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03-04
05 February 2004
CC TO BLOCK STENA ACQUISITION OF P&O
IRISH SEA FERRY ROUTE
The Competition Commission (CC) has today announced
that it has decided to block the transfer of P&O’s
Liverpool–Dublin ferry route to Stena. The CC confirmed
its provisional finding that the transfer of this route was
expected to result in a substantial lessening of competition.
This would give Stena scope to increase prices to some customers
of ferry services on the Irish Sea. It also confirmed that
the transfer of P&O’s Fleetwood–Larne ferry
route to Stena was not expected to result in a substantial
lessening of competition.
Publishing the first merger report under the
Enterprise Act, the Chairman of the inquiry Group, Professor
Paul Geroski, said:
"Following the publication of our provisional
findings report and our remedies notice, we carefully considered
the responses received from all parties. We looked closely
at possible ways of remedying the expected substantial lessening
of competition on the central corridor of the Irish Sea,
but concluded that the only effective measure was to block
the transfer of P&O’s Liverpool-Dublin route to
Stena.”
The Group’s inquiry was extensive. The
Group held a number of hearings with both Stena and P&O
as well as 17 hearings with other interested parties from
Great Britain and Ireland. Evidence was received from other
ferry companies, freight and travel customers, ports, trade
associations, trade unions, consumer bodies, government departments,
MPs, the Scottish Executive and the Welsh Assembly. Some hearings
were held in Belfast and Dublin, where the inquiry Group also
toured the ports and observed Stena’s and P&O’s
operations. The Group also commissioned two independent customer
surveys.
The CC found that, post merger, Stena’s market share
on the central corridor would more than double, giving Stena
a market share significantly larger than its nearest rival.
The four main competitors on this corridor would be reduced
to three. The lack of transparency of pricing in the freight
ferry market, coupled with Stena’s enhanced market power,
would give Stena scope to increase prices to some customers.
The CC explored possible remedies, including a package of
behavioural remedies proposed by Stena. Following consultation,
the CC decided that the only effective remedy to the substantial
lessening of competition identified was to block Stena’s
acquisition of P&O’s Liverpool–Dublin route.
The CC found that the transfer of P&O’s Fleetwood–Larne
route would result in Stena replacing P&O as the largest
ferry operator on the northern corridor. P&O would, however,
remain as a competitor, with a larger market share than Stena
has now. The CC concluded that the transfer of this route
would not be expected to result in a substantial lessening
of competition.
The CC’s reasoning is set out in the report published
on its web site today.
Notes for Editors
- The Enterprise Act 2002 empowers
the Office of Fair Trading (OFT) to refer to the CC completed
or proposed mergers for investigation and report which create
or enhance a 25 per cent share of supply in the UK (or a
substantial part thereof) or where the UK turnover associated
with the enterprise being acquired is over £70 million.
- On 22 August 2003, the OFT asked
the CC to consider the proposed acquisition by Stena of
five vessels and related assets currently operated by P&O
on the Liverpool–Dublin and Fleetwood–Larne
routes on the Irish Sea. This proposed acquisition would
affect two markets for freight ferry services on the Irish
Sea: the central corridor (in relation to Liverpool–Dublin)
and the northern corridor (in relation to Fleetwood–Larne).
- This inquiry was undertaken by
a group of five CC members and led by Professor Paul Geroski,
a Deputy Chair of the CC. The other members were John Baillie,
Barbara Mills, Jeremy Seddon and Peter Stoddart.
- This was the first reference under
the Enterprise Act 2002 that proceeded to the report stage.
After publication of the report, the CC will take remedial
action, either through accepting undertakings or by making
an order. Before taking such action, the CC will normally
publish a notice of the proposed undertakings or order and
allow a period of not less than 15 days for representations
to be made.
- The report is available on:
www.competition-commission.org.uk/rep_pub/reports/2004/index.htm
- Copies of the report will also
be available electronically, within 24 hours of publication,
on The Stationery Office (TSO) web site: www.official-documents.co.uk/reps/comp/comp.htm
and in hard copy, ISBN 0117065005, priced £35, within
seven days.
Enquiries should be directed to Francis Royle, Chief Press
Officer, tel 020 7271 0242.
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