Freight firm is allowed to take over rival

- Advertisement -

In a decision issued yesterday the Jersey Competition Regulatory Authority (JCRA) conclude that the takeover – announced six months ago – will ‘substantially lessen’ competition in the market for temperature-controlled sea freight services between Jersey and Portsmouth.

Currently Ferryspeed have up to 70 per cent of the temperature-controlled freight market, Condor Logistics up to 20 per cent, Channel Express up to ten per cent, and Bowman Haulage up to five per cent.

Following the takeover Ferryspeed will therefore have up to 80 per cent market share.

Even if CI Traders, a customer of Ferryspeed, changed allegiance to Condor Logistics, this ‘would not appear to be an effective counterweight to the substantial lessening of competition that would result from the proposed acquisition’, says the JCRA.

‘Duopoly’ Specifically, the merger would effectively create a ‘duopoly’ for large customers such as CI Traders, realistically with only two firms to choose from – Ferryspeed or Condor Logistics.

Ferryspeed, a Jersey-registered business and wholly owned subsidiary of Empyraen Group Ltd (also incorporated in Jersey), also has depots in Portsmouth and Fareham.

Channel Express is a Guernsey-registered company and wholly owned subsidiary of Dart Group plc which has been trading for over 30 years.

The company leases a 7,600 square foot warehouse at Elizabeth Harbour from the States and has its main depot at Portchester and a shared depot at Castle Donington in the East Midlands.

Both firms use the Commodore Clipper and Goodwill ferries, which are the only services with roll-on, roll-off facilities vital for chilled foods, seafood and fresh plants and flowers.

In its 49-page report the JCRA, whose executive director is William Brown, says that although there are a ‘significant number’ of customers depending on this service, the barriers to enter the market are substantial.

The regulator has also found evidence of past examples of ‘coordination’ among freight operators, in the form of ‘overt or tacit’ agreements to divide or allocate customers.

This gives the JCRA sufficient grounds to refuse approval of the acquisition under Article 22 of the Competition Law.

However, having concluded that access to suitable harbourside warehouse space is a key factor to entering the market, the JCRA has agreed to an offer from Ferryspeed to not acquire the Channel Express warehouse at Elizabeth Terminal leased from Jersey Harbours, but to surrender it back to the Harbours after a transitional period.

Ferryspeed has recommended DFDS, a firm which has supplied freight distribution services on a subcontract basis with Ferryspeed, as a potential occupant.

Jersey Harbours has agreed to put the warehouse out to tender, although if DFDS takes on the lease it will be on condition that the previous arrangements with Ferryspeed are terminated.

The JCRA says it believes this arrangement will remove Ferryspeed’s potential to further strengthen its dominant position and give a new entrant both the means and incentive to expand its business in Jersey and reduce costs of entry into the market.

- Advertisement -
- Advertisement -
- Advertisement -

Latest Stories

- Advertisement -

UK News

- Advertisement -
- Advertisement -

Read the latest free supplements

Read the Town Crier, Le Rocher and a whole host of other subjects like mortgage advice, business, cycling, travel and property.