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Eurotunnel wins appeal battle on the Channel

A British Competition Appeals Tribunal ruled to quash the British Competition Commission's decision to ban Eurotunnel from operating ferries on the English Channel. According to DFDs the case will now be subject to a new review.

On Wednesday the British Competition Appeals Tribunal decided to quash the British Competition Commission's decision to ban Eurotunnel's subsidiary My Ferry Link from operating on the key route between Dover and Calais on The English Channel.

According to DFDS, this means that the case will now be returned to the Competition Commission, where it will be subject to review. Meanwhile, MyFerryLink sees the decision differently and as a maintainance of the market situation as it is today.

The decision could prove expensive to DFDS. CEO Niels Smedegaard recently told ShippingWatch that Eurotunnel's presence on The English Channel is costing the carrier between USD 1.4 and 1.8 million per month.

The DFDS share decreased 5.8 percent on the Copenhagen Stock Exchange immediately following the announcement from the Tribunal.

On June 6th this year the British Competition Commission banned Eurotunnel from operating ferry activities out of Dover through subsidiary carrier My Ferry Link, and the ban was set to become effective six months from this date at the latest.

The decision was based on a weakening of the competition on Dover-Calais, which is the shortest and thus also the most attractive ferry route on the Channel, as well as on other passenger and freight routes on the Channel.

DFDS would withdraw

According to a transcript of the decision from last summer, the Competition Commission found that Eurotunnel's acquisition of three ferries from bankrupt SeaFrance would likely make DFDS withdraw from operating on Dover-Calais in the short-term. The Commission also found that Eurotunnel would seize this opportunity - the withdrawal of DFDS - to raise the prices, and that Eurotunnel would be encouraged to let the company's carrier My Ferry Link operate less aggressively.

Niels Smedegaard: Bloodbath on the English Channel

The decision was subsequently appealed by Groupe Eurotunnel, which claimed that the British Competition Commission did not handle the case in a fair manner by not letting Eurotunnel defend itself before reaching a decision. Additionally, Eurotunnel claims that the decision placed to heavy an emphasis on DFDS's statement that the company was likely to withdraw from Dover-Calais in Eurotunnel continued to operate on the route.

Eurotunnel states that the British Competition Commission has been unable to sufficiently document such a development, referring to the fact that the French competition authority had previously reached a different conclusion when it green-lighted Eurotunnel's ferry activities on Dover-Calais.

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The SeaFrance bankruptcy

In July 2012 Groupe Eurotunnel acquired the ferries from bankrupt SeaFrance - and DFDS also bid on the ferries - which had seized to operate in November 2011. The ferries are currently sailing under the My Ferry Link name, owned by Eurotunnel but managed through a cooperative, the Société Coopérative de Production - SeaFrance, which employs a large number of former SeaFrance employees.

The case has been drawing big headlines in France since SeaFrance went bankrupt, and the case has especially received a lot of political attention due to the collapse of the ferry company, an event that left hundreds of people unemployed in and around the port city in norther France.

Critics of the construction between Eurotunnel and the former SeaFrance employees have implied that the public, subsequent crisis support was used to, among other things, establish the new carrier, and that Eurotunnel has boosted freights on the My Ferry Link ships every month in an effort to show that the company can make money and thus should be allowed to exist.

The Battle for the Channel will be settled next week

DFDS' humble officer

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