Eurotunnel should be barred from operating its MyFerryLink service from Dover to Calais, the UK competition authority ruled today.
The Channel Tunnel operator will be given six months to stop running services from the date of an order to that effect.
Eurotunnel could also find another owner for the MyFerryLink business, if that made the ferry business completely independent of Eurotunnel.
The decision comes as a result of the Competition and Markets Authority confirming that it has jurisdiction over Eurotunnel’s 2012 acquisition of three ferries and related assets that previously belonged to defunct ferry operator SeaFrance.
The CMA said developments in the market since the Competition Commission’s original decision in June 2013 do not provide any reason to change that decision.
Although passenger growth on the Dover-Calais route has been greater than originally anticipated, at least two of the ferry operators are still making substantial losses, the CMA said.
Alasdair Smith, chairman of the Eurotunnel Remittal Group and CMA panel deputy chairman, said: “With two of the operators on the Dover-Calais route making substantial losses, it remains our view that the current level of competition on the route is unsustainable and likely to lead to the exit of a competitor.
“That will leave Eurotunnel, which is funding MyFerryLink’s current losses, as one of only two ferry operators in addition to owning the competing rail link.
“Eurotunnel’s purchase of the ferries means it now has over half the market and its share will rise further if competitors exit.”
He added: “It would be much better for passengers and freight customers to have three competing cross-channel operators – with Eurotunnel running the rail link and two independent operators on the ferry route.
“We will stop MyFerryLink running services out of Dover while it is owned by Eurotunnel but we would not prevent Eurotunnel from finding a suitable purchaser that was completely independent of Eurotunnel to operate the ferry service.
“Our primary concern is to protect competition on the route for the benefit of customers. We are conscious of the potential effect of our decision on the jobs of the MyFerryLink workers.
“However, there will also be job losses if MyFerryLink remains on the route and another operator leaves.
“In order to reduce disruption and uncertainty for ferry customers, and to enable Eurotunnel to find an independent purchaser for the business if it chooses to sever its links with the ferry operations, there will be a six-month notice period before the ban comes into effect.”
Eurotunnel said that by removing one competitor from the market, the CMA is creating a de facto duopoly in the maritime sector which will lead to an increase in prices for consumers and a reduction in revenues for the ports of Dover and Calais, without taking account of the “social drama” it will generate for the 600 employees.
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