In 2012, the French company SeaFrance SAS (SeaFrance), formerly engaged in the maritime transport of passengers and freight transportation between France and England, was subject to a French liquidation procedure. After having examined several purchase offers, the Paris Commercial Court designated the Eurotunnel SA Group (Eurotunnel), a Franco-British company concessionaire of the Channel tunnel, as the buyer of SeaFrance’s assets (including 3 ferries) and in August of 2012, Eurotunnel created a cross-Channel ferry service called MyFerryLink.
The French Competition Authority (FCA) was consulted as the acquisition could have an impact on competition in the passengers and freight France/England transport market.
In its investigation, the FCA found that the operation could raise competition issues notably if Eurotunnel were to use its strong position on the market to offer tickets combining ferry and train to favour MyFerryLink over ferry only competitors.
As a result, Eurotunnel undertook, for a period of five years, not to grant any discount on its train transportation offer tied to the customers’ use of its maritime offer and notably not to take into account MyFerrylink’s freight volume in the course of its annual train transportation tariff. Eurotunnel committed to enter into separate contracts for its maritime and train offers which were to be managed by distinct commercial teams.
The FCA found that the commitments offered constituted sufficient remedies and cleared the acquisition of certain SeaFrance SAS assets by Eurotunnel (FCA’s decision 12DCC-154 dated November 7, 2012).
However, the considerations and findings differed on the other side of the Channel.
Indeed, in June 2013, the UK Competition Commission (now the Commission and Markets Authority or “CMA”) considered that allowing Eurotunnel to buy SeaFrance’s assets (3 ferries) and to run a ferry service would give it a majority of the local cross-Channel market and would lead to an increase of prices. The CMA continues to fear that profits from the tunnel would be used to unfairly subsidise the ferry business. The Competition Commission ruled that as a result, it was likely that certain competitors such as DFDS and P&O could be forced to exit the market, leaving Eurotunnel as the sole operator of both the rail link and one of only two ferry services between Dover and Calais.
Eurotunnel appealed the decision and submitted that a material change of market had occurred, based upon the 12% growth since SeaFrance ceased its operations. However, in May 2014, the CMA provisionally considered that there had not been a material change of circumstances since the June 2013 decision on the Eurotunnel/SeaFrance merger. The final decision is expected in a fortnight.
This case illustrates the issues which may be encountered when two countries are involved and when the European Commission does not rule on a matter as a one stop shop for competition regulation. At the beginning of this year, the FCA filed a report to the French Government containing ten recommendations to prevent conflicts between competition authorities. The FCA suggests that competition authorities should be able to refer and transfer cases to the European Commission when two countries are involved (instead of three, as presently required) and to unify the basic concepts of national merger legislations (implementing a unified maximum time period to rule on a cross-border mergers and to harmonize the merger control thresholds).
It remains to be seen whether the MyFerryLink case will contribute to the general debate about the reform of the EU Merger Regulation to prevent such conflicts in the future. A White Paper on the reform of the EU Merger Regulation is expected this summer.