Public Financing of Urban Transport: The Application of EC State Aid Rules

Abstract

This article provides an overview of the relevant legislation concerning the granting of State aid to transport and considers how Articles 87 and 73 of the EC Treaty apply. It outlines in detail the main provisions of Regulations Nos 1191/69 and 1107/70 which lay down the main rules on State aid for urban transport and analyses how they have been interpreted and applied in the Commission’s decisions and Courts’ jurisprudence. Consideration is given to the concept of services of general economic interest and how public service obligations may be compensated by the State. The link between transport services and infrastructure and how the acquisition or replacement of rolling stock is treated under various State aid rules is also examined, as well as the relationship between structural funds and State aid and the concept of “internal operator”, which plays a predominant role in the context of RegulationNo. 1370/2007. The article outlines the main provisions of the new regulation and concludes by introducing the steps to be followed by Member States that wish to provide public support via the discharge of public service obligations to transport operators.