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New EU Regulation Increases Competitiveness Railway Companies

On April 28 the 4th railway package market pillar was approved by the EU Council. As the regulation will open the domestic rail passenger market in Member States, competition will be enhanced.

The package consists of three parts, one part revising the regulation of public service contracts, the second part revising the directive on a single European railway area and the final part repealing the regulation on the normalization of railway undertaking’s accounts. The legislative procedure to approve the package is expected to be finished by the end of this year.

The aim of the revised regulation is the improvement of train services. This is hoped to be achieved by creating a competitive environment for train companies. The shift of passengers to rail transport and clearness of regulation are also encouraged.

Competition would be enhanced by non-discriminatory access of railway companies to Member States’ rail passenger market. This will offer operators the opportunity to enter new markets. In order to receive public service contracts in most cases competitive bidding will be used, while also taking into account the quality of services. Equal access is guaranteed by strengthening the independence and impartiality of infrastructure managers. The regulation also aims to increase financial transparency as to avoid conflicts of interest.

The new regulation with regard to infrastructure managers will apply from January 1, 2019, onwards. By December 14, 2020, Member States need to have guaranteed non-discriminatory access and launched new commercial services. Seven years from the publication of the legal acts the competitive bidding for public service contracts will enter into force. This will, however, not affect existing directly awarded contracts.

As the reforms enhance competition and reduce the costs of railway services, the 4th railway package directly affects trade flows and mobility. Furthermore, the reforms can contribute to a better functioning and more competitive single market which are in the interest of European shippers. It is also important for shippers that technical and administrative barriers in rail transport are lowered, particularly with regard to freight transport. Competition in rail transport is supported as it will lead to lower prices, improved quality and efficiency for European shippers.

This article was posted on May 16th, 2016 by ESC under News