European 4th Railway Package. France, Germany et al still try to prevent competition

Lord Berkeley




From Tony Berkeley, House of Lords, London SW1

Message to Luxembourg Presidency on 4th Railway Package. 

There has been progress; the technical part is agreed, and the package is still together.  Keep it together, and ignore the warnings of the monopolists.  There are still a few serious outstanding issues which need resolving to make a fair and competitive single market in the rail sector.   Here are some examples of member states’ resistance to change, and an unworkable compromise in the latest text1:

France in trouble over SNCF reform. There will never be fair competition above tracks if the proposal to turn SNCF into an EPIC (établissement public industriel et commercial) goes through.   One of the main rules that apply to EIPCs is that they cannot go into liquidation.  The French Government tried this route with la Poste but in 2012 the European Court of Justice declared that this structure was not legal. The same would apply to SNCF’s passenger and freight operators who could not go into liquidation.   So how can they compete fairly with the private sector and other state owned companies such as DB if SNCF was prevented by subsidy from going into liquidation.    I urge the European Commission to investigate whether the EPIC of SNCF complies with EU law.

Meanwhile, France is trying to get round the Public Sector Obligation (PSO) draft texts by awarding 10 year plus contracts for regional passenger services around France to SNCF.  So the French Government can say, in all honesty, that all such services are open to bids from other operators, including DB, but that sadly the first time that this can happen is in 2025.  So at the 11 June Transport council, the French delegation stated that the Governance and PSO parts are sensitive areas, ‘but markets must be opened up with clear transparent conditions for this. He stated direct attribution in a competitive market becomes the exception to the rule for PSO contracts and this derogation needs a strict framework, based on objective criteria.’  He did not say that nothing would not happen to comply with these statements because SNCF had sewn up the market for 10 years.

 UK – Co-operation agreements are dead!   The first such agreement in the UK, called an ‘alliance’ between South West Trains and Network Rail, has been closed as not bringing any benefit.  What is left is what there was before it started, a useful commitment for both parties to talk to each other and work together for the common good of all parties, including customers.  So there does not need to be any such agreement in the 4th RP text such as would allow DB Netz and DB Regio/DG Schenker to form an alliance, or SNCF to do the same with a view to continuing to exist as they are at present, to the detriment of fair competition from other operators.

Germany – DB operations cannot survive without unfair subsidy from Infrastructure Manager! In Germany, DB has admitted to unfair state aid which a senior DBAG Officer admitted at the Smartrail conference in Amsterdam on 19 May 2015:  ‘DB cannot survive without transferring funds from Infrastructure Manager (IM) to its Railway Undertakings (RUs).’   This may explain the German representative’s more negative comments at the Transport Council meeting on 11 June.

Essential functions of Infrastructure management must be under the control of the Infrastructure Manager.  It appears that the Commission is happy that only charging and path allocation should be with the IM, but that traffic management and maintenance should have a separate provision, being non-discriminatory and regulatory oversight. However, the separate provision could also be the incumbent RU.   But that means that other RUs will have to deal with two separate bodies, one dealing with path allocation and another dealing with changes due to maintenance requirements or perturbations; they are unlikely to agree.  Certainly SNCF has a good record in favouring its own trains at the commercial disadvantage of other operators.

Secondly, how can one operator really be trusted to deal with traffic management and maintenance co-ordination for all operators fairly? It just won’t happen!

The only fair way is for one body, the IM, to be responsible for and held accountable for charging, path allocation, traffic management and maintenance – in a non-discriminatory way – and to be held accountable for this by their customers.

Note 1: Council of European Union Working Document TRANS TER W. Doc. 2015/109

3rd July 2015

Tony Berkeley is a Board Member of the European Rail Freight Association and Chairman of the UK Rail Freight Group.  The opinions expressed are his own.