EU ruling sparks new row over ferry route tendering
The Herald, David Ross Highland Correspondent January 31 2007
A new statement from the European Commission rekindled the row over whether the tendering of Caledonian MacBrayne's ferry routes has been necessary.
It comes in the wake of V Ships withdrawing from the tendering on Monday, leaving CalMac as the only company left bidding to operate its own routes.
Two years ago, alternative proposals to the highly complex and costly tendering process were rejected by ministers convinced tendering was the only way to justify, under European regulations, the near £30m subsidy CalMac receives. New information suggests these proposals should not have been rejected.
The new information concerns a 2003 ruling by the European Court of Justice in a case about German bus company Altmark Trans.
The European Court ruled government payments for essential services should not be considered state aid as long as they were clearly defined and covered the costs of providing the service. It even removed the onus on governments to notify European Commission regulators of payments.
Three years ago, CalMac received senior legal opinion that the Altmark ruling allowed the Scottish Executive to stop tendering without fear of legal consequence. Executive legal advisers disagreed.
However, in response to a recent inquiry from Alyn Smith, the SNP MEP, Jacques Barrot, the European Transport Commissioner said of public support for ferry services: "If this subsidy complies with the four criteria laid down by the court of justice in its judgment in the case of Altmark Trans - then this subsidy would not constitute state aid."
Professor Neil Kay, emeritus professor of business economics at Strathclyde University, said yesterday: "The commission's response quite clearly indicates the executive was completely wrong to dismiss the Altmark criteria."
A spokesman for the executive said: "The Transport Minister met the European Transport Commissioner in July 2005 and asked whether there were any options to tendering. He said there was not."