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Eurotunnel Ferry Buy May Drive Up Prices: U.K. Regulator

Feb. 19 (Bloomberg) -- The operator of the Channel Tunnel linking Britain and France by rail may raise prices after buying a ferry service between the countries to keep it from a competitor, a U.K. antitrust regulator said.

Groupe Eurotunnel SA’s 65 million-euro ($87 million) purchase of three vessels from the former ferry operator SeaFrance during its liquidation may drive up prices for passengers traveling by both sea and tunnel, the Competition Commission said today in a statement on its provisional findings. Eurotunnel already controls more than 40 percent of the cross-channel market, the watchdog 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,” Alasdair Smith, the Competition Commission’s deputy chairman, said in the statement.

Three ferry services have been operating between Dover, England, and Calais, France, since SeaFrance ceased operations in November 2011. One of the remaining companies is likely to exit the market as a result of excess capacity on the route, and customers will be better off if the remaining ferry operators are independent, the regulator said.

During SeaFrance’s liquidation, Paris-based Eurotunnel bought three of the company’s four ferries and created MyFerryLink in August 2012. The Competition Commission says Eurotunnel made the deal to block a unit of DFDS A/S, Scandinavia’s biggest ferry operator, from buying the ships.

Eurotunnel will challenge the provisional findings, the company said today in a statement. The deal was cleared by France’s competition authority, it said.

Eurotunnel’s “acquisition of the ex-SeaFrance ships, nine months after that company ceased all operations, and the creation of a new competitor in the cross-channel marketplace, MyFerryLink, constitutes an increase in competition and brings additional choice for customers,” Eurotunnel said.

A final report is scheduled to be published by the London-based Competition Commission by April 14.

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net

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