Tuesday, July 29, 2014

Cross Channel RoRo Freight and Passenger Ferry Service Battle Goes to the Wire

Last Chance Saloon for MyFerryLink as Competition Authority Prepares Final Order to Close
Shipping News Feature

FRANCE – UK – The controversy surrounding the cross channel RoRo freight and passenger service MyFerryLink, looks to be entering the final stages as the UK’s Competition and Markets Authority (CMA) has published a draft Order which will ban the parent company, Groupe Eurotunnel, from operating vessels under the MyFerryLink brand from Dover. This really is the last chance saloon for Eurotunnel, should the appeal to the Competition Appeal Tribunal (CAT) fail, the final version of the Order awaits like the sword of Damocles and will come into effect immediately giving MyFerryLink that final six months and no more.

Assuming the last appeal is heard and refused by the CAT in the latter stages of 2014 it will mean for the rest of 2014 and possibly continuing to the second half of 2015, the MyFerryLink service will continue to operate as normal without any penalties due to the appeal. Eurotunnel has obviously come out strongly against the CMA’s decision in June to ban the sailings and in releasing its half year figures which show that the subsidiary saw revenues increase by 31% with freight traffic leaping 30%, both compared to the same period the year before, the unit seems to be doing reasonably well despite what the Group refers to as a ‘series of negative announcements from the CMA’.

Eurotunnel had until July 24 to lodge an appeal, which it duly did, and because it believes that the acquisition does not constitute as a merger as it had bought the assets of the now defunct SeaFrance nine months after it had ceased trading, therefore wouldn’t fall within the CMA’s jurisdiction. The Group also believes that MyFerryLink increases competition as it means three surface carriers are operating on the route, contrary to the CMA’s findings which says Eurotunnel’s overall share of traffic is too monopolistic. Confirming its application to appeal Eurotunnel said:

“It is on behalf of the customers who are attracted in significant numbers to the quality service offered by this maritime operator that Eurotunnel is appealing the prohibition, decreed by the CMA, from operating out of Dover. This decision, if it is confirmed, would lead immediately to a reduction in consumer choice across the Channel and would probably increase prices for consumers.”

With the appeal lodged, MyFerryLink and Eurotunnel expect that the case will be heard by the Tribunal at a Hearing in the autumn, with judgment towards the end of the year or early in 2015 and in the meantime the CMA has confirmed that any Order imposing the remedies will not have effect while these proceedings are ongoing.

If this appeal fails then the final version of CMA’s decision will be upheld and there would be no way for Eurotunnel to formally object, the CMA having confirmed to us that by consulting on the draft now, which the CMA has done in similar situations in other cases, that does allow it to proceed swiftly if the latest decision is upheld by the Tribunal. The CAT had previously ruled in favour of the merger after an earlier appeal but the case was still referred to the then Competition Commission, the duties of which the CMA has taken over.

To read the full details of this long running saga simply enter suitable keywords (SeaFrance MyFerryLink) into the News Search Box at the top of the page.