[Updated] Eurotunnel Reluctantly Sells Ferries to DFDS

Eurotunnel, the operator of the undersea rail link between England and France, is selling its Calais-to-Dover ferry business to Danish rival DFDS to end its lengthy battle with British competition authorities.

Loss-making MyFerryLink was put up for sale this year after Eurotunnel failed to overturn a ban on it operating the sea route because of antitrust concerns.

Eurotunnel had wanted to sell the business to workers' cooperative SCOP SeaFrance rather than to DFDS, a competitor on the same sea route, but said the cooperative failed to secure sufficient backing to submit an offer.

"DFDS are great professionals but I deeply regret having to abandon this business. DFDS is no enemy, it is a rival," CEO Jacques Gounon said in a conference call.

The price was not disclosed, but Gounon described the DFDS offer as "the least bad" to preserve jobs.

MyFerryLink, which employs about 600 people and has about 12 percent of a cross-Channel market in which it competes against Britain's P&O Ferries and DFDS.

Britain's Competition and Markets Authority (CMA) has been examining Eurotunnel's move into the ferry market since it bought the former SeaFrance ferries from French rail operator SNCF in 2012.

A tribunal this year ruled that the ferry business made Eurotunnel too dominant in cross-Channel traffic.

Eurotunnel announced its MyFerryLink exit plan on May 28, even though a British court had contradicted the tribunal ruling and cleared the way for continued operation.

The company said it made the decision because it feared the CMA would continue its campaign despite the ruling.

"The CMA would have continued to torpedo us and prevent us from continuing this business," Gounon said.

In an emailed reply to a Reuters question on the issue, a CMA spokesman said: "Our concern throughout our investigation has been about the effect any reduction in competition would have on passengers and freight customers."

Eurotunnel said it had a binding offer from DFDS for a let-to-buy sale of passenger ferries "The Rodin" and "The Berlioz" but that it intends to ask the CMA to allow it to continue to operate the "Nord Pas de Calais" freight ship.

A Eurotunnel statement said that it regrets that SCOP SeaFrance did not receive the support it needed to be able to present a takeover proposal.

Eurotunnel shares were down 2.6 percent at 1317 GMT while DFDS shares dipped by 0.1 percent, having spiked to their highest in nearly eight years last week on expectations of a deal for Eurotunnel's ferries.