Markets for rail freight services have already been fully opened to competition since January 2007and those for international passenger transport services as of 1 January 2010, yet national markets for domestic passenger transport services by rail remain largely closed and are the bastions of national monopolies. The Fourth Railway Package, thorough the proposal of opening the market to the national rail passenger transport, seeks to improve the quality and the efficiency of services so that railway transport could become a more attractive choice for passengers.
Ensuring high quality, integrated services providing wider social benefits and lower external impacts compared to other modes will continue to require a large proportion of rail services across the EU (66% of passenger-km) to be provided under public service contracts, specified and subsidized by member states, regional or local authorities. Removing the legal barrier by only allowing open access would have rather limited effects given that most domestic services are covered by public service contracts. Competition on domestic markets should therefore be addressed at two levels with competition “in the market” for those services that can be provided through open access and competition “for the market” to allow the transparent and cost-efficient award of public service contracts, as experienced today in some member states.
Existing rules give competent authorities extensive scope to directly award public service contracts in rail transport, avoiding competitive tendering procedures (which are generally required for public service contracts in other modes of public transport). Directly awarded public service contracts constitute 42% of all EU passenger-kilometres, contributing to the fact that in 16 out of 25 member states with rail, the incumbent holds above 90% market share.Evidence of competition for public service contracts in Germany, Sweden and the Netherlands has shown that tendering accrues savings for competent authorities, sometimes up to 20-30%, which can be re-invested to improve services or be used elsewhere. Experience in other liberalised markets such as Sweden and the UK has shown improvements in quality and availability of services with passenger satisfaction rising year on year and passenger growth of over 50% over ten years. Improved services would bring clear benefits to passengers and savings of some EUR 30-40 Billion to taxpayers.
By amending the Regulation dealing with public service obligations in public transport by road and by rail, the Commission aims to introduce mandatory tendering of public service contracts as of December 2019. The scope of those contracts and the underlying public service obligations are to be defined in compliance with criteria based on ge-neral Treaty principles. To avoid excessive geographic scope of contracts being used to foreclose markets, the Commission proposes a flexible definition of maximum contract volume. A minimum threshold below which contracts may be awarded directly will enable competent authorities to avoid organising a tendering procedure, if the expected savings of public funds would not exceed the costs of tender. Contracts directly awarded after the adoption of this legislative package will not be able to continue beyond31 December 2022.
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