The City of Mackinac Island has filed a countersuit against two ferry companies, asserting it has the right to regulate fees for parking and fares and claiming that the companies’ common ownership created a monopoly and eliminated competition.

The counterclaims, filed earlier this month in U.S. District Court for the Western District of Michigan’s Northern Division, continue a dispute over whether Shepler’s Inc. and Arnold Transit Company are operating as a monopoly. Both are owned by Naples, Florida-based Hoffmann Family of Companies, also known as Hoffmann Marine.

“The City has determined under its authority to ‘regulate and license ferries,’ which was delegated exclusively to the City through the Michigan Legislature’s adoption of the City’s Charter, that the common ownership and control by Hoffmann Marine of Shepler’s and (Mackinac Island Ferry Company)/Arnold … has eliminated competition in ferry boat service to and from the City and created a monopoly in the provision of such ferry boat services,” the lawsuit said. “The City therefore ‘has the right to assert its jurisdiction over schedules and fares to the extent permitted by present law,’…”

Neither Hoffmann Marine's attorney Vince Reuter nor City Attorney Erin Evashevski immediately responded Wednesday to requests for comment.

In March, Shepler's Inc. filed a complaint in federal court against the city over what it calls a maritime contract dispute. It alleged the city has overstepped its authority in regulating the company's fares and schedules for ferries, prices for parking and its business operations.

In 2022, Hoffmann Marine purchased Shepler's Mackinac Island Ferry. In June, the company acquired the Mackinac Island Ferry Co. and its Star Line jets, later rebranding to a historic name, Arnold Transit Company. In the fall, the company, with the city's approval, temporarily paused operations of the Mackinac Island Ferry Co. fleet for what Hoffmann Marine said were $4 million in repairs. Ferry transportation shifted to Shepler's during that time. The situation prompted some to question the impact that single-company ownership could have on the market

According to the city's counterclaim, Shepler’s and MIFC/Arnold, through their owner Hoffmann Marine, proposed in the fall identical $2 increases to all children and adult ticket rates for the 2025 season. In December, the city council voted to freeze the rates that were in place for the 2024 season.

In its countersuit, the city said that "Hoffmann Marine, Shepler’s, and MIFC/Arnold, acting together as a monopoly of ferry services to Mackinac Island, will — unless regulated by the City through its exclusive authority delegated by the Michigan legislature — set supra-competitive prices and charges in connection with transportation by ferry to Mackinac Island that maximize their monopoly profits and harm the City, its residents and visitors, businesses on Mackinac Island, and their employees."

Parking is also a factor in the case as Shepler's and MIFC claimed in the initial lawsuit that the city has no right under the franchise agreements to approve parking rates. Earlier this year, the company's attorneys submitted proposed 2025 parking rates to the city council for the lots in St. Ignace and on Mackinac Island, which the city rejected. The city demanded the business provide information on 2023 and 2024 parking rates, lot locations and capacities, according to the firm's complaint. The city also told the company to "remove all reference to the unapproved parking rates from their websites and advertisements."

In its countersuit, the city said it was within its rights and that "The Michigan Legislature, through the adoption of the City’s Charter, conferred on the City the exclusive authority to 'regulate and license ferries” providing services to the City, including regulating parking fees, when the City has determined — as here — that there is 'no competition. . . . in ferry boat service to and from the City.'"

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