Andrew Turner yesterday met with officials from the Office of Fair Trading (OFT) to discuss their draft report on the cross-Solent ferry market. During the meeting, the OFT and Mr Turner confirmed the competition issues on which they agree, which include:
• the fact that competition is limited;
• the difficulties of bringing new operators into the market due to restricted berthing availability;
• that high profits have been enjoyed in the past; and
• that the prices that had been paid for both Red Funnel and Wightlink were high, as are related levels of debt.
Both parties also recognise that there are high levels of customer dissatisfaction with the ferry services.
The Island’s MP and others who have been working with him on this project met OFT Director, Mary Starks and five other members of the OFT team at their headquarters just off Fleet Street. Mr Turner described the meeting, which lasted over two hours, had been ‘very useful and constructive’
Speaking this morning Mr Turner said:
“We thanked the OFT for the work they had done so far which had drawn them to the same conclusions as we had reached about the background problems in the cross-Solent ferry market. There is a high level of agreement on those issues, and I am saying that it is hard to see how those factors could not adversely affect consumers.
“We discussed a number of matters that we thought the OFT should look at in more depth, including fare levels in recent years and issues relating to services, such as the lack of capacity at times of peak demand. We had the opportunity to impress on senior OFT staff how important this is to the Island, and they do understand that it is literally a lifeline service. I was pleased that the OFT acknowledged that one of the factors they had taken into account when deciding to look at this market was the high level of public support I was able to demonstrate when I asked them to investigate, so I would like to thank everyone who supported the campaign – that is over 8,000 people and organisations. It really did make a difference.
“The OFT have made a finely balanced judgement and they are currently deciding whether to take any further formal action. In order to move forward they need robust evidence that high ferry fares cause hardship to Islanders and harm the economy. We had a very useful and constructive exchange of views and I now have to think about how we can help produce what they need. I will be considering these matters over the weekend. I do believe that with public support we may still be able to achieve a full investigation and I will let Islanders know next week how I plan to move forward.”
The meeting followed up on a report issued by the OFT on June 12 containing provisional findings following a market study. Although they found clear evidence that competition in the market was not working properly, they have said that they have seen only limited evidence that this has caused harm to consumers. Additionally, the lack of an ‘appropriate and proportionate’ way of resolving the issues means they have provisionally decided to take no formal action at present. They have already suggested that the ferry companies should publish more information on prices and services on a voluntary basis so that it would be easier to take action in the future in the case of any abuse of market position. They are consulting on their findings until 12th August and would welcome comments from the public on what information the ferry companies should publish.
Mr Turner commented:
“Although more information would clearly be welcome I do not believe it would solve the problem – and I am glad to say the OFT agree. For instance the OFT report contains a chart based on information supplied by the ferry companies which suggests that average prices for the car ferry have gone up only 20% since 1990 – I think many Islanders would question that statistic. The difficulty is that the ferry companies have all the evidence and can present it however they wish – it is only with a full investigation that the background information would be properly examined. I am not giving up on achieving that.”
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