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The Ontario government has declared the company that owns the 407 toll highway in breach of contract for raising tolls without permission. 407 International Inc., owned by a consortium of multinationals, unilaterally increased tolls on February 1 by one cent per kilometre.

Since the former Conservative government signed off on the $3.1 billion P3 scheme to privatize one of the most traveled roads in the Greater Toronto Area, some peak-hour drivers have seen a more than 200 per cent rate hike. Public outcry against the company has prompted the McGuinty government to promise to roll back the latest toll increase. But business is for profit and despite the governments legal challenge, the company threatens to take action to protect the companys and its stakeholders interests.

The conflict reveals the weakness of P3s: privatization costs more and the public will eventually be hit with the increased cost. Moreover, the public and government lose control over pricing when infrastructure is handed over to the private sector. And costly legal battles gobble up funding that should go to community services.

The Ontario government is also complaining about poor customer service, billing errors and other breaches of the companys contract obligations.