Thursday, December 12, 2013

Cross Channel RoRo Freight and Passenger Ferry Services Will Carry On As Normal – For Now

Ghost of SeaFrance Still Hovers Around the Courts
Shipping News Feature

UK – FRANCE – EUROPE – The UK’s Competition Appeal Tribunal has ruled, somewhat marginally, in the past week in favour of the continued operations of Eurotunnel’s RoRo cross Channel freight and passenger ferry service MyFerryLink, following a decision by the Competition Commission (CC) earlier this year in June which would have banned the French rail group from operating a ferry route on the Dover Strait. The Tribunal found that the Commission might well not have jurisdiction to investigate MyFerryLink as the acquisition of certain former SeaFrance assets might not constitute a merger.

The CC had concluded that the acquisition of three ferries and other assets Eurotunnel bought from former ferry operator, SeaFrance, could result in a ‘lessening of competition within any market in the UK for goods or services’, and gave Eurotunnel six months to cease operations on the route. Eurotunnel immediately appealed the decision, stating that that the decision was ‘not based on any concrete facts’ and that it contradicted the decision of the French Competition Authority. The Group further added that the conclusion to close the service would restructure the maritime activity across the Dover Straits into a duopoly which would have a detrimental effect on the crossing by effectively lessening competition, exactly the opposite effect intended.

Rival ferry operator DFDS has warned that the tribunal requires a further review into the CC’s ruling, namely Eurotunnel’s purchase of certain assets from SeaFrance. DFDS were in the running to purchase SeaFrance assets as part of the DFDS/LD consortium, but were unsuccessful due to an insufficient bid. The Tribunal ruled that the CC did not properly consider whether it has legal jurisdiction to consider the transaction, the matter has now been referred back to the CC in order to reconsider its final decision, focusing on whether or not it had jurisdiction to investigate the transaction in the first place, and come up with a new decision.

The Competition Commission has one month reopen their investigation, if they do not then the matter is closed. The action by Eurotunnel was in tandem with partners Société Coopérative de Production SeaFrance S.A. (SCOP) which contested the CC judgement on four loosely connected grounds; that SCOP and Eurotunnel were not ‘associated persons’, even if they were they remained individual entities not under common control, Eurotunnel did not exert ‘material influence’ on SCOP and finally that Eurotunnel did not acquire the assets of a business as SeaFrance had ceased to trade 7 ½ months previously.

In the end the judgement of the Tribunal was somewhat scornful of the CC’s decision, using phrases such as, “the term ‘enterprise’ does not mean simply what the Commission says it means: the term ‘enterprise’ must be defined and on this definitional question there is no margin of appreciation.”

Using the carefully couched language of the relevant Act the Tribunal states that an ‘enterprise’ is essentially the activities, or part of the activities, of a business. Using an existing ruling the Tribunal decided that its judgement hinged on whether the fact that the ships were formerly owned by SeaFrance made the essential difference to what the situation would be if they had purchased them elsewhere, when there would have been no case to answer in the matter of whether Eurotunnel/SCOP had simply bought SeaFrance effectively as a going concern (or one in which the ‘glowing embers’ remained in the Tribunal’s words).

The judgement itself is, for an extended legal document, a very interesting read. In the final analysis the Tribunal, whilst admitting its own limitations, accepted that SCOP’s final grounds for appeal were successful and referred the matter back to the CC ‘to consider the question of its own jurisdiction anew’, additionally the Tribunal ruled that the arguments put forward by Eurotunnel which the CC had ruled ‘out of time’, should have been considered.

On other points the Tribunal unequivocally backed the Commission’s decisions but, having decided that the Eurotunnel/SCOP assorted arguments failed on all natural justice points and on the cases that the CC had neglected to address certain issues or that the CC’s ‘natural remedies’ (closure of the services) were in any way incorrect, that final point, whether the Competition Commission actually had jurisdiction in the case at all, threw the whole thing back into contention. MyFerryLink Managing Director Robin Wilkins obviously had no doubts as to the victors in the case, saying:

"We are delighted with the ruling. We anticipate that this will finally enable us to build our business without further legal challenges. We are already the highest rated cross-Channel operator and have built a substantial business based on quality of service and value for money. This is a very good day for our staff, our customers and our future customers.”