Friday, January 9, 2015

Cross Channel RoRo Freight and Passenger Ferries to be Sold Off

UK Court Decision Goes Against Eurotunnel so MyFerryLink On the Market
Shipping News Feature

UK – FRANCE – Today saw the publication of what was thought would be the ‘final’ decision in the controversial case involving Groupe Eurotunnel and its subsidiary MyFerryLink, the RoRo freight and passenger ferry service which rose from the ashes of the SeaFrance collapse. The UK Competition Appeal Tribunal (CAT) today handed down its verdict on the latest appeal after the Competition and Markets Authority (CMA) had banned operations by the operator back in September 2014. The verdict today confirmed the original UK decision that one group was controlling too much of the traffic in the market and that operations must cease.

Whilst we had predicted this would be the final nail in the MyFerryLink coffin it seems there are still legal wormholes open. Although Eurotunnel has decided not to appeal and to sell the assets of MyFerryLink on the open market it may be that others decide there are sufficient grounds for a further appeal, in which case there will be the need to lodge arguments with the CAT once again asking the Court to decide its fate and requesting that the order to cease operations in six months imposed by the Court today, be suspended whilst the case proceeds.

Time is of the essence whichever route is taken as MyFerryLink will need scope to take bookings into the busy summer period which the order to close would negate and in the light of this and other factors, Groupe Eurotunnel has decided to sell up instead.

Certainly today’s judgement will not sit well on the other side of the Channel as it was the swift action by Groupe Eurotunnel which preserved many of the jobs for those who had hitherto been employed by SeaFrance and it would not be unexpected for SCOP, the French subcontractor which runs the service for Eurotunnel, to appeal independently.

Within minutes of the Court’s decision, Groupe Eurotunnel published an obviously pre-prepared statement announcing the decision to sell up. Jacques Gounon, Chairman and Chief Executive Officer of Groupe Eurotunnel commented:

“MyFerryLink is an operating and commercial success. We are proud to have succeeded where so many others have failed. Given the position of the British authorities, the future of MyFerryLink will now be determined outside the Group.”

Note that it was the British authorities who deemed the service inappropriate. Eurotunnel make a good case for the continuation of the MyFerryLink service saying it bought a company (SeaFrance) which had not traded for nine months prior to the purchase and it was in effect a defunct company. This view was supported by the French authorities but in the UK, some months after the deal was struck, the takeover was declared a merger. This left the way open to declare that, by controlling the new ferry service, Eurotunnel had become too powerful in that cross Channel market.

Eurotunnel point to the fact that, when in French hands, SeaFrance had received state aid and a €200 million restructuring and still failed to keep its head above water. Since Eurotunnel took over it has gained a 10% market share and, at a time when the economy is growing, abiding by the new MARPOL environmental regulations is a mandatory requirement and cross channel trade is becoming more concentrated on the shorter straits, a revitalised ferry service is exactly what is required.

Certainly it will be a concern for customers if the demise of this service means no new operator takes over the route, a reduction in capacity will surely lead to increased prices. With analysts saying the trade will increase by 500,000 to a million vehicles in the next five years the market will need the leeway in capacity it currently has. Eurotunnel also points out its singular ability to switch customers between services in times of stress. This week’s storms have meant ferry traffic can be referred to the undersea link whilst problems in the tunnel mean a diversion to the ferries.

The history of this case goes back to our original 2012 story, and indeed has its basis in the 2009 articles regarding all out strikes at the company. By 2011 it was clear that it was only a matter of time until the lack of cross Channel trade dealt a fatal blow to the French group.

Anyone who wishes to read the whole sorry saga can simply type SeaFrance and MyFerryLink into the News Search box on this page to bring up all of the stories in chronological order.