Watchdog warns on Stena-P&O deal

P&O agreed to transfer its Irish Sea routes to Stena in May

UK competition watchdogs have said the transfer of P&O's Irish Sea routes to Stena Line will mean less competition.

The Competition Commission warned the move would also mean higher prices for freight customers on the Liverpool to Dublin route.

But, after a three month probe into the deal, the watchdog found no problem with the transfer of P&O's Fleetwood-to-Larne service.

P&O and Stena now have 21 days to respond to the Commission's report

P&O said it is reviewing the findings and is continuing its talks with the commission.

The two firms agreed to the route transfer in May, and the deal was referred to the Commission by the Office of Fair Trading in August.

Competition 'put off'

Under the agreement, £50m of P&O's assets will be transferred to the Swedish ferry operator, including five ferries and their crews.

The Competition Commission, which focused its investigation on the impact on freight prices, said the deal would double Stena's market share on both the Liverpool-Dublin and Fleetwood-Larne routes.

Under the plans, Stena would gain a route on both the short and long crossings on the central corridor, which includes the Liverpool-Dublin crossing, between the UK and Ireland - unlike other operators on the route.

The Commission argued this would lessen competition and put off new entrants to the market because it would be difficult to gain access to suitable berths and land at peak times.

It also said P&O would have a greater incentive to replace the lost capacity if it continued to operate the Liverpool-Dublin route than Stena.

But the Commission was not concerned that the takeover of the Fleetwood-Larne route would make Stena the largest ferry company in the northern corridor.

The watchdog said that three main operators would remain - Stena, Norse Merchant Ferries and P&O - which meant competition would not be substantially reduced there.