The excessive track access charges mean the Channel Tunnel is not used to its full capacity resulting in more freight being carried by road. As much as 43% of tunnel capacity is unused currently.
EU rules require these charges to be based on direct and marginal costs. For example, the cost directly incurred as a result of operating a train service.
The current charges do not appear to be based on direct costs or the long term investment costs of building the Tunnel.
The charging structure is complex but as an example, for passenger trains the charge is €16.6 (£14) per passenger plus at least a reservation fee of €4,320 (£3,697). For freight trains, at least €3,645 (£3,119) per train. Charges are for one way and dependent on time of day.
The Commission considers these charges should be considerably lower.
The high prices also discourage new railway operators from entering the market thereby stifling growth in the rail sector.
A weak rail regulator
The Commission is also seeking a fully independent regulator. The tunnel has its own regulator - the Intergovernmental Commission - which is made-up of representatives from UK and French state-owned companies. The concern is a lack of independence can lead to a failure to address complaints by operators or compliance with EU rules which in turn can lead to distortions of competition.
Restrictive user agreement
An agreement dating back to 1987 between Eurotunnel and certain operators allocates capacity to certain train operators for 65 years. This type of agreement is not permitted under EU rules due to its excessive duration. This kind of agreement should only be for a temporary period and therefore the Commission is seeking for an end to this competition distorting arrangement.
The decision to issue a "letter of formal notice" follows 18 months of informal negotiations between the parties which have been unsuccessful in resolving the Commission's concerns.