Competition regulator bars Eurotunnel’s ferry service

The UK’s Competition Commission is to force Eurotunnel’s MyFerryLink cross-Channel ferry service to cease operating from Dover.

The Commission has ruled that Eurotunnel’s interest in the ferry operation, which began last year when it purchased three ferries from bankrupt cross-Channel provider, SeaFrance, could be detrimental to passenger prices. Operating the Channel Tunnel and a ferry service would provide Eurotunnel with more than 50 percent of the Dover-Calais market and as a result prices would rise, the Commission stated.

The Commission also found that the prime reason for Eurotunnel’s purchase of the ferries was to prevent its cross-channel competitor, DFDS/LD lines from buying them. The Commission’s report said, ‘Eurotunnel was concerned that if DFDS/LD obtained the assets cheaply, it could drive down prices for customers.’

If the Commission failed to take action against Eurotunnel, it feared that one of the three present operators on the Dover to Calais route would be likely to leave the market, and Eurotunnel’s share would grow larger still. In order to ensure that the ferries will not be operated by a company with an interest in the rail service, Eurotunnel will be given a limited amount of time to sell the two biggest vessels to competitive purchasers.

Alasdair Smith, chairman of the Eurotunnel/SeaFrance inquiry group and Competition Commission deputy chairman, stated, ‘It cannot be good for competition when Eurotunnel, which already holds a market share of over 40 percent, moves into the ferry business – particularly when it did so to stop a competitor from buying the ferries. Customers would lose out from Eurotunnel increasing its share even further and being able to raise prices on the tunnel services.

‘In view of the current excess capacity on the Dover-Calais route, it also seems likely that one of the current ferry operators will exit in the short term if we don’t take action.

‘Customers will be better off if there are two independent ferry companies competing with the tunnel than if one of the two is owned by Eurotunnel. By preventing Eurotunnel from operating ferry services out of Dover, we can protect the interests of customers.

‘We did consider ordering Eurotunnel to sell the ferries but we were conscious of the uncertainties and possible delays affecting a sale. We can achieve the same outcome this way and it should be clear that we will not be diverted from ensuring the best result for customers.’

Eurotunnel responded that the ruling was ‘incomprehensible and seriously disproportionate’, and its chairman and chief executive, Jacques Gounon, commented, ‘This decision by the Competition Commission will reduce the choice of services across the Straits of Dover to the detriment of the consumer. It will inevitably lead to an increase in the price of a crossing.’

The company has pledged to appeal the ruling.