Moves at EU level to seriously curb State subventions to bus companies like Dublin Bus have significantly receded following a landmark ruling from the European Court of Justice.
The ruling, involving German bus company Altmark Trans, found that public subsidies to bus companies do not necessarily constitute "state aid".
The court's ruling says that if four conditions are met by bus companies their subvention is not a form of state aid. The four conditions are:
The bus company must have public service obligations to discharge and these must be clearly defined.
The subvention must be worked out in advance in an objective and transparent manner.
The subvention cannot be more than the cost of providing the service. However, allowance is made for a "reasonable profit".
In a case where no tender process is used to allocate the annual grant, the subvention must be worked out based on what it would cost a private bus company to provide the service.
The ruling is being studied by the Department of Transport and Dublin Bus. It means Irish private bus companies may find it hard to successfully challenge the current level of subvention awarded to Dublin Bus.
The case in Germany centred on a company called Altmark Trans which provides bus services in the Sendal region of Germany.
In the mid-1990s, a private bus company brought proceedings before the German courts arguing that Altmark Trans could not survive without public subsidies and consequently its licence was unlawful.
The European Court of Justice ruling means once bus companies show they are meeting their public service obligations their subventions cannot be curbed.
The European Commission has been pushing for a new regulation on the issue of public transport and State subsidies. Several countries have proposed that subventions should be the subject of public tender. However, this has been fiercely resisted by France and Germany. Because of several amendments in recent years, the EU Commission has made little progress getting consensus on a regulation. The case for a new regulation is now likely to be less urgent based on the ruling.
The key issue in the Altmark case was whether subventions would give certain companies a real financial advantage over competitors. The court has ruled that once the four conditions are met, bus companies getting subsidies are simply fulfilling their public service obligations.
The Minister for Transport Mr Brennan is still planning to put 25 per cent of Dublin Bus routes out to tender next year and the latest ruling does not prevent this.
However, Mr Brennan has said for some time that initiatives at EU level make de-regulation inevitable, but the Altmark ruling opens up debate on that issue.
The ruling also means the chances of a private company taking a successful case against subsidies for Dublin Bus more unlikely.
