Uncertainty continues for MyFerryLink

NEWS: Another day of legal drama on the English Channel sees the tide turn against Eurotunnel and MyFerryLink. The Competition Commission will not drop its merger inquiry while it seems Eurotunnel is running out of patience.

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UNCERTAINTY CONTINUES FOR MYFERRYLINK.

Competition Commission will not drop case involving new Dover-Calais operator.

DFDS ‘very pleased’ – Eurotunnel ‘expresses incomprehension’.

Moment of truth: Dover-Calais ferry operator MyFerryLink finds out this morning if the Competition Commission will finally drop the case which has caused so much uncertainty for the new operator.

The Competition Commission will not drop its Eurotunnel/SeaFrance merger inquiry.

It means the uncertainty which has dogged Dover-Calais operator MyFerryLink since it opened for business in 2012 will continue until early May at the earliest.

A statement from the Competition Commission this morning says, ‘It is our provisional view that Eurotunnel in effect acquired a business that was already geared up to run a ferry service between Dover and Calais, using assets that had been proven in practice to be suitable for that activity. It would have faced a much longer, more expensive and riskier process to get the service up and running if it had tried to buy alternative assets in the market. We found that the commercial operability of the assets had not been greatly affected by SeaFrance’s liquidation.’

The now long running saga turns on a fine legal issue, whether – when Eurotunnel Group bought the former SeaFrance ferries and leased them to new operator MyFerryLink in 2012 – it had just bought assets, or had effectively acquired an ‘enterprise’.

In its original decision in June 2013, the Commission had found the latter and barred the ‘Eurotunnel ferries’ from Dover.

However, in December 2013, the Competition Appeals Tribunal said the Competition Commission had not proved the deal was effectively a merger between the two companies. It queried therefore whether the CC had jurisdiction.

On 8 January 2014, the Competition Commission announced it would re-examine the case and publish provisional findings in mid-March.

The interested parties now have an opportunity to argue their cases ahead of a final decision due in early May.

A statement from DFDS says: ‘We are very pleased with the provisional findings and look forward to the CC’s final decision,’ says Niels Smedegaard, CEO of DFDS. ‘DFDS remains committed to acting in the best interests of our customers, employees and shareholders. Our objectives can only be achieved if conditions for fair competition are re-established in the Channel market.’

A statement from Eurotunnel, ’emphasises that over the past two years the market has in no way been negatively affected by MyFerryLink. On the contrary statements by a competitor confirming that it would have to leave the short straits market are, in the light of the evidence from public statements about their financial strength and ambitions to expand, entirely incredible.

To conclude, if prior to its final decision the Competition Commission does not wish to review its perspective on the competition which exists across the Strait of Dover in the light of the current reality, and not based on suppositions from two years ago, Groupe Eurotunnel will withdraw its ferries from The Channel.’

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EUROTUNNEL UNLIKELY TO APPEAL CC’s FINAL DECISION.

Competition Commision’s final decision could spell end of road for Eurotunnel and MyFerryLink.

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Eurotunnel is unlikely to appeal if the final decision of the Competition Commission due in May goes against the company.

The Competition Commission announced this morning it would continue its inquiry into the alleged merger between Eurotunnel and MyFerryLink, see below.

A spokesman for Eurotunnel told @DriveEurope this afternoon that the matter was coming to a ‘crux point’ and that the continued uncertainty for MyFerryLink was stretching out when the operation could start to make money.

MyFerryLink lost €22m in 2013 but doubled its market share over the year.

Eurotunnel’s last hope is that the Competition Commission will carry out a new review of the market as part of its deliberations and find that the situation has changed substantially since the investigation was first opened.

However, a spokesman for the Competition Commission subsequently told @DriveEurope the CC was not obliged to do this. Unless someone brought forward ‘dramatic’ evidence that the market had changed then a fresh review was unlikely he said.

SCOP, the company which leases the ferries from Eurotunnel and operates them as MyFerryLink, would then be left to pursue any appeal on its own, and lease new ships.

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