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Simon Dodd

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About Simon Dodd

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  • Birthday 11/04/1982

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  1. Brest was discussed by the Commission, but wasn't found to be competing with Roscoff - lack of facilities, not in terms of a linkspan, but other issues (haven't the decision in front of me though - possibly lack of immigration/customs and restrictions around the naval base?).
  2. Absolutely. I was selectively referencing the B&I one merely as B&I is now Irish Ferries. There's other decisions relating to ports being essential facilities in other Member States too (eg Rodby in Denmark). Some very interesting cases!
  3. Thanks! :-) Yes, Roscoff port did indeed try to block ICL in order to protect BF. In terms of competition law, where there is such an essential facility, 'reasonable' access must be given - ie the port cannot deny access or impose conditions that are equivalent to denial (eg berthing slots that are completely unacceptable). Interestingly, there was a similar case a couple of years earlier involving Holyhead, where Sealink (owner of the port as well as the ferry operator) was found to breached competition law by arranging its schedules to cause maximum inconvenience to B&I (since acquired by the successor to ICL). Where there is no essential facility (ie there's no vertical links between ports and operators or if there are competing ports so that there is no one essential port that must be served), then this principle won't apply.
  4. In 1995 Irish Continental Group wanted to run a ferry service to Roscoff. CCI Morlaix, the manager of the port, although not a ferry operator, had a 5% shareholding in Brittany Ferries. The European Commission considered that CCI Morlaix’s conduct over the negotiations was a refusal to supply access and that this refusal would have constituted an abuse of dominance (ie a breach of competition law). (sorry about the detail - I'm a rare poster and also a competition lawyer)
  5. Simon Dodd

    Brexit may raise BF fares

    and, in addition, Sterling is predicted to fall significantly against the US Dollar (down to £1=US$1.15) - as oil is priced in US Dollars, this will make fuel significantly more expensive
  6. Simon Dodd

    MY FERRY LINK - Latest updates

    The Competition Appeal Tribunal has dismissed the appeals by Eurotunnel and SCOP against the CMA's decision
  7. Simon Dodd

    Bretagne Commodore cabins

    Re: Bretagne commodore cabins We had a commodore cabin on the Bretagne in the summer with our young daughter in a cot - it was brilliant, the extra space was great as we put her to bed in the cot behind the curtain whilst we sat in the lounge and then when we went to bed, we moved the cot into the lounge. She slept really well, including sleeping through the delivery of breakfast! Definitely recommend upgrading!
  8. Simon Dodd

    CC Rules Against My Ferry Link

    Re: CC Rules Against My Ferry Link Hi all, First post here, but some of you may be interested in this analysis that I wrote on the Competition Commission's decision for work (I'm a competition lawyer): CC sinks ferry merger 06/06/2013 Competition analysis: Why has the Competition Commission prohibited the Eurotunnel/SeaFrance merger and what are its concerns about ferry travel between the UK and Europe? Original news Competition Commission: Eurotunnel / SeaFrance merger inquiry Final Report Eurotunnel will be stopped from operating ferry services at the port of Dover, after the Competition Commission decided that its acquisition of three ferries and other assets from the former ferry operator, SeaFrance, could mean higher prices for cross-Channel passengers and freight customers. Before the prohibition at Dover takes effect, Eurotunnel will be given a limited period to sell its two largest ferries to one or more purchasers approved by the CC as a means of solving the competition problem. What's happening in the market? In 2010, French ferry company SeaFrance became insolvent and was placed into administration. SeaFrance was owned by SNCF, the French national rail operator which is state owned. Following failed attempts to sell the business and a failed bid by the French government to provide financial support (this was rejected by the European Commission under State aid rules), the French insolvency court ordered SeaFrance to stop operations in January 2012. At this time, it had operated four ferries on the busy Dover to Calais ferry route. The French insolvency court invited bids for three of SeaFrance's four ferries—Eurotunnel, working with a workers' co-operative of former SeaFrance employees, offered to purchase all three ferries. Ferry operators DFDS and Stena Line also each offered to buy one or two of the more modern ferries. The court accepted Eurotunnel's bid for all three ferries—not only was the bid the highest in value, but the court also noted it was the only bid that would preserve employment for former SeaFrance employees and also the only bid that confirmed the ferries would remain registered under the French flag. Eurotunnel also purchased other SeaFrance assets, including: • logos • the brand and tradename • software • websites and domain names • IT software and hardware • customer records These were all important factors in the CC's conclusion that Eurotunnel has acquired an 'enterprise' within the meaning of the UK merger rules. Eurotunnel used the ferries to launch ferry sailings between Dover and Calais under the MyFerryLink brand in August 2012, with the workers' co-operative operating the ships and acting as sales and marketing agent whilst Eurotunnel accepted the commercial risk. The main competitors to the MyFerryLink service are P&O, with sailing from Dover to Calais, and Eurotunnel's Channel Tunnel train. DFDS operates sailings from Dover to Dunkirk and also launched its own sailings between Dover and Calais using ships acquired from elsewhere—these sailings commenced in early 2012 before MyFerryLink's service. DFDS has also recently entered into a joint venture with French ferry company LD Lines, which includes the routes from Dover as well as Newhaven to Dieppe and Portsmouth to Le Havre sailings (this joint venture was cleared last year by the OFT). MyFerryLink now operate sailings from Dover to Calais as well. Key customers in the market are freight operators, who will make a considerable number of journeys each year. It is typical for freight operators to have contracts in place with each of the ferry companies and Eurotunnel—the choice as to which route to use for each lorry will depend on a number of factors, including the goods being carried and delivery time. Freight traffic is fairly constant throughout the year and, due to the size of the customers, there is some buyer power here. By contrast, private passengers make on average less than one return trip per year—this traffic is highly seasonal in nature, with passenger numbers peaking in the summer. It is generally accepted there is excess capacity in the market, even accounting for the large seasonal fluctuations in demand. Capacity has actually increased in the past year, with P&O introducing new ships that are considerably larger than those replaced, and the combined five ships operated DFDS and MyFerryLink exceed the four ships operated by SeaFrance. Eurotunnel's initial rationale for the deal appears to have been a desire to prevent a competitor, namely DFDS, acquiring the ferries and operating them on the Dover to Calais route. Evidence presented to the CC, including Eurotunnel's board papers, showed Eurotunnel was concerned that if DFDS acquired the ferries, passenger prices would be driven down. Eurotunnel claimed they later realised they could use the vessels profitably themselves, offering an 'economy' ferry service between Dover and Calais to complement the Channel Tunnel rail service. Eurotunnel also claimed that this would allow them to take advantage of expected growth in the market. However, P&O, the main ferry operator on the Dover to Calais route and Eurotunnel's main competitor, told the CC it doesn't foresee any growth in the market in the short-to-medium term. While the deal in the UK has been investigated by the CC through an in-depth phase II merger investigation, last year the French competition authority cleared the acquisition unconditionally after a phase I investigation. What is the relevant market? The geographic market is that for the transportation of freight and passengers across the 'short sea' part of the English Channel—this covers all routes from Newhaven to Dieppe in the west to Ramsgate to Ostend in the east, including the Channel Tunnel train shuttle service and ferry routes from Dover. The market is concentrated on the Channel Tunnel and sailings from Dover to Calais with the Dover to Dunkirk route also providing a competitive constraint—the routes on the border of the market though account for less than 4% of market by volume. There are separate product markets for passenger and freight traffic. This market definition is settled, having being used in a number of previous CC, OFT and European Commission investigations. What are the CC's concerns that have led to the prohibition decision? The CC fears prices could go up as Eurotunnel already has a 40% share of the short-sea cross channel market through its Channel Tunnel train operations—and this deal will increase Eurotunnel's market share. The CC carried out pricing analysis that indicates that the likely impact of this is Eurotunnel increasing prices. For six years Eurotunnel has charged a premium for its quicker train shuttle service compared to the slower ferry services from Dover to Calais. However, there is a limit and customer surveys have shown that, if there was a considerable price increase for the train shuttle service, customers would switch to ferry services–this shows the constraint offered by the ferry operators on Eurotunnel. The CC also studied likely customer diversion, including looking at what has happened in the past when one of the competitors on the market has had to reduce operations (eg through strike action or a fire in the Channel Tunnel). The CC's analysis shows there is considerable diversion between the train shuttle and the ferry services—so, if Eurotunnel increased the prices for its train shuttle service, a good number of customers are likely to divert to MyFerryLink. In addition, the CC was concerned that by bundling shuttle train operations and MyFerryLink sailing, Eurotunnel may be able to disadvantage customers and other competitors. The possibility of bundling in this way is of more relevance to freight operators. As explained above, the big customers in the market are freight operators who will typically use both ferry and train shuttle operations and they will have contracts with all the major competitors in the market. Now, Eurotunnel are in the position of being able to offer freight customers a unique bundle of train shuttle and ferry options to cross the channel—this will meet customers' needs of wanting sea and train alternatives at the expense of other competitors in the market. Any buyer power of customers is unlikely to provide any protection to the vast majority of customers–only a small number of the biggest freight customers with strong all-year round demand may be in a position to enjoy any sort of buyer power, but even this will be limited as only Eurotunnel can offer the train shuttle option. The CC has also found that Eurotunnel only acquired the ferries to prevent the Danish ferry operator DFDS acquiring them (DFDS has since launched its own Dover to Calais route using other ships). Evidence presented to the CC showed that Eurotunnel was concerned that if DFDS acquired the ferries, which the CC note was the most likely alternative, passenger prices would have been driven down. When determining the appropriate counterfactual in this case, the CC couldn't have this as being the continued operation of SeaFrance as the company ceased operations over a year ago. Instead, the counterfactual scenarios considered were the alternative bids for the ferries being successful—the CC is confident the most likely alternative to Eurotunnel acquiring the ships and other assets was DFDS acquiring either two or three of the ferries and using them on its Dover to Calais route (in place of the ferries it has subsequently chartered to operate this route). As part of its analysis, the CC found there has been excess capacity on the market for the past five years, and this has been boosted considerably in the last year (see above), and that one of the current ferry companies operating in the market is likely to exit the Dover to Calais route in the short to medium term. It is generally accepted that the Dover to Calais route can only sustain two ferry operators—this reflects the history of the route (in the past few years, there have been a couple of failed attempts to enter the market by new players) and is also the view of the chief executive of the workers' co-operative working with Eurotunnel (who is also a manager of MyFerryLink). Surveys found that freight customers are also expecting one of DFDS or MyFerryLink to exit the route In particular, the CC was concerned that DFDS may exit the Dover to Calais route (although it is likely to retain its Dover to Dunkirk route). DFDS was seen as the most likely to exit the Dover to Calais route as it is currently operating only two ferries, less than the three the CC believes is the minimum for an efficient operation, and also because the ferries it is using aren't suited to the route (they were built for longer routes), being chartered from other operators, whilst MyFerryLink is using the former SeaFrance ferries that were specifically built for the route. Also, whilst Eurotunnel and DFDS are both financially able to support loss-making operations, there is greater incentive for Eurotunnel to do so given the advantages the ferry service would bring to the train shuttle operation. The CC noted that it would expect DFDS to exit the route in the short to medium term. If an operator did exit, the CC is of the view that passengers would be better off if there remained two independent ferry operators competing with Eurotunnel's Channel Tunnel operations, rather than one if this deal is cleared and DFDS exit as expected. The CC is concerned that service quality, including sailing frequency, will go down and prices may rise—indeed, pricing analysis shows Eurotunnel would be able to increase prices. Future expansion, other than by the two main operators Eurotunnel (through MyFerryLink) and P&O, is very unlikely and the CC is of the view there isn't sufficient buyer power to counter Eurotunnel's market position in the event of DFDS scaling back its operations. For these reasons, the CC has concluded the transaction does raise serious competition concerns for the supply of transport services to both passengers and freight on the short-sea English Channel routes. What remedies has the CC imposed? Given the competition concerns identified, the CC has decided that the only appropriate remedy is for Eurotunnel to be prohibited from operating ferry services from Dover. The CC considered ordering Eurotunnel to sell the MyFerryLink business, however it decided not to do this, not least because the French insolvency court, when selling the former SeaFrance vessels to Eurotunnel ordered that they should be sold for five years. Also, the ownership structure of the vessels and the MyFerryLink business is very complex. In addition, there were questions about whether any divestiture order should be limited to the three vessels owned by Eurotunnel or include the whole MyFerryLink business. There were also concerns that the only likely purchaser of the MyFerryLink business would be DFDS—given the over capacity identified by the CC and evidence presented by other ferry operators, the CC found it was unlikely that any other potential buyer would bid for the business. Therefore, the CC concluded the most appropriate remedy would be to prohibit Eurotunnel from operated ferry services from Dover—this addresses the competition concerns identified and avoids a potentially complicated divestment order that would also require the approval of the French insolvency court. This prohibition also won most support from third parties, both competitors and customers, as the most effective remedy. The CC has given Eurotunnel six months to stop ferry services from Dover—the CC has noted that this will give Eurotunnel a chance to sell the vessels if it wants to before it is forced to stop operations. The prohibition on Eurotunnel operating ferry services from Dover will be in place for ten years. If Eurotunnel does sell the vessels, it will not be allowed to re-acquire them for ten years and will not be allowed to operate ferry services from Dover using other vessels for two years. The CC notes that this remedy will not necessarily result in a new operator on the market. Given the excess capacity and the history of the route, the CC is satisfied that the remedies will return the market to what is commonly considered to be the most effective state—two strong ferry operators on the Dover to Calais route in competition with Eurotunnel. Simon Dodd, solicitor in the Lexis®PSL Competition team.