European Commission closes investigation into public financing of ferry shipping services in Scotland

The European Commission has today decided that public financing for the operation of ferry shipping services in Scotland is compatible with State aid rules. However, this decision is subject to the condition that the national authorities launch a transparent and non-discriminatory public tender for the operation of the Gourock-Dunoon route in the western islands. The Commission will continue to closely monitor the public financing of the Scottish ferry transport system in order to avoid any undue distortion of competition.
On 16 April 2008, the Commission started1 an in-depth review of the public financing of regular ferry shipping services between the Scottish mainland and the islands off the west and north coasts of Scotland. With the exception of the Gourock-Dunoon route in the western islands, these services are currently provided under public service contracts, which followed open public tender procedures. The operators currently providing these services are: CalMac Ferries Ltd. (western islands, with the exception of Gourock-Dunoon); Cowal Ferries Ltd. (Gourock-Dunoon route); and NorthLink Ferries Ltd. (northern islands).
In its decision of April 2008, the Commission expressed doubts about whether the public compensation granted to the operators of the different routes was proportional to its declared objective. In particular, the Commission wanted to ascertain whether the compensation paid to the operators did not exceed the costs of providing the public service entrusted on them and whether these operators had engaged in any type of anti-competitive behaviour. In the absence of a public tender for the operation of the Gourock-Dunoon route, the Commission also doubted whether the public compensation for the operation of this route was compatible with State aid rules. In today's decision, the Commission confirmed that the public service obligations for the western and northern islands were legitimately defined and entrusted on the operators, with the exception of the Gourock-Dunoon route. In the case of this route, the national authorities have committed to take the necessary steps to launch a public tender for its operation before the end of 2009. The subsequent public service contract should enter into force before end June 2011.