The Competition and Markets Authority provisionally confirmed today an earlier decision by the Competition Commission that Eurotunnel should be barred from operating a ferry service from Dover.
This follows a review of whether circumstances had changed enough in the market for it to alter its original decision.
The Channel Tunnel operator acquired three former SeaFrance ferries in August 2012 to re-commence service on the Dover–Calais route under the MyFerryLink brand.
Alasdair Smith, CMA deputy panel chair and chairman of the Eurotunnel Remittal Group, said: “MyFerryLink is making losses and being funded by Eurotunnel. This is causing the current level of competition on the Dover–Calais route to be unsustainable and is likely to lead to the exit of a competitor.
“The interest of cross-Channel customers, both passengers and freight, will not be well served if Eurotunnel ends up as one of only two ferry operators in addition to owning the competing rail link.
“Eurotunnel’s purchase of ferries means it now has over half the market and its share will rise further if competitors exit.
“It’s much better to have three competing cross-Channel operators – Eurotunnel running the rail link and two independent operators on the ferry route.
“We have looked again at our proposed solution of banning Eurotunnel from operating ferries from Dover. We don’t think any of the alternatives proposed to us will restore effective competition on the Channel.
“A six-month notice period before the ban comes into effect will minimise disruption and uncertainty for ferry customers.
The Competition Commission ruled last June that by adding the ferries to its existing Channel Tunnel business Eurotunnel would increase its share of the market to over half – and was likely to end up as one of only two ferry operators on the route – leading to price rises for passengers and freight customers.
Following a legal challenge by Eurotunnel to that decision, the Competition Commission considered again whether the acquisition of the ferries qualifies as a merger under the UK merger control rules.
The issue was then remitted to the Competition Commission by the Competition Appeal Tribunal (CAT).
In March the Competition Commission provisionally ruled that it did have jurisdiction to make the decision.
The CMA took over the case from the Competition Commission last month, and will now consider the responses it has received to its provisional decisions before publishing its final decision next month.