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Brussels takes tough stance on ferry joint venture

Stena Line and P&O, the cross-Channel ferry operators, may have to meet tough conditions to win European Commission clearance of a planned joint venture which the companies claim is crucial if they are to compete with the Channel tunnel.

Brussels officials indicated yesterday that they feared the emergence of a cross-Channel duopoly in which Le Shuttle and the new ferry venture might collaborate to fix prices.

"What we want to avoid is nice little arrangements which would ultimately push up fares for passengers," said one EC source. Officials said the Commission and Britain's regulatory authorities, which are also considering the deal, shared the same concerns.

The Commission, which has the final say over the link-up, will write to the two ferry operators next week outlining "serious doubts" according to officials. While rejection is unlikely the Commission is expected to demand compliance with certain conditions and next week's letter from the Competition Commissioner, Karel van Miert, will outline the guarantees he will want before delivering approval to the alliance. P&O Stena, as the cooperative joint venture would be known, could be asked to operate independently of the two parent companies.

The companies are hoping to have their Dover to Calais passenger service up and running by the start of the peak summer season. Together Stena and P&O would control about 40 per cent of the tourist vehicle market, putting the venture on a par with Eurotunnel, the Channel tunnel operator, in terms of market share.

The joint venture would maintain services on the Dover- Zeebrugge route for freight as well as Stena's Newhaven to Dieppe line. Most of the focus, however, would be on the Dover to Calais operation where six multi-purpose vessels would run departures every 45 minutes.

Brussels received notification of the ferry alliance last October and has since received comments from "wide-ranging sources", officials said. They stressed that neither the Commission nor the Monopolies & Mergers Commission had completed their inquiries.

Meanwhile, ferry operators protested yesterday that the EU's planned abolition of duty- free sales from June 1999 would cost 50,000 jobs. The European Shipowners' Association said ferry routes faced closure and ticket prices would be driven up by the move.