§ 1.—(1) The Secretary of State shall, after consultation with the Director General of Fair Trading, release all existing undertakings given by ferry or hovercraft operators to the Secretary of State containing restrictions on co-operation between such operators in respect of cross-Channel car ferry services and the fares and rates charged for such services upon receipt from the operators concerned of substitute undertakings as referred to in subparagraph (2) below.
§ (2) Such operators shall enter into substitute undertakings to the Secretary of State in the following or a substantially similar form—
- (a) to provide ferry services reasonably sufficient to meet the demands of the cross-Channel ferry market for all categories of traffic until the opening of the tunnel system; and
- (b) to maintain fares and rates for all categories of traffic using such services at or below those levels subsisting at the date of the passing of this Act until the opening of the tunnel system, subject to adjustment for increases in operating costs properly incurred.
§ (3) In this paragraph "hovercraft" has the same meaning as in the Hovercraft Act 1968.").
§ The noble Lord said: My Lords, at this late hour I hesitate to detain the Committee. However, this amendment is directed to a very real problem to which I think, at a later stage, we should give further consideration; namely, how to ensure that adequate ferry services are maintained in the interval between now and when the tunnel opens. If the ferry operators follow the advice of the Select Committee and apply proper commercial standards—the pursuit of the profit motive—then clearly services will begin to tail off some time before the tunnel is ready, to the detriment of our trade both in tourism and in goods. Perhaps it would be better to ask the Government at another hour their views on how best to deal with that matter. However, the Minister may wish to give a preliminary view at this stage.
§ One suggested solution is that the ferry operators, together with the Secretary of State, should try to work out a reasonable schedule of ferry services in this difficult period, not least because the cash flow of the operators varies greatly with the season. They make a lot of money in the summer and very little in the winter. It would be sensible, I suppose, if many of them closed at the end of the summer season in 1992. Then we should lose the capacity for freight and so on until the tunnel was ready. That would be a very serious problem. I think it demands a rather more careful and mature consideration than we are likely to be able to give as the hour approaches midnight.
§ Lord Brabazon of TaraI shall take the opportunity, if I may, of responding briefly to the amendment of the noble Lord. No doubt he can read what I have said and, if necessary, come back to the issue at another stage.
This amendment would release European Ferries and Sea link from undertakings they gave following 593 the 1974 report by the Monopolies and Mergers Commission on cross-channel car services. Those undertakings were not to agree tariffs, not to enter into new pooling agreements without the Secretary of State's prior approval and not to discuss tariffs without arranging for a record to be sent to the Director General of Fair Trading within 30 days. Subsequently, in 1982, European Ferries gave a further undertaking not to seek a merger with Sealink.
The ferry companies wish to be released from these undertakings in order to be free to integrate their operations in a manner which would enable them to compete more effectively with Eurotunnel's frequent no-booking shuttle service. As the Select Committee noted in paragraph 80 of their special report, the Secretary of State for Trade and Industry, on the advice of the Director General of Fair Trading, rejected last October an application by the companies for release from the undertakings. However, the Secretary of State pointed out that the undertakings did not prevent the companies from discussing ways in which they might respond to the prospective competition of the tunnel, provided that a record of the discussion was sent to the Director General of Fair Trading. But if the companies wished to make a specific proposal for co-ordinating or integrating their services, it would need to be considered by the Office of Fair Trading against the circumstances prevailing at the time.
The Select Committee accepted that the Director General would need to take many factors into account, including the effect on users of any reduction in competition between the ferries in the period before the tunnel opens. The substitute undertakings proposed in subsection (2) of the amendment are unsatisfactory, not least because they would be statutory and inflexible, whereas under the present system the Director General has a duty to keep undertakings under review and to recommend to the Secretary of State whether the undertakings should be varied in the light of changing circumstances. The Select Committee concluded that it would he wrong to pre-empt the Director General's judgment by writing the ferry operators' amendment into the Bill.
In its response to the Select Committee's report the Government confirmed that the Director General would, when considering any proposals from the ferry operators for integrating their services, take into account the possibility that the operators would otherwise restrict their investment or curtail their services in the period before the tunnel opens, which was the particular point raised by the noble Lord, Lord Mulley, in moving the amendment.
I hope that the noble Lord will agree that it would be wrong to pre-empt the decision of the Director General in the way this amendment would do, and that he will consider what I have said before returning to the matter at a later stage.
§ Lord MulleyI am most grateful to the Minister. I think I speak for all Members who have been concerned with this debate when I say that I 594 congratulate him on the way in which he has conducted the Committee. It is a very demanding task dealing with one amendment after another and he has performed with great courtesy and efficiency for the benefit of us all. I shall read very carefully the report of what he said in regard to the problem that I have just raised and, if necessary, will perhaps seek an alternative form at a later stage. I am most grateful to the Minister. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 151 not moved.]
§ Remaining schedule agreed to.
§ House resumed: Bill reported with amendments.
§ House adjourned at twenty-seven minutes past eleven o'clock.