Eurotunnel ‘Astonished’ as Regulator Blocks Ferry Business

Groupe Eurotunnel SA said a U.K. Competition and Markets Authority ruling that bars it from running ferries across the English Channel creates a duopoly among existing operators and threatens hundreds of jobs.

The Channel Tunnel operator said in a statement that it is “astonished” by the affirmation of a 10-year prohibition on it entering the Dover-Calais ferry market, the shortest sea route between Britain and France and parallel to its rail link. Eurotunnel said it will appeal the “unjust” decision.

Today’s ruling comes after the U.K. Competition Appeal Tribunal in December overturned a June decision on the grounds that Eurotunnel’s takeover of the SNCF’s SeaFrance operation may have amounted to the purchase of three ships rather than a business, since the company had ceased operating. The CMA said that a merger situation applies and that its ruling stands.

“The decision is a denial of the reality of the situation,” Eurotunnel Chief Executive Officer Jacques Gounon said in the company’s release. “It penalizes the consumer and puts 600 people out of work without any real justification.”

Eurotunnel currently has 37 percent of the so-called short-straits rail and ferry market, the Paris-based company said. P&O Ferries has 29 percent, DFDS A/S of Denmark has 24 percent and the Eurotunnel ferry operation based on SeaFrance -- renamed MyFerryLink -- has 9 percent, it said, showing that competitors are “in no way threatened” by the operation.

Six-Month Deadline

The CMA said in a statement that Eurotunnel already controls half the market and that the P&O and DFDS operations are running at a loss, so that if the current level of competition continues one will inevitably exit.

“It would be much better for passengers and freight customers to have three competing cross-Channel operators, with Eurotunnel running the rail link and two independent operators on the ferry route,” Alasdair Smith, deputy chairman of the CMA panel, said in the release.

SeaFrance constituted an enterprise because its purchase allowed Eurotunnel to establish ferry operations quicker, cheaper and with less risk than if the rail company had bought alternative assets separately, the regulator said.

Eurotunnel must stop running the MyFerryLink service within six months, though it may sell the business if all links are severed. While jobs are a concern, positions would also be lost were a rival ferry operator to collapse, according to the CMA, which replaced the Competition Commission in April.

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