Britain and France could face EU court action unless they open up Channel Tunnel rail services to more competition, the European Commission warned today.
Opening up the market will lead to better services and lower prices for passengers and freight traffic using the Channel fixed link, said the Commission.
But neither country has implemented the so-called "first railway package" of EU competition laws which should have been place by March 15 2003, said a statement.
It added: "Failure to remedy the current situation in the UK and France within two months will result in further measures against these two countries."
The Commission said it was launching "infringement proceedings" because of the lack of independence of the Channel Tunnel "rail infrastructure manager", and the insufficient implementation of provisions in the EU's rules on rail access charging, an independent regulatory body and capacity allocation regarding the fixed link.
The Commission statement warned: "If the first railway package is not fully implemented, it could prevent the creation of an internal market for rail services in Europe.
"Having an internal market is important because competition between different rail operators would encourage them to become more efficient and would result in more choice, better services and lower prices for passengers and for freight traffic."
London and Paris now have two months to respond to today's demand. Failure to "react satisfactorily" would trigger a "reasoned opinion" from the Commission - the last step before a decision on European Court action if the issue remains unresolved.
Conservative MEP for the South East Richard Ashworth said: "The Commission's decision to penalise the UK over failing to open the Channel Tunnel for competition is precisely what I've warned would happen since the first railway package came into law.
"A single market for rail would increase competition between different rail operators and encourage them to become more efficient.
"When consumers are offered greater choice the result is a better standard of service and lower prices for passengers and business."
He added: "This legislation has been in place for the better part of a decade so why are the Channel Tunnel authorities dragging their feet?"