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Channel tunnel operator Eurotunnel could be forced to offload its MyFerryLink venture after a watchdog warned its ownership may be anti-competitive.
The Competition Commission said it feared passengers and freight firms faced higher prices after Eurotunnel snapped up three boats from collapsed operator SeaFrance and started running ferry services between Dover and Calais.
P&O Ferries, DFDS and MyFerryLink all currently run ferries on the route, but with excess capacity the Commission said it was likely that one would leave in the short to medium term.
Alasdair Smith, who chaired the inquiry group, said the Commission believed it would be better if there were two independent ferry companies competing with the tunnel.
SeaFrance, which was owned by French state-owned rail firm SNCF, went into liquidation in November 2011 and Eurotunnel bought three of its four ferries for 60 million euros (£52 million) last year.
The Commission claimed Eurotunnel, which now runs 16 ferry crossings a day, bought the boats to prevent Danish rival DFDS from picking them up cheaply and driving down prices.
In its provisional report the Commission said the sale or disposal of the business may be needed to address its concerns.
But Eurotunnel said it would fight the claims, accusing existing operators of using the Commission process to protect their own interests. It said its new brand, MyFerryLink, would bring more choice for customers.
Eurotunnel chief executive Jacques Gounon, said: "Eurotunnel intends to continue to work with the Competition Commission to allay the concerns raised by existing ferry operators and to demonstrate that the creation of MyFerryLink is a good thing for the market as it is both pro-customer and pro-competition.''
The Competition Commission is expected to publish its final report on April 14.