In the annals of Spanish economic regulation, the compensation system for freight transport in the Canary Islands is consolidating as a case study on institutional resistance to change. An analysis of reports from the National Commission on Markets and Competition (CNMC) issued between 2015 and 2025 reveals an unchanging bureaucratic choreography: the regulator points out severe inefficiencies, and the Ministry of Transport responds with administrative silence or purely cosmetic changes.
The core of the discord lies in the so-called ‘standard costs’. These figures determine how much public money—covering up to 100% of the transport of agricultural and industrial products—companies receive to compensate for insularity. However, the CNMC has been denouncing for a decade that the Ministry calculates these aids based on what the operators claim they spend, rather than on what a ‘efficiently managed company’ would spend. For a Financial Times analyst, this is equivalent to giving a blank check to inefficiency: if a shipping company is slow or poorly organized, the State simply subsidizes its higher costs, eliminating any incentive to improve competitiveness.
Another point of ongoing friction is Ineco’s role. The CNMC has insisted year after year that the study to determine the standard costs should be subjected to a public and transparent tender. Instead, the Ministry systematically resorts to the ‘management assignment’ to this public company. This practice, which the regulator has requested to review since 2015, creates a closed decision-making circuit that prevents independent experts from auditing whether the figures that the Government handles correspond to the reality of an increasingly volatile global logistics market.
The ‘bunker methodology’ applied by Madrid not only ignores efficiency but also lacks what the CNMC calls ex-post evaluation. After ten years of validity, the State still has not conducted a critical analysis to determine whether these subsidies actually lower prices on the shelves of Canarian supermarkets or merely inflate the profit margins of carriers. The regulator warns that without this control, there is a real risk of ‘overcompensation’, a market distortion that Community Law prohibits, but which seems to have found a safe refuge in the Atlantic under the umbrella of ultraperiphery.
Despite the introduction of novelties such as the distinction between ‘capital islands’ and ‘non-capital islands’ in the reports for 2024 and 2025, the CNMC is blunt: the methodology remains the same as it was a decade ago. The ‘trolling’ of the regulator has fortified a system that moves millions of euros annually in public funds, yet refuses to undergo the scrutiny of effective competition. For the economic actors in the islands, the message is clear: as long as the Ministry maintains this standoff with the CNMC, the transport of goods in the Canary Islands will continue to be a protected, opaque market, fundamentally detached from the rules of modern efficiency.
The conflict, which for a normal observer in Brussels would represent a case study on protected inefficiency, focuses on the ‘standard costs’. These are the benchmarks that determine how much public money transporters receive to cover the additional cost of insularity. However, what the CNMC denounced in 2015 as a lack of rigor in calculation continues today, in 2025, to be the axis of its protest. The regulator insists: the State is subsidizing inefficiency by basing payments on the average costs of operators rather than on the costs of an ‘efficiently managed company’.
The ‘trolling’ of the regulator has a recurring protagonist: INECO. For a decade, the CNMC has been recommending that the cost study be subjected to competitive procedures. Nevertheless, the Ministry has opted for systematic recourse to the management assignment to this own entity, avoiding opening the process to the market. In its latest report on the orders for 2024 and 2025, the CNMC uses a tone of technical resignation when recalling that it ‘reiterates recommendations already made in previous exercises‘, as the methodology does not present ‘substantial changes’.
The risk of this stalemate is not just theoretical. By not conducting ex-post evaluations on the effectiveness of the subsidies—another historic demand from the competition authority—the system risks generating overcompensations that distort the market. After ten years of ignored warnings, the CNMC’s report leaves an implicit conclusion for investors and analysts in the sector: in the transport of goods to the Canary Islands, the subsidy policy takes precedence over economic efficiency. The ‘trolling’ of the Competition Authority has allowed the maintenance of an opaque system under the umbrella of ultraperiphery, leaving the question of how many millions of euros in public funds are lost annually due to failure to adjust costs to the reality of a modern market.
