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| Ferry subsidy 'in order', says EC | Ferry subsidy 'in order', says EC |
| (20 minutes later) | |
| Concerns that the government's funding of Scotland's lifeline ferry services breached European competition law have been rejected by an official inquiry. | 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. | 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". | 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". | The commission also warned it would keep an eye on the situation to "avoid any undue distortion of competition". |
| READ THE INQUIRY REPORT Subsidies to CalMac and NorthLink for maritime transport services in Scotland [28KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here | READ THE INQUIRY REPORT Subsidies to CalMac and NorthLink for maritime transport services in Scotland [28KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here |
| Scotland's main private ferry companies, Western Ferries and Pentland Ferries, have expressed serious concern of being squeezed out by CalMac. | 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. | 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. | 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. |
| 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". |