Ferry merger set to founder
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by Karen Miles • International operators look set to continue to benefit from the current array of highly competitive cross-Channel rates as the proposed merger between P&O and Stena seems doomed to failure.
Latest signals suggest the competition authorities—the Department of Trade and Industry in the UK and the European Commission in Brussels— are "75% to 80%" in favour of rejecting the request by the two ferry giants to merge operations on their short-sea routes.
Opposition to the merger is grounded in fears that it would restrict competition on the tourist market, But freight operators, who have voiced fears about higher rates and fewer routes under a merged P&O/Stena regime, would have much more to lose.
If the merger does win approval the combined company and Channel Tunnel operator Eurotunnel will command an estimated 80% of Channel traffic in both the freight and tourist markets, effectively creating a duopoly.
Announcements by Board of Trade President Margaret Beckett and the European Commission— which will take the final decision on the merger— are expected later this year, probably in September. The French government has already sanctioned the deal.
A refusal would disappoint the two ferry companies which have argued they need to merge on their Dover-Calais, DoverZeebrugge and NewhavenDieppe routes in order to survive the onslaught of Euroturmel.
It would also represent a harsher attitude from the competition authorities—in the spring it appeared the merger would be allowed, albeit with stringent conditions attached (CM 27 March-2 April).