Curbelo — now part of the Baleària group following its acquisition — waged a lengthy legal battle by filing a formal complaint with the European Commission in April 2013. Armas based its complaint on three pillars: the granting of exclusive rights to Fred Olsen without a prior public tender; the partial exemption from port charges, particularly those relating to berthing and storage; and public financing for infrastructure used exclusively by a single operator.
The stalled tenders and Brussels’ initial backing
The case, registered under reference SA.36628, plunged Brussels into an extensive preliminary assessment lasting more than two years and eight months. During that period, the Canary Islands regional authorities sought to resolve the deadlock by launching, in October 2014, a tender divided into two lots to allocate berthing time slots, after carrying out expansion works on the Agaete breakwater. Although the procurement committee awarded one lot to Fred Olsen and the other to Naviera Armas, the Norwegian-founded shipping company challenged the tender before the Spanish courts, obtaining interim suspension measures that halted the allocation of the time slots.
Despite the judicial impasse in Spain, the European Commission issued a no-objection decision in December 2015, declaring that the measures at issue did not constitute state aid. Brussels reasoned that the infrastructure had not been designed specifically for Fred Olsen, that the charges applied were identical to those at other ports in the archipelago, and that the tender promoted by the regional government demonstrated its intention to ensure non-discriminatory access, describing the judicial suspension as a purely temporary situation.
Naviera Armas responded by taking the matter to the General Court of the European Union. Represented by lawyers José Luis Buendía Sierra and Ángel Givaja Sanz, the applicant argued that the complexity of the case, the excessive length of the preliminary examination and the contradictions in the investigation required the opening of a formal investigation procedure under Article 108(2) of the Treaty on the Functioning of the European Union.
The tax battle over the T-9 charge and the Morro Jable precedent
On the tax and tariff front, the legal battle focused on the T-9 charge for storage services and the occupation of premises. The European Commission’s defense, backed by Fred Olsen itself, maintained that the Scandinavian shipping company had paid in full the assessments imposed by the regional government since 2005 and that there had been no preferential tax treatment. To support the soundness of the technical approach, the EU executive emphasized that Naviera Armas itself had operated at Morro Jable port for more than 15 years under the same assessment framework. It had been charged T-9 only for buildings and privately occupied areas such as offices or warehouses, without extending the taxable base to open yards and berthing ramps. Including those areas in T-9, the Commission and the intervener argued, would have created double taxation, since the docks and cargo-handling areas were already subject to T-2, T-3 and T-4 charges.
A Solomon-like verdict in Luxembourg and a blow to the Commission
The ruling ultimately handed down by the Ninth Chamber, chaired by Judge Stéphane Gervasoni, with R. da Silva Passos as rapporteur, partly dismantled the European Commission’s position but produced a Solomon-like outcome. The EU court sided with Brussels regarding the T-9 tax regime, concluding that Armas had failed to provide evidence that the tax calculation gave its rival a selective or discriminatory advantage over the other ports managed by the regional government.
However, the court upheld Armas’s appeal decisively with regard to the exclusive use of the infrastructure. The ruling found that the EU executive had conducted an insufficient analysis by failing to assess whether the judicial suspension of the tender in Spain indefinitely perpetuated Fred Olsen’s competitive advantage through the use of public funds and assets. Consequently, the ruling of March 15, 2018 partially annulled the Commission’s decision, requiring Brussels to reopen the case and subject the operating conditions at Puerto de Las Nieves to a formal, in-depth review. It also ordered the Commission to pay three-quarters of Armas’s legal costs.
The new map of maritime transport in the Canary Islands
The legal dispute laid bare the economic value of the Agaete crossing, which reduced the journey between the two capital islands to less than 80 minutes. For Bonheur’s fleet, the dock represented an uncontested operational stronghold for more than 20 years; for Naviera Armas, it symbolized denied access to publicly owned infrastructure. Baleària’s subsequent entry into Armas’s shareholding reshaped Spain’s maritime transport map, but the doctrine established in Case T-108/16 remains a key precedent on the limits of port concessions and the oversight of public aid for island services in the European Union.
The article “10 Years Since the Landmark Ruling That Hemmed In Bonheur’s Monopoly at Agaete Port — and Which Baleària Is Revisiting” was first published on canarymaritime.com.
