Eurotunnel loses fight to keep Dover-Calais ferry service

The Competition and Markets Authority has issued a statement today provisionally backing an earlier decision by the Competition Commission that Eurotunnel should be barred from operating a ferry service from Dover.

Its decision comes after a review of whether circumstances had changed enough in the market for it to change its original decision.

In 2012, Eurotunnel bought the three ferries and related assets of the former SeaFrance and restarted a ferry service on the Dover-Calais route under the MyFerryLink brand.

But last June the Competition Commission ruled that by adding the ferries to its existing Channel Tunnel business, Eurotunnel would increase its share of the market to over half, which was likely to lead to the failure of a rival and, in turn, to higher prices.

Eurotunnel launched a legal challenge and the Competition and Markets Authority (CMA) took over the case in April.

It found that although passenger growth on the Dover-Calais route has been more than expected, at least two of the ferry operators are still making substantial losses.

Alasdair Smith, CMA deputy panel chair and chairman of the Eurotunnel Remittal Group, said: "MyFerryLink is making losses and being funded by Eurotunnel. This is causing the current level of competition on the Dover-Calais route to be unsustainable and is likely to lead to the exit of a competitor.

"The interest of cross-Channel customers, both passengers and freight, will not be well served if Eurotunnel ends up as one of only two ferry operators in addition to owning the competing rail link. Eurotunnel’s purchase of ferries means it now has over half the market and its share will rise further if competitors exit.

"It’s much better to have three competing cross-Channel operators – Eurotunnel running the rail link and two independent operators on the ferry route.

"We have looked again at our proposed solution of banning Eurotunnel from operating ferries from Dover. We don’t think any of the alternatives proposed to us will restore effective competition on the Channel."

He said a six-month notice period before the ban comes into effect will minimise disruption and uncertainty for ferry customers.

"The CMA will now consider the responses it has received to its provisional decisions before publishing its final decision in the remittal next month," he added.

A spokesman for Eurotunnel said the decision was wrong.

"Groupe Eurotunnel believes that, when stating that there has been no material change, the CMA simply seeks to justify the Competition Commission’s original analysis, despite the change in the facts relating to the market: market growth has been far greater than the 2% predicted by CMA and DFDS continues to operate successfully in the market, whereas the Competition Commission’s original decision was based on the premise that DFDS would rapidly be forced to exit the market.

"Groupe Eurotunnel believes that the CMA’s preliminary decision is based upon an erroneous analysis of the significant changes in the cross Channel Ferry market since the Competition Commission’s original findings relating to the market in 2012."