Channel Tunnel operator Groupe Eurotunnel SA’s plan to boost cargo revenue by running ferries alongside the 30-mile subsea rail route risks unraveling amid opposition from antitrust regulators and shipping companies.
Eurotunnel must decide next week whether to bid for the French ports of Calais and Boulogne to complement its ferry unit. Creating that business has been hampered by opposition from the UK Competition Commission, while Britain’s P&O Ferries says the harbor purchase would hurt competition in one of the world’s busiest cross-border freight markets.
Eurotunnel spent 65 million euros ($82 million) in 2012 buying three roll-on roll-off ferries from state railway SNCF’s defunct SeaFrance arm in a bid to lift its 43 percent share of the 3.36 million trucks that cross between Britain and France at their closest point each year. The takeover of the French ports, mooted last month, would lay foundations for a wider business tapping all forms of transport across the Channel.
“If this were to develop into a full bid to operate the ports I’d imagine Eurotunnel would not have many friends at the Competition Commission, given what they had to said about the ferry business, because it does bring up some issues,” said Andrew Jones, an analyst at RBC Capital Markets in London who rates the stock “outperform.”
The Nord Pas-de-Calais Regional Council, which is auctioning a 50-year concession to run the harbors, located 20 miles apart on the Dover Strait, wants binding bids by March 9.
P&O wrote to the UK Office of Fair Trading on Jan. 8, saying a sale to Eurotunnel would result in a “substantial lessening of competition” by giving the tunnel owner control of two of the three French ports serving the so-called short-sea market with the UK, leaving Dunkirk as the sole independent.
Eurotunnel Chief Executive Officer Jacques Gounon said last week he’d contest the UK regulator’s findings regarding last June’s purchase of SeaFrance vessels Berlioz, Rodin and Nord- Pas-de-Calais, which operate under the MyFerryLink brand.
A shipping arm would complement Eurotunnel’s rail shuttle, with trucks using ferries in the event of the tunnel being restricted, and vice versa, Gounon said when he bought the ships.