Malta wins Gozo Channel monopoly case in European Court

Malta has been cleared by the European Court of any wrongdoing following the government's decision to award a direct contract to Gozo Channel a few days before it joined the EU in 2004.

The ruling was given this morning by a five-member team of judges, presided by Judge J.N. Cunha Rodrigues.

The Advocate General assigned to this case had already previously advised the court that Malta was not bound by EU rules when the contract was signed.

Advocate General Eleanor Sharpston had taken Malta's side, stating that "the court should dismiss the application and, as requested by Malta, order the (European) Commission to pay costs".

She added that: "Malta's intention to conclude that contract (Gozo Channel), for a period extending some three years or more beyond the date of Malta's accession to the Union had been made clear during the accession negotiations... the Commission did not at the time object to that intention."

The issue goes back to a few days before Malta's accession to the EU (May 1, 2004) when then minister Censu Galea, the minister responsible for Gozo Channel, signed a direct contract with the state-owned company to continue providing its ferry services on the Malta-Gozo crossing without any competition.

The contract also stipulated that Gozo Channel be given millions of euros each year in subsidies in the form of a Public Service Obligation.

The European Commission instituted infringement procedures and accused the government of breaking EU rules when it failed to issue an international call for tenders.

However, the government argued it was not bound by EU regulations at the time since Malta did not yet form part of the EU on April 16, 2004 - the date the contract was signed.

The ECJ said that the other arguments that the Commission brought up during the case could not be considered as they had not been included in the initial application by the Commission. It ordered the Commission to pay the costs related to this case.

During a hearing held last May before five judges in Luxembourg, Malta claimed its actions were in "good faith" and in line with what had already been discussed and agreed with the Commission before EU membership.

Since then, the contested Gozo Channel tender has come to an end and the government is to issue a call for tenders.