Eurotunnel service prohibited

The UK Competition Commission (CC) has prohibited Groupe Eurotunnel from operating ferry services from the Port of Dover, due to pricing concerns.

In a report published on 6 June, the CC indicated that by adding ferry services to its existing Channel Tunnel business, Eurotunnel would increase its market share to more than 50 per cent and prices would rise due to lack of competition on the route.

Eurotunnel provides rail transport services to passengers and freight customers, runs the Le Shuttle car carrier service and has acquired three ferries following the liquidation of its former close competitor SeaFrance, in January 2012.

The three vessels recommenced service on the Dover to Calais route on 20 August 2012, operating under the MyFerryLink brand, which is primarily run by former SeaFrance employees.

“It cannot be good for competition when Eurotunnel – which already holds a market share of over 40 per cent – moves into the ferry business, particularly when it did so to stop a competitor from buying the ferries,” said chairman of the Eurotunnel/SeaFrance Inquiry Group and CC deputy chairman, Alasdair Smith. “Customers would lose out from Eurotunnel increasing its share even further and being able to raise prices on the tunnel services.”

After finding evidence that Eurotunnel acquired the SeaFrance ferries in order to prevent ferry operator DFDS/LD obtaining the assets cheaply and reducing customer prices, the CC also found that one of the three current ferry operators on the Dover–Calais route was likely to exit in the short term.

Emphasising the importance of preventing Eurotunnel from gaining an even larger share of the cross-Channel market, Smith said: “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.”

Eurotunnel is set to appeal the decision which it said in a written statement is “incomprehensible and seriously disproportionate” and “not based on any concrete facts, but solely upon a random association of virtual hypothesis.”

Jacques Gounon, chairman and CEO of Groupe 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 company said that prohibiting its ferry services will deprive the Dover and Calais ports of significant revenue, that it contradicts the decision of the French Competition Authority and contravenes the French Commercial Court’s decision to sell the SeaFrance assets, which are subject to a requirement preventing Eurotunnel from selling the ferries until 2017.

Before the prohibition at Dover takes effect, Eurotunnel will be given a limited period in which to sell its two largest ferries to one or more purchasers approved by the CC to ensure that all Dover–Calais ferry services are run by companies independent of the competing rail link.

Rebecca Gibson
By Rebecca Gibson
06 June 2013