Commission drags its feet over state aid

State aid for public transport provision is still a moot point under EU law.

The European Commission has long been dragging its feet over its update of sector-specific EU state aid rules from the 1970s.

Part of the reason for the Commission’s reluctance to tackle the matter is a fear of "jeopardising the whole structure of state aid", says one Brussels-based lawyer. The debate over funding of public transport, like a host of other sectors such as healthcare, is highly sensitive.

A 2003 ruling at the European Court of Justice has gone some way towards clarifying matters. The Altmark case involved a bus operator that had received compensation from a German local authority for operating services of limited profitability in sparsely populated areas. A rival operator complained that the compensation amounted to an unfair subsidy.

The court ruled that payments made by governments to companies fulfilling public service obligations should not be classed as state aid as long as the services provided had been clearly defined. The service provider should, the court said, be allowed to make a ‘reasonable profit’.

A number of grey areas, such as the definition of what should constitute "reasonable profit" still remain, however. Public transport providers and local authorities are still awaiting further clarification from the European Commission.

Any overhaul of current rules making it more difficult to grant state aid could open the door to thousands of complaints from disgruntled operators that feel they have been disadvantaged in the past by help given to competitors.

State aid for public transport provision is still a moot point under EU law.