Business

Monday 22 January 2018

Competition watchdog bans Eurotunnel from running ferry service to France

Holly Williams

CHANNEL tunnel operator Eurotunnel is being banned from operating ferry services from Dover amid fears it could use its dominance of cross-Channel transport to hike prices.

 

The Competition Commission said Eurotunnel's MyFerryLink venture saw it control more than half of the cross-Channel market and said it needed to take action to protect consumers.

Eurotunnel launched MyFerryLink last August with services between Dover and Calais after it snapped up three boats from collapsed operator SeaFrance.

But the commission said it believed Eurotunnel only bought the boats to prevent ferry group DFDS/LD from buying them at a cut price and driving down prices for passengers.

It also said it feared one of the current ferry operators was likely to quit in the short term, which could hand Eurotunnel an even bigger share of the market.

Alasdair Smith, chairman of the inquiry group and deputy chairman of the commission, said: "It cannot be good for competition when Eurotunnel, which already holds a market share of over 40pc, 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."

He added it would be better if there were two independent ferry companies competing with the tunnel.

"By preventing Eurotunnel from operating ferry services out of Dover, we can protect the interests of customers," he said.

Eurotunnel vowed to appeal against the ban, which it said was "incomprehensible and seriously disproportionate".

Jacques Gounon, chairman and chief executive of Eurotunnel, 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."

The commission's decision throws MyFerryLink's 600-strong workforce - including 100 staff at Dover - into uncertainty and could have an impact on passenger demand at the height of the booking season.

The commission said it would not impose the ban immediately, instead offering Eurotunnel limited time to offload its key MyFerryLink services.

But Eurotunnel, which now runs 16 ferry crossings a day, would have to get clearance from the French Commercial Court, which ruled at the time of the purchase from SeaFrance that the ferries could not be resold for five years, to offer security to employees.

SeaFrance, which was owned by French state-owned rail firm SNCF, went into liquidation in November 2011 and Eurotunnel bought three of its four ferries for 60 million euros (£52 million) last year.

P&O Ferries, DFDS and MyFerryLink all run ferries on the route.

Dover Harbour Board said it would "take time to properly study the decision and its implications".

"The port's interest lies in fulfilling its commitment to provide the best customer service as well as job security and opportunity in the local community," it added.

MyFerryLink said it was "business as usual" and that bookings were safe.

UK managing director Robin Wilkins added: "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."

He went on: "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."

Press Association

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business