* UK regulator recommends Eurotunnel find buyer for
* Eurotunnel says will appeal against "absurd" decision
* Denmark's DFDS welcomes UK regulator's decision
* Eurotunnel shares up 1.3 pct, Oddo ups rating to "buy" vs
(Adds comments by French minister, analyst; updates shares)
By Sarah Young and Dominique Vidalon
LONDON/PARIS, June 27 Britain's competition
regulator has told Groupe Eurotunnel, the operator of
the undersea rail link between Britain and France, it will have
to stop operating its separate cross-channel ferry service in
the next six months and find a buyer for the ships, confirming a
decision it made in May.
Eurotunnel immediately said it would appeal against what it
called an "absurd" decision that it said would mean higher
prices for consumers and put 600 people out of work.
French transport minister Frederic Cuvillier said on Friday
that his government would do all it could to "find a solution
allowing the ships to continue operating and to preserve jobs,"
noting that 533 jobs were at risk in France and 71 in Britain.
Groupe Eurotunnel started to operate services on the
Dover-Calais crossing in 2012 under the MyFerryLink brand when
it acquired three ferries from the now-defunct SeaFrance service
owned by French railways operator SNCF.
"Eurotunnel will be given six months to stop running
services from the date of an order to that effect. It could also
find another owner for the MyFerryLink business if that made
MyFerryLink completely independent of Eurotunnel," Britain's
Competition and Markets Authority (CMA) said.
The regulator repeated its previous reasoning that with two
of the operators on the ferry route running at a loss the
current level of competition was not sustainable and could lead
to the exit of a competitor.
As well as Eurotunnel, which operates its vessels under the
MyFerryLink brand, Danish ferry operator DFDS and
Britain's P&O Ferries also runs services on the Dover-Calais
crossing, competing against the rail link for freight and
DFDS has said it is losing between 8 and 10 million Danish
crowns ($1.47-1.84 million) a month as a result of MyFerryLink.
"Today's final report from the CMA is good news for DFDS and
our 1,300 employees providing ferry services on the English
Channel ... We hope the decision will be implemented as swiftly
as possible," Niels Smedegaard, CEO of DFDS said in a statement.
Eurotunnel said in a statement that by removing one
competitor from the market, CMA was creating a "de facto
monopoly", which would lead to higher prices for consumers and
lower revenue for the ports of Dover and Calais.
"The decision by CMA is a denial of the reality of the
situation. It penalises the consumer and puts 600 people out of
work without any real justification," Eurotunnel's chief
executive Jacques Gounon said.
The French transport ministry said there was room for three
operators, adding: "It is a paradox that in the name of fair
competition the British authority eliminates one of the
Shares in Eurotunnel were up 1.5 percent at 9.78 euros by
0952 GMT after French broker Oddo raised its rating to "buy"
from "neutral" and its target price to 11.2 euros from 9 euros,
saying the CMA decision would cut costs for Eurotunnel.
Eurotunnel posted earnings before interest, tax,
depreciation and amortisation (EBITDA) of 449 million euros last
year, which included a 22 million-euro loss at MyFerryLink.
Group operating costs totalled 643 million euros, a rise of 86
million euros with 76 million euros attributed to MyFerryLink.
(Additional reporting by Shida Chayesteh in Copenhagen; Editing
by Kate Holton and Greg Mahlich)