AG Nessel sues Mackinac Island ferry company

All right, here we go. Oh, take a look at this beautiful part of our state. Michigan's attorney general says people need more options to get to Mackinac Island. AG Dana Nessel is suing Hoffman Marine, the owner of the Mackinac Island Ferries. She says the ferry service is currently a monopoly. It needs to be broken up. She also alleges that ferry options have been significantly reduced over the past decade. Take a listen. consolidated their control in these areas, eliminating any competition for ferry service or parking, we've seen Hoffman do exactly what you'd expect a monopolist to do. They've raised prices, limited services, and leveraged their massive power in alarming ways, even threatening to suspend ferry service to Mackinac Island entirely if local government didn't give them favorable extended agreements to let them keep hiking their prices. All right, well, Hoffman also owns some of the parking lots on Mackinac Island. Now we did reach out for a statement we have not heard back, but we're gonna bring in the lawyer on this. We're gonna bring in our big guns, Charlie Langdon is here. Yeah, our medium-sized guns. Charlie. That's much better. There we go. There we go. We're going to be accurate here. I could say something, but I'm not going to. Anyway. Okay. Yes. Good. Yes. I get in trouble. It's Friday. Yes, it is Friday. You've always made it to the end of the week. I know. without getting in trouble Let's not mess up now. A couple more hours. I'm ready. I'm ready. It sounds like she's got a point, right? Well, she has a point, but it is not illegal to have a monopoly. Monopolies sound like a dirty word. There are monopolies in the state. DTE is one. Consumers Energy is one. So if they're heavily regulated, then they can have monopolies. And there's some other exceptions, too. But in this particular case, and it seems that... I remember Arnold's and Starline and now Shepler's. It looks like this company, Hoffman, pretty much bought all of the passenger ferries to Mackinac Island. And that's 100%. And then they own about 80% of the parking. Okay. And on the surface sounds like a monopoly. So what's a monopoly? A monopoly is really just a vehicle. To eliminate competition. The law and everyone, we like competition. And we'll do everything we can. So we have these acts, these anti-monopoly Sherman acts and a whole bunch of things. We don't want monopolies in general. We want competition. That's the better thing. All right. So Dana Nessel is now saying that she wants to do two things. She wants to... Force Hoffman to sell part of it to create competition and then she wants some money and attorney fees and all these other kind of things because she says that they've been ripping off the public. When Hoffman bought... Shepler's and then the Mackinac Island Ferry back in 2024, allegedly, and I guess this is true, rates went up, parking went up, some of it was free. And when you have, we've all been to Mackinac Island, I guess, you have to park because there's no cars on the island. So you have to use their parking. Now, does Shepler have, does Shepler or Hoffman, do they have any defenses? They do. And a couple of defenses, which is interesting, is that what's preventing another company from just coming in? They have to build a dock, buy land, create, what's to prevent them? It's not like this is a per se regulated company like DTE or whatever. But what's interesting, and I think this is going to get some attention. There's an old statute from 1899 that allows the city of Mackinac to set prices and regulate the ferry company. They give the franchise. So they are regulated to some extent, which could help the Hoffman argument, I think, just like DTE. So here's the problem. A couple of years ago, when all the residents, I was up there and this was, everyone was screaming about it. The parking did go up a lot, and the ferry service went up a lot. So it's noticeable. It's noticeable there. Okay. But what happened was the city said, basically, you have to charge X amount, can't charge it higher, and Hoffman said, too bad, we're charging whatever we want. That's not good. That's not good. So this looks like it's a creative monopoly. Hoffman bought out all the competition, and they own everything. So it fits the definition. Do they have any defenses? But Charlie, if they say, if Hoffman says to whatever the other company, we want to buy, and they say, yeah, we want to get out of the business, we'll sell to you, that's legal. Yes, it is. But they bought it to have a monopoly. To eliminate competition, if that's the reason. I guess what I'm asking is, is it incumbent on Hoffman to create competition for themselves? Yes, that's the question. What are they supposed to do? If you, again, this is a very limited area. There's only a big enough island. There's only a certain docks. I don't know how deep it is around there. So it could be a very restricted area. But you cannot. According to Dana Nessel, go out and create this monopoly. So before 2016, we have three different services. So there are other services that can happen here. Charlie, I believe you mentioned something about anti-monopoly acts. Like, what kind of prevention do we have to prevent monopolies and to not get to this point? In this particular case, you know, if I'm a company. Boundaries. You start your own. company. You could do that or you could have bought one of the companies. Now, Hoffman is a private equity fund. They're a billion, I don't know what their assets are, but they're quite a bit. And they've owned a lot of different properties. And they decided that they wanted to buy, strategically buy, the different ferry services and parking for this particular island. So the argument that Dana Nessel is going to make is that they strategically created a monopoly to eliminate competition. So what's the recourse then if they are forced to sell part of their business? Do they have to sell it for market value? Do they have to sell it for what they bought it for? Great question. I know. Very good question. Don't know. I don't know what they paid for it, but if it's a forced sale, that is a problem. Right. And if nobody wants it because of whatever, maybe they have to have a monopoly. And I kind of think because the city of Mackinac regulates these ferries anyway, they're just like DT and Consumers Energy. So the city of Mackinac should perhaps bring down the prices a little bit. Throwing it out there.