A recent European Commission decisionabout alleged State aid in the form of grants from local authorities to community transport organisations (CTOs) is useful reading for those seeking to rely on the exemption for funding for services of general economic interest. Edward Reynolds, Associate at Bevan Brittan LLP, summarises the case and what may be learnt from it.
A recent European Commission decision (see here) about alleged State aid in the form of grants from local authorities to community transport organisations (CTOs) is useful reading for those seeking to rely on the exemption for funding for services of general economic interest. Edward Reynolds summarises the case and what may be learnt from it.
There has been tension for a number of years between private and voluntary sector providers of transport services. This has stemmed mainly from a perception that voluntary sector providers have benefitted from grants not available to the private sector, and that these have allowed CTOs to submit more competitive bids for, and so win more, local authority contracts than would otherwise be the case.
In this case, the complainant was a minibus and private hire firm, which in 2012 alleged unlawful aid had been provided by Nottinghamshire and Derbyshire County Councils to a CTO that tendered successfully for home-to-school transport services. The main complaint was that the latter had been able to offer lower prices as a result of cross-subsidies from local authority grant funding for other services.
The Commission divided the alleged aid into two categories. Under the first, grants by Nottinghamshire County Council were found not be constitute aid on the basis that they fell below the €500,000 threshold contained in Regulation 360/2012 of 25 April 2012 for de minimis aid for services of general economic interest. It is not clear from the decision whether this was by luck or design on the part of the authority.
Under the second category, grants by Derbyshire County Council were initially found to be aid. However, the Commission ultimately concluded that the aid was permissible aid under Article 93 (a specific transport provision), notwithstanding the fact that it fell outside Regulation 1370 / 2007 of 23 October 2007 on public passenger transport services.
It took well over three years for the complaint to be decided, which means significant time and expense is likely to have been incurred by all the parties involved. The decision confirms, as you might expect, that the Commission does not look favourably on those who give aid in breach of the standstill obligation (see its Conclusion on page 14). The following points can be taken away:
If you would like to discuss this or any other State aid query, please contact a member of our State Aid team.
* Case C-280/00, Altmark Trans GmbH und Regierungspräsidium
Magdeburg v Nahverkehrsgesellschaft Altmark
GmbH,  ECR I-7747.
** State aid SA.34155 (2013/N) (ex 2011/PN) – Germany,Regional law on the compensation of school bus transport in the LandRhineland-Palatinate