Federal Court Rules Against Oceanex / Status Quo For Marine Atlantic Subsidy

In late 2017, Oceanex (container shipping business) had a hearing before the Federal Court of Canada where it asked for a ruling that the federal Transport Minister is exceeding his jurisdiction through providing an annual subsidy ($94 million in 2016-17) to Marine Atlantic. On March 7, the Federal Court ruled against Oceanex.

Objective:

Ensure all levels of government are aware of the important role that Oceanex and Marine Atlantic play in getting retail product to Newfoundland. If the Marine Atlantic subsidy were to be reduced / eliminated, or if Oceanex were to go out of business due to its inability to compete against a heavily subsidized competitor, the effect on the price and ability of Newfoundlanders and Labradorians to access retail products would be significant.

Current Status:

Oceanex argued before the Federal Court that annual federal government subsidy of Marine Atlantic contravenes various federal Acts and has an ‘unduly injurious effect upon Oceanex’ as a competitor of Marine Atlantic.

Marine Atlantic argued that they require the subsidy as they provide a public service, mandated through the terms of Confederation. They argued that in providing a public service, they cannot turn a profit, e.g. offering 2 sailings every day for a cost of only $787 (approx.) per drop. Oceanex argued that the terms of Confederation have changed and the arguments for the subsidy should no longer apply.

Marine Atlantic stated that if the subsidy were eliminated and it maintained its current service levels (sailing twice daily), it would need to almost triple its rates for commercial traffic. Currently, Oceanex only sails 3 times per week.

RCC provided its perspective on this issue with officials at all three levels of government. RCC encouraged stakeholders to speak publicly about the need for both services to continue in order to protect jobs at Marine Atlantic, Oceanex and throughout the supply chain. RCC also informed stakeholders of the need for both companies to remain economically viable so that retailers could maintain reasonable prices and availability of retail products in Newfoundland and Labrador.

Next Steps:

RCC will continue working with various government officials, media and stakeholder groups to lead / support any initiatives expressing support for the Oceanex and Marine Atlantic services.

If you have any questions or concerns, please don’t hesitate to contact: Jim Cormier, Director (Atlantic) at:  jcormier@retailcouncil.org or (902) 422-4144