CalMac subsidies admission angers rival

Published on Saturday 23 December 2006 00:10

A RIVAL ferry firm is to make a formal complaint against CalMac after it was revealed the state-owned company has been offering massive discounts.

Western Ferries says the discounts of up to 70 per cent on the route between Gourock and Dunoon are against competition law and is complaining to the Auditor-General. Ultimately it is threatening to go to the Court of Session over the issue.

Ministers said they were unaware of the discounts and formally admonished CalMac.

Last night CalMac said it has discontinued the discounts, but Western Ferries insisted its rival was guilty of "questionable practices" with millions of pounds worth of subsidies and will proceed with a complaint.

Tory politicians threatened to take up the matter with the Office of Fair Trading and the European Union.

The controversy will add to claims that the Executive tendering of CalMac routes following concerns over European competition law is still unfair because of subsidies and other issues.

Subsidies on the Gourock-Dunoon route have long been an issue between the rival companies. Western Ferries has complained for the past three years. This week it received a letter from the Executive confirming that subsidies were paid.

Gordon Ross, managing director of Western Ferries was "appalled".

He said: "The Scottish Executive has confirmed that in correspondence to us that hauliers have been receiving discounts of over 70 per cent. Furthermore, whilst CalMac has been raising fares on an annual basis, they have at the same time been raising the discount level so that some fares have not increased for several years."

The vehicle service is supposed to be unsubsidised but Western Ferries pointed out hauliers can take advantage of huge discounts. Discounts on subsidised routes are capped at 15 per cent.

Mr Ross went on: "Western Ferries believes that these massive discounts and the period over which they have been gifted, is clear evidence of a deliberate and sustained attack on the company.

"All we want is to compete fairly, providing first-rate ferry services. These discounts prevent us from doing that and are being backed by unlimited amounts of taxpayers' money."

However the Scottish Executive said that ministers had been unaware that the firm had been offering discounted rates on the Gourock to Dunoon crossing.

A spokesman said: "Ministers ... expressed serious concern to CalMac about its lack of knowledge about its own pricing policies, particularly on such a sensitive route.

"CalMac has apologised and written to the companies concerned giving notice that these discounts are now being removed."

CalMac spokesman Hugh Dan MacLennan said the company had only provided discounts to one haulier on the Gourock-Dunoon route. The discount had been up to 60 per cent.

He said they had been doing this for four or five years, but stopped when they found out this was "problematic".

However, Western Ferries insisted the route is subsidised in other ways and said it would pursue the complaint.

David Davidson, Scottish Conservative transport spokesman, said disciplinary action must be taken against senior managers responsible.

"I will be contacting the OFT, the European Union and the Auditor-General to see if there has been a breach of competition rules. It is very clear that [this] ... shouldn't have been going on, and action needs to be taken against those who have not been playing by the rules."