by business editor Trevor Sturgess

Competition watchdogs have provisionally ruled Eurotunnel's purchase of three ferries from the defunct SeaFrance could trigger higher prices for customers.

The Competition Commission has been probing the decision by the Channel Tunnel operator to buy the ships and lease them to the new French-owned MyFerryLink Dover-Calais service.

In its provisional findings, it said that by adding ferry services to its existing Channel Tunnel business, Eurotunnel would significantly increase its already high share of the cross-Channel market and that prices could rise.

The Commission also alleged Eurotunnel acquired the SeaFrance ferries "in order to prevent ferry operator DFDS/LD Lines from buying them." It claimed Eurotunnel was concerned that if DFDS/LD obtained the assets cheaply, it could drive down prices.

Inquiry chairman Alasdair Smith said: "It would seem that Eurotunnel moved into the ferry business because it was concerned at the increased competition it would face if another operator bought the assets.

"Given that the company already holds a market share of over 40%, we're concerned that customers could lose out from Eurotunnel increasing its share even further and being able to raise prices on the tunnel services.

"In view of the current excess capacity on the Dover–Calais route, it also seems likely that one of the current ferry operators is likely to exit in the short to medium term. We think that customers will be better off if there are two independent ferry companies competing with the tunnel than if one of the two is owned by Eurotunnel."

Eurotunnel bought three ships from the defunct SeaFrance

Eurotunnel vowed to challenge the findings, contending existing ferry operators had sought to use the inquiry process "to protect their own interests from new entrants and increased competition".

It considered the acquisition of the ships nine months after SeaFrance ceased operations - and the creation of a new competitor constituted "an increase in competition and brings additional choice for customers".

Jacques Gounon, Eurotunnel Group chairman, said: "Eurotunnel intends to continue to work with the Competition Commission to allay the concerns raised by existing ferry operators and to demonstrate that the creation of MyFerryLink is a good thing for the market as it is both pro-customer and pro-competition."

The Commission is expected to publish its final report in April.

Ferry rivals P&O and DFDS had already protested to the Commission about Eurotunnel's purchase of the ships.

A P&O spokesman said: "We welcome the Competition Commission's concerns about Eurotunnel's expansion into the ferry market, and we look forward to the commission's final report."

Meanwhile, P&O has also raised concerns with the Office of Fair Trading about Eurotunnel's bid for a 50-year concession to run the ports of Calais and Boulogne.