Eurotunnel’s cross channel ferry services operating under the MyFerryLink brand from Dover are to be stopped by the competition regulator.
The Competition Commission today ruled that Eurotunnel’s acquisition of three ferries from defunct SeaFrance last year could mean higher prices for cross channel travellers.
The commission concluded that Eurotunnel would increase its market share to over half and prices would rise by adding ferry services to its existing Channel Tunnel business.
A final report into the purchase of the ferries confirms provisional findings published in February.
Speaking after the decision was announced, MyFerryLink’s UK managing director Robin Wilkins said it was “business as usual” on their Dover to Calais route.
The commission found that Eurotunnel decided to acquire the SeaFrance ferries in order to prevent ferry operator DFDS/LD LInes from buying them.
“Eurotunnel was concerned that if DFDS/LD obtained the assets cheaply, it could drive down prices for customers,” the report said.
It also found that one of the three current ferry operators on the Dover-Calais route was likely to exit in the short term, if the competition authority took no action, in which case Eurotunnel could gain an even larger share of the cross-Channel market.
Eurotunnel will be given a limited period to sell its two largest ferries to one or more purchasers.
This will ensure that all Dover-Calais ferry services are run by companies which are independent from the competing rail link.
Chairman of the Eurotunnel/SeaFrance inquiry group and Competition Commission deputy chairman Alasdair Smith said: “It cannot be good for competition when Eurotunnel, which already holds a market share of over 40%, 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.”
He added: “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 reacted by saying it found the Competition Commission ruling as “incomprehensible and seriously disproportionate” and pledged to appeal the ruling.
It claimed the decision was not based on any concrete facts, “but solely upon a random association of virtual hypothesis”.
Eurotunnel chairman and chief executive Jacques Gounon said: “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”.
Wilkins said: “I think the important message is that it’s business as usual. We are providing the highest rated service at the lowest cost on the Channel and increasing choice for customers, who are putting their faith in us.
“Our competitors believe they have more chance of stopping us in the courts than in the marketplace. We offer the best service on the Channel and we believe we should let the customers decide.”
Wilkins added : “We believe that a solution to the ownership issue can be found in the coming months and that we will remain in the market, albeit with a different structure.”