Local bus operators takes government to court over free public transport plans

Local bus operators are taking the government to court over its plans to make all public transport free of charge, arguing that this measure would distort the market and increase the already-substantial subsidies being doled out to Autobuses de León, the Spanish public transport company operating in Malta under the name Malta Public Transport.

Last week, Unscheduled Bus Services Ltd (UBS), a group of local bus service providers which includes Paramount, Zarb Garage, Koptaco, Supreme, Garden of Eden and Robsons, as well as a number of individual operators, filed a judicial letter against Transport Malta, Malta Public Transport (MPT), the State Advocate, the Malta Competition and Consumer Affairs Authority (MCCAA), the Ministry for Finance, the Department of Contracts as well as the European Commission Representation in Malta.

In 2015, UBS had lost out to Autobuses de León in the tendering process, resulting in a 15-year contract which is expected to cost the government more than €430 million over its duration. 

A recent report by the National Audit Office (NAO) found that despite passenger numbers declining from almost 57 million in 2019 to 35 million in 2021, the compensation paid out to Autobuses de León increased from €30.5 million in 2019 to €37.3 million in 2020 and €34 million in 2021.

In a judicial letter filed before the First Hall of the Civil Court, UBS’ lawyers, Mark Attard Montalto and Douglas Aquilina, made reference to the 2022 Budget Speech, in which it was announced that from October onwards, all public transport in the Maltese islands will be free of charge. 

This constituted a substantial change to the conditions laid out in the contract that Transport Malta had signed with Autobuses de León in 2015, they argued, because it was effectively increasing that company’s subsidy for scheduled bus services further. The lawyers argued that, in terms of the applicable EU Directives, a new tender had to be issued.

In addition to that, such a subsidy would cause “heavy and unfair” distortions to the transport market because Autobuses de León (and every other entity benefitting from an MPT tender) would enjoy a substantial economic and competitive advantage, “which effectively translates into State aid.”

This, argued the lawyers, would create a situation of excessive and unnecessary Government interference, as defined in the Treaty of the Functioning of the European Union, in the market for bus services.

UBS urged the defendants to immediately issue a new tender for the provision of public transport, reflecting the new budget measure, warning that it would be holding Transport Malta responsible for damages.

A copy of the judicial letter was also sent to Malta’s European Commission office, in order for it to monitor this measure together with the Malta Competition and Consumer Affairs Authority.