Channel tunnel loses duty-free battle

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Eurotunnel, the Channel tunnel operator, has lost its legal battle to stop ferry companies and airlines selling duty-free goods after the High Court yesterday threw out its challenge.

It may still test the legality of ferry companies to sell one-day "booze cruise'' tickets, but such action could take years to resolve.The company claims that its competitors have an unfair advantage under European free trade laws because they can subsidise fares from on-board sales profits.

Eurotunnel, which is allowed to sell duty-free goods at its terminals at Folkestone and Calais but not on the train, estimates the duty-free trade is a £20m-a-year subsidy for its competitors.

The court challenge is a mark of the hostility between Eurotunnel and its rivals for cross-channel business. The company was last year given permission to seek a judicial review of the money-spinning benefits enjoyed by its competitors.

But yesterday the High Court took the unusual step of blocking that decision, ruling that Eurotunnel had failed to meet the time limits imposed for launching such action.

The company was ordered to pay costs, unofficially estimated at £250,000, but said it was considering an appeal. The court, however, said Eurotunnel could challenge the legality of "booze cruises'' if it acted promptly.

Any further action would not affect day-trippers to French hypermarkets, but only those thousands of travellers who make return crossings without disembarking.

The decision was a victory for ferries, airlinesand the Dover Harbour Board which stood to lose hundreds of millions.Duty-free sales contribute up to a quarter of annual revenue to cross-Channel ferry companies.