The Economic equilibrium test

The Economic equilibrium test

Thursday, 10 October 2013

Article 11 of Directive 2012/34/EU foresees the execution of an economic equilibrium test, to be carried out by the regulatory body upon request, in order to determine whether and to what extent a prospective open access service may be detrimental to a Public Service Contract in place. In that case and on that basis, the regulatory body is tasked with issuing a decision that may impose limitations to the rights of access of the open access operator. The Commission’s proposal in the context of the Fourth Railway Package confirms this approach in general terms.

CER considers that the economic equilibrium test should be based on an adequate economic methodology, enabling projections of passenger flows and passenger revenues as compared to a baseline without the entry of the new service. Based on these projections, the regulatory body should then focus the analysis on two key questions: whether the new service is mainly revenue-generating or mainly revenue-abstracting, and whether the revenue loss that is projected for the Public Service Contract is or is not substantial.

An open, transparent, and collaborative approach is recommended with respect to how the regulatory body develops and improves the methodological tools needed for the economic equilibrium test.

Last but not least, a parsimonious approach with respect to information requirements and the full respect of commercial confidentiality are essential.