IP/07/366

Brussels, 21 March 2007

Commission approves public financing of bus transport in Malta

The European Commission today decided that payments made by Malta to finance public transport on its territory do constitute State aid but are compatible with the common market. Instead of signing public service contracts, Malta had unilaterally imposed public service obligations on the bus operators of the Public Transport Association. In exchange, it pays the companies public service compensation.

Having received a complaint from Unscheduled Bus Services, an association of bus companies operating occasional transport services, the Commission examined the compensation granted by Malta in exchange for the public service obligations it imposes on the companies belonging to the Public Transport Association. It found that, based on criteria laid down by the Court of Justice,^[1] the compensation comes under the State aid provisions of the Community competition rules.

However, as the payments comply with the European rules on aid in the form of compensation for public service obligations in the field of transport,^[2] the Commission has decided to declare them compatible with the common market.

On the other hand, the Commission is not competent to express an opinion on the public support paid to some transport companies to replace the vehicles in their fleet and install an electronic ticketing system, as this was granted before Malta joined the EU.

^[1] These criteria were set out in the ECJ judgment in the Altmark Trans case (24 July 2003). If they are fulfilled, compensation for public service obligations cannot legally be termed as State aid.

^[2] See conditions in Chapter IV of Regulation 1191/69/EC on action by Member States concerning the obligations inherent in the concept of a public service in transport by rail, road and inland waterway.