Ferry subsidy 'in order', says EC

CalMac says it runs vital lifeline services for island communities

Concerns that the government's funding of Scotland's lifeline ferry services breached European competition law have been rejected by an official inquiry.

Services in the Clyde, Hebridean and Northern Isles are provided mainly by state-owned Caledonian MacBrayne and Northlink.

The European Commission said this was "compatible with state-aid rules".

But it insisted on an open and accountable tender for operators to run the Gourock-Dunoon ferry route.

The commission also warned it would keep an eye on the situation to "avoid any undue distortion of competition".

Obviously the EC discovered some evidence of subsidy misuse and market distortion, so I believe it's a very much a case of 'not proven' Gordon Ross Managing director, Western Ferries

Scotland's main private ferry companies, Western Ferries and Pentland Ferries, have expressed serious concern of being squeezed out by CalMac.

But CalMac has argued that opening up individual routes to competition could result in private operators "cherry picking" the most profitable ones and pose a substantial threat to the future of "lifeline" services, which need subsidy to survive.

The operator has insisted that maintaining the current situation where the Clyde and Hebridean routes are offered as a package of 24, with the exception of Gourock-Dunoon, best served island communities and the taxpayer.

Western Ferries managing director Gordon Ross described the ruling as "positive", saying the government was now under close scrutiny to tender openly the Gourock-Dunoon route, but added: "With regards the issue of anti-competitive behaviour, the decision does not give a clean sheet with regards to CalMac's past activities.

"Obviously the EC discovered some evidence of subsidy misuse and market distortion, so I believe it's a very much a case of 'not proven'."

Services 'secure'

SNP MEP Alyn Smith, who called for the inquiry, said its findings had secured the future of vital ferry services.

"After decades of jumping through EU legal hoops this is a positive decision for Scotland's remote and island communities," he said, adding: "I hope those operators of alternative routes who have repeatedly threatened legal action will accept this decision."

The European Commission moved to investigate the issue after expressing doubts about whether subsidy levels were higher than the actual cost of providing ferry services, and whether the absence of a tendering exercise to operate Gourock-Dunoon was in line with state aid regulations.

The commission ruled the compensation paid to the operators in the past "did not exceed the costs of providing the public service entrusted on them" and added it "did not find sufficient evidence that these operators had engaged in any type of anti-competitive behaviour that might have unduly distorted competition".