Eurotunnel labels the decision, made over fears the firm would raise prices with a market share over 50%, as ‘solely based on random association of virtual hypothesis’
Eurotunnel has said it will immediately appeal a decision made by the Competition Commission (CC) on June 6 to prohibit it from operating a ferry service from the port of Dover, a decision which it branded ‘incomprehensible and seriously disproportionate.’
Eurotunnel acquired three vessels from SeaFrance after it went into liquidation in November 2011. It began leasing them out to the MyFerryLink service, run primarily by former SeaFrance employees, in August 2012.
The CC claimed the ferry service gave Eurotunnel a market share above 50% for cross- channel services, which it said was bad for competition and would lead to higher prices. It also claimed the ferries were bought to prevent a rival firm, DFDS/LD, from buying them cheaply and driving down cross-channel prices.
The CC also stated that DFDS could be driven away from the channel, leaving only P&O to compete.
Chairman of the Eurotunnel/ SeaFrance Inquiry Group and CC Deputy Chairman, Alasdair Smith, said: “It cannot be good for competition when Eurotunnel, which already holds a market share of over 40%, 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.”
In a statement, Eurotunnel claimed the CC’s decision:
- Is not based on any concrete facts, but solely upon a random association of virtual hypothesis;
- Restructures the maritime activity across the Straits of Dover into a duopoly, thereby disadvantaging consumers;
- Prohibits access to a port, in total contradiction with the freedom of movement incarnate in Europe;
- Deprives the Ports of Dover and Calais of significant revenues; and
- Ignores the ruling of the Paris Commercial Court linking the sale of the assets of SeaFrance with a requirement not to re-sell them for a period of five years and is in contradiction with the decision of the French Competition Authority.
Jacques Gounon, Chairman and Chief Executive Officer of Groupe Eurotunnel SA, commented: “This decision by the CC 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”.