Commission notice pursuant to Article 12(2) of Council Regulation (EEC) No 4056/86 concerning Case COMP/D2/37.939 — P&O Stena Line 2 (Text with EEA relevance)
Date: 2001-03-08
Institutions: European Commission
Subjects: carriage of passengers, cross-channel connection, economic concentration, maritime transport, merger control, restriction on competition

C 76/2

EN

Official Journal of the European Communities

8.3.2001

pursuant

to Article 12(2) of Council Regulation (EEC) No 4056/86 concerning Case

COMP/D2/37.939 (cid:151) P&O Stena Line 2

COMMISSION NOTICE

(2001/C 76/02)

(Text with EEA relevance)

Application

1. On 31 October 1996, The Peninsular and Oriental Steam
Navigation Company ((cid:145)P&O(cid:146)) and Stena Line Limited
notified to the Commission in accordance with Article
12(1) of Regulation (EEC) No 4056/86, an agreement
relating to the establishment and operation of a joint
venture ((cid:145)the agreement(cid:146)) merging the parties’ respective
ferry operations on the short sea (as defined below). The
joint venture is operating under the name P&O Stena Line.

7. P&O Stena Line operates a regular passenger and freight
ferry service across the short sea. On the Dover/Calais
route it operates seven multi-purpose ro-ro (roll on-roll
traffic. On the
off) vessels carrying freight and tourist
Dover/Zeebrugge route it operates
three ro-ro vessels
carrying freight traffic only. Its service on the Newhaven/
Dieppe route ended on 31 January 1999.

Spillover

2. On 13 March 1997, pursuant to Article 12(2) of Regulation
4056/86, the Commission published a summary of the
application in the Official
European
Communities and invited interested parties to submit their
comments within 30 days (1).

Journal

the

of

8. The parent companies have remained independent ferry
operators on the western Channel, North Sea and Irish
the joint
Sea. The parties state that
venture has not
cooperation
between the parties and that there is no reason to expect
such spillover in the future.

resulted in any wider

the formation of

3. On 10 June 1997, before the expiry of the 90-day deadline
provided for
in Article 12(3) of Regulation (EEC) No
4056/86, the Commission informed the parties that there
existed serious doubts as to the applicability of Article
85(3) (now Article 81(3)) to the agreement (2).

The market

4. On 6 February 1998, pursuant to Article 23(3) of Regu-
lation (EEC) No 4056/86,
the Commission published a
notice indicating its intention to exempt the agreement (3).
The Commission granted an exemption under Article 85(3)
(now Article 81(3)) by decision dated 26 January 1999 for
the period 10 March 1998 to 9 March 2001 (4).

5. The exemption will come to an end on 9 March 2001. On
22 December 2000, P&O and Stena Line (UK) Limited
((cid:145)Stena Line(cid:146)), which holds Stena Line group’s shareholding
in P&O Stena Line and has therefore replaced Stena Line
Limited as the relevant party, together with P&O Stena Line
submitted to the Commission pursuant to Article 13(2) of
Regulation (EEC) No 4056/86 an application for renewal of
the Article 81(3) exemption until 2020. The application for
the Commission
renewal
considers there to be a restriction of competition falling
under Article 81(1).

is made in the event

that

The joint venture

6. Details of

the agreement establishing the joint venture,
in the

unchanged,

found

which remains
Commission’s notice of 13 March 1997 (1).

can be

(1) OJ C 80, 13.3.1997, p. 3.
(2) See press release IP/97/511 of 11 June 1997.
(3) OJ C 39, 6.2.1998, p. 21.
(4) OJ L 163, 29.6.1999, p. 61.

9. The parties do not challenge the definition of the relevant
markets in the Commission decision of 26 January 1999.
The application is based on that definition, namely:

(a) the market for tourist passenger services (passenger and
passenger vehicles) on routes across the short French
sea (routes between Dover, Folkestone, Ramsgate,
Newhaven and Calais, Dieppe, Boulogne, Dunkirk and
the Channel Tunnel) and the Belgian Straits (Ramsgate/
Ostend) ((cid:145)the short sea tourist market(cid:146)); and

and

for unitised freight
door-to-door

(maritime
services
(b) the market
services)
services
intermodal
(western
between England and mainland Europe
Channel, short sea and North Sea routes) ((cid:145)the Anglo/
Continental freight market(cid:146)).

The parties’ arguments for negative clearance

10. The parties believe that the market conditions in both the
short sea tourist market and the Anglo/Continental freight
market are more competitive with the continued operation
of P&O Stena Line than they would be in the absence of
the joint venture. It is therefore the parties’ opinion that
the restrictions in the agreement do not (now) restrict,
distort or prevent competition to an appreciable extent.

8.3.2001

EN

Official Journal of the European Communities

C 76/3

The parties’ arguments for renewal of exemption

11. The parties consider that even if Article 81(1) applies, the
operation of P&O Stena Line continues to qualify for
exemption pursuant
for the following
to Article 81(3)
reasons.

frequency of

12. The application considers that P&O Stena Line has yielded
substantial benefits to consumers. The joint venture has
regular
maintained and improved the
departures and reduced the waiting time on the quayside
by using a continuous loading embarkation system. The
annual cost savings achieved through the formation of
the joint venture have enabled P&O Stena Line to keep
price increases to the minimum and have created a viable
platform for investments in the quality of onboard services
and facilities as well as investments in new ticketing and
reservation systems. The application considers that
the
reduced cost base for P&O Stena Line has allowed the
parties to consider a proposed ship renewal programme
which would maintain the high standard of service.

13. The application draws attention to Eurotunnel’s increasing
market position and Eurotunnel’s competitive strength in
the short sea tourist market, and states that P&O Stena Line
is the only operator who is able to offer frequency of
services and continuous loading which comes close to
the service offered by Eurotunnel’s Le Shuttle tourist
forms of cooperation between the
service. No lesser
parent companies could yield similar benefits. In addition
the parties believe that lesser forms of cooperation would
be more restrictive of competition than a continued
operation of P&O Stena Line.

14. The parties do not consider that the joint venture has
eliminated competition in respect of any part of
the
markets under consideration. As regards the Anglo/Conti-
the
nental
conditions on the market are characterised by strong
competition between a wide range of routes and operators,
low barriers to market entry and material excess capacity.

the application states

freight market,

that

the

(October

end of duty-free

the consumer concern over increased ticket prices, but
argue that the end of duty-free concessions has contributed
to the loss of passenger volumes, has significantly reduced
the contribution from on-board spending and has also
contribution to profits
largely removed any positive
during the low season quarters
to March).
concessions, on-board
Before
spending was by far
source of
the most
contribution to costs. The application states that overall
the increase in ticket revenue has not compensated for
the reduced contribution from on-board spending and
itself contributed to declining passenger
has moreover
volumes. The application considers
there are no
restrictions which limit entry to the market and the
applicants are subject to effective and potential competition
from other operators. There has furthermore been a new
entrant
of
the market with
Norfolkline’s services on the Dover/Dunkirk route.

introduction

significant

that

the

on

16. The parties request a 20-year exemption until 2020 in
order to enable the parties to finance a planned ship
renewal investment programme which could replace half
of P&O Stena Line’s existing fleet. The application further
states that a 20-year exemption is needed to maintain a
long-term and effective competitive constraint on Euro-
tunnel’s services and that there are no foreseeable major
disruptions to market conditions on the horizon as was the
case in 1996 with the loss of duty-free concessions.

Third party comments

17. This notice is issued pursuant to the procedure established
by Article 12 of Regulation (EEC) No 4056/86. The
Commission has not at this stage taken any position on
the applicability of Article 81 of
the Treaty to the
agreement. In accordance with Article 12(2) of Regulation
(EEC) No 4056/86,
interested
parties to submit their comments within 30 days from
the date of publication of this notice, quoting reference
(cid:145)Case COMP/D2/37.939 P&O Stena Line 2(cid:146), to:

the Commission invites

15. As regards in particular the short sea tourist market, the
application states that there is no evidence to indicate any
grounds for a concern that duopolistic conduct between
the joint venture and Eurotunnel has either occurred or
is likely to develop in the future. The parties acknowledge

European Commission
Directorate-General for Competition
Antitrust Greffe
Rue Joseph II/Jozef II-straat 70
B-1000 Brussels
Fax (32-2) 295 01 28.