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Britain, France face EU action over high Eurostar charges

Four members of the Scot's Guards pose for a photograph next to a new Eurostar train, during a media event, in central London, October 7, 20
Four members of the Scot's Guards pose for a photograph next to a new Eurostar train, during a media event, in central London, October 7, 20

By Ethan Bilby

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 to use the Channel Tunnel, or face possible court action, it said on Thursday.

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

"Access charges for passenger services and freight are much higher than they need to be," an EU official said, saying usage of the tunnel was less than it should be because of the cost.

Tunnel operator Eurotunnel charges a reservation fee of 4,320 euros ($5,800) one way for Eurostar trains and 16.60 euros per passenger. EU officials said the charges should be roughly half that amount, and the excess meant only 43 percent of the tunnel's capacity is used.

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 higher-than-necessary access charges, and using this income to subsidize 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 usage agreement which reserves 50 percent of traffic for French national rail operator Societe Nationale de Chemins de Fer and German DB Schenker, a unit of Deutsche Bahn, for 65 years 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 may bring Germany to court if it does not change rules to make sure accounts and profits are transparent in its rail system.

The European Commission has the power to refer nations to the EU 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 subsidize 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 that money earned from track charges should either be used on infrastructure or redistributed as dividend to the state.

(Editing by David Gregorio)

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