Aad Veenman - Rail-Related Services: Evolving markets in Europe

Aad Veenman - Rail-Related Services: Evolving markets in Europe

Monday, 5 May 2008

During the past fifteen years, the European institutions concentrated their efforts on setting strong foundations for the liberalisation of the rail transport sector. Over that period of time, three railway packages were proposed, discussed and eventually adopted, the European Railway Agency was created and additional – more technical but essential pieces of legislation deemed to favour the development on interoperable services were enacted.

As a result, the legal framework for rail transport today can take an “honourable” complete shelf in a lawyers’ library!Is this a sufficient argument to say that the rail sector is now fully liberalised ? Far from there! I tend to believe that a lot still needs to be done: all this “paperwork” needs to be ‘digested’ by all operators on the market (new entrants and existing companies) so that they are all able to grasp the opportunities which lie before them in a liberalised market. Real growth in the rail transport sector (as on any other market) is possible when the legislation needed is fully, properly and consistently implemented in the national legal systems. The rights and obligations they contain need to start producing their concrete effects on the market. In other words, the legal framework for business is set at EU level and should be implemented nationally. This legislation defines the size of the playground as well as the rules of game. It is on that predefined pitch that all stakeholders can strive for real business opportunities: business activities that will benefit individual customers as well as the society as a whole.It is in this context that the European Commission is now questioning the need to tackle “rail related services”. “Rail related services” is the technical jargon commonly used to designate all those services surrounding the core infrastructure, that can be necessary and sometimes are even essential for the actual transport service to take place.The European Commission finds that the current legal framework ( whether under EC transport law or under EC competition law ) is not sufficient to allow full access to rail related services to new entrants under normal market conditions. There is therefore today a large debate on the necessity to further address these services with new additional legislation.This short paper tries to analyse this matter. It does not intend to be exhaustive, but I hope it will contribute to the debate by triggering a certain number of key issues which need further thought before more legislation (and potentially additional red tape! ) is imposed upon railway operators, whether new entrants or national companies.This paper will therefore analyse closely key elements contained in Directive 2001/14 2 which contains the principles for the access and charging rules of railway infrastructure.The principles laid down in the successive railway packages are essential to allow better accessibility to the market to all operators, including new entrants and lower market entry barriers for freight and passenger rail operators in order to offer more attractive and modern rail transport services to their customers.The main actors of the railway sector are now all actively involved in the process of making the Third Railway Package into a success. In this context, all stakeholders ( the national railway operator, new entrants, rail infrastructure managers, rail industry, regulatory bodies and competition authorities ) have a very distinctive role to play.When one takes a close look at the “Tableau de la Troupe” at this moment in time, one will be intrigued to see with how much flexibility and vigour these actors are accommodating to the changes taking place and new opportunities that are opening up.One of these new rail market opportunities is in fact the evolving market for rail related services.This paper will therefore first analyse the current state of the art on the market for rail related services. The question will then be to analyse whether rail related services can be systematically assimilated to ‘essential facilities’. In that context, how apply access rules to these facilities on a competitive market.

The key conclusions of this essay is that market is currently in transition and that rail related services markets are emerging in europe. It is for a fact that each national rail market is at a different stage of development.

Some were already opened a decade ago, some are just in the process of opening, in conformity with EU law. The market needs therefore to mature somewhat more before any form of conclusions and any potential initiatives may be validly drawn. In other words, let competition rule the game giving room for full entrepreneurship and innovation.

Aad Veenman