The accession of new Member States in the 1980s and the issue of ‘quota hopping’
This new framework of TACs and national quotas thus combined international management of resources with the maintenance of national sovereignty. The principle was equal access to community fishing grounds, while guaranteeing to each Member State their share of the TAC. In subsequent years, however, this system of equal access on the basis of relative stability would increasingly come under pressure because of the accession of new Member States, and contradictions inherent to the institutional environment in which the CFP is embedded (e.g., Lequesne, 2000; van Ginkel, 2009; Coelho, 2010). A first major challenge was posed by the accession of Spain and Portugal to the European Community in 1986. This was associated with a significant increase in fishing capacity (i.e., a 75% increase in the number of vessels, and 65% in gross tonnage) (Symes, 1997). This created some concern among existing Member States, notably Ireland and the UK, who feared that the principle of equal access would result in an invasion of northern waters by the Spanish fleet, and subsequent quota reductions for established members. However, the principle of relative stability was applied and the status quo was maintained. The solution was a phased access to the full benefits of the CFP through a period of adjustment. A period of 16 years was originally agreed upon, but in 1994 the date of full accession was moved forward with 6 years after political pressure from Spain. Subsequent enlargements of the European Union in 1996 (Sweden, Finland), 2004 (Malta, Cyprus, Estonia, Latvia, Lithuania, Poland, Slovenia), 2007 (Bulgaria, Romania) caused similar problems in other sea basins (Symes, 1997, 2012)16.
While averting a deeper institutional crisis, the accession of new members combined with the principle of relative stability posed a real threat to the fishing industries of certain established Member States. More precisely, the freedom of establishment and the free movement of capital – both key pillars of the EEC’s Common Market – enabled ship owners to purchase fishing vessels in other Member States, and utilize their quotas. This phenomenon is better 16 The accession of Croatia in 2013 seems to not have caused these problems since fisheries are based on effort (and tuna fisheries are managed through ICCAT) (STECF, 2019a).
known as “quota hopping” (Lequesne, 2000; Hoefnagel et al., 2015). During the transitional period, some Spanish vessel owners were able to buy vessels in other EU member states, thus obtaining access to their national quotas. Over the years, quota hopping would become a major way for EU fishers (most notably Spanish and Dutch) to circumvent quota restrictions due to the relative stability principle (Lequesne, 2000; van Ginkel, 2009).
The issue of quota hopping thus uncovered a major institutional weakness of the CFP: the incompatibility of the principles of ‘relative stability’ and ‘free establishment’ (Coelho, 2010). Lequesne (2000) argues that such liberal market norms are consistent with the EEC’s aim to build a European market, but are not in agreement with the territorial logic of an economic sector. On the contrary, they actively contribute to its deterritorialization. Member States have tried to mitigate the negative economic effects of quota hopping by requiring quota hoppers to demonstrate a ‘real economic link’ with the host country (e.g., Lequesne, 2000; Hatcher et al., 2002; van Ginkel, 2009). In turn, this economic link was criticized for restricting competition, and a specific measure by the UK Government was even ruled against by the European Court of Justice for violating the principle of freedom of establishment (see Jensen, 1999, pp. 43-45 for an account of the « quota hopping trial »).
Overcapacity and fleet adjustment: 1983 to present
The CFP’s first comprehensive structural policy was introduced in 1983 (Hatcher, 1999). With the exception of some financial aid in the early 1980s for the removal of fishing vessels following a reduction in fishing opportunities in third countries, the structural policy has focused on fleet construction and modernization throughout the 1980s and 1990s, and well into the 2000s (see Hatcher, 1999 for an overview of structural policies). To this end, extensive subsidization programs were implemented, which were only phased out in 2005 (Lindebo, 2005). A recent study by Skerritt et al. (2020) provides a retrospective of subsidies in EU fisheries in the past 20 years.
This created a structural problem of overcapacity which multiple reforms of the CFP were not able to resolve, despite the implementation of Multi-Annual Guidance Programs (MAGPs) to guide this process (Cueff, 2007). After recognizing the problem during the discussions preceding the 2002 CFP reform17, the Commission implemented a reform of the structural policy focused on structural assistance and emergency measures for the scrapping (“decommissioning”) of fishing vessels (Lindebo, 2005). Also in subsequent reforms, decommissioning schemes remained the main tool for capacity reduction (DG MARE, 2013). In 2009, the European Commission’s Green Paper (EC, 2009) proposed an EU-wide system of transferable fishing concessions as a “more efficient and less expensive way” to reduce overcapacity. Although the proposal contained conditions for the protection of small-scale fishers and fishing communities (e.g., the exclusion of small-scale fishers from the system, non-appropriable and time-limited allocations, reserves for new entrants, etc.), the proposal was finally not implemented in the 2013 reform following pressure from NGOs and some Member States (e.g., France, on the basis that such system would lead to concentration) (Gouvernement Français, 2009). Notably a lobby group for small-scale fishers, the LIFE platform (Low Impact Fishers of Europe) was able to push for the inclusion of social and environmental criteria instead of the mandatory transferability to ensure a more equitable and fair allocation of fishing opportunities (STECF, 2020a).
Case study: the French Atlantic fleet
The French Atlantic fleet (FAF) is the main case study for the four chapters of this PhD thesis. We may consider three pivotal moments in the post World War II development of the French fishing fleet. The first is the collapse of the industrial fishing fleet in the 1960s and the development of an independent artisanal fleet. The second is the crisis of the 1990s, caused by overfishing and unrestrained growth during the 1980s. In this period, many artisanal boat owners were pushed out of the fishery. The third pivotal moment is marked by the discontinuation of subsidies for vessel construction, a number of policy reforms aimed at capacity reduction and the development of a quota co-management system. A full account of the post-war development of the French Atlantic fishing sector is beyond the scope of this introduction, but we refer to Menzies (1997, 2003), Rieucau (1980), Le Gallic (2006), Ponsot and Mauget (2008), Delbos (1995, 1996, 2006), Deldrève (2001) and (Le Floc’h, 2018) for a detailed description.
The so-called ‘artisanal fishing model’ has been a key element in the development of the French Atlantic fleet after World War II (Meuriot, 1986) and was aided by the State through the establishment of financing instruments and governance structures, including fishing cooperatives (see Ponsot and Mauget, 2008 for a description). The artisanal model is usually characterized by following elements (Debeauvais, 1985; Deldrève, 2001; Delbos, 2006): The fisher (artisan) is owner or co-owner of his or her fishing vessel, and has the statute of embarked owner. They invest their own capital (sole proprietorship) and manage the firm technically and economically (Debeauvais, 1985); This ‘owner-operator’ has one fishing vessel, which is generally smaller than 12 meters in length, but may be up to 25 m according to legislation18. Crew size is generally small, with a maximum of 5-10 for larger vessels (Delbos, 2006). A number of other criteria are commonly used to contrast artisanal fisheries with industrial fisheries: a high degree of family involvement in the firm, strong local anchoring, the polyvalence of the fishing activity and relatively short fishing trips (Debeauvais, 1985; Menzies, 1997; Delbos, 2006; Ifremer, 2007; Reyes et al., 2015).
During the 1980s and 1990s, the funding model of vessels and fleets was highly dependent on subsidies. Boncoeur et al. (2000b) reviewed the different types of subsidies and classified them according to their nature, purpose and allocation by beneficiary. More common financial aids included public aids (income transfers through subsidies or debt relief due to interest rates lower than market rates) and fiscal aids (derogatory regimes on taxes or capital gains upon resale of a vessel) (Le Floc’h et al., 2011).
After the fishing crisis in the 1990s, the French government reacted with emergency funding support and introduced legislation that would allow for new forms of firm governance. The aim was to better protect owner-operators by allowing them to legally separate their personal and professional assets, and protect them and their spouses better against bankruptcy, divorce or death (Menzies, 2003; Delbos, 2006; Le Floc’h, 2018). Capacity was reduced through a series of decommissioning schemes between 1991 and 201019 (Guyader and Jacob, 2012). A contradictory policy focused on fleet renewal was implemented at the same time (Mesnil, 2008). Between 1992 and 2010, the size of the French Atlantic fleet was reduced by 35% (1736 vessels) (Van Putten et al., 2012), and recent trends show that the number of vessels >12 m decreased by 45% between 2000 and 2020 (SIH, 2021) (Figure 0-2).
The second-hand vessel market became a key entry point because of capacity regulations, limits on new vessel constructions and the establishment of operation permits per vessel (Guyader et al., 2006; Van Putten et al., 2012). Figure 0-3 shows the evolution of the vessel transaction rate on the second-hand market for the French Atlantic fleet in the last 30 years20. Transaction rates were relatively high over the entire period (between 6% and 10%), with changes dependent on the economic and institutional context (Guyader, 2018)
Fisheries management in France
In France, fisheries resources are considered national resources belonging to the inhabitants (JORF, 1997, 2010), and fishing opportunities are non-transferable by law. Quota and license allocations constitute a use right for a given species, area and time period (maximum 1 year), rather than a property right fixed in time (Larabi et al., 2013). While market transactions of fishing opportunities are prohibited by law, in practice (due to their strong link with historical track records) they may be transferred when the vessel is sold on the second-hand market (see Larabi et al., 2013). Management is the responsibility of POs (for TAC-managed species) and fisheries committees (for non-TAC managed species), alongside administrative authorities (Mongruel et al., 2017). Before any fishing vessel is eligible to fish, the operator must apply for an operation permit (permis de mise en exploitation, PME). The PME is replaced with a European fishing license once the vessel has entered the fleet, giving the operator the right to use a proportion of European fishing capacity (Lagière et al., 2012). To access specific fisheries, the operator must apply for one or multiple fishing authorizations.
The administration may allocate fishing opportunities to POs and fisheries committees based on three criteria: historical track records, socioeconomic balances and market orientation (Legifrance, 2019). In practice, however, the vast majority of allocations are performed based on historical track records alone (Carpenter and Kleinjans, 2017). The same holds for the subsequent allocation of fishing opportunities to fishers or groups of fishers by POs and fisheries committees. Fishing opportunities are allocated to the so-called ‘vessel-producer partnership’ (couple navire-armateur). While market transactions of fishing opportunities are prohibited by law, in practice (due to their strong link with historical track records) they may be transferred when the vessel is sold on the second-hand market (see Larabi et al., 2013). The focus on track records as a distribution criterion by the administration has created an incentive for POs to attract vessels with track records attached, and, consequently, for producers to invest in such vessels. As such, the main way for French fishers to acquire additional fishing opportunities is through investment in fishing vessels with track records and/or licenses attached.
Current fleet structure and value chain
According SIH (2021) the commercial fishing fleet registered on the Atlantic coast in 2019 was composed of 2901 vessels with a total engine power of approximately 504,000 kW and a total of 7636 crew members (SIH, 2021). The fishing effort deployed by this fleet represented 387,000 fishing days. Landings in quantity for all species reached approximately 372,000 tonnes for a landed value of € 932 million. Within this population, vessels over 12 meters in length represented 25% of the fleet, 55% of engine power, 52% of crews and 41% of fishing days. The landed value of vessels greater/less than 12 m represented around 73% and 27% of the total, respectively. The fleet is distributed all along the Atlantic coast with 40% of the vessels registered in Brittany (42% of power), 21% in Normandy (21%), 19% in Nouvelle-Aquitaine (19%), 11 % in Pays de la Loire (13%) and 8% in Hauts-de-France (4%).
Vessels >12 m are mostly exclusive trawlers (44% of vessels) and dredgers-trawlers. The other fleets are mainly gillnetters, pure dredgers, demersal seiners, purse seine vessels and vessels using hooks and line. Some of the vessels >12 m are potters specializing in crustaceans. The main fleets for <12 m are the fleets targeting European eel, potters, dredgers, gillnetters and longliners. The diversity of gear used is greater for vessels <12 m than for vessels >12 m. Fishing effort is mainly distributed in the Channel and the Bay of Biscay, but also in the Celtic and North Seas. The landed values come respectively from 66.8%, 18.4% and 11.3% of the French, British and Irish EEZs. The value extracted in the Norwegian EEZs including the areas of Svalbard and Jan Mayen Island is around 2.6%. Other EEZs contribute less than 1% of the overall value. The first 25 species landed account for about 85% of total landed value and for 73% of the total landed volume. The first five species are hake (12% of total landed value), monkfishes (9.6%), scallops (9.4%), sole (6.8%) and squid (3.9%). Within the top 25 species, the species with the highest volume are hake (9.4%), scallops (8.4%), herring (7.3%), sardines (6.6 %) and monkfishes (5.1%). The highest value species are lobster with a landing price of 20.5 €/kg, sole and sea bass (13.5 €/kg), langoustine (11.9 €/kg) and John Dory (11.1 €/kg). The average price across species is 2.4 €/kg (SIH, 2021). After increases in 2016 and 2017, the economic results of the French fleet fell in 2018 while remaining at a higher level than at the start of the decade (2011-2015). The gross value-added decreased due to the combination of stability in the value of landings and the increase in costs, in particular those of energy (Agreste, 2020). Key figures about the value chain in France are provided by FranceAgriMer (2020).
Table of contents :
1 General context
1.2 The distributional effects of capacity management in fisheries: is concentration unavoidable?
1.3 The inadequacy of the ‘small vs. large’ dichotomy
1.4 Perspectives on ownership and concentration in the fishing industry
1.5 Towards an organizational perspective of ownership?
1.6 Current status of ownership analysis in the EU fishing industry
2 Research questions and organization of the PhD thesis
3 Conceptual framework
3.1 The ownership structure of small and large fishing companies
3.2 The role of the entrepreneur
3.3 Opening the ‘black box’: a neo-institutional approach to the study of organizations
3.3.1 Williamson’s transaction cost economics
3.3.2 Barney’s Resource-Based View (RBV)
3.3.3 The contractual view of the firm and agency theory
3.3.4 Industrial Organization theory
3.4 Fishing opportunities as intangible capital in a bundle of rights
3.4.1 Fishing opportunities as intangible capital
3.4.2 Fishing opportunities in a property rights framework: a bundle of rights
3.5 The EU Common Fisheries Policy as a driver of fishing industry structure
3.5.1 The unification of fisheries management in the EU: from open-access to regulated fisheries
3.5.2 The accession of new Member States in the 1980s and the issue of ‘quota hopping’
3.5.3 Overcapacity and fleet adjustment: 1983 to present
3.6 Case study: the French Atlantic fleet
3.6.1 Historical perspective
3.6.2 Fisheries management in France
3.6.3 Current fleet structure and value chain
Chapter 1: The inadequacy of the “artisanal vs. industrial” dichotomy in French Atlantic fisheries: an organizational perspective
2 The fishing firm as an organizational unit
3 Material and methods
3.1 Case study description
3.2 Semi-structured interviews and key information
3.3 Selection of firm attributes for typology construction
3.4 Multiple Correspondence Analysis with hierarchical clustering
4.1 Multiple Correspondence Analysis and Hierarchical Clustering
4.1.1 Multiple Correspondence Analysis (MCA)
4.1.2 Hierarchical clustering based on the MCA results
4.2 Review of organizational types
5.1 Growth of “artisanal” fishing firms
5.2 Drivers of horizontal integration
5.3 Forward and backward vertical integration
5.4 Towards new ownership models
5.6 Conclusions and recommendations
Chapter 2: A methodological framework for ownership analysis of EU fishing vessels and its application to the French Atlantic fishing sector Introductory remarks
1 Scope of ownership analysis in the fishing industry
1.1 The means of production and two perspectives on ownership
1.1.1 ‘Ownership’ over the resource
1.1.2 Ownership of the vessels and the fishing company
1.2 The fishing company as the main unit of analysis
1.3 Percentage ownership, corporate control and the ‘divisibility property’ of fishing vessels
1.4 Chapter outline
2 Building a framework for ownership analysis
2.1 Available data sources
2.1.1 The Union fishing fleet register
2.1.2 Fisheries-specific data on the vessel level (national information systems)
2.1.3 Ownership data at the company level (Business Registers)
2.1.4 The Orbis database (Bureau van Dijk)
2.2 Constructing a conceptual data framework for ownership analysis
2.2.1 Step 1: construction of ‘Vessel-Company Registers’
2.2.2 Step 2: linking the Vessel-Company Register with ownership data from Orbis
2.2.3 Three objectives for ownership analysis
3 Extraction of ownership data from Orbis
3.1 Corporate ownership in Orbis
3.2 Issues with the Orbis approach to ownership analysis
3.3 Customized approach: two additional pathways
3.4 Ownership data: shareholders, subsidiaries and information on directors/managers
3.5 Synopsis of the extraction protocols
3.5.1 Bottom-up (Pathway 1) and top-down protocols
3.5.2 The Directors/Managers (DM) protocol (Pathway 2)
4 Use of extracted ownership data for the analysis of vessel ownership
4.1 Ultimate owners in the French Atlantic fishing sector: a first appraisal
4.1.1 Ownership analysis of fishing vessels: operator ID number vs. SIREN number
4.1.2 Profile of the direct and ultimate owners of French Atlantic fishing vessels ..93
4.1.3 Global Ultimate Owners (GUOs)
4.2 Exploration of case studies: added value of the protocols and issues encountered
4.2.1 Case study 1: Euronor
4.2.2 Case study 2: Scapêche
4.2.3 Case study 3: Fisher “X”
5.1 Data issues and the construction of a Vessel-Company Register for France
5.2 The customized protocols: application and scope for EU-wide analysis
5.3 Profile of the direct and ultimate owners of French Atlantic fishing vessels
5.4 Policy recommendations and future research
Chapter 3: Measuring concentration in the French Atlantic harvesting sector: a preliminary analysis
1.1 Concentration in the fishing industry
1.2 Guarding against concentration in market-based economies
1.3 Evidence for capital accumulation and concentration in the French fishing industry
1.4 Measuring concentration of fishing assets in the EU fishing industry
1.5 Chapter aims and objectives
2.1 Case study description
2.2.1 Fleet, production and operator data
2.2.2 Ownership data
2.2.3 Concentration analysis at different levels of ownership
2.3 Concentration indices
2.3.1 Concentration Ratios (CR4, CR8, CR20)
2.3.2 The Herfindahl-Hirschman Index (HHI)
2.3.3 The Gini coefficient
2.3.4 The Theil Index
2.4 Scope, objectives and limitations of concentration analysis in this chapter
3.1 Trends in multi-vessel ownership based on fleet register data
3.2 Industry concentration at different hierarchical levels
3.2.1 Atlantic fleet in 2018
3.2.2 Case studies
3.3 Evolution of industry concentration 2008-2018
3.4 Contribution of subgroups to concentration: the decomposition of the Theil Index .
3.4.1 On the vessel level
3.4.2 On the operator level
4.1 Accumulation of fishing vessels
4.2 Concentration and foreign ownership
4.3 Hierarchical levels considered: sense or non-sense?
4.4 Data issues
Chapter 4: Navigating institutional change in the French Atlantic fishing sector: how do artisanal fishers obtain and secure fishing opportunities?
1.1 The French artisanal fishing model
1.2 Artisanal fisheries in a changing institutional environment
3 The legal framework of French fisheries management
3.1 Fishing opportunities for EU species: history and current situation
3.2 Fishing opportunities for non-EU species: history and current situation
4.1 An exploration of second order injustices
4.1.1 Fishers’ perceptions about resource access
4.1.2 An implicit and unregulated market for fishing opportunities
4.1.3 Institutional buffers as counter-measures: preemptions and track records reserves
4.2 An exploration of first order interactions
4.2.1 Membership in fisheries committees and POs
4.2.2 Innovative firm governance as a way to secure fishing opportunities
5 Conclusions and policy recommendations
General discussion and conclusion
1 Summary of the main findings
2 Recontextualization of the findings and main contributions
2.1 What can be expected from organizational types?
2.2 The French Atlantic fleet: industry drivers, scale economies and opportunities for rent capture
2.3 Methodological contributions to ownership analysis in the EU fishing industry
3 Policy implications
4 Limitations of the PhD research
5 Perspectives and further research
5.1 Ownership analysis in an EU setting
5.2 Who captures the rents of fishing?
5.3 Perspectives for small-scale fisheries