Running a French Holiday Gite in Rural Brittany

Saturday, March 16, 2013

There's a barney brewing above and below the Straits of Dover

Changing topic slightly, I've been following with interest recent developments in the emerging spat between Eurotunnel and the Competition Commission over the recently launched MyFerryLink.

Last summer I wrote about SeaFrance going into liquidation and then in June Eurotunnel announced that they had bought 2 of the 3 defunct SeaFrance vessels, spending €65m in the process, and in August I included photos of their nearly launched new Dover/Calais service named MyFerryLink.

Some might think it odd that the undersea channel tunnel ferry operator is funding what is effect a direct competitor to Eurotunnel whose ferry boats will carry freight and passengers over a pretty much identical route.

P&O and DFDS as the other two incumbent Dover/Calais ferry operators at this point cried "foul" and their unhappiness was further intensified when Eurotunnel considered bidding for the concession to run Boulogne and Calais ferry ports as well.

In October 2012 the whole Eurotunnel/SeaFrance takeover was referred for investigation to the Competition Commission. Preliminary findings from the Competition Commission's investigation into Eurotunnel's actions were that Eurotunnel acquired the boats to prevent DFDS doing so and that "the transaction may be expected to result in a substantial lessening of competition in the freight and passenger markets. This could be expected to lead to an increase in the prices charged".

The Competition Commission's recommended remedy for the Eurotunnel/SeaFrance issue is for Eurotunnel to dis-invest in MFL (i.e. sell the boats), but the possibility of P&O investing in its place was also rejected as being another conflict of interest.

Eurotunnel not surprisingly contests this point of view and in an interview with ThisIsKent, the chairman and chief executive officer of Groupe Eurotunnel said: "Eurotunnel intends to continue to work with the Competition Commission to allay the concerns raised by existing ferry operators and to demonstrate that the creation of MyFerryLink is a good thing for the market as it is both pro-customer and pro-competition".

Today Eurotunnel published their formal response to the Competition Commission's report, saying that:
  • Groupe Eurotunnel took part in an open and transparent tender process for the assets of the defunct company, and put forward the best offer
  • The acquisition was approved by the French Competition Authorities, subject to some restrictions including a requirement not to market a bundle of Tunnel/Ferry options
  • Eurotunnel considers the maritime activities of MyFerryLink to be complementary to those of Le Shuttle, in particular for the new breed of super-large lorries that won't fit onto the tunnel trains
  • Eurotunnel does not envisage the activity putting the two incumbent operators at risk.
The CC's deadline for resolution of the issue is currently set at 22nd of April so there will no doubt be further spats and press releases over the forthcoming month.

One news item that the Competition Commission will undoubtedly take into account when coming to their final ruling is that for the first time in Eurotunnel's 19 year history, official Government statistics reveal that it outperformed the ferries. When the tunnel was first built it was predicted that the quicker undersea route would serve as the death-knell for the ferry operators, but its taken all this time for rail passenger numbers to overtake the ferry operators - in 2012, 20 million people used Le Shuttle or Eurostar services, compared to 19.7m travelling by sea.

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