EU warns Britain and France on Channel tunnel charges

The European Union on Thursday told Britain and France to act to bring down charges for trains running through the under-sea Channel tunnel, saying passengers and freight operators were paying too much. London and Paris were given two months to respond to the "formal request" by the European Commission, the executive arm of the 27-nation bloc, or face being brought before the European court. Shares in Eurotunnel -- the private company which has operated the tunnel since it opened to rail traffic in 1994 -- fell by 12.3 percent to close at 5.49 euros. "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. "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. A single operator, Eurostar, runs passenger services from London to Brussels through the tunnel while there are several rail freight operators but they only send around six trains a day through the tunnel, the commission said. The EU said it had asked Britain and France to ensure a fully independent regulator for the tunnel, unlike the current system, and to end a "restrictive" agreement reserving capacity for certain train operators. The commission said 43 percent of the tunnel's capacity was unused. "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. Eurotunnel charges a one-way reservation fee of 4,320 euros ($5710) per passenger train plus 16.6 euros a passenger and 3,645 euros per freight train, but these fees should be "considerably" lower, the commission said. "The Commission has been contacted by numerous stakeholders who complain that the charges for use of the Channel Tunnel are far too high," it said. The fees did not appear to be based on direct costs or on the long term cost of building the tunnel, it said. Eurotunnel said in a statement that the EU moves were "targeted at the states and not at the company". The company added that it had "always sought the development of cross-Channel traffic and concentrates significant resources on this goal." But 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" at Eurotunnel 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. On Thursday the European Commission also threatened to take Germany to court if it does not implement rules on the separation of accounts by firms that operate both trains and rail networks. It said Deutsche Bahn was unfairly transferring money paid to it by rivals for track access fees to subsidise its train operating businesses.