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MyFerryLink under threat of closure after Competition Commission says Eurotunnel's acquired an enterprise when it bought former SeaFrance ferries
08:28, 21 March 2014
Cross-channel operator MyFerryLink is back under risk of closure following the latest announcement from the Competition Commission today.
In a provisional ruling the body has confirmed it believes Eurotunnel’s acquisition of three ferries formerly belonging to SeaFrance could have broke merger-control rules designed to protect against monopolies.
It concluded Eurotunnel had essentially taken over the running of SeaFrance when it bought the three vessels after it went into administration in April 2012.
The Channel Tunnel operator then launched MyFerryLink in August 2012, run by 560 ex-SeaFrance staff, known as SCOP SeaFrance.
Competition Commission deputy chairman Alasdair Smith said: “It is our provisional view that Eurotunnel in effect acquired a business that was already geared up to run a ferry service between Dover and Calais, using assets that had been proven in practice to be suitable for that activity.
“It would have faced a much longer, more expensive and riskier process to get the service up and running if it had tried to buy alternative assets in the market.
“We found that the commercial operability of the assets had not been greatly affected by SeaFrance’s liquidation.”
“[Eurotunnel] would have faced a much longer, more expensive and riskier process to get the service up and running if it had tried to buy alternative assets in the market..." - Competition Commission's Alasdair Smith
In its original decision, published in June last year, the Competition Commission decided that by adding ferries to its existing Channel Tunnel business, Eurotunnel would increase its cross-Channel market share to over half.
It said this would cause prices to rise for passengers and freight customers, with a “substantial lessening of competition” as a result.
However, following a legal challenge by Eurotunnel and SCOP SeaFrance, a judgement by the Competition Appeal Tribunal in December forced the commission to look again at whether it had the right to rule on the case.
The decision today confirms the body does have the right to rule on the case.
In a statement, Eurotunnel expressed disbelief at the findings.
It said: “Groupe Eurotunnel cannot understand how it is possible to acquire a company six months after it has ceased to exist and nine months after the closure of all operations.
“Groupe Eurotunnel also points out that the decision of the Competition Commission is completely contradictory to that expressed previously by the French competition authorities.
“Groupe Eurotunnel emphasises that over the past two years the market has in no way been negatively affected by MyFerryLink.
“On the contrary statements by a competitor confirming that it would have to leave the Short Straits are, in the light of the evidence from public statements about their financial strength and ambitions to expand, entirely incredible.
“To conclude, if prior to its final decision the Competition Commission does not wish to review its perspective on the competition which exists across the Strait of Dover in the light of the current reality, and not based on suppositions from two years ago, Groupe Eurotunnel will withdraw its ferries from the Channel.”
It was Dover to Calais operators P&O Ferries and DFDS who originally complained to the Office of Fair Trading when Eurotunnel launched MyFerryLink.
In a brief statement, DFDS said the company “is pleased with the UK Competition Commission’s provisional findings”.
It added: “As the findings announced today are provisional, we are not able to comment further on this at the moment.
“We can only reaffirm our objective, which is to act in the best interests of our employees and customers. This can only be achieved if conditions for fair competition are established in the Channel.”
The Competition Commission aims to make its final decision by early May.
It is inviting comments on the provisional findings, which can be made by emailing Eurotunnel.SeaFrance@cc.gsi.gov.uk.
