P&O wants ban lifted on ferry merger talks

Lord Sterling yesterday stepped up his efforts to secure government approval for merger talks between P&O and Stena Sealink, writing to Trade and Industry Secretary Ian Lang to ask for a 15-year-old restriction on talks to be lifted.

The P&O chairman denied, however, that the talks were a prelude to an imminent tie-up between the company's cross-Channel operations and Sealink's. Both services have been hit hard by competition from the Channel tunnel, which has taken 40 per cent of cross-Channel traffic.

In the letter, Lord Sterling said: "The Channel tunnel has had, and will continue to have, a profound and irreversible effect on the market". A spokesman for the Department of Trade and Industry said Mr Lang would make a decision "in due course".

P&O said two weeks ago that it would be seeking to have the restrictions lifted. They date back to 1974 when the company agreed not to discuss fares or co-operation with rival ferry operators. It asked for the undertaking to be cancelled three years ago but had its request turned down.

The Government said at the time it would have to wait until data on the Channel tunnel's effect on the ferry operators was available. P&O said it now was, having started last month to publish a quarterly review of its traffic figures. Those showed a 17 per cent decline in P&O's ferry traffic compared with a year earlier.

Commenting on his request, Lord Sterling said: "The tunnel has a major share of cross-Channel traffic. This has completely transformed the market. In addition, competition law in both the UK and Brussels has developed in such a way as to make the undertakings redundant. There is an overwhelming case for them to be removed."