P&O Ferries confirmed today it has initiated legal proceedings against the Department for Transport (DfT) over an ‘unfair and unreasonable’ £33m settlement paid to Eurotunnel last month.
Eurotunnel had sued the DfT over the procurement of three ferry contracts worth over £110m awarded to DFDS, Brittany Ferries and Seaborne Freight in December 2018, to provide additional freight capacity in the event of a no-deal Brexit.
An agreement between the DfT and Eurotunnel, announced in March, saw the firm withdraw its legal claim in return for £33m to invest in its terminal in Folkestone to enable it to keep freight moving in the event of a no-deal Brexit.
And Bernadette Kelly, DfT permanent secretary, recently told the Public Accounts Committee that the department would audit Eurotunnel’s settlement spend to ensure it benefited the taxpayer.
But in today’s announcement of legal action, P&O Ferries argued the £33m paid to Eurotunnel to invest in the tunnel’s infrastructure would put its own services at a “competitive disadvantage.”
A company spokesperson said it accepts it was “prudent of the government to make contingency plans to protect international supply chains” in the event of a no-deal Brexit, but claimed the Eurotunnel settlement was not “fair or reasonable.”
They said: "We have repeatedly made clear during decades of providing vital transport services between Britain and the Continent that we are happy to compete with other providers on a level playing field.”
The P&O Ferries spokesperson added: “We do not believe that the payment of £33m of public money to Eurotunnel to settle its legal challenge to these plans is fair or reasonable. It is explicitly designed to be invested in the tunnel's infrastructure and if left unchallenged would put our services at a competitive disadvantage.”
In response, a government spokesperson said: “This cross-government decision helped protect vital freight capacity for medical supplies to enter the country, in the event the UK left the EU without a deal.”
They added: “We are confident we acted appropriately in reaching an agreement with Eurotunnel.”