Does Corsica need subsidies for the ferry services?

By | 2022 Newsletter week 5 | No Comments

“The current Maritime Public Service Delegation (DSP) between Corsica and Marseille expires on December 31, 2022. The European Commission’s questioning of the very existence of the public service principle puts a sword of Damocles on the territorial continuity,” writes Corse Net Infos in a long article in French, quoting several political stakeholders (but not the ferry operators).

Some interesting elements, quotes, remarks of the debate:

  • Brussels does not see the need to subsidize a service which could very well be provided by private companies. Compensation is against the rules of the market and free competition.
  • Why is what is granted to other regions, such as Croatia or Greece, becoming problematic for Corsica?
  • A decision needs to be taken soon, because the new (multi-year) DSP should start on 1 January 2023.
  • Why only having Marseille as continental port? Toulon, Nice or even Livorno are closer to Corsica. Less fuel. Better utilization of ships.
  • The need to resolve the “painful legacy of the past”.
  • What sense does it make to have ‘market tests’ if the market is changing? (which it does)
  • Corsica, today, imports 90 to 95% from France. We want a system where Corsica is economically connected with Tuscany, Sardinia and Catalonia.

Victory For Corsica Ferries, At Last

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The Administrative Court of Appeal of Marseille condemns the Territorial Collectivity of Corsica to pay Corsica Ferries France the sum of €86.3 million in compensation for the damage it suffered as a result of the illegal subsidy provided by the Collectivity to SNCM.

This subsidy was given for the ferry service provided by SNCM and CMN between the Port of Marseille and Corsica, in the period between July 2007 and December 2013.

On top of the payments for the public service contract, the alliance SNCM/CMN received 40 million per year for the so-called additional service for the transport of passengers during peak periods.

The European Commission considered in 2013, that the financial compensation paid by

Corsica under this additional service were incompatible with the freedom of competition in the internal market. In 2014 the Commission ordered the refund of this illegal subsidy.

After endless legal fights, Corsica Ferries has finally obtained a favourable decision.


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No Corsican Regional Ferry Company before 2025

A Corsican public-private partnership (SEMop) ferry company was supposed to be created on 1 January 2021, to provide the ferry services between Marseille and the five ports of Corsica.

This new approach was due to replace the actual public service delegation (PSD) system.

SEMop would have as shareholders the Corsican Community (50.1%) and private operator(s) (49.9%), for a duration of seven years.

Only one private operator showed up: the alliance Corsica Linea – La Méridionale.

The idea of creating a SEMop is being abandoned. Why?

  • The shipowners’ group was asking EUR 776 million for 7 years. Too much says Corsica, who offered EUR 570 million.
  • The coronavirus outbreak has a substantial impact on traffic. The offer presented by Corsica Linea – La Mériodionale is no longer in line with the real needs.

What now? Probably the solution will be to extend the actual PSD one year… or more.

A New High-Speed Ferry Link between Sardinia and Corsica

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The Naples-based ferry company Navigazione Libera del Golfo, controlled by the Aponte family and run by Maurizio Aponte as a CEO, is opening a new high-speed ferry line linking the ports of Santa Teresa di Gallura in Sardinia and Bonifacio in Corsica.

On the same routes both Blu Navy and Moby are already active but with ro-pax vessels.

The deployed catamaran is the PONZA JET which can accommodate 350 passengers (no cars) and will cover the distance between Santa Teresa and Bonifacio in 15 minutes, much less than the car ferry service offered by the competitors which takes at least 50 minutes.

The new high-speed ferry link is expected to run until mid-September.


By | 2020 Newsletter week 24 | No Comments

SNCM History: Collectivity Of Corsica Sentenced To Pay A 20 Million Provision

Sentenced in 2017 to pay EUR 84 million to the company with the yellow ferries for irregular competition within the framework of the DSP, the Collectivity of Corsica must now pay a provision of EUR 20 million according to the administrative court of appeal of Marseille.

Standstill Agreement between Moby and Creditors Expired: What Now?

By | 2020 Newsletter week 10 | No Comments

The standstill agreement (with a with a group of bondholders under the €300 million bond due 2023 issued by Onorato Armatori Spa) announced one month ago by Moby, expired on 28 February.

The Milan-based ferry company also said to be engaged in discussions with the banks (Unicredit, Intesa Sanpaolo, Ubi, Banco Bpm and Mps) under the €260 million loan regarding a potential restructuring transaction.

On 2 March, a statement from the ferry company informed that

“Moby and its shareholders have received a proposal from the Ad Hoc Group of bondholders that

  1. is incompatible with the applicable laws of the underlying finance documents,
  2. incompatible with existing operational contracts, and
  3. excessively penalising creditors outside the Ad Hoc Group.”

“The desire of the Onorato Group and the shareholders of Moby is to satisfy all of the outstanding creditors and not to prioritise one subset of creditors. The Company is working with its advisers to find legal solutions that protect the interests of all stakeholders”.

Last week, an invitation was formally sent by the Company to all members of the Ad Hoc Group requesting further negotiations with their advisers regarding a potential restructuring solution.

“The Onorato family, always respectful of the needs of its creditors as well as the implementation of its business plan, has repeatedly reiterated the full availability of the Onorato Group and its shareholders and the firm desire to progress the restructuring negotiations,” the statement further explained.

“The group is committed to an open dialogue regarding the future governance (including the creation of nomination and remuneration committee) of the company with the aim of creating added value for all stakeholders and creating a platform for future growth. The company believes the elements for this restructuring are possible.”

Moby also highlighted that “The value of the group’s fleet, based on the latest Unitramp appraisal and valuation, exceeds € 1 billion. If these valuations are confirmed by the broker to be appointed, the restructuring plan can be implemented based solely on the rescheduling of the current debt profile.”

The big question now is: will the banks and the bond holders be patient with Moby or opt for a more aggressive approach as was the file for bankrupt proposed last autumn?

State Aid: Commission Launches In-Depth Investigation into Public Service Delegation Contracts for Maritime Services to Corsica

By | 2020 Newsletter week 10 | No Comments

The European Commission has launched an in-depth investigation to determine whether the public service delegation contracts for maritime services to Corsica awarded in June 2019 are in line with EU State aid rules.

Maritime services between Corsica and mainland France run between three mainland ports (Marseille, Toulon and Nice) and five ports in Corsica (Ajaccio, Bastia, Porto-Vecchio, Propriano and Ile Rousse). The French authorities awarded Corsica Linea three public service delegation contracts for the routes between Marseille and Ajaccio, Bastia and Ile Rousse, for the period from 1 October 2019 to 31 December 2020.

The Commission takes the preliminary view that these three contracts constitute State aid since, at this stage, they do not meet any of the cumulative criteria for excluding State aid set by the European Court of Justice in its judgment in the Altmark case.

Furthermore, the Commission has not yet ruled out that the public service compensation received by Corsica Linea may give it an undue advantage over its competitors, in breach of the EU rules on services of general economic interest (SGEI).

The Commission has doubts, in particular, with regard to:

  • whether the scope of the three contracts awarded meets a genuine public service need. In particular, the Commission doubts the necessity of including passenger transport in the public service contracts, given the presence on the market of a significant source of commercial supply from the neighbouring port of Toulon.
  • the obligations in the public service contract that do not appear to be necessary or proportionate to the provision of public maritime services: (i) the requirement for a specific type of fleet to be used on certain routes; (ii) the automatic exclusion of Toulon and Nice as possible mainland home ports for public service.
  • whether the compensation parameters could lead to the over-compensation of Corsica Linea as a result of a misallocation of costs between the company’s public service and commercial activities.
  • whether the award procedure for the three contracts complied with EU rules on public procurement, since France was able to apply selection criteria and technical specifications differently for the various tenderers.

The Commission now intends to investigate whether or not its initial concerns are justified. The launch of an in-depth investigation gives France and all interested parties the opportunity to put forward their comments on the measures in question.

Corsica Ferries versus Collectivity of Corsica: No Money Yet

By | 2020 Newsletter week 10 | No Comments

In 2017, the Administrative Court of Bastia condemned the Collectivity of Corsica to pay €84.3 million to Corsica Ferries. It is a compensation for the so-called “complementary service”. This was an illegal financial system which was given to SNCM, as compensation for the extra passengers in high season, on top of the DSP contract.

Corsica Ferries’ request to enforce this 2017 judgment was rejected on Monday 2 March 2020 by the Marseille Administrative Court of Appeal.

Compensation will eventually be paid by the Collectivity of Corsica to Corsica Ferries, but apparently the judge decided there was no rush.

Sources: Le Marin, Corse-Matin