French water and transport group Veolia Environnement is in advance talks to run high-speed train services to compete with SNCF, including its Eurostar services between London, Paris and Brussels.

Le Figaro newspaper said that Veolia and Italian train operator Trenitalia, part of Italy’s state-owned rail firm, could focus on routes from Paris to Brussels, London and Strasbourg, starting in 2012.

Those routes would break Eurostar’s current monopoly on cross-channel services.

Veolia was in similar talks with Air France-KLM, which was interested operating a high-speed connection between its Paris and Amsterdam hubs. However the airline pulled out in October.

Both Veolia and Trenitalia refused to comment on the record about the talks, however a source is quoted by Reuters saying: “Veolia is in discussions with Trenitalia but nothing is concluded.”

The news follows just the French market for international rail travel was opened to competition on December 14 following a European directive.

Trenitalia has emerged as the first company to apply for a licence the only alternative operator so far to have applied for a licence to compete against SNCF. The Italian state-owned group is also hoping to launch services this from Paris to Milan and Paris to Genoa.

However competitors have complained that although the French government has opened up international rail travel to competition, the conditions are unfavourable to competitors compared to SNCF.

The French Rail Association, a lobby for SNCF’s potential competitors, has argued that the rules make it difficult for alternative suppliers to invest the significant capital needed to enter the market.

This week operator Eurotunnel challenged Eurostar’s strategy of reducing capacity to boost per-seat prices and said it could open the tunnel to others.

In an interview with Reuters, Eurotunnel Chief Executive Jacques Gounon said it could help other train operators interested in developing new services under the Channel if Eurostar continued its strategy of capacity reduction in a bid to hike average ticket prices.