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Transport: New rules to establish a more competitive rail market

Siim Kallas welcomed the agreement today by transport ministers on new EU rules setting out how competition on the rail market must work in practice by: ensuring fair access to rail infrastructure and rail-related services; strengthening the power of national regulators; and improving the framework for investment in rail.


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Irish air travel tax: Commission welcomes overhaul of discriminatory charges; closes infringement case

The European Commission has welcomed Ireland's decision to remove the discriminatory aspects of its air travel tax, levied on air passenger travel. The Commission had expressed its concerns that the tax breached EU law by charging passengers on flights to other Member States more than passengers on domestic flights. As Ireland now levies the same charge regardless of destination, the Commission has decided to close its infringement procedure.


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Commission requests 10 Member States to comply with green vehicle procurement rules

The European Commission has requested Austria, Bulgaria, Estonia, Greece, Ireland, Luxembourg, Slovenia, Slovakia, Sweden and the United Kingdom to implement a Directive on promoting clean and energy-efficient vehicles, in accordance with their obligations under European Union law. The deadline for implementation of the Directive was 4 December 2010. The request takes the form of a reasoned opinion under EU infringement procedures. If the Member States fail to inform the Commission within two months of measures taken to ensure compliance with EU law in this respect, the Commission could refer the cases to the EU Court of Justice.


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Maritime security: the Commission calls on Sweden to apply correctly measures to improve port security

The European Commission has sent Sweden a formal request asking it to apply correctly the EU Directive on improving port security, and in particular to initiate assessments and develop port security plans. The Directive, which is one of the cornerstones of maritime security policy, aims to guarantee uniformly high levels of security in all European ports. Sweden has two months to show that it is applying the Directive, failing which the Commission may bring a case against Sweden before the Court of Justice of the European Union.


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Maritime Safety: Commission requests nine Member States to comply with EU vessel traffic monitoring and information system regime

The European Commission has requested Belgium, Estonia, France, Hungary, Austria, Poland, Portugal, Finland and the United Kingdom to adopt national legislation to implement EU rules setting up a vessel traffic monitoring and information system . The rules in question, an important measure to prevent loss of life and environmental damage from shipping accidents, were due to be implemented by Member States no later than 30 November 2010.The Commission's request takes the form of a reasoned opinion under EU infringement procedures. If these Member States fail to inform the Commission within two months of what measures they have taken to ensure full compliance with the law, the Commission could refer the case to the EU Court of Justice.


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Commission requests eight Member States to implement railway interoperability Directives

The European Commission has formally requested eight Member States to fully implement the railway interoperability Directive of 2008 (2008/57/EC) and its 2009 amendment. Austria, the Czech Republic, Germany, Ireland, The Netherlands, Poland, Sweden and the United Kingdom have so far failed to notify the Commission of measure taken to implement both these two Directives into national law (the deadline was 19 July 2010). The Commission has requested the Member States in question to remedy the situation within two months, failing which the Commission may refer them to the EU's Court of Justice.


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Europeans generally satisfied with train services but want more access to information when travelling

A Eurobarometer survey was conducted to examine EU rail passengers’ satisfaction with domestic rail services, including trains themselves, railway stations and the rail network in their country. The Eurobarometer identified, on the one hand, good points for rail passengers who, in general, feel safe and secure when travelling by rail or find it easy to purchase their tickets; and on the other hand shortcomings such as lack of information regarding passenger rights or delays. The results will help in defining future measures to ensure medium-distance passenger transport goes primarily by rail by 2050, an objective set in the 2011 White Paper on transport recently published by the European Commission. Rail passengers were asked about the punctuality and reliability of trains in their country. 66% of all rail passengers interviewed said they were "very" or "rather" satisfied with the service in their countries. The highest satisfaction levels for were measured in Spain (89%), Ireland (89%), Portugal (91%), Latvia (93%) and Lithuania (96%). On the contrary, in some countries such as Romania (43%), France (45%), Sweden (45%), Germany (46%) and Poland (52%), rail passengers indicated to be very or rather dissatisfied with the punctuality and reliability of rail services in their countries. On ease of ticket purchasing, 79% of respondents find it easy to buy train tickets. However, only 61% of respondents in Austria and 54% in Germany find it easy to buy tickets. The Commission is currently in the process of assessing the need for further measures to remove barriers that are holding back multi-modal travel planning and ticketing.


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Transport ministers discussed new EU rules to create a more transparent and competitive rail market  at their meeting in Luxembourg on 16 June. The proposals set out how competition on the rail market should work in practice by: ensuring fair access to railway infrastructure and rail related services; strengthening the power of national regulators; and creating a better regulatory framework to stimulate investment in rail.

1. What was the first railway package?

The first railway package consists of three directives (2001/12/EC, 2001/13/EC and 2001/14/EC) which were substantially amended in 2004 (second package) and 2007 (third package). Its purpose was to revitalise railway transport (still largely in the hands of state monopolies confined to their national markets) by gradually opening it to competition at Europe-wide level. The market for rail freight transport has been completely opened since 2007 and for international passenger services since January 2010.

The level of success of this policy is demonstrated by the stabilisation of rail's modal share during the last decade after a long period of decline (its share among inland modes has remained around 17.1% in tonne kilometres for rail freight and between 8.6 and 8.4% in passenger kilometres for rail passenger transport since 2002). But, despite this achievement, which was difficult to arrive at, the establishment of a single rail market is a fragile construction and is hampered by several problems.

And why do we need a recast?

The proposal to recast the first railway package is: firstly an exercise in legislative simplification and consolidation ("codification") with the merger of the three directives in force and their successive amendments (all in all nine directives, one decision and two acts of accession). The recast also aims to modernise the legislation and tackle key problems areas which have been indentified on the market over the last 10 years.

2. What are the main problems that need to be addressed?

The EU railway market suffers in particular from three major problems:

  • A low level of competition due to market access conditions which are not sufficiently precise and therefore still biased in favour of the incumbents. The persistence of conflicts of interest in particular for access to rail related services (access to terminals, maintenance and servicing of trains etc…) between different market players and discriminatory practices. Concrete examples of discriminatory practices on access to tracks and rail-related services include: km-based infrastructure charging or kWh-based charging for electricity that give disproportionate discounts to the largest operator (incumbent); insufficient information on requirements for newcomers' access given in "network statements" (the document setting out the characteristics of the infrastructure and the conditions for its use); denied access to central stations for international passenger trains competing with those of the incumbent , no information nor ticketing facilities in stations for these same trains; denied or very limited access to freight terminals when no alternatives are available.
  • Inadequate regulatory oversight by national authorities, often with insufficient independence, competences and powers. With a small number of exceptions, regulators' offices in most other Member States are understaffed, have limited investigating powers and cannot enforce their decisions with financial penalties. When appeals against decisions by the regulator have suspensive effect, these decisions can be challenged through the entire judicial system and it can take years before a decision putting an end to an anti-competitive practice is enforced. Under present legislation cases concerning access to services (the most sensitive and frequent ones in the domain of competition on the rail market) may not be brought to the regulator. In several Member States the office of the rail regulator belongs to the ministry of transport, which also owns or controls the incumbent railway undertaking – a clear case of conflict of interest.
  • Low levels of public and private investment as the quality of infrastructure is declining in many Member States because of insufficient funding, investment in railway services becomes less attractive both for incumbent and new operators. Underinvestment at national level is partly due to the absence of a clear "financial architecture" (investment plans, long term strategies, transparent and state-aid compatible relations between the state – nearly always the infrastructure owner and often the owner of the incumbent railway company – and infrastructure managers and railway undertakings).

In this context a new forward step in rail reform is necessary to remove these obstacles and create a genuine Single Railway Area, which would provide a key contribution to the effective completion of the internal market and the development of an efficient and competitive transport system in line with the EU 2020 Strategy objective of smart, inclusive and sustainable growth.

3. What are the key elements of the new proposal?

The proposal to recast the first railway package:

  • is firstly an exercise in legislative simplification and consolidation ("codification") with the merger of the three directives in force and their successive amendments (all in all nine directives, one decision and two acts of accession), the elimination of cross-references and the harmonisation of terminology;
  • secondly, it aims at clarifying existing provisions (solving in particular problems of diverging interpretations by Member States) and at adapting them to the evolution of the market during the last decade, with a view to addressing key problem areas - building on the experience of the last 10 years. These are the problems mentioned in the second section above and facilitating implementation.

In particular, concerning the issues referred to in the second bullet point, the proposed changes address the problems identified above as follows:

  • Competition issues: the proposal will improve transparency of the rail market access conditions for example by
  • requiring more detailed network statements -documents published annually so potential newcomers can see clearly the characteristics of available infrastructure and conditions for its use;
  • establishing improved (and in certain cases guaranteed) access to rail-related services (subject for instance to management independence requirements) for freight and passenger trains;
  • establishing explicit rules on conflicts of interest and discriminatory practices in rail related services.
  • Regulatory oversight: The proposal strengthens the power of national rail regulators including:
  • extending the competence of national regulators (to rail-related services);
  • requiring the independence of national rail regulators (from any other public authority);
  • strengthening the powers of the national rail regulators (with sanctions, audit and ex-officio investigating powers) and establishing the obligation imposed on these bodies to cooperate with their counterparts on cross-border issues.
  • Investment: the proposals aims to strengthen the "financial architecture" to encourage investment including by
  • requiring national long-term strategies and multi-annual contractual agreements between the state and infrastructure managers linking funding to performance, and business plans. These instruments of medium to long term planning should allow an orderly development of the infrastructure and give market players better predictability of business opportunities and thereby facilitate their own investments;
  • requiring more precise and smarter infrastructure charging rules. Better implementation of the charging principles contained in the existing legislation should lead to lower track access charges for rail transport operators in many Member Sates. The new charging rules (with the introduction of noise-related modulation as the rail equivalent to external cost charging for road transport, discounts for interoperability) should also stimulate private investments in greener and interoperable technologies.


[Rail Market]

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