The European Commission has approved under the EU Merger Regulation the acquisition of Norfolk, a ferry and cargo shipping provider in the North Sea, by DFDS of Denmark. The approval is conditional upon the conclusion by DFDS of a space charter agreement on routes between the UK and Denmark.
The Commission had concerns that the transaction, as initially notified, would have led to a quasi-monopoly on these routes. However, in light of the remedies offered by the parties, the Commission concluded that the acquisition would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
DFDS and Norfolk operate sea transport networks mainly in Western and Northern Europe. Their main activities are trailer shipping (so-called Roll-on/Roll-off or “Ro-Ro”), passenger sea transport, sea terminal services and freight forwarding.
The proposed transaction mainly affects the market for Ro-Ro shipping between Scandinavia and the UK. The markets for passengers shipping services and unitised freight services between Western Europe and the UK are also concerned but the Commission found that the presence of other large competitors would safeguard competition in these markets.
DFDS and Norfolk’s combined position in the Ro-Ro shipping market between Scandinavia and the UK is particularly strong. In particularly, there would be a situation of quasi monopoly in a post-merger scenario on the UK-Denmark corridor, where pre-merger Norfolk was active via a space charter agreement concluded with DFDS. A space charter agreement is an agreement whereby a party purchases space volumes on the vessels of another company.
To protect competition on these routes, DFDS proposed to conclude a space charter agreement with a competitor in similar terms to the current one with Norfolk for vessels operating between Denmark and the UK and to transfer customers. This will allow the emergence of another competitor that will market the space including to Norfolk’s current customers. This remedy will sustain the current market situation on the Scandinavia/UK Ro-Ro market. The Commission therefore concluded that the remedy would remove the competition concerns initially identified in its investigation.
The transaction was notified to the Commission for regulatory clearance on 26 April 2010.
