Industry
After lengthy disputes at the Corsican Assembly, politicians agreed in October 2012 to remove additional services (peak periods and school holidays) and passenger subsidies, a saving of nearly €34 million and €16 million respectively.
Public Services Outsourcing is therefore restricted to the basic service, which will be from Marseille only.
Capacity identical to the basic service under the current agreement
This volume of traffic is almost identical to the previous agreement (2007-2013). Public Services Outsourcing will work on the basis of 23 trips per week between Bastia (7 days a week), Ajaccio (7/7), and La Balagne and Porto-Vecchio with three weekly trips.
Future Public Services Outsourcing sounds the death-knell for car-ferries as the specifications stipulate that companies must operate mixed ro-ro vessels under 25 years of age on signing the agreement, and less than 30 years while the contract is in force.
For the current incumbents, this involves renewing part of the fleet, four new buildings for SNCM and a new mixed cargo ship to replace La Méridionale’s Kalliste.
the PSO puzzle without passenger subsidies
With rock-bottom prices and maximum prices (from -50% to +50% of the base price), the Transport Office strictly regulates passenger fares with different prices for Corsican residents and non-residents.
This is a blow to companies who consider that this scale is too low, as it is itself indexed to a resident discount that is also revised downwards. All this without financial compensation.
The OTC has also decided to revise prices for trailers downwards. In future, a return trip for a trailer will cost €1000 compared to €1300 at the moment.
Public Services Outsourcing and OSP are in the same boat
New constraints are emerging for the first time in this future agreement. From now on, if the assignees are part of a consortium, they will have to form a company dedicated to operating Public Services Outsourcing lines. The Collectivity of Corsica indeed wants more transparency in the use of public money. It is no longer a case of using Corsica’s “territorial continuity” budget to fund unprofitable activities outside Public Services Outsourcing (ports in North Africa, Italy, Toulon and Nice).
So, SNCM will create a company with a scope dedicated to Public Services Outsourcing, as will Corsica Ferries. La Méridionale says it is ready to end its relationship with Propriano and Porto Torres in Sardinia rather than creating a new company.
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The agreement must be signed in May 2013 to allow reservations to open next June. The initial duration of the contract for twelve years has been reduced to ten years (January 2014 – May 2023).
Corsica Ferries versus SNCM…with Brussels sitting in judgement
The opening of maritime cabotage services to competition in Europe in 1992, followed by the arrival of Corsica Ferries in 1996 in Nice then Toulon in 2001, undermined the monopoly of the Société Nationale maritime Corse-Méditerranée.
Service to Corsica has never ceased to inflame the passions of the operators involved, giving rise to many lawsuits in French and European courts. The Law has had to consider issues as diverse as tenders, social plans, agreements, subsidies of all kinds, including the last recapitalisation of SNCM in 2005 just before privatisation. This has led to a boomerang effect as this recapitalisation is now being questioned seven years later and is causing SNCM and its two main shareholders, the State and Veolia Transdev a lot of headaches.
In a decision given on 11th September 2012, the Luxembourg Court, consulted at the request of Corsica Ferries, cancelled the 2008 decision of the European Commission. At that time, Brussels had approved measures taken by France during the privatisation of SNCM two years earlier. How could it be otherwise? SNCM was then threatened with liquidation, striking seamen and office staff were demonstrating. Pressure from the street, political pressure? Something had to be done quickly to find a buyer, at all costs.
The European Commission’s “obvious mistake”
According to the court, Brussels made an “obvious mistake” in finding that the last recapitalisation did not constitute State aid. A small reminder of the facts: it was particularly the matter of a direct contribution by the State to SNCM in the amount of €158 million, and a capital contribution by CGMF (State holding company owning 80% of SNCM in 2002) to the tune of €8.75 million with an overdraft of €38.5 million to finance an employee redundancy scheme.
The SNCM could be ordered to pay back these sums. The case looks complex. Veolia Transdev has since become the majority shareholder and does not see things that way. A real sword of Damocles hangs over Veolia which, let us not forget, suggested in 2012 that the company should be disposed of for the modest sum of one euro!
On 22 November 2012, the SNCM filed an appeal before the Court of Justice of the European Union against the court judgement. Four days later, the French Republic presented a second appeal before this same court.
In June 2012, the Commission opened an in-depth investigation into monies received by SNCM and CMN for the Marseille-Corsica sea link. This time, it was to analyse if public money, which benefitted both companies for the period 2007-2013, breached EU rules. Once again Brussels has French State aid in its sights.
A few years earlier, on 30th October 2001, the European Commission considered that the “aid paid by France to the SNCM as part of the five-year agreements with the Transport Office of Corsica in 1991 and 1996, as compensation for public service obligations”, was “compatible with the common market”. Same old, same old...
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