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U.K. Blocks Eurotunnel Channel Ferry Service France Endorsed

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June 6 (Bloomberg) -- Eurotunnel Group SA was barred by the U.K. Competition Commission from operating a ferry service between France and Dover in the U.K. on concern it would give it too much dominance on the Channel traffic route.

The watchdog blocked the service for two years and set restrictions for another eight. Eurotunnel will appeal the decision, the Paris-based company said. The French transport ministry said it will take up the matter the matter with U.K. authorities to find a compromise after France had backed the deal.

“It cannot be good for competition when Eurotunnel, which already holds a market share of over 40 percent, moves into the ferry business,” Alasdair Smith, deputy chairman of the competition commission, said in a statement.

Eurotunnel acquired three ferries from French rail operator SNCF’s defunct SeaFrance ferry arm last year with the aim of augmenting its London-to-continent rail service with Calais-to-Dover on-water operations. The service, rebranded MyFerryLink, would have provided backup capacity when travel through the tunnel is disrupted, the company had argued.

“This decision by the Competition Commission will reduce the choice of services across the Straits of Dover to the detriment of the consumer,” said Jacques Gounon, Eurotunnel’s chairman and chief executive officer. “It will inevitably lead to an increase in the price of a crossing.”

British anti-trust officials determined that Eurotunnel acquired SeaFrance assets, including three vessels, to stymie competition by keeping Copenhagen-based DFDS A/S from buying them, the Competition Commission said.

The decision creates an “unprecedented situation” where two European national regulators differ after France backed the deal, the French transport ministry said in a statement today. The U.K. review accorded excessive importance to the idea the ship purchase would give Eurotunnel market restricting power.

Forcing a sale of some of the ships could have caused delays, it said. Nevertheless, Eurotunnel could sell the two largest ferries approved by the regulator to gain clearance to operate to Dover in two years, the competition authority said.

The French ministry said it would “do everything within its power” to protect the more than 500 jobs at MyFerryLink, noting the company had won nine percent of the freight and six percent of passenger market in only 10 months.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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