Eurostar gets EU restructuring approval, but faces cross-Channel rail competition

The European Commission gave the green light to London & Continental Railways (LCR) and France's SNCF to create a "New Eurostar" company yesterday, but on condition that the routes between London and continental Europe be opened up to new competition.

The new group, which will create a single Eurostar company board for the first time, giving it control of its own profit and loss account, is conditional on the new joint venture opening up the London to Paris and London to Brussels routes to other rail operators.

Europe's competition watchdog had been concerned that the new company would hinder other potential competitors' entry into the market, but last-minute tweaks to the arrangement led to it winning approval.

The current Eurostar operator is a consortium owned by SNCF, the Belgian railway company SNBC, and the British registered Eurostar (UK) Ltd, a subsidiary of LCR. SNCF will get a 55 per cent stake in the new group, LCR will receive 40 per cent, while SNBC will be given a 5 per cent holding.

To alleviate the EC's worries, the companies have offered to give access for new entrants to their international station services at London St Pancras, Paris Gare du Nord and Brussels Midi, and to light maintenance services in depots in France, the UK and Belgium that are currently under the control of the three companies.

"The commission has concluded that the transaction ... would not significantly impede effective competition in the European Economic Area or any substantial part of it," the European Union's executive and regulatory body said yesterday.

A spokesman for Eurostar said: "The restructuring of the business marks a major milestone for our business and puts us in a strong position to compete and expand our business going forward. Establishing Eurostar as a single corporate entity is central to the growth and expansion of our business. With the new structure, we are creating the first international rail company and will be the key link between the UK and the Continent."

There is unlikely to be any immediate competition from other rail companies, although the European Commission is eager to see other groups on the London to Paris and Brussels routes as soon as possible.

The Eurostar spokesman said it was unconcerned about the new entrants to the market, adding that Eurostar has long competed with airlines and ferry companies for cross-Channel travellers. He claimed that the promise of increased competition was an "opportunity" for the new Eurostar company. Eurostar has operated since 1994.