UK regulator says has jurisdiction to rule in Eurotunnel case

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LONDON, March 21 (Reuters) - Britain's competition regulator said on Friday it did believe it has jurisdiction to rule on competition issues in the case of French transport firm Groupe (Other OTC: GROPF - news) Eurotunnel (Paris: FR0010533075 - news) 's operation of ferries between Calais and Dover (Berlin: DOV.BE - news) .

The Competition Commission ruled last June that Eurotunnel's acquisition of the ferries was a merger that hurt competition, a decision Eurotunnel appealed.

"It is our provisional view that Eurotunnel in effect acquired a business that was already geared up to run a ferry service between Dover and Calais, using assets that had been proven in practice to be suitable for that activity," Competition Commission Deputy Chairman Alasdair Smith said.

"It would have faced a much longer, more expensive and riskier process to get the service up and running if it had tried to buy alternative assets in the market," he added.

The CC said it would make a final decision in early May as to whether competition rules had been breached.

Last year it banned Eurotunnel, which operates the undersea rail link between Britain and France, from docking its ferries at Dover for two years, citing concerns the company would dominate the Channel crossing with over half the market.

But Eurotunnel appealed against the ruling and the Commission said in December it would assess whether it had jurisdiction to review the matter.

In a statement, Eurotunnel said it did not understand the Commission's decision.

"Groupe Eurotunnel underscores that the market's functioning over the past two years has not been negatively affected by MyFerryLink, to the contrary," it said.

Rival Danish ferry operator DFDS Seaways welcomed the Commission's decision, which it predicted would mean that Eurotunnel would ultimately have to cease ferry operations at the Port of Dover.

"We are very pleased with the provisional findings and look forward to the CC's final decision," says Niels Smedegaard, CEO of DFDS (Copenhagen: DFDS.CO - news) .

A decision forcing Eurotunnel to dock the ferries could threaten some 500 jobs at MyFerryLink, a cooperative company made up mostly of employees who used to work at now-defunct SeaFrance.

The northern region where MyFerryLink suffers from a jobless rate of around 14 percent versus nearly 11 percent for the rest of France, and has become a stronghold for the far-right National Front party facing local elections this weekend.

However, Eurotunnel's earnings would not suffer from a decision effectively barring its ferries from docking at Dover as MyFerryLink is loss-making, having posted a net loss of 22 million euros last year, CEO Jacques Gounon has said.

As well as Eurotunnel, which operates its vessels under the MyFerryLink brand, Danish ferry operator DFDS Seaways and P&O Ferries also run boats on the Dover-Calais crossing, competing against the rail link for freight and passengers. (Reporting by Sarah Young and Nicholas Vinocur; editing by James Davey)