JOC Staff | Feb 20, 2013 10:50AM EST
Eurotunnel vowed to fight an interim ruling by UK regulators against the move by the operator of the subsea rail tunnel between Britain and France into the shipping market between the two countries.
The Competition Commission said Eurotunnel’s acquisition of three ships formerly owned by SeaFrance, a French ferry company that collapsed in early 2012, would “ significantly increase” its “already high” 40 percent share of the cross-Channel market, one of the world’s busiest shipping lanes.
The Commission claimed freight rates and passenger fares would rise, particularly if the extra capacity forced a ferry operator to quit the route. Its proposed remedies include the forced disposal of the three ships operated by Eurotunnel’s MyFerry Link subsidiary.
“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 [SeaFrance] assets,” said Alasdair Smith, the deputy chairman of the Competition Commission.
The UK regulator, which is due to make a final ruling in April, faces a showdown with its French counterpart which waved through Eurotunnel’s 65 million euro ($87 million) acquisition of the three ships from SeaFrance, a unit of SNCF, France’s state-owned railway.
The French authorities raised concerns, however, about the impact on the freight market and forbade Eurotunnel from cross-marketing cargo services on rail and ships for five years.
Eurotunnel, which outbid a subsidiary of Denmark’s DFDS for the vessels, said MyFerryLink had increased competition and brought additional choice for customers.