EU tells France and Britain to cut Channel Tunnel prices

The European Union on Thursday told Britain and France to reduce charges for trains using the under-sea Channel tunnel, judging that both passengers and freight operators were paying too much.

Photo: Dickbauch

Shares in Eurotunnel, the private company which operates the tunnel, fell by 4.47 percent to 5.98 Euros after the EU demand.

The European Commission gave London and Paris two months to respond to its "formal request" to take action on the high charges, or face having the issue brought before the European court.

"The Channel Tunnel is not being used to its full capacity because of these excessive charges," EU Transport Commissioner Siim Kallas said in a statement. The commission noted that the tunnel operates at only 43 per cent of its capacity.

"As a result, more freight is being carried on lorries instead of by rail, freight operators and their customers are being over-charged, and passengers are paying over-the-odds for their tickets."

The charges were stifling growth in the European rail sector, Kallas added.

The EU said it had also asked Britain and France to ensure a fully independent regulator for the tunnel and to end a "restrictive" agreement reserving capacity for certain train operators.

A single operator, Eurostar, runs passenger services through the Channel Tunnel and there are several rail freight operators but they only send around six trains a day through the tunnel, the commission said.

"The high track access charges get passed on to passengers in their ticket prices and rail freight companies complain that they cannot afford to send more freight through the Tunnel - it remains on the roads causing congestion and pollution," the Commission statement said.

At RBC Capital Markets, analysts commented that the effect of the decision by the Commission was "negative" and amounted to "a high threat to profits" if it took effect.

The EU ruling comes despite an announcement by Eurotunnel last week that Germany's rail company Deutsche Bahn has been given the green light for its passenger trains to use the tunnel.