Britain, France face EU action over Eurotunnel charges

BRUSSELS Thu Jun 20, 2013 4:23pm BST

Passengers queue to use the Eurostar service at St Pancras railway station in central London December 20, 2010. REUTERS/Paul Hackett

Passengers queue to use the Eurostar service at St Pancras railway station in central London December 20, 2010.

Credit: Reuters/Paul Hackett

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BRUSSELS (Reuters) - The European Commission has given France and Britain two months to respond to a request to lower charges for passenger and freight trains using the Channel Tunnel, or face possible court action, it said on Thursday.

The Commission said excessively high track-access charges resulted in higher ticket prices for passengers of the Eurostar service linking London with Paris and Brussels.

"Passengers are paying over the odds for their tickets, freight operators and their customers are being overcharged, and overall the current regime is stifling growth in the rail sector," the Commission's spokeswoman for transport told reporters.

Partly as a result of the high charges, she said 43 percent of the tunnel's capacity was not used.

Tunnel operator Eurotunnel charges a one-way reservation fee of 4,320 euros (3,753 pounds) for Eurostar trains and 16.60 euros per passenger. EU officials said the charges should be roughly half that amount.

EU officials said if the charges were lower, the tunnel could make up the difference through increased freight traffic, forecasting a doubling of the amount of daily freight trains.

Under EU law, rail companies are only allowed to charge fees consistent with the amount of wear caused by a train journey.

But the officials said the Commission investigation found operators of the Channel Tunnel were charging more than necessary and using the income to subsidise the operator's car shuttle service, which does not pay such charges.

Officials said the tunnel had sought an exception to levy higher access charges to pay construction costs. They said the investigation did not find evidence to support this, and noted that Eurotunnel's financing costs declined significantly after a write-off in 2007.

In addition to access charges, Commission regulators found that a 65-year usage agreement that reserves 50 percent of traffic for French national rail operator Societe Nationale de Chemins de Fer and Germany's DB Schenker, a unit of Deutsche Bahn, violated EU rules because of its length.

The tunnel's own rail regulator is also too weak, they said, and the railway operators have too much control.

DEUTSCHE BAHN ALSO IN BREACH

In a separate case, the Commission said it might bring Germany to court if it did not change rules to make sure accounts and profits were transparent in its rail system.

The European Commission has the power to refer nations to the EU's Court of Justice, which can impose daily fines if EU member states do not respond to a warning they are breaking EU law.

Regulators said current rules allow railway operators who also manage infrastructure, namely Deutsche Bahn, to unfairly transfer money earned from track charges paid by competitors to subsidise its other divisions.

"The Commission welcomes Europe's railways establishing services in other member states, but it is vital that this is done, and seen to be done, without using money given to the railway by member states to support infrastructure investments," Transport Commissioner Siim Kallas said in a statement.

This violates an EU law against transferring public funds between infrastructure and transport services, Commission officials said.

EU officials said money earned from track charges should either be used on infrastructure or redistributed as dividend to the state.

(Corrects tunnel usage figure in 4th paragraph)

(Editing by David Gregorio and Will Waterman)

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