Cross-Channel Car Ferry Services (Hansard, 3 May 1974)

Mr. Alan Williams

Owing to industrial action I am unable to publish the report today as had been my intention. It will nevertheless be made available as soon as possible. However, because the Monopolies Commission's inquiry has attracted wide public interest I have decided, as originally planned, to announce today the main conclusions and recommendations in its report, together with my decision upon them.

The commission has found that monopoly conditions, as defined in the legislation in force at the time the reference was made, prevail in the supply of certain cross-Channel car ferry services—as defined by the reference which excluded supply by foreign operators—because at least one-third of the services is supplied by the British Railways Board and at least one-third by European Ferries Ltd. and because at least one-third is supplied by persons who so conduct their affairs as to restrict competition in connection with the supply of the services.

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British Rail and European Ferries Ltd., with Southern Ferries Ltd., are United Kingdom members of the Harmonisation Conference which relates to most of the cross-Channel routes covered by the reference. Other members represent shipping and other interests in Belgium, the Netherlands and France. One of the functions of the conference is to determine fares by agreement.

The commission concluded that the structural monopoly positions of British Rail and European Ferries Ltd. did not operate against the public interest. But it did find that the participation by cross-Channel ferry operators covered by the reference in collectively agreeing through the Harmonisation Conference to charge fares at not less than common minimum rates, and their participation in pooling agreements—arrangements for the sharing of receipts, and in some cases expenses, between various groups of operators—operate and may be expected to operate against the public interest.

The commission found no evidence of excessive profits. But the operators' policy of providing capacity to meet the highest level of demand on any day at the same price as on any other day during the peak season was considered to be a contributory factor to their higher costs.

Although not recommending the withdrawal of the United Kingdom operators from the existing pooling agreements, the commission said that the continuance of existing agreements required some safeguard of the public interest, especially since it was only the international character of the agreement between British Rail, European Ferries Ltd. and SNCF which had precluded the commission from recommending that pooling arrangements between British Rail and European Ferries Ltd. should be ended.

To remedy the adverse effects of practices which it found to operate against the public interest, the commission recommended:

(i) that the cross-Channel ferry operators covered by the reference should be required not to participate in any collective agreement of fares in respect of the services covered by the reference, such as that now operated by the Harmonisation Conference;
(ii) that they should be required not to become parties to any extension of 270 an existing pooling agreement covering the reference services which would have the effect of providing for any greater degree of pooling;
(iii) that no further pooling agreements covering the reference services should be entered into without the Government's approval; and
(iv) that unless and until discontinuance of supervision is justified by a substantial change in the competitive situation, fare increases should be subject to the Government's approval, and the possibility of improving the fare structure should be considered.

The commission recognised that there could be a substantial change in the situation if and when the Channel Tunnel came into use, since it would provide a major new element of competition. However, it noted that the element of uncertainty introduced by the tunnel project was unrelated to agreed fares and something which ferry operators would have to face whether fares were agreed or not.

I accept the conclusions and recommendations in the report. I am asking the Director General of Fair Trading to discuss implementation of the commission's recommendations with the United Kingdom operators and to explore any issues related to cross-subsidisation which are revealed in the report.