SeaFrance ferry sale could raise Eurotunnel prices, watchdog warns
by business editor Trevor Sturgess
Competition watchdogs have provisionally ruled Eurotunnel's
purchase of three ferries from the defunct SeaFrance could trigger
higher prices for customers.
The Competition Commission has been probing the decision by the
Channel Tunnel operator to buy the ships and lease them to the new
French-owned MyFerryLink Dover-Calais service.
In its provisional findings, it said that by adding ferry
services to its existing Channel Tunnel business, Eurotunnel would
significantly increase its already high share of the cross-Channel
market and that prices could rise.
The Commission also alleged Eurotunnel acquired the
SeaFrance ferries "in order to prevent ferry operator DFDS/LD Lines
from buying them." It claimed Eurotunnel was concerned that if
DFDS/LD obtained the assets cheaply, it could drive down
Inquiry chairman Alasdair Smith said: "It would seem that
Eurotunnel moved into the ferry business because it was concerned
at the increased competition it would face if another operator
bought the assets.
"Given that the company already holds a market share of over
40%, we're concerned that customers could 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
is likely to exit in the short to medium term. We think that
customers will be better off if there are two independent ferry
companies competing with the tunnel than if one of the two is owned
Eurotunnel bought three
ships from the defunct SeaFrance
Eurotunnel vowed to challenge the findings,
contending existing ferry operators had sought to use the
inquiry process "to protect their own interests from new entrants
and increased competition".
It considered the acquisition of the ships nine months
after SeaFrance ceased operations - and the creation of a new
competitor constituted "an increase in competition and brings
additional choice for customers".
Jacques Gounon, Eurotunnel Group chairman, said: "Eurotunnel
intends to continue to work with the Competition Commission to
allay the concerns raised by existing ferry operators and to
demonstrate that the creation of MyFerryLink is a good thing for
the market as it is both pro-customer and pro-competition."
The Commission is expected to publish its final report in
Ferry rivals P&O and DFDS had already protested to the
Commission about Eurotunnel's purchase of the ships.
A P&O spokesman said: "We welcome the Competition
Commission's concerns about Eurotunnel's expansion into the ferry
market, and we look forward to the commission's final report."
Meanwhile, P&O has also raised concerns with the Office of
Fair Trading about Eurotunnel's bid for a 50-year concession to run
the ports of Calais and Boulogne.
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