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The Competition Commission (CC) has provisionally confirmed that it has jurisdiction over Groupe Eurotunnel’s (GET’s) acquisition of three ferries and related assets, previously belonging to the ferry operator SeaFrance (now liquidated).

The CC has been considering whether GET, together with a workers’ cooperative formed by former SeaFrance employees (known as SCOP SeaFrance), acquired an ‘enterprise’ giving rise to a merger under the UK merger control rules, after the issue was remitted to the CC by the Competition Appeal Tribunal (CAT) in December.

In its provisional remittal decision published today, the CC has concluded that the acquired assets do constitute an enterprise. There was a considerable level of continuity between the former SeaFrance services on the Dover–Calais route and GET’s new services on that route. The combination of assets that GET and SCOP SeaFrance acquired enabled them to establish ferry operations more quickly, more cheaply and with less risk than if alternative assets had been separately acquired in the market. Whilst there had been a period of inactivity between SeaFrance operating ferries on the route and the assets being acquired, GET/SCOP were able to commence operations on the route relatively quickly due to the considerable benefit of having vessels that are specifically configured to meet the requirements of the Dover–Calais route as well as ex-SeaFrance staff with experience of running a service on that route.

Alasdair Smith, CC Deputy Chairman and Chairman of the Eurotunnel Remittal Group, said:

‘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.’

In its final decision published in June last year following its original inquiry, the CC decided that by adding ferry services to its existing Channel Tunnel business, GET would increase its market share to over half and prices would rise for cross-Channel passengers and freight customers, and there would be a ‘substantial lessening of competition’ (SLC) as a result of the merger.

Following a legal challenge to the CC decision by GET and SCOP SeaFrance, the CAT issued a judgment in December in which it asked the CC to look again at whether the acquisition involved a merger.

The CC aims to make its final decision by early May. The remittal decision, along with all other information on the inquiry, are available on the CC’s Eurotunnel inquiry home page. Alongside the CC’s provisional remittal decision, the CC has also published today a Notice inviting comments on whether, since the CC published its final decision in its original inquiry, there has been a material change of circumstances that the CC should take into account in remedying the SLC that it identified in that decision.

MyFerryLink started a ferry service on the Dover–Calais route in August 2012, using vessels acquired by GET which were previously owned by SeaFrance before the ferry company was placed in liquidation in November 2011. The vessels are operated by SCOP SeaFrance, a cooperative including many former employees of SeaFrance. GET also operates passenger and freight train services through the Channel Tunnel between Folkestone and Calais.

The CC is now inviting responses to its provisional remittal decision in writing to Eurotunnel.SeaFrance@cc.gsi.gov.uk or:

Eurotunnel Remittal
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries. In April, the CC will join with the competition and certain consumer functions of the Office of Fair Trading (OFT) to form the new Competition and Markets Authority.

2. The Enterprise Act 2002 empowers the Office of Fair Trading to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

3. The members of the Eurotunnel Remittal Group are: Alasdair Smith (Chairman of the Group and CC Deputy Chairman), Robin Aaronson, Ivar Grey and Malcolm Nicholson.

4. Further information on this inquiry, including the Conduct of the Remittal and other key documents, as well as on the CC and its procedures (including its policy on the provision of information and the disclosure of evidence) can be obtained from the CC website at: www.competition-commission.org.uk.

5. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.