Italy's beaches: open for business but closed to competition

Jun 18 2014, 12:26 IST
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SummaryItaly's beaches are a family affair - and that's a problem for the euro zone's third-largest economy.

Italy's beaches are a family affair - and that's a problem for the euro zone's third-largest economy.

Most of the beaches along Italy's 7,500 kilometres of sun-kissed coast have for decades been managed by small businesses operating concessions that are passed on from generation to generation.

Though licences are state-owned, they rarely come up for public bids, allowing Italy's balneari - or beach managers - to keep a tight grip on amenities ranging from single-shack parasol rentals to up-market bars and restaurants.

The balneari say the all-in-the-family system keeps costs low for beachgoers. But local and foreign entrepreneurs say they're being shut out.

The battle of the beaches offers a window onto one of the biggest barriers to Italy's economic development: the lack of competition across sectors. Guilds, associations and other lobbies that are politically powerful have for decades prevented new blood from entering the economy and are one of the reasons it has barely grown over the past two decades.

"Beach concessions should be given to people who will manage them effectively, who will work hard and create new jobs," says Flavio Briatore, a businessman and former Italian Formula One investor.

Briatore has been running the "Twiga" beach club in the trendy resort of Forte dei Marmi for the past 15 years. But he has never been able to bid for the licence directly. Instead he says he sublets the beach from a licence holder for 250,000 euros a year. That compares to the 3,570 euros on average that each direct licensee pays the government, according to official figures.

"The government shouldn't give concessions to those who speculate by subletting," says Briatore.

Many governments have tried to pry open parts of Italy's services sector including taxis, pharmacies and legal practices. But the results have been mixed.

Two years ago the government of Mario Monti attempted deregulation, but many of the measures were diluted by parties protecting vested interests. Italy's new prime minister, Matteo Renzi, nicknamed Demolition Man, has staked his reputation on cleaning up Italian business and rewarding merit.

The European Union is also trying to put its foot down. In 2006, the EU ordered its member states to open up various sectors to competition. It told Italy to put its 28,000 beach licences up for public tender.

Yet Italy has been stalling. First it got the EU to agree to extension of the existing licensing system to 2015. Then in 2012, the government yet again bowed to pressure from

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