Gozo Channel Company's monopoly will soon come to an end, with the government set to liberalise the transport of passengers and goods between Malta and Gozo.

Following pressure from the European Commission, the government has decided to issue an international call for tender by the end of this year for the provision of transport services between the two islands, The Sunday Times has learnt.

The government is responding to a decision taken by the European Commission earlier this month to take Malta to the European Court of Justice over the issue.

The Commission is arguing that the current monopoly enjoyed by Gozo Channel breaches EU rules and that the service, subsidised to the tune of more than €3.4 million annually, should be allocated on the basis of a time-limited contract open to all interested parties in the EU.

Sources yesterday confirmed that the government had already informed Brussels that it would issue an international public call by the end of this year to rectify the situation. The offer will be for a five-year period contract ending in 2013.

The sources stressed that the government feels there is only place for one ferry service between the two islands and thus the Gozo-Malta crossing will still be operated by one company and will therefore not be totally liberalised. However, through this tender Gozo Channel will now have to compete in an open market in order to keep providing its services.

The issue dates to 2006 when the Commission stated that Malta had not justified the requirements to enable a government to conclude an exclusive public service contract with a private operator - Gozo Channel in this case.

Moreover, according to the Commission, the contract was signed without a prior tender procedure offering all interested operators equal access to the market.

"Under the regulation applying the principle of freedom to provide services to maritime transport within member states, the latter must allow the operators concerned to operate freely in this type of market. Exceptions to this principle are only granted in special circumstances where market forces do not provide a satisfactory level of service," the Commission had said.

The disputed direct contract between the government and Gozo Channel was signed in April 21, 2004, just a few days before Malta's accession to the EU by the then minister responsible for Gozo Channel, Austin Gatt.

He had announced that his ministry had also drawn up a public service obligation contract with Gozo Channel, through which the government would finance subsidised tickets to the tune of €3.4 million per year.