By Daniel Machin
Eurotunnel is being banned from operating ferry services across the English Channel due to fears that its dominance of the crossing could result in a raw deal for passengers.
The operator controls more than half of the cross-Channel market thanks to the Channel Tunnel and its MyFerryLink venture - something that the Competition Commission has ruled could be damaging to consumers.
It has therefore decided to prohibit Eurotunnel from running ferries between Dover to Calais, although the ban will not come into force immediately.
MyFerryLink, which was launched last August, employs around 600 employees, including 100 staff at Dover.
Eurotunnel initially snapped up three boats from collapsed operator SeaFrance to start the venture, but the commission believes the company only bought the vessels to prevent ferry group DFDS/LD from buying them at a cut price and driving down prices for passengers.
With one of the current ferry operators likely to quit in the near future, it also fears Eurotunnel could be handed an even bigger share of the market.
"It cannot be good for competition when Eurotunnel, which already holds a market share of over 40 per cent, moves into the ferry business - particularly when it did so to stop a competitor from buying the ferries," said Alasdair Smith, chairman of the inquiry group and deputy chairman of the commission.
"Customers would lose out from Eurotunnel increasing its share even further and being able to raise prices on the tunnel services. By preventing Eurotunnel from operating ferry services out of Dover, we can protect the interests of customers."
Eurotunnel has vowed to appeal against the ban, which it described as "incomprehensible and seriously disproportionate".
A cloud of uncertainty now hangs over MyFerryLink's workforce, while the decision could also have an impact on passenger demand at the height of the booking season.
The commission said it would give Eurotunnel limited time to offload its key ferry services, although this could prove problematic as the operator will have to get clearance from the French Commercial Court, which ruled at the time of the purchase from SeaFrance that the ferries could not be resold for five years.
SeaFrance, which was owned by French state-owned rail firm SNCF, went into liquidation in November 2011 and Eurotunnel bought three of its four ferries for 60 million euros (£52 million) last year.
"This decision by the Competition Commission will reduce the choice of services across the Straits of Dover to the detriment of the consumer," declared Jacques Gounon, chairman and chief executive of Eurotunnel.
"It will inevitably lead to an increase in the price of a crossing."