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Commission invites Ireland to update compensation arrangements for school bus scheme; closes in-depth investigation into Bus Éireann and Dublin Bus.

Following an in-depth investigation the European Commission has concluded that arrangements to compensate state-owned Bus Éireann and Dublin Bus, the two principal bus companies in Ireland, for the operation of bus services across Ireland and for the transport of schoolchildren, were put in place before the liberalisation of the EU bus sector when EU state aid rules were not yet applicable to this industry sector (i.e. the measures constitute “existing aid”).

Whilst the compensation arrangements for the bus services that were the subject of this investigation ceased to be operational in December 2009, the arrangements for the transportation of schoolchildren are still in place and the Commission will now initiate a dialogue with Ireland to update those arrangements and bring them into line with EU state aid rules. The Commission also found that small grants made for training were compatible with the Single Market.

Following a complaint by a representative body for private bus companies in Ireland, the Coach Tourism and Transport Council, against the State-owned Bus Éireann and Dublin Bus, the Commission in July 2007 opened an in-depth investigation regarding a number of measures (see IP/07/1116):

• compensation to both companies for bus services operated until December 2009 under a ‘public service obligation’ in the form of annual operating payments and various grants for the purchase of new buses and the upgrading of infrastructure, such as bus stations and garages;
• compensation to Bus Éireann for operating the School Transport Scheme, under which rural schoolchildren travel daily to and from school; and grants made between 2001 and 2003 to both companies for disability awareness training for their drivers.

State aid measures which were already in place before EU state aid rules became applicable (so-called “existing aid”) are subject to a specific procedure between the Member State and the Commission. When the Commission finds existing aid to be in breach of EU state aid rules, it does not ask for the Member State to recover the aid granted but rather asks it to put an end to the measure.

The Commission concluded that the measures described under i) constituted existing aid since the legal basis upon which they were paid (various Irish Transport Acts from the 1980s and earlier) pre-dated the opening of the EU bus sector to competition in 1995.

With regard to the School Transport Scheme, the Commission also considered this was existing aid since it is based on a 1975 agreement. In its current form the scheme is not compatible with EU rules. Under EU rules, Member States must bring existing measures in line with EU state aid rules. The dialogue that the Commission will now initiate under the so-called “appropriate measures” procedure will give Ireland and the Commission a chance to explore options for reforming that scheme to bring it in line with the Single Market.

The disability awareness training grants were found to be compatible with EU state aid rules under the former general block exemption rules (see IP/08/1110 and MEMO/08/482).

Background

The two state-owned Irish bus companies Bus Éireann and Dublin Bus benefitted from aid measures that were put in place before the EU bus sector was liberalised. The measures are therefore considered to be existing aid.

State aid measures are deemed to be existing aid where they refer to i) aid measures, which were already in place in the legislation of a Member State before its accession to the EU, or ii) it can be established that at the time they were put into effect, they did not constitute aid, but subsequently became an aid due to the evolution of the internal market, without having been altered by the Member State in a way that they amount to new aid.

In this case the measures constitute existing aid because they were put in place before the opening of the relevant industry sector, the EU bus sector, to competition. Since the Altmark judgment, (see Case C 280/00, Altmark Trans GmbH and Regierungspräsidium Magdeburg [2003] ECR I-7747), the Commission has accepted in its subsequent decisional practice that since 1995 the market for public transport services has been de facto opened to competition in parts of the internal market.

The non-confidential version of the decision will be published in the Official Journal of the EU and made available under the case number SA.20580 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

Articles on Irish sites

http://www.irishtimes.com/business/sectors/transport-and-tourism/school-transportscheme-not-compatible-with-eu-rules-1.1964631

http://www.independent.ie/irish-news/politics/payments-to-schooltravel-firms-are-notillegal-state-aid-says-eu-30668340.html

http://www.breakingnews.ie/ireland/40-year-school-bus-scheme-not-compatible-with-eurules-645480.html

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