Eurotunnel has been banned from running ferries out of Dover after the Competition Commission said its dominance of the cross-Channel market would allow it to push up fares.
The decision threatens 600 jobs at Eurotunnel's Myferrylink venture – including 100 at Dover – and could hit passenger demand at the height of the booking season.
Eurotunnel said it would appeal the ruling, which it branded "incomprehensible and seriously disproportionate".
The Euronext-listed company runs roll-on/roll-off train services through the tunnel – shuttling trucks, cars and coaches under the Channel – and captured 46% of the traffic between Dover and Calais in 2012.
In addition, it bought three ferries from the wreckage of the bankrupt SeaFrance last year to launch Myferrylink in August, prompting the Competition Commission investigation. The company will continue to operate the ferries until the resolution of its appeal.
In its final 134-page report, the Competition Commission said the ferry service gave Eurotunnel more than half the cross-Channel market, which could lead to higher prices for both passengers and freight customers.
It said Eurotunnel bought the ships to stop ferry operator DFDS from buying them and is concerned that if it takes no action DFDS could exit the market, leaving Eurotunnel with an even larger market share.
Alasdair Smith, deputy chairman of the commission, said: "It cannot be good for competition when Eurotunnel, which already holds a market share of over 40%, moves into the ferry business – particularly when it did so to stop a competitor from buying the ferries."
Eurotunnel hit back saying the decision "was not based on any concrete facts, but solely upon a random association of virtual hypothesis". It argues that the ban would leave just P&O and DFDS offering ferry services across the Channel, which would reduce competition.
Jacques Gounon, chairman and chief executive of Eurotunnel, said: "This decision by the Competition Commission will reduce the choice of services across the strait of Dover to the detriment of the consumer. It will inevitably lead to an increase in the price of a crossing."
The commission said it would not impose the ban immediately but would give Eurotunnel a limited period to sell its two largest ferries, as a means of solving the competition problem.
That would require clearance from the French commercial court, which ruled at the time of the purchase that the ferries could not be resold for five years, in order to provide stability for employees.
Eurotunnel bought three of SeaFrance's four ferries for €60m (£52m), after the company collapsed into liquidation in November 2011.
