Short-sea routes are EC’s next port of call

Merger

Short-sea routes are EC’s next port of call

Short-sea routes are EC’s next port of call

Merger’s period of consent nears expiry

THE short-sea routes, from Dover to Calais and Folkestone to Boulogne, are coming under the watchful eye of the European Commission this autumn.

The EC’s three-year approval for the March 1998 merger between P&O European Ferries and Stena Line is nearing its expiry. The limited period of consent was given by competition regulators to allow them to assess the impact of the joint venture on the cross-Channel market after it had been in place for a few years.

They feared it would result in a duopoly on the Channel between P&O Stena Line and Eurotunnel. But that has not happened. There are still three ferry companies on the short sea – P&O Stena Line, Hoverspeed and SeaFrance – which operate alongside Eurotunnel. Fares are still competitive even though they have increased by 20% due to the abolition of duty-free in July last year.

SeaFrance managing director Robin Wilkins said: “We objected to the merger as we felt it was detrimental to competition but we are still here and the market is as competitive as ever.

“Taking one player off the route has made the operation of Dover port easier. There is a better allocation of space, which means we can offer a better service to customers.”

P&O Stena Line is submitting a formal application to be allowed to continue the joint venture and believes any assessment will be a formality.

“The merger benefited the whole short-sea ferry industry by taking out capacity and enabling the industry to put up a viable competition to the tunnel,” said a spokesman.

Two ferries were taken out of service on the Dover-Calais route when the joint venture first started, reducing the fleet from eight to six. The number of ships has since risen to seven.

Hoverspeed was expected to be one of the first casualties when the tunnel opened in 1995, but instead it has expanded its services, taking over the Dover-Ostend and Newhaven-Dieppe routes.

EC competition commission spokeswoman Amelia Torres said it will be looking into the issues of price and frequency of service to see how consumers have benefited from the merger. One spin-off from the merger has been an enormous level of investment in the on-board product (see box below).

P&O Stena Line inherited six very different ships and has spent millions of pounds improving service. Hoverspeed is also competing heavily on product, particularly investing in its 1st premier service to offer dedicated lounges on-board the ferries and in its terminals.

Choice: 1998’s merger has not created the expected duopoly on cross-Channel routes to places such as Calais

P&O Stena Line: will submit an application to continue the venture