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What is the Future for My Ferry Link?

Tuesday 03 February 2015

Eurotunnel has finally thrown in the towel over its ownership of My Ferry Link, but does this mean the end of this cross-channel ferry service?

After legal skirmishes lasting two years, Group Eurotunnel has conceded that it has lost the battle to operate the My Ferry Link (ex SeaFrance) Calais-Dover cross-channel service.

Last month the UK Competition Appeal Tribunal (CAT) rejected its appeal against the decision in May 2013 of the Competition Markets Authority (CMA) to ban the group from operating a ferry service out of Dover.

The UK monopolies watchdog considers that by adding ferry services to its existing Channel Tunnel business Eurotunnel would increase its market share to more than 50%, which the CMA argue would cause prices to rise for passengers and freight customers due to lack of competition on the route.

The CMA believes that if Eurotunnel were allowed to continue its ferry service, one competitor is likely to withdraw from the route, which would leave Eurotunnel as the operator of both the rail link and one of three ferry services operating on the route. The other ferry operators are Brittany Ferries and DFDS.

The company must now cease the service within six months of the decision, which was made on 9th January.

With the notice period now in operation, it is highly likely that the company will want to get the business off its books as soon as possible, as any prospective owner will want to ensure they are able to obtain bookings for the crucial forthcoming summer holiday period.

That position is not an easy for them, for Eurotunnel have previously argued that under the terms of the purchase of three vessels from SeaFrance in 2012 they are forbidden to sell them again until 2017.

Nevertheless, Jacques Gounon, President of Eurotunnel has stated that: "This company is an industrial and commercial success, but given the position of the British authorities, the future of My Ferry Link will now play outside the Group.

Eurotunnel employ no staff in My Ferry Link, as the service is provided through the French based workers cooperative 'SCOP', who operate the service under contract from Eurotunnel. They seem less inclined to end the guerrilla war, stating they will appeal the decision to the UK Court of Appeal.

The French government have also sound the drum of resistance, with Alain Vidalies, the Secretary of State for Transport stating that it is a "profoundly unjust decision", and it is "totally determined" to find a solution. Not surprisingly, for My Ferry Link employs around 500 workers in Calais, where the unemployment rate is 16%.

Despite obtaining around 12% of the market share since it started the cross-channel route in August 2012, the My Ferry Link service has racked up very substantial losses, amounting to around £14 million in the first quarter of 2014.

So it is by no means clear that there will be lots of bidders knocking on the door to buy the business.

One sticking point may well be the existing operational structure, for a new owner may be unwilling to be burdened with running it through the workers cooperative, which is a completely separate legal entity.

However, there are significant legal, political and industrial risks in trying to unbundle it, for the cooperative is strongly backed by the French government, and the workers have shown themselves in the past to be a highly combative force.

Eric Vercoutre, a local maritime trades union leader has already somewhat menacingly warned about the risk of selling to an unsuitable buyer, stating that: "We must not end up in low-cost hands that would break our project".

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