LONDON, June 6 (Reuters) - Britain's competition watchdog has barred France's Groupe Eurotunnel from docking its ferries at Dover for at least two years due to concerns its purchase of three ferries would allow it to dominate over half of the market.
The channel tunnel operator branched out into sea transport last year with its 65 million euro ($85 million) purchase of three ferries formerly operated by SeaFrance, a unit of French railway operator SNCF that went into liquidation in early 2012.
The Competition Commission said that Eurotunnel's move was motivated by concerns that Danish ferry operator DFDS Seaways would buy the vessels cheaply and drive down prices for customers. The other operator on the Dover-Calais crossing is P&O Ferries.
"It cannot be good for competition when Eurotunnel, which already holds a market share of over 40 percent, moves into the ferry business-particularly when it did so to stop a competitor from buying the ferries," said Alasdair Smith, the Commission's deputy chairman.
"Customers would lose out from Eurotunnel increasing its share even further and being able to raise prices on the tunnel services," he said.
France's antitrust watchdog cleared the deal in November.
The Dover-Calais ferry crossing cuts across the Dover Strait, one of the world's busiest international seaways which is used by over 400 commercial vessels daily. It competes for passengers and freight customers against the Channel Tunnel rail link which Eurotunnel operates.
The watchdog has now given the channel tunnel operator a limited period to sell its two largest ferries to one or more approved purchasers before the ban takes effect. It decided against ordering Eurotunnel to sell the three ferries as the French Commercial Court had prohibited a sale until 2017.
A spokesman for the Commission said that given the French ban on a sale, Eurotunnel would need to appeal to the French court in order to sell the two ferries. The two vessels will be barred from Dover for ten years if Eurotunnel does not sell them.
It also said it was likely that one of the ferry operators would exit the Dover-Calais route should the Commission not take action due to excess capacity.
Eurotunnel said it would appeal the decision.
"This decision by the Competition Commission will reduce the choice of services across the Straits of Dover to the detriment of the consumer. It will inevitably lead to an increase in the price of a crossing," said the company's Chief Executive Officer Jacques Gounon.