The European Commission decided on the 16 April 2008, to open a formal investigation procedure to look into complaints about subsidies paid by the Scottish Executive to the Scottish ferry companies NorthLink and CalMac.

Following representations by third parties alleging that State subsidies to NorthLink and CalMac breached EU rules on State aid, the Commission has carried out a preliminary investigation. The decision on April 16th 2008, formally opened the investigation procedure. The main issue to be addressed is whether the financing of ferry services by the public authorities has led to over-compensation, which could have distorted competition in related commercial activities.

The decision does not question the need for a regular and affordable lifeline ferry service for local communities, nor does it threaten the continued provision of such essential services in the future. However, in line with EU Treaty rules, the mechanisms put in place to finance these services must remain proportionate to such public interest objectives.

The decision to open the formal procedure does not prejudge the final view the Commission will take once its investigation has been completed. It is addressed to the UK, which is given two months to file a reply. It will be published soon in the EU Official Journal for comments by interested parties.

Who are NorthLink Ferries?

NorthLink Ferries limited is the new company that has taken on the contract to operate the Northern Isles lifeline ferry services.  The new company Northlink Ferries Limited, is a wholly owned subsidiary of David MacBrayne Ltd, whose sole shareholder is Scottish Ministers.  David MacBrayne Limited was a dormant company, wholly owned by Scottish Ministers, which has been activated to become the parent company of the Northern Isles contract. David MacBrayne Limited now owns Northlink Ferries Limited and remains in the ownership of Scottish Ministers, as does Caledonian MacBrayne Limited which is a separate Company.

Who are CalMac?

CalMac sail to twenty-four destinations on Scotland's West Coast. From Arran in the south to Lewis in the north, our network covers some of the most beautiful and dramatic places in Scotland.