Bus Éireann could face huge bill over school bus scheme

European Union investigates claims of illegal State aid

Bus Éireann faces the possibility of being forced to repay hundreds of millions of euro to the

exchequer if a series of EU investigations find that it has been receiving illegal State aid, according to a leading competition lawyer.

The EU is carrying out three separate investigations into claims that giving the company the exclusive contract to operate the Department of Education’s school transport scheme is a form of illegal State aid.

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.

Both it and the department contend the agreement is neither a commercial contract nor a form of State aid, and in 2012 successfully defended an action, brought by US-backed Student Transport Scheme (STS) claiming that it should be put out to tender. That case is now being appealed.

At the weekend, Prof Christopher Bovis, who works for the University of Hull in the UK and Berkeley in the US, told The Irish Times that there appeared to be "significant doubts in the mind of the EU Commission that the calculation of compensation for the provision of school transport and the provision of the relevant infrastructure are clear of any State aid".

Prof Bovis warned that if it were found that the arrangement was in breach of state aid rules, the commission could demand the company repay all the aid it has received from the Government.

“Recovery of aid extends to the period where it can be proved that the illegal aid commenced and impacted negatively on the functioning of competition in the domestic market or in the EU market,” he said. The Government could also face fines.

The EU began the first of its investigations into the relationship between the company and government in 2007, following a wide-ranging complaint from the Coach Tourism and Transport Council (CTTC), which represents independent bus operators.

It has since received two more complaints from STS, which went to the High Court in 2012 seeking to have the schools service put out to public tender.

EU law bans member states from providing aid to businesses and commercial undertakings if it distorts or damages normal competition in the marketplace.

The rules apply to both government- and private sector-owned enterprises.

Attempts to contact Bus Éireann for a comment were not successful.