£370-million ferry contract poses ‘existential threat’ to Pentland Ferries

Pentland Ferries has claimed a proposed £370-million contract to provide ferry services to the Northern Isles poses an “existential threat” to its market position.

A judicial review at the Court of Session in Edinburgh has heard the ferry operator’s view that the proposed multi-million pound subsidy by the Scottish Government is unlawful and if the subsidy is successful, it could force the company to cease trading.

Three firms — CalMac Ferries Ltd, Forde Reederei Seetouristik GmbH and Serco NorthLink Ferries — are currently bidding to win the eight-year year contract.

Scottish Ministers are offering to subsidise the business which wins a tendering process to provide the services.

Lawyers for Pentland Ferries, which operate a service between Gills Bay and St Margaret’s Hope, told judge Lord Boyd that the Scottish Government is acting unlawfully in its plans to attract companies.

Pentland Ferries’ advocate Mark Lindsay QC said: “This is viewed as an existential threat by the petitioner who is concerned that they will no longer be able to trade.

“The subsidy is unlawful state aid and it will disturb the market.”

Minister for the Islands Paul Wheelhouse MSP said the contract had flexibility built-in to allow the services to meet demand across important sectors for the island’s economies.

On Wednesday, Mr Lindsay told Lord Boyd that the proposed subsidy contravenes EU State Aid regulations, which dictates that individual governments can’t help companies in such a way that it provides them with an unfair advantage over rivals.

Mr Lindsay added that the Scottish Government hadn’t done enough to establish the routes being put up for tender need financial assistance.

He added: “The point of onus is on the State to demonstrate market failure. The onus is not on the petitioners to show market failure.”

The judicial review continues.