School transport scheme ‘not compatible’ with EU rules

Arrangements between Bus Éireann, Dublin Bus and the Department of Education relating to school transport services breach EU rules but do not represent illegal State aid, the European Commission has said.

Following a lengthy investigation, the Commission said the arrangements under which the companies operate the services were put in place “before the liberalisation of the EU bus sector when EU state aid rules were not yet applicable” in 1995.

The Commisison classifies the arrangement as “existing aid” as a result of the timing, it said.

“In its current form the scheme is not compatible with EU rules,” the commission said in a statement. “Under EU rules, Member States must bring existing measures in line with EU state aid rules. The dialogue that the Commission will now initiate under the so-called ‘appropriate measures’ procedure will give Ireland and the Commission a chance to explore options for reforming that scheme to bring it in line with the Single Market.”

Bus Éireann has run this service for the department for more than 40 years, and the arrangement is currently worth around €160 million a year to the State-owned transport company.

It could have faced the possibility of being forced to repay hundreds of millions of euro to the exchequer if the investigations find that it has been receiving illegal State aid.

The investigation into the matter began in 2007 following a complaint from a body representing private bus operators, the Coach Tourism and Transport Council.

The commission said the relationship it was investigating between the department and the firms “ceased to be operational” in December 2009 but arrangements for transporting schoolchildren were still in place.

The commission said a separate investigation into grants given to both companies between 2001 and 2003 for disability awareness training for their drivers were also compatible with the Single Market.