CC questions Eurotunnel ferry deal
19 Feb 2013
Cross-Channel passengers and freight customers could face higher prices following Eurotunnel’s acquisition of three ferries from the former ferry operator, SeaFrance, the Competition Commission (CC) has provisionally found today.
According to a summary of the CC’s provisional findings published today, by adding ferry services to its existing Channel Tunnel business, Eurotunnel would significantly increase its already high share of the cross-Channel market and prices would rise.
The CC also found that Eurotunnel decided to acquire the SeaFrance ferries in order to prevent ferry operator DFDS/LD from buying them. Eurotunnel was concerned that if DFDS/LD obtained the assets cheaply, it could drive down prices for customers.
Chairman of the Eurotunnel/SeaFrance Inquiry Group and CC Deputy 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 per cent, 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 by Eurotunnel.
‘We will now look at how we can protect competition in this market. Whilst our focus is primarily on customers’ interests, we will also consider carefully the interests of the ferry employees.’
Eurotunnel provides rail transport services to both passengers and freight customers across the narrowest section of the English Channel via the Channel Tunnel. Until November 2011, SeaFrance provided ferry services to both passengers and freight customers across the same section of the English Channel between Dover and Calais.
Three of the four vessels and other related assets operated by SeaFrance at the time of its liquidation were subsequently bought by Eurotunnel which then launched ferry services between Calais and Dover on 20 August 2012 under the MyFerryLink brand.
As well as the provisional findings summary, the CC has also published a notice of possible remedies, outlining ways of addressing the anti-competitive effects of the acquisition. The full provisional findings report will be published shortly. The documents and all other information relating to the investigation are available on the inquiry home page.
The CC is expected to publish its final report by 14 April 2013.
Any interested party is invited to respond to the provisional findings and notice of possible remedies, in writing, by no later than 12 and 5 March 2013, respectively. To submit evidence, please email Eurotunnel.SeaFrance@cc.gsi.gov.uk or write to:
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The members of the Eurotunnel/Sea France Inquiry Group are: Alasdair Smith (Chairman of the group and CC Deputy Chairman), Robin Aaronson, Ivar Grey and Malcolm Nicholson.
3. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
4. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
5. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.
6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.