Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions - Transeuropean rail freight freeways
Date: 1997-05-29
Institutions: European Commission
Subjects: carriage of goods, freedom to provide services, freight rate, rail transport, trans-European network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  29.05.1997 
COM(97) 242 final 

COMMUNICATION  FROM THE  COMMISSION 

TO THE COUNCIL,  THE EUROPEAN PARLIAMENT, 
THE ECONOMIC AND SOCIAL  COMMITTEE 
AND  THE COMMITTEE OF THE REGIONS 

TRANS EUROPEAN RAIL FREIGHT FREEWAYS 

1. BACKGROUND 

3 

CONTENTS 

1.1  Rail Freight Situation 
1.2 Origins 
1.3  Summary of existing access rights under European  legislation 
1.4 Freeways as a step toward  liberalisation 
1.5 The principal elements 
1.6 Relationship to other Community transport policies 

2. DISCUSSIONS 

2.1 High Level Group 
2.2 Industry, Business and Shippers 
2.3 Community of European Railways 
2.4 Outcome of discussions 

3. DEFINITION 

3.1 Operation on a Freeway 
3.2 One-stop-shop 
3.2.1  Tasks 
3.2.2 The organisation  of the OSS 

3.3 Train path allocation 

3.3.1 Capacity 
3.3.2 Priority 
3.3.3  Speed of Decision 
3.3.4 Appropriate Paths 

3.4 Charging 
3.5 Border issues 
3.6 Relations between Infrastructure  Managers, the OSS and Train Operators 
3.7 Performance  incentives 
3.8 Complaints and Arbitration 
3.9 Information  about ancillary services 
3.10 Cohesion of individual Freeways 

4. COMPETITION  LAW 
4.1 Article 85 
4.2 Article 86 
4.3 State aid 

5. NEXT STEPS 
5.1 Location 
5.2 Practical work underway 

5.2.1 North-South Pilot Action 
5.2.2  Freight Leaders and Logistics Club 
5.2.3 Other Community Freeways 

6. CONCLUSIONS 

6.1 Benefits 
6.2 Further work 

6.2.1  Short Term Action Required to Establish  Individual  Freeways 
6.2.2  Long Term Issues 
6.2.3 Research 

6.3  Access  by  third  countries  and  extending  Freeways  to  Central  and  East 

European countries 

6.4 The future  role of the Commission and the High Level Group 

2 

1 
4 
4 
5 
6 
7 

8 
8 
8 
9 
9 

9 
10 
10 
11 
11 
11 
12 
12 
13 
13 
14 
14 
15 
15 
16 
16 
16 

16 
16 
17 
17 

18 
18 
18 
18 
19 
19 

19 
19 
19 
19 
20 
21 

21 
21 

1. BACKGROUND 

1.1  Rail Freight  Situation 

Between  1970 and  1995 freight  carried  by  Europe's  railways  declined  by  nearly  a 
quarter from  283 to 220 billion tonne kilometres.  In  itself this would  have  serious 
consequences, but when  it is put  in the context  of an  increase  in the overall  freight 
market  of  70%  it  means  that  rail's  market  share  has  halved  from  some  32%  to 
15%.  The majority  of this increase in freight  traffic  has been carried by road which 
has  led  over the  same  period  to  an  increase of  150% in road  freight.  If this  trend 
continues for the next ten years the railway's  share of the market will drop from  15 
to 9% while the overall market expands by a further  30%. 

While these are global figures, the trends have very real  impacts.  If the predictions 
are borne out they  suggest serious increases  in congestion, pollution  and to a lesser 
extent  accidents.  While  it is clear that rail  cannot possibly  solve  all  freight  needs, 
it  can  make  a  real  contribution  to  the  Community's  need  for  sustainable  freight 
transport,  particularly  over  longer  distances.  In  fact,  even  though  some  85%  of 
goods by tonnage transported within the Community are within a range of less than 
150km  and  most  of this  is not  a market  for  rail  freight,  more  than  50% of  tonne-
kilometres  are  transported  over  150km  and  this  clearly  illustrates  the  relative 
importance  of  long-distance  freight  traffic  within  the  EU.  The  impact  which  rail 
could have on this long-distance market is compounded  by the fact that a great deal 
of  this  freight  is  concentrated  on  high  density  corridors  (particularly  but  not 
exclusively  related  to ports).  It  is this  specific  market where the Freeway  concept 
outlined  in this  paper could  make a valuable contribution  to reversing  the trend  of 
declining market share for rail  freight. 

Concern  over  transport  trends,  and  particularly  the  failure  of  the  railways  to 
respond to the needs of the market,  led the Commission  to publish  a White  Paper1 
in  1996  on  revitalising  Europe's  railways;  This  emphasised  that  rapid  action  is 
needed  to  stop  the  decline  of  rail  freight  because,  if  present  trends  continue,  it  is 
likely that rail freight  will disappear from  major  segments of the market. 

Many of the problems which were  identified  have arisen because  railway  manage 
ment  has  had  neither  the  freedom  nor  the  required  incentives  to  address  the 
challenges  facing  it;  in  short  railways  do  not  operate  like  businesses.  To  change 
this  the  Commission  considers  that  the  management  of  rail  organisations  have  to 
be  given  the  freedom  and  resources  to  improve  performance  in  addition  to  the 
introduction  of  market  forces  and  the  better  integration  of  national  systems. 
However,  action  to  achieve  this  on  a Europe  wide  basis  will  take  time  to  achieve 
results. 

International journeys  are a major  cause  for  concern, as railways  frequently  fail  to 
offer  services  which  are  competitive  with  road  freight  in  terms  of  price,  speed, 
flexibility  and  reliability.  This  is  particularly  important  because  rail  is  more 
competitive  over  longer  distances,  but  to  realise  transport  over  these  distances  in 
Europe  generally  means  crossing  national  borders.  The  national  focus  of  railways 

1  A Strategy for revitalising the Community's railways COM(96)421  final 

3 

has  left  them  handicapped  when  dealing  with  this  traffic  although  they  are 
potentially well suited to carry it.  It is in view of the urgent need for  action  for  rail 
freight  that the Commission  proposed  the  creation  of Trans  European  Rail  Freight 
Freeways in its White Paper. 

1.2  Origins 

for 

in  1996,  Transport 
the  Commission's  White  Paper 
In  preparation 
Commissioner, Neil Kinnock, asked a group of experts to offer  advice on the  future 
of  the  railways  in  Europe.  In  their  report2  the  group  first  proposed  the  idea  of 
creating  a  number  of  "Trans-European  Rail  Freight  Freeways"  to  tackle  the 
specific  problems of cross-border rail freight.  When the Commission  subsequently 
published  its  railway  White  Paper  it  launched  the  idea  as  a  practical  first  step  to 
revitalising  freight  transport  by  rail.  The  Transport  Council  discussed  the  White 
Paper in October  1996  and welcomed the concept of Freight Freeways. 

The  Commission  advocated  the  setting  up  of  Freeways  on  a  voluntary  basis  as  a 
step  towards  revitalising  rail  freight.  The  broad  definition  developed  in  this 
Communication  should,  therefore,  be  considered  as  a  recommendation  by  the 
Commission  on  how  such  Freeways  should  be  set  up.  This  recommendation  is 
based  on the work  of the High Level  Group, which  was  set up  in November  1996, 
and discussion with a wide range of interested  parties (see § 2). 

Clearly,  other  forms  of  improving the organisation  of  international  rail  freight  can 
be  envisaged  which  could  make  a  contribution  to  the  promotion  of  rail  freight. 
However,  the  Commission  considers  that  the  detailed  definition  presented  in 
Section  3  of  this  Communication  holds  out  the  best  prospect  of  improved 
performance  of  international  rail  freight  services  in the  short  to  medium  run.  This 
Communication  clarifies  the requirements  stemming  from  Community  law, and  in 
particular  Competition  law,  for  Freeways  developed  in  accordance  with  this 
definition. 

1.3  Summary of existing access rights under European  legislation 

Directive 91/440/EEC3 set out, for the first time  in Community  law, rights of access 
to railway  infrastructure  in the  Community.  Until  its adoption  each  enterprise  had 
benefited  from  a  national  monopoly  and  therefore  exclusive  utilisation  of  the 
infrastructure  in  its  country.  The  first  paragraph  of  Article  10  provides,  for 
international  groupings  of  railway  undertakings,  a  right  of  access  in  the  Member 
States  in  which  they  are  established,  as  well  as  a  right  of  transit  in  the  other 
Member  States, but does not permit the  loading or unloading of passengers  or cargo 
in the transit  countries.  For  railway  undertakings  operating  international  combined 
transport the second  paragraph  of Article  10 provides a total  right of access  as well 
as the right to  load and  unload  cargo, with the only  limitation  being that cabotage  is 
not  included.  To  facilitate  the  exploitation  of  the  rights  established  in  directive 

2  The Future of Rail in Europe 

3  Council directive 91/440/EEC of 29th July  1991 on the development of the Community's railways. O.J. 

L 237, 24.8.91. 

91/440/EEC,  two  further  directives  95/18/EC4  and  95/19/EC5  were  adopted  which 
set out requirements relating to licensing, charging and train path allocation. 

Directive  95/18/EC  establishes  the  framework  for  the  licensing  of  Community 
railway  undertakings.  It  creates  the  right  for  undertakings  to  apply  for  a  licence 
when  they  are  or  will  provide  services  referred  to  in  Article  10  of  directive 
91/440/EEC.  The  directive  establishes  the  broad  criteria  for  issue  or  refusal  of  a 
licence and conditions regarding the validity of the licence. 

Directive  95/19/EC  established  a  framework  for  rail  infrastructure  charges  and 
train  path  allocation.  For  charges  the  rules  should  enable  the  infrastructure 
manager to market the available  capacity  efficiently  and  the charges  must  be  non 
discriminatory  for  services of an equivalent  nature  in the same market.  Fixing  the 
level  of  the  charges  can  take  account  of  the  nature  of  the  service,  the  market 
situation and the type and degree of wear and tear of the  infrastructure. 

Article  3 of  directive  95/19/EC  provides  two  principles  for  the  allocation  of  train 
paths:  first,  rail  infrastructure  capacity  must  be  allocated  in  a  fair  and  non 
discriminatory  manner;  second, the allocation  procedure  must  permit  efficient  and 
optimal  use  of  the  infrastructure.  Nevertheless,  the  directive  allows  certain 
derogations  from  these  principles.  Priority  can  be given  in the allocation  of  paths 
to services  provided  in the public  interest  and to services which, without  prejudice 
to  competition  law,  are  effected  on  infrastructure  specifically  constructed  or 
managed  for  that  purpose. 
States  can  provide  special  rights  if  these  are 
indispensable to ensure a good  level of public service or to permit the financing  of 
new infrastructure,  but without prejudice to Articles  85, 86 and 90 of the Treaty. 

Both directive 95/18/EC and 95/19/EC must be implemented  by Member  States by 
27 June  1997. 

1.4  Freeways as a step toward  liberalisation 

International  rail freight  is characterised  by national  monopoly operators who  have 
collaborative  agreements with other national operators.  These agreements result in 
a  lack  of  clarity  about  responsibility  or  liability  for  cargo  and  frequently  poor 
service  as  a  result.  Even  companies  for  whom  a  rail  solution  would  be  ideal  are 
often  thwarted  by  the  inability  of the  railways  to  provide  the  type  of  service  that 
they  require,  at  a  competitive  price.  The  current  arrangements  mean  that  to  put 
together an offer,  in response to a request from  a shipper, requires  negotiation  with 
each  national  railway  to  establish  the  availability  of  an  appropriate  path  and  the 
total charge to be levied. This process is time consuming and does not lend itself to 
easy  adjustment  if the  price  or  time  is un-competitive.  The  cumulative  nature  of 
the process means that frequently journey times and cost are excessive. 

The  creation  of  Freeways,  as  outlined  in  the  Railway  White  Paper  is  intended  to 
improve the international rail freight  product, and can be done quickly and  cheaply. 
This  concept  implies that  Member  States  and  infrastructure  managers  would  open 

4  Council directive 95/18/EC of  19th June  1995 on the licensing of railway undertakings. O.J. No. L 143, 

27.6.95. 

5 Council directive 95/19/EC of 19th June 1995 on the allocation of railway infrastructure  capacity and the 

charging of infrastructure  fees. O.J. No. L 143, 27.6.95. 

access on a voluntary  basis, without waiting for changes to Community  legislation. 
Existing  infrastructure  would  be  used  and  trains  would  continue  to  operate  on  the 
basis  of  existing,  but  where  easily  possible  simplified,  procedures  and  technical 
requirements.  Freeways  are  a  short  to  medium  term  measure  to  facilitate  the 
development  and  implementation  of the  long term  policy  that the  Commission  set 
out in its White Paper. 

Existing railway  companies  are already  subject  to very effective  competition  from 
road transport.  The purpose of Freeways  is to enable rail freight  to become a more 
attractive option.  This will be achieved  in two ways, firstly through the removal  of 
the 
artificial  obstacles 
improvement  of  the  offer  by  the  creation  of  competition  in  the  provision  of  rail 
freight  services.  The  White  Paper  talked  in  some  detail  about  the  multitude  of 
problems  which  had  arisen  as  a result  of the  way  that  rail  Had evolved  in  Europe. 
The  Freeway  concept  aims  to  overcome  the  purely  organisational  issues  which 
hamper  international  freight. 

international  rail  freight  and  secondly 

through 

to 

The Commission  believes that the second component, the creation  of a competitive 
market  with  a  customer  oriented  offer,  is  essential  if  rail's  potential  is  to  be 
released.  While  it  is  hoped  that  existing  train  operators  will  have  the  courage  to 
begin to compete with each other where that makes sense, it could  in part, and over 
time, also be achieved  by new entrants. However,  in view of the high  start-up  costs 
and risks it is not likely that there will  initially  be many new entrants and these  are 
likely to concentrate on specialised  areas of the market.  These are likely to be new 
markets  so  new  entrants  would  increase  the  rail  customer  base  rather  than  taking 
business  away  from  the  incumbents.  The  increase  in  the  overall  rail  freight 
business  should  benefit  existing  railways  in  a  number  of  ways  such  as  the 
spreading  of  fixed  costs,  traffic  feeding  on  to  their  networks  and  increased 
awareness of the potential  of rail  freight.  Fostering this fledgling  competition  will 
require  the  Commission  and  national  competition  authorities  to  be  acutely 
conscious  of the  danger  of  abusive  behaviour  by  operators  and  to  act  swiftly  and 
decisively  if this is detected. 

The  Commission  takes  this  opportunity  to  recall  that  co-operation  which  goes 
beyond  pure  infrastructure  co-operation  envisaged  and  also  covers  areas  of  train 
operation,  in  particular  if  it  includes  revenue  pooling  and  sharing  of  train  opera 
tions,  most  probably  falls  under  Article  85. The  Commission  has  given  a  3  year 
exemption  under  competition  rules to co-operation  agreements  between  railways6. 
This  exemption  does  not  cover  commercial  agreements  between  train  operators 
except  for  combined  transport.  The  operation  of  this  exemption  is  currently 
monitored  by the Commission  which will analyse  its implementation  later  in  1997. 
If a railway  company  exploiting  the  freedom  of  a Freeway,  needs  assistance  from 
another  railway  operator  (for  example  for  traction,  drivers,  shunting,  wagon 
management)  then  this  should  normally  be  provided  on  the  basis  of  a  service 
contract with non-discriminatory  terms and  tariffs. 

1.5  The principal  elements 

Leading  from  this  analysis  the  Commission  proposal  for  Trans  European  Rail 
Freight  Freeways  as outlined  in the  White  Paper contained  the  following  principal 
elements: 

6 

Case IV-35  111, decision of 25.7.95, concerning two fiches of the Union  Internationale des Chemins de Fer 

6 

( 1 ) 

Open access for all operators. 

(both  existing railway  enterprises wishing to operate beyond  their national  borders 
and companies new to rail transport). 

(2) 

The facilitation  and simplification  of the use of rail  infrastructure. 

(for  example  by  establishing  one-stop-shops  for  access  to  the  Freeway;  creating 
simple,  attractive,  transparent  charging  systems;  ensuring  that  path  allocation  is 
fast  and  simple; seeking ways of providing  adequate  priority to freight;  seeking  to 
eliminate or reduce border delays.) 

1.6  Relationship to other Community transport  policies 

The Commission  transport  policy aims at achieving  sustainable mobility.  A  major 
aim  is to ensure that transport decisions are made that are rational and take  account 
of  all  the  consequences  of transport  decisions,  including,  their  environmental  and 
safety  impact.  These decisions are dependent  on a range of factors  such as quality, 
reliability,  availability  and  price.  If  decision  making  is  not  to  be  distorted  by  in 
correct price  signals, it is necessary that the charge for  services  is aligned  with  the 
full  cost  of  that  transport  to  society;  that  is  to  say  it  should  cover  external  costs, 
such as congestion, pollution and accidents as well as direct costs.  At present these 
costs are largely  not paid directly by transport  users but by society as a whole, and 
this  leads  to  distortion  of  transport  decisions  both  within  and  across  modes.  (In 
particular  transport  modes  with  larger  external  impacts  appear  more  attractive  to 
users  than  their  net  social  benefit.) 
in  the 
Commission's Green Paper "Towards Fair and Efficient  Pricing  in Transport7". 

ideas  were  amplified 

These 

The  first  concrete  step  to  apply  these  ideas  was  the  Commission's  proposal  for  a 
revision  of  directive  93/89/EC  which  sets  a  framework  for  road  user  charges  and 
tolls for  heavy goods vehicles  8.  The Commission  proposal  seeks to relate  charges 
for  road  use  for  these  vehicles  more  closely  to  the  costs  which  they  impose, 
principally  through  greater  differentiation  of  charges  relating  to  road  damage, 
emissions and  location.  At locations where the costs are very high, and where high 
charges  would  consequently  be justified,  the  Commission  believes  it  is  desirable 
that,  before  the  full  costs  should  be  charged,  an  alternative  to  road  transport  is 
available with open access to infrastructure  thus providing a competitive choice  for 
the movement of goods. 

The Alpine area provides a natural barrier between much of Northern  and  Southern 
Europe.  The  growth  in  trade  resulting  in  particular  from  the  single  market  has 
placed  considerable  strain  on  the  limited  number  of  routes  through  this  area.  A 
strategy  is needed  to tackle the problems which arise from  this Alpine transit.  The 
Commission  will  shortly  be  producing  a Communication  on  a  Framework  for  the 
solution  of  environmental  problems  caused  by  heavy  goods  vehicles.  While  the 
Eurovignette  proposal  can  offer  some assistance  in this direction  through  ensuring 
that  more  sensible  modal  choices  are  made  through  charges  more  accurately 
reflecting  costs,  it  is also  necessary  to  ensure  that  the  alternatives  are  sufficiently 

7  Towards Fair and Efficient  Pricing in Transport COM(95)691 final 

8  Proposal  for  a  Council  Directive  on  the  charging  of  heavy  goods  vehicles  for  the  use  of  certain 

infrastructures COM(96)331 final 

attractive  to  be  used  rather  than  simply  leading  to  higher  transport  costs.  The 
creation  of  a  more  attractive  rail  freight  and  combined  transport  offer,  facilitated 
through  the  creation  of  Freeways  does  raise  the  prospect  of  a  significant  shift  of 
long distance goods traffic  from  road to rail. 

On  29  May  1997  the  Commission  adopted  a  communication  on 
freight 
intermodality9.  This  identifies  the  impact  of various  factors  on  modal  choices,  as 
well  as  identifying  a number  of  obstacles  which  discourage  inter-modal  transport. 
The  communication  seeks  to  identify  actions  which  can  contribute  to  an 
improvement  of  the  ability  for  freight  users  to  make  use  of  the  optimal  transport 
mode at each point of the transport  chain. 

2.  DISCUSSIONS 

2.1  High Level Group. 

After  the  discussion  of  the  railway  White  Paper  at  the  Transport  Council  in 
October  1996,  it  was  agreed  that  the  Commission  should  establish  a  High  Level 
Group  of  personal  representatives  of  the  transport  Ministers  to  take  the  idea  for 
ward. This group met five times before  May  1997 and has discussed  working papers 
produced  by  the  Commission  as  well  as  the  results  of  the  work  carried  out  by  the 
Community of European Railways (CER) who have also been closely involved  in the 
exercise.  The  aim  has  been to arrive at a common  view  of the Freeway  concept  as 
well  as  a  broad  definition.  The  definition  should  contain  general  principles  on  the 
key  issues  identified,  and these  include: access to the  infrastructure;  the  single  point 
of  contact  which  deals  with  charging  and  train  path  allocation  for  the  Freeway; 
Performance  levels; and Border delays. 

The  meetings  have  been  positive,  with  general  support  for  the  Commission's  aim 
and  agreement  on  the  issues  which  should  be tackled.  The  group  has  particularly 
emphasised  the  need  to  ensure  not just  open  access  on  the  Freeway  but  also  fair 
access  to  ancillary  facilities  such  as  terminals.  However,  there  have  been 
differences  in approach particularly relating to the degree of access to the  Freeway. 
Some  Member  States  have  indicated  that  in their  view  access  to  Freeways  should 
not go beyond  current Community  law, that  is to say that open access  on  Freeways 
would not be immediately acceptable to them. 

2.2  Industry,  Business and  Shippers 

For the Freeways to achieve their  objective,  it  is essential  that they  meet the  needs 
of  their  users.  The  immediate  users  are  of  course  train  operators,  but  equally 
important  are  the  views  of  the  end  customers,  that  is to  say  the  businesses  which 
are  sending  the  freight. 
Increasing  competition  in  the  provision  of  transport 
services are clearly  important for  business, and will  increasingly  facilitate  SMEs in 
taking  advantage  of  the  opportunities  provided  by  the  Single  Market.  In  view  of 
this the Commission  has sought to keep business and  in particular  shippers and rail 
users  well  informed  of  its  proposals.  Dialogue  has  taken  place  in  a  number  of 
ways,  through  formal  meetings,  informal  contacts  and  through  correspondence 
including  a  submission  from  the  European  Shippers  Council.  It  is  apparent  that 
there  is  considerable  desire  by  shippers  to  make  use  of  rail  and  its  advantages 

9  Intermodality  and intermodal freight  transport  in the European  Union, Com(97) 243  final. 

8 

where  it makes  sense  for  their  businesses.  There  is a general  endorsement  of  the 
Commission's  analysis  of  the  reasons  for  rail's  current  unattractiveness  and  a 
recognition  that  the  implementation  of  Freight  Freeways  could  be  an  important 
step  toward  making  the  rail  freight  product  more  attractive.  Business  in  general 
quite  clearly  believe  that  real  competitive  train  operation  will  lead  to  railway 
enterprises which are better able to respond to their demands. 

2.3  Community of European  Railways 

The  Community  of  European  Railways  (CER),  which  represents  railway  Train 
operating and Infrastructure  Management  organisations  in the European  Union  and 
Switzerland  and Norway,  is concerned  to  ensure  that  proposals  for  the  creation  of 
Freeways are practical  and achievable and will  result  in an  improvement  in the rail 
freight  product.  The CER has therefore  set up a number of working groups to  look 
into  practical  issues  raised  by  Freeways  and  has  kept  the  High  Level  group 
informed  of  progress  with  that  work.  To  identify  the  sort  of technical  problems  to 
be  overcome  and  to  develop  an  understanding  of  the  operation  of  a  Freeway  a 
simulation  was  performed  on  a  number  of  routes  from  Benelux  to  Italy.  This 
simulation  has  identified  potential  for  17  additional  freight  train  paths  per  day 
along  this  route  at  commercially  attractive  times  and  speeds  averaging  almost 
60kph. 

An  independent  consultant  was  employed  by  the  CER  to  provide  external  advice 
and  input  to the  practical  implementation  of the  concept.  The  analysis  performed 
has confirmed  the feasibility  of the concept and has outlined  in some detail how the 
Freeway  concept  can  be  realised  within  a  relatively  short  period.  The  CER 
concludes that the technical  barriers can be overcome, and that the product  offered 
by  the  infrastructure  managers  can,  through  different  means  of  working  and 
improved  co-operation,  be  improved.  The  CER  thus  confirms  the  Freeway 
approach as put forward  by the Commission  in its White Paper.  These  conclusions 
are outlined  in the CER's report10 on its work which was published  in April  1997. 

2.4  Outcome of discussions 

The  Commission  has  found  the  discussions  with  the  High  Level  Experts,  railways 
and  shippers  from  the  Member  States  extremely  useful.  This  communication 
reflects  the  outcome  of  these  discussions  which  have  led  to  a  large  degree  of 
consensus,  even  though  this  does  not  meaft  that  the  parties  had  a unanimous  view 
on  all  the  issues  discussed.  The  following  chapter  on  the  Freeway  definition  is 
based on both the Commission's  working papers prepared  for  and discussed  by the 
High Level group, as well as on the more detailed findings  of the CER. 

3.  DEFINITION 

An  overriding  factor  during  the  development  of  the  Freeway  concept  and  during 
discussions  between  the  Commission  and  interested  parties  has  been  that  all  elements  of 
the definition  of a Freeway and their subsequent  implementation  by Member  State railways 
must  respect  Community  Law.  Nevertheless  Freeways  will,  on  a  voluntary  basis,  take  a 
number  of  issues  further  than  the  requirements  of  Community  law.  These  issues  include 
elements  such  as the  question  of  access,  and  the  co-ordination  of  train  path  allocation  and 

10 European  Rail Freightways: Proposal to The European  Commission 

9 

charging  Following  discussion  in  the  High  Level  Group  the  following  definition  was 
generally agreeable in most of its elements to all Member States. 

3.1  Operation on a Freeway 

The Commission as well as a large number of Member  States see the Freeways as a 
first  practical  step  to  overcoming  the  limitations  of  Directive  91/440/EEC  (see  § 
1.3  above).  Therefore,  access  should  ideally  be  open  to  all  licensed  Community 
railway  undertakings, who comply with the  necessary  access conditions  which  are 
established  on  safety  grounds,  on  a  non-discriminatory  basis. Directive  95/18/EC 
provides for  licensing of railway undertakings to carry out services provided  for  by 
Article  10 of Directive  91/440/EEC.  The scope of a Freeway  goes wider than  this 
limited  definition  of access rights  so  it  is proposed  that the  same  generally  agreed 
licensing  principles  should  apply  to  this  wider  range  of  operators.  While  this  is 
straightforward  for a number of Member  States, in particular those who have  in the 
meantime  entered  into discussions  on North-South  Freeways  (see  § 5.2.1.  below), 
some  other  Member  States  (as  mentioned  in  § 2.1. above)  prefer  a  more  cautious 
approach.  The  Commission  is  interested,  in  order  to  make  rail  freight  transport 
more  attractive,  that  the  Freeway  concept  as  described  in  this  communication  is 
implemented  on  as  many  routes  as  is  economically  feasible,  even  if  in  some 
Member  States the whole concept would  need to be  implemented  in several  stages 
over  a  certain  time.  What  is  essential,  is  that  railway  undertakings  may  acquire 
business  in  a  Member  State  other  than  the  one  in  which  they  are  licensed,  and 
operate train services into that second Member State without being obliged to enter 
into  a  classical  co-operation  agreement  with  a  railway  undertaking  from  that 
second  Member  State  even  if  it  needs  locomotives  and  drivers  to  be  provided  by 
the  second  railway  undertaking.  The  Commission • believes  that,  as  in  other 
economic  activities, these  should  be  acquired  through  service  contracts  instead  of 
risk  sharing  agreements.  It  should  however  be clear that the  Freeway  agreements 
will  eventually  lead  to  open  access  on  the  determined  Freeways  in  all  Member 
States. 

In summary the Commission concludes that: 

A Freeway should  be open for fair, equal and  non-discriminatory  access to all 
train operators licensed  in the Community. 

The  criteria  for  licensing  train  operators  to  operate  on  a  Freeway  should 
follow the same principles as laid down in directive 95/18/EC. 

The  criteria  for  the  allocation  of  railway  infrastructure  capacity  and  the 
charging  of  infrastructure  fees  should  be  in  compliance  with  directive 
95/19/EC 

Freeways should, subject to national regulations, be open to cabotage. 

Freight  Terminals  on  a  Freeway  will  be  open  for  fair,  equal  and  non 
discriminatory  access  to  all  train,  road  haulage  and  waterway  operators  as 
appropriate. 

3.2  One-Stop-Shop 

One of the principal elements to improve the rail freight  offer  is the creation  by the 
relevant  Infrastructure  Bodies of a One-Stop-Shop  (OSS) to market the freeway  to 
licensed  railway  undertakings.  Clearly  the  establishment  and  operation  of  OSSs 
must  comply  with  Community  law.  To  be  effective  the  OSS  will  need  to  be 

10 

operated  by staff  with an excellent knowledge of the requirements  of operators and 
the constraints of the system. 

3.2.1  Tasks 

Ideally the OSS as "Freeway Manager" will: 

(1) 

Analyse capacity and market the infrastructure  of the Freeway. 

(2) 

Undertake  path  allocation  discussions  with  Infrastructure  Bodies  and 
Forum  Rail  Europe  (which  is  the  body  responsible  for  co-ordinating 
international train paths) on behalf of train operators and allocate paths. 

(3) 

Monitor and control performance  of the Freeway. 

(4) 

Undertake  charging  on  behalf  of  the  individual  Infrastructure  Managers. 
This would  involve it undertaking a billing and clearing house  function. 

3.2.2  The organisation  of the OSS 

The role of the OSS can be characterised  as that of the "Freeway Manager".  It will 
not  be  a  large  bureaucratic  organisation,  and  indeed  the  CER  work  identifies  the 
possibility  of its creation  as a "virtual  office"  which will  actually  only exist on the 
Internet  with  greatly  improved  communication  between  existing  Infrastructure 
Managers. 

The  main  issues  to  be  addressed  when  establishing  the  OSS  are  that  it  should  be 
neutral,  non-discriminatory  and  have 
success. 
Consideration  must  be  given  when  establishing  and  determining  its  mode  of 
operation  that the  OSS will  need  to  be compatible  with  existing  arrangements  and 
priorities already  determined. 

incentives 

right 

the 

for 

To provide  assurance that the OSS will act  in a non-discriminatory  manner,  where 
linkages  still  exist  between  train  operators  and  infrastructure  managers  the  OSS 
should  ideally be a completely  independent body. 

It  is  essential  for  the  success  of  the  Freeway  that  the  OSS  is  provided  with 
appropriate  incentives.  In principal this means that it must be in the interests of the 
OSS to maximise both international  freight  traffic  and revenues. 

When  a Freeway  is created  by  Infrastructure  Managers,  a code  of  conduct  should 
be  established  which  would  define  how  the  OSS  could  function.  This  would 
specify  1) each  operators  rights, 2)  criteria  for  path  allocation  (these  criteria  must 
reflect  the  interests  of  all  users)  3)  appropriate  mechanisms  to  ensure  that  the 
allocation  of capacity  is carried  out  on this  basis,  including  providing  justification 
for decisions which the OSS takes. 

3.3  Train path allocation 

Some  of  the  most  frequently  voiced  criticisms  of  international  rail  freight  stem 
from  the train path  allocation  process.  Currently this  is essentially  performed  on a 
national  basis.  Low  international  rail  freight  performance  is  frequently  due  to  the 
gaps  between  these  national  timetables.  Attempts  are  then  made  to  marry  up  the 
resulting  paths, but this cannot  overcome the fact  that the paths are sub-optimal  by 
definition.  The  problem  is exacerbated  by the  low priority  given  to  freight  traffic 
when  allocating  paths.  There  is plenty  of evidence  to show that  high  performance 

11 

international  path  allocation  is  possible  and  the  CER  simulation  illustrated  that 
time  spent waiting at borders on those  routes  can  be reduced  by between  15% and 
80%. 

3.3. J  Capacity 

One of the  most  important  results  of the  work  done  by the  CER  was  to  show  that 
even  on  busy  routes  there  seems  to  be  sufficient  spare  capacity  available  to  start 
the  Freeway  exercise.  It has already  been  mentioned  that  for  example  on the  1400 
km  route  from  Rotterdam  to  Milan  some  17 daily  paths  (with  competitive  arrival 
and  departure  times  and  speed)  could  be  made  available;  on  the  Brenner  route,  a 
notorious European  bottleneck, there are some 5-6 daily paths free  for freight  trains 
in  both  directions.  The  available  capacity  appears  sufficient  to  commence  the 
setting up of Freeways  and to prove that the trend  of decreasing  rail  freight  market 
share, can be turned  around. 

If  however,  the  Freeway  initiative  is  really  successful,  the  question  of  additional 
capacity  may  arise.  The. High Level  Group  discussed  the  issue  of capacity  and  its 
allocation  at  its  fourth  meeting.  While  it  is  frequently  possible  to  find  means  of 
increasing  capacity  through  adjustments  to  the  timetable,  a  point  inevitably  arises 
with  increased  traffic  at  which  the  lost  benefits  justify  infrastructure  investment. 
Such  investment  might  simply  be  enhanced  command  and  control  systems.  The 
European  Rail  Traffic  Management  System  (ERTMS),  developed  as  part  of  the 
Community's  Research  and  Development  programme,  is  an  instrument  which 
could  make  a  decisive  contribution  to  the  enhancement  of  customer  service  and 
improving the cost-effectiveness  of operations by allowing much shorter  separation 
between  trains  operating  on  the  same  track.  It  therefore  offers  the  potential  to 
reduce direct operating costs, maximise track capacity and optimise fleet  operation. 
Where  there  is  greatly  increased  demand,  investment  in  actual  permanent  way 
might  be  required,  possibly  for  dedicated  freight  lines.  The  re-formulation  of  the 
TEN priorities may play a useful  and important role in this respect. 

In  its proposal  for  a revision  of the TENS guidelines  in  1997, the Commission  will 
propose  that  rail  projects  which  form  part  of  a  Freeway  should  be  considered  as 
being of common  interest thereby making them  eligible for  support from  the  TENs 
budget  line.  In  1999 the  Commission  will  propose  a more  general  revision  of  the 
TENs guidelines  in which  full  account will be taken of the need to give  appropriate 
priority  to  the  further  development  of  Freeways  including  the  possibility  of 
adjusting  the outline plans. 

3.3.2  Priority 

The  Commission  does  not  propose  that  Freight  should  be  granted  an  automatic 
priority  on  a  Freeway.  However,  the  objective  should  be  to  better  reflect  the 
differing  needs  of  customers  than  is currently  the  case.  Where  freight  has  a  very 
high value and  needs to be moved  quickly there  seems to be  little sense  in  it  being 
granted automatically the lowest priority.  In many ways this issue is a political  one 
where,  for  example,  local  and  regional  authorities  may  impose  requirements  on 
railways  for  passenger  services.  It  could  be  desirable  to  reflect  on  whether  the 
outcome of this is optimal particularly where  it can result  in rail services  becoming 
unattractive to freight  and leading to a transfer  to road haulage with the consequent 
impact  on  society.  The  Commission  is  convinced  that  it  is  possible  to  better 
exploit the present  infrastructure  while taking better account of the need to  provide 
adequate  paths  for  international  freight  traffic.  In  that  case  it  is  not  a question  of 
establishing fixed priority  rules for freight  or passenger traffic  but to ensure greater 

12 

flexibility  to  guarantee  a  satisfactory  path  allocation  for  both  traffic  types.  Any 
review  of  allocation  priority  must,  of  course,  take  account  of  any  rights  and  the 
expectations of existing operators. 

Another  important  factor  is the desirability  of  looking  at the whole  corridor  rather 
than seeking to apply differing  criteria on  individual  segments.  Decisions taken on 
one  Infrastructure  network  can  impact  on  traffic  on  another  network  and  for 
optimal  performance  these  implications  need  to  be  taken  into  account.  Such  an 
approach would  inevitably result in a better result for  international  freight. 

3.3.3  Speed of Decision 

The  OSS  in  collaboration  with  Infrastructure  Bodies  must  work  to  speed  up  train 
path  allocation  decisions.  The time taken  to  reach  decisions  will  depend  upon  the 
circumstances  of  the  application.  A  distinction  can  be  drawn  between  a  regular 
service  which  is  planned  in  advance  and  which  can  be  allocated  a  path  during 
regular,  frequent  allocation  conferences  and  urgent  requests  for  single  or  multiple 
paths. 

For  many  regular  services,  the  train  paths  required  can  be  requested  in  advance, 
and  therefore  it  is  likely  that  the  existing  procedures  as  foreseen  in  Directive 
95/19/EC  will  adequately  meet  the  needs  of  train  operators.  These  type  of  train 
paths  could  therefore  be  dealt  with  during  the  normal  allocation  conferences, 
respecting deadlines.  Where there is a conflict  between  a request  for  a new regular 
service  and  an  alternative  service,  the  OSS  will  attempt  to  accommodate  both 
services and to resolve any conflict  through  negotiation.  If a negotiated  settlement 
is  not  possible  then,  subject  to  the  provisions  of  directive  95/19/EC,  the  path 
should be allocated to the user who is willing to pay the highest fee for  its use. 

Outside  the  allocation  conference  requests  will  have  to  be  accommodated  taking 
account  of  previously  agreed  and  operating  services.  Efforts  should  be  made  to 
ensure  that  occasional  services  can  be  accommodated  with  minimal  disruption  to 
those  existing  services.  In  recognition  that  applications  for  paths  which  are  not 
made  during  the  normal  allocation  process  are  generally  urgent  the  OSS  will 
respond  to such requests rapidly.  In some circumstances the response time will  be 
affected  by  factors  such  as whether  the  applicant  is a new  operator  on the  section 
of the  network  and  would  therefore  require  checks  of  safety  etc.  However,  when 
the  Train  Operator  is  already  approved  for  operation  then  in  general  the  target 
should be set which require that 

(1) 

(2) 

For regular paths, a decision  should be made within seven working days. 

For one-off  paths, a decision  should be made within one working day. 

3.3.4  Appropriate  Paths 

The  OSS will  aim to  provide  paths which  meet  as closely  as possible  the  needs  of 
customers  in particular with regard to the journey times  requested. 

The  OSS  should  seek  to  provide  a  competitive  path  speed  as  requested  by  the 
operator.  For  some  traffic  the  speed  may  be  unimportant,  for  other  absolute 
reliability  is what  counts,  and  for  other  traffic  high  speeds  and  reliability  must  be 
achieved.  This  latter  category  of traffic  has not  been  as well  served  in the  past  by 
rail as by road.  If the Freeway  is to enable rail to break  into this market  it must  be 
able  to  offer  the  potential  for  average  freight  train  speeds  of  50  kph  or  more. 
Performance  improvement  will  among  other  things  depend  on  the  quality  of  the 

13 

existing  train  paths.  The  CER  simulation  was  able to  provide  a number  of  paths 
with  increases  in average  speed  of  some  20%.  The  resulting  paths  were  certainly 
competitive  being  some  6  hours  shorter  than  the journey  time  for  a  lorry  with  a 
single driver. 

While the OSS and Infrastructure  Bodies must retain routing flexibility  to optimise 
infrastructure  use, they should  endeavour to provide operators with  paths routed  as 
requested. 

Where a path cannot be provided to meet the operators requirements and within the 
freeway  specification,  the OSS should  provide the operator with an explanation  of 
the  reason  for  this  inability  and  inform  the  train  operator  of  the  best  available 
alternative paths. 

3.4  Charging 

Freeway  charges  must  be non-discriminatory,  however,  it  is also desirable that  the 
system  should  be as simple and transparent  as possible. As a result the charge  that 
would be offered  to any operator to use the same section of track should  be derived 
using the  same  principles  for  each  operator.  Charges  should  reflect  relevant  costs, 
and  should  therefore  not  be  determined  through  the  use  of  arbitrary  factors. 
Freeway discussions with the Member  States have highlighted the wide  divergence 
between  charging  systems.  Indeed,  on  some  routes  it  is  conceivable  that  infra 
structure  charges  may  be  so  high  that  services  cannot  be  run  competitively  with 
road haulage. 

In  the  short  term  Freeway  charges  are  likely  to  be  based  on  the  existing 
infrastructure  charging systems and this will probably result  in a scale of published 
tariffs.  The  Commission  believes  that  it  could  be  desirable  for  the  OSS  to  be 
empowered  by  the  relevant  Infrastructure  Bodies  with  a  certain  flexibility  in 
charging levels, to ensure that charges can be competitive. This flexibility  might be 
limited by for example a price floor which should at least cover the freight  specific 
marginal  costs.  In  the  short  run  the  success  of  the  Freeway  exercise  will  largely 
depend  on the willingness of the Member  States (and  in particular those which  are 
in  a  central  position  within  the  Community)  to  efficiently  exploit  the  flexibility 
available  in their  individual  charging  systems. In  the  longer  run  rail  infrastructure 
charging  principles  will  be  proposed  by  the  Commission  which  is  undertaking  a 
study,  with  the  view  of  bringing  the  present  extremes  of  the  individual  rail 
charging  systems  closer  together.  To  avoid  intermodal  discrimination  it will  also 
be  necessary  to  look  at  ways  of  bringing  charging  systems  for  access  to  the 
infrastructure  of different  modes closer together. 

In  any  case  the  OSS  will  be  able to  provide  a train  operator  on  the  Freeway  with 
one  price  offer  for  the  whole  of  their  journey. 
Ideally  such  a  charge  could  be 
differentiated  to  take  account,  for  example,  of  congestion  such  as  peak/off-peak 
usage,  or  on  environmental  impacts  or  wear  as  discussed  in  the  Green  Paper  on 
Fair  and  Efficient  Pricing  in Transport.  Consideration  might  also  be  given  to  the 
appropriate  level of charges for empty running and the effect  on charges of the size 
and  load of trains. 

3.5  Border issues 

The existence  of the single European  market  means that there  should  be no  reason 
for  checks  at  internal  physical  frontiers.  Infrastructure  Bodies, train  operators  and 
Member  States  should work to eliminate or minimise  border procedures  and  speed 

14 

up any which must remain.  The work of the CER points to the sub-optimisation  of 
marrying national timetables as a major  reason for  excessive border crossing  times 
within  the  Community.  The  creation  of end  to end  international  freight  paths  has 
been shown to be effective  in tackling this issue and vastly reducing delay which  is 
of course one of the reasons for proposing the establishment of Freeways. 

Member  States  should  give  commitments  to  suppress  border  checks  for  customs, 
safety  and  phytosanitary  purposes  where  they  still  occur.  If  they  are  performed 
they should be carried out to cause minimum  hindrance to trains. This might  imply 
that they would  be performed,  as much  as possible, at marshalling yards or  origins 
and  destinations.  There  should  be  mutual  recognition  of  checks  which  have  been 
carried out in the originating State. 

Where  there  are  no  technical  reasons  why  locomotives  cannot  be  used  across 
borders  then  the  Commission  sees  no  reason  why  this  should  not  be  allowed. 
Ideally  all  rolling  stock  which  is  authorised  for  operation  on  one  national  infra 
structure  network  will  be permitted  to  operate  anywhere  on  the  Freeway  provided 
it  is  suitably  equipped  to  interact  with  the  necessary  fixed  systems  of  the 
infrastructure. 

In  line with  EC directives  which  enable  cross  border  operation  by  suitably  trained 
crew,  Members  States,  Train  Operators  and  Infrastructure  Bodies  shall  facilitate 
such  operations.  Adequate  arrangements  must  exist  for  route  learning  and  other 
training  required. 

3.6  Relations between Infrastructure  Managers, the OSS and Train  Operators 

Ideally 

the  OSS. 

legal  models 

through  contracts  with 

the 
for 
Infrastructure  Managers  may  develop  alternative 
establishment  of 
the  relevant 
Infrastructure  Managers  in  different  Member  States,  the  OSS  should  be  in  a 
position  to  enter  into  contracts  with  train  operators  wishing  to  make  use  of  the 
Freeway  on  behalf  of  the  Infrastructure  Managers  as  well  as  invoice  and  collect 
funds  from  the  train  operators.  This  would  avoid  cumbersome  procedures  which 
had to be performed  by train operators and each  individual Infrastructure  Manager. 
For  simplicity,  it would  be desirable  to have  a single  contract  governing  access  to 
the  Freeway  between  the  OSS  and  train  operators.  In  view  of  this  it  could  be 
desirable  to  carry  out  further  work  on  the  development  of  such  a contract  for  use 
between an OSS and train operators throughout the Community.  The use of such a 
contract  is  unlikely  to  be  possible  in  the  short  run  and  therefore  the  OSS  might 
initially  simply  act  as  a  contact  point  for  the  provision  of  all  the  appropriate 
contracts between train operators and each  individual Infrastructure  Manager. 

3.7  Performance  incentives 

The  Commission  believes  that  it  is  desirable  for  Freeways  to  be  established 
incorporating  quality  and  reliability  criteria.  This  could  lead  to the  establishment 
of schemes which ensure the payment of rebates or surcharges  where  performance 
differs  form  that  contractually  agreed.  Such  a  scheme  would  need  to  ensure  that 
both  the  Infrastructure  Managers  and  the  train  operators  were  liable  to  make 
payments  where  they  were  responsible  for  failure  to  operate  as  planned.  It  is  in 
any case also desirable for  quality  indicators to be developed  showing for  example 
the  percentage  of paths provided  as requested  or percentage  meeting  specification, 
and for Infrastructure  Bodies to make data available showing how effectively  these 
standards are met. 

15 

3.8  Complaints and Arbitration 

The  One-Stop-Shop  would  be particularly  well  placed  to  look  into  queries  related 
to  the  quality  or  operation  of  the  Freeway.  Its  good  links  with  the  Infrastructure 
Managers  should  facilitate  the  resolution  of  minor  problems.  However,  if  train 
operators  have  complaints  relating  to  the  allocation  of  train  paths  then,  in 
accordance  with  directive  95/19/EC,  these  must  be  handled  by  separate  appeal 
bodies. 

It  is  essential  that  solutions  to  possible  complaints  are  found  in  a  relatively  short 
time, and that the arbitration  body  is neutral  and  independent  in its decisions.  The 
CER report suggests that the UIC Arbitration  body could fulfil  a useful  function  in 
this respect. Apart  from  this  specific  arbitration, the  normal judicial  processes  are, 
of course, always open. 

3.9  Information  about ancillary services 

In  addition  to  its role  of  managing  the Freeway  the  OSS  may  provide  information 
to  operators  which  will  facilitate  their  operations  on  the  Freeway.  This  may 
include  information  on,  for  example,  the  availability  of  traction  and  drivers, 
shunting,  fuel  and  maintenance  facilities.  Such  information  would  need  to  be 
provided  on a non-discriminatory  basis. The OSS would  however,  not  be  involved 
in actually providing or brokering any such services related to train  operation. 

3.10  Cohesion of individual  Freeways 

The  whole  concept  of  Trans  European  Rail  Freight  Freeways  is  for  voluntary 
implementation  by Infrastructure  Managers  and  Member  States.  In view of this  it 
is  clearly  not  essential  to  specify  a definitive  model  to  be  followed.  Nevertheless 
there  may  be  benefit  in  ensuring  compatibility  for  example  in  organisation  and 
operation  so  that,  for 
is 
straightforward.  In addition to simplify  the notification  procedure  it is desirable to 
ensure that the  same  broad  issues are tackled  in a comparable  manner.  The  High 
Level  Group  established  by  the  Commission  and  Member  States  should  play  an 
important role in safeguarding  the cohesion of the different  Freeways. 

instance  where  Freeways 

inter-running 

intersect, 

4.  COMPETITION LAW 

4.1  Article 85 

The  Freeway  concept  as  described  above  is  essentially  a  collaborative  venture 
between  railway  infrastructure  companies.  There  may  be  good  reasons  to  argue 
that  pure  co-operation  between 
infrastructure  managers  does  not  affect 
competition,  at  least  between  most,  if  not  all,  of  the  intra-Community  freight 
corridors concerned  and therefore, would not fall  under Art. 85(1). 

The  main  instrument  to  implement  the  Freeway  concept  is the  establishment  of an 
OSS.  The  OSSs'  basic  functions  will  include:  identification  and  allocation  of 
capacity  on  the  relevant  Freeway;  monitoring  and  control  of  performance  of  the 
Freeway;  and  charging  on  behalf  of  the  individual  infrastructure  managers.  The 
nature  and  scope  of  the  particular  co-operative  agreements  that  the  relevant 
infrastructure  managers will conclude for the establishment  of each Freeway  is still 
uncertain and will  in any case depend  on the flexibility  and  independence they will 
be willing to grant to the OSS. 

16 

In  these  circumstances,  it  is  not  possible  to  determine  a  priori  whether  the 
agreements required  for the establishment  of any particular OSS will fall  under the 
prohibition  of Article  85 (1) of the EC Treaty.  Certainly,  co-operation  which  goes 
beyond  the  above  mentioned  infrastructure  management  functions  to  also  cover 
areas  of  train  operation  is  more  likely  to  fall  under  Article  85  (1)  EC.  Railway 
undertakings  entering  into  infrastructure  co-operation  agreements  must  decide 
whether  these  need  to  be  notified  to  the  Commission.  The  Commission  will, 
following  a  notification,  decide  in  each  individual  case  on  the  applicability  of 
Article 85(1) EC. 

It  is to be  noted  that  agreements  falling  under  Article  85 (1) EC  may  be  declared 
permissible  by the Commission  if they  have pro-competitive  effects  that  outweigh 
the anti-competitive effects  of the restrictions contained  in them. Therefore,  even if 
Article  85  (1)  EC  might  be  applicable  to  certain  agreements  related  to  the 
establishment  and  operation  of a Freeway, the Commission  would  in principle  see 
no  difficulty  in  declaring  them  exemptible  if  they  fully  satisfy  the  following 
conditions: 

the  Freeway  in  question  improves  the  distribution  of  goods  and  speed  up  their  transport,  in 
particular,  by  means  of  the  creation  of  a  new  product,  that  is  an  international  train  path 
offered  through a One-Stop-Shop; 

the Freeway in question promotes the economic process by making rail freight  transport  more 
competitive  with  road  haulage,  in  line  with  the  Community's  general  transport  policy  and 
without distorting competition  between train operators  in the railway  sector; 

consumers  (that  is the train  operators  and their  customers)  benefit  from  the  establishment  of 
the Freeway because rail haulage is faster,  possibly cheaper, and of better quality; 

the agreements are indispensable to attain the above objectives; and 

the agreements are not capable of eliminating competition  in any relevant  market. 

The  Commission  considers  that  through  assuring  open  access  to  licensed  railway 
undertakings  such  agreements  are  not  capable  of  eliminating  competition  in  any 
relevant  market.  Provided  that  the  notifications  contain  all  necessary  information 
and  the  agreements  in  question  satisfy  the  above  mentioned  conditions,  the 
Commission  will  endeavour  to  handle them  speedily  and  will  be  prepared  to  give 
comfort to the notifying  parties in appropriate terms. 

4.2  Article 86 

If  all  train  operators  are  to  enjoy  access  to  and  operate  on  the  Freeway  on  fair 
terms, then care must be taken to ensure that the allocation  and charging process  is 
non-discriminatory.  An  undertaking 
should  not  at  the  same  time  be  both  a 
competitor  and the judge determining  access to any relevant  market.  Article  86 or 
90(1) of the Treaty would  prevent a railway enterprise  in a dominant  position  from 
determining  what  other  parties  are  its  competitors.  The  existence  of  an 
independent  appeal  mechanism  or  the  absence  of  apparent  discriminatory 
behaviour  are  not  sufficient  to rule out  infringement  of Articles  86 or 90(1)  of the 
Treaty. 

4.3  State aid 

In  general  responsibility  for  promoting  the  development  of  railway  infrastructure 
largely remains with the Member  States.  As outlined  in more detail  in the Railway 
White  Paper,  it  is  the  Commission's  practice  to  authorise  public  investment  in 

17 

infrastructure,  so long as it is equally accessible  under the same  non-discriminatory 
conditions  and  does  not distort  competition  to  an  extent  contrary  to  the  interest  of 
the Community.  For the time being it is legitimate for  States to finance  investment 
in railway  infrastructure  so as to compensate  for  unpaid  external  costs  in the  road 
sector or to meet non-transport  objectives, such as regional development, as long as 
these conditions are met.  However,  it is true that this practice does not  necessarily 
resolve  all  problems  of  distortion  of  competition,  notably  those  arising  from 
different  rules  being  applied  in  different  Member  States  to  the  various  modes  of 
transport.  Moreover,  in the  long run, the Commission  believes that  in all modes of 
transport,  users  should  pay  the  full  cost  of  infrastructure.  The  Commission  will 
carry  out  a  study  on  charging  for  railway  infrastructure  costs,  in  order  to  define 
further  common  principles. 

5.  NEXT  STEPS 

A broad degree of consensus has been reached  on the Freight Freeway concept  in the High Level 
group.  The  work  performed  by  the  CER  has  identified  the  practicality  of  implementing  the 
concept  as well  as  a broad  consensus  among  existing  train  operators  on  the achievability  of  the 
concept  while  identifying  a  number  of  longer  term  issues  which  need  to  be  tackled.  It  now 
remains  for  rail  Infrastructure  Managers  to  identify  suitable  routes  and  make  proposals  where 
they consider this desirable.  So far a number of proposals are under discussion. 

5.1  Location 

The  Commission's  White  Paper  included  an  illustrative  map  of  potential  Freeway 
it  is  principally  for  rail 
routes.  However,  the  Commission  believes  that 
infrastructure  managers  working  together  to  identify  the  most  attractive  routes. 
Clearly there  is also a role  for  Member  State  governments  and  the  Commission  to 
play  in facilitating  the process.  So far there have been  a number  of possible  routes 
identified  and  the  relevant  infrastructure  managers  are  working  on  an  analysis  of 
the feasibility  as Freeways (see  § 5.2  below  and the  map  at annex  1). In  principle, 
the  potential  Freeways  should  meet two  basic  criteria: they  must  first  be  attractive 
from  a  demand  viewpoint,  and  second,  they  should  have  sufficient  capacity  as 
mentioned  above.  This  implies  that  Freeways  are  likely to  be concentrated  on  the 
major  international  freight  corridors  which  today  are  largely  served  within  the 
Community  by road haulage.  The co-ordination  of Freeways with the TEN rail and 
combined  transport  networks could  allow, where appropriate, that  Freeways  would 
benefit  from  infrastructure  improvements  in the framework  of projects  of  common 
interest. 

5.2  Practical work  underway 

5.2.1  North-South  Pilot  Action 

At  the  informal  Transport  Council  in  January  1997  the  Netherlands  proposed  to 
Germany,  Austria  and  Italy  that  they  should  jointly  explore  the  potential  for 
establishing  Freeways utilising their rail  networks.  It was subsequently  agreed  that 
a  sub-group  of the  High  Level  Group  would  be established  to carry  out this  work. 
The  group  has  now  met  and  a  programme  of  work  is  underway.  The  group  is 
considering  a number of routes, these would  link: Gioia Tauro to Genoa then  north 
via  Germany  to  Rotterdam;  Brindisi,  via  Verona  and  Brenner  to  Hamburg;  and 
Vienna  via Nuremberg  to the  Ruhr  area.  It  is anticipated  that  the  One-Stop-Shop 
could  be created  in  17 weeks and that  it should  be feasible  to  have these  Freeways 
operational  by the end of  1997. These discussions also involve  Switzerland. 

18 

5.2.2  Freight  Leaders and Logistics  Club. 

This  group  representing  some  of  Europe's  largest  manufacturers  and  transport 
organisations  has  enthusiastically  embraced  the  Freight  Freeway  concept.  Three 
working  groups  have  been  established  to  examine  the  potential  for  the  concept. 
The  routes  being  investigated  are  Rotterdam  (NL)  to  Milan  (I),  Wolfsburg  (D)  to 
Barcelona (E) and London (UK) to Sopron (H). These initiatives which are demand 
driven  could  possibly  be  fitted  into  a Freeway  concept  including  the  creation  of  a 
One-Stop-Shop, by the Infrastructure  Managers  concerned. 

5.2.3  Other Community  Freeways 

As  mentioned  earlier  the  Commission  would  expect  that  Freeways  will  sooner  or 
later, link all Member States. The Commission  hopes that,  in view of its position as 
a  major  transit  country, 
the  possibilities  for  both  North-South  and  East-West 
Freeways involving France will be explored  in the near  future. 

The annex to this Communication  presents an overview of the practical work on Freeways that is 
underway. 

6.  CONCLUSIONS 

6.1  Benefits 

The work so far has identified  that there are benefits  to be reaped from  the  concept. 
It remains for Member  States and Rail Infrastructure  Managers to identify  potential 
routes  and  put  the  concept  into  practice.  The  Commission  remains  willing  to 
facilitate  such action. 

6.2  Further  work 

There  remain  a  number  of  unresolved  issues  which  clearly  will  require  work  at 
different  levels.  For the purposes  of this  paper these  have been  divided  in to  short 
and  long term  issues. 

6.2.1  Short  Term Action  Required  to Establish  Individual  Freeways 

Member  States 

•  Complete timely transposition  of Directives 95/18/EC and 95/19/EC; 

•  Finalise licensing conditions for train operators; 

•  Address  infrastructure  charging  issues (notably to ensure  a competitive  level  of 

infrastructure  access charges for  freight); 

• 

Initiate  or  participate  in  debate  on  priority  issues  in  particular  looked  at  from 
wider transport policy  objectives; 

•  Resolve remaining border crossing  issues not related to railway  operations. 

Infrastructure  Managers 

• 

Identify  demand and appropriate routes; 

•  Designate  Staff to lead development  and  implementation; 

•  Reach agreement with other Infrastructure  Managers; 

•  Ensure compliance with Community  law; 

19 

•  Set up OSS; 

•  Resolve  issues related to charges and path allocation  (notably priority rules and 

reconciling infrastructure  access charges with market prices); 

• 

Initiate debate on priority issues. 

Train Operators 

• 

Identify  commercial  opportunities  using  proposed  Freeways  and  lobby  for 
creation of Freeways where they would benefit  business; 

•  Develop appropriate services and resources to take advantage of the commercial 

opportunities; 

•  Ensure compliance  with  Community  law where co-operation  is envisaged  with 

other train operators; 

•  Establish  links with  other  elements  of the total transport  offer  e.g.  hauliers  and 

terminal operators. 

European  Commission 

•  Monitor and give comfort  on competition  issues in appropriate terms; 

•  Address the issue of interfaces with non-EU networks; 

•  Facilitate creation of Freeways and development  of services (PACT,  intermodal 

task  force,); 

•  Revision of TENs guidelines; 

•  Direct appropriate research toward enhancing the Freeway concept; 

•  Continue the co-ordinating role of the High Level Group. 

6.2.2  Long  Term Issues 

In  seeking  to  improve  the  commercial  environment  in  which  Europe's  railways 
function,  it is important that care  is taken to avoid the sort of fragmentation  which 
has arisen  in the past.  Therefore  it is worth reflecting  on how individual  actions fit 
into  a  longer  term  strategy.  The  CER  in  its  report  on  the  Freeway  concept 
identified  a  number  of  issues  which  need  to  be  given  further  consideration.  The 
Commission  believes that the following  issues are among the most  important: 

One Stop Shop 

The  potential  for  expansion  of  the  One-Stop-Shop  concept  to  enable  better 
European  rail  infrastructure  Management.  The  question  of  how  One-Stop-Shops 
on different  Freeways can best  interact. 

Cabotage 

While, ideally, in the  longer run  it will be desirable for cabotage to be permitted  in 
the  railway  as  in  other  transport  sectors,  this  is  not  immediately  essential  to  the 
Freeway concept which addresses international  traffic. 

Charging 

Further  consideration  needs  to  be  given  to  rail  infrastructure  charging,  both  to 
ensure  harmonisation  of  systems  across  networks  but  also  to  reduce  charging 
distortions between transport modes. 

20 

Performance  incentives and penalties 

It could be desirable to focus  attention  on performance  quality through  a system  of 
charges  and  rebates.  This  would  require  the  establishment  of  a  performance 
monitoring  regime.  If  experience  with  the  Freeways  shows  that  such  a  system 
could be of use then  it would be wise to develop one. 

Priority in train path allocation 

The existence of priority regimes has been  identified  as one of the reasons for  poor 
If  Member  States  are  serious  about 
international  rail  freight  performance. 
encouraging a shift  from  road haulage of goods to more sustainable modes then the 
issue of appropriate  levels of priority must be considered. 

6.2.3  Research 

An  appropriate  research  and  innovation  strategy  for  rail  can  play  a  role  in 
delivering  enhanced  customer  service  with 
improved  efficiency  and  cost-
effectiveness.  The  Community's  Framework  Programme,  through  the  promotion 
of  socio-economic  studies  and  demonstration  activities,  can  assist 
in  the 
implementation  of the Freeway concept. 

6.3  Access  by  third  countries  and  extending  Freeways  to  Central  and  East  European 
countries 

There  are  likely to  be  significant  opportunities  for  extending  the  Freeway  concept 
beyond  the  borders  of the  Community  and,  in principle, where  demand  exists  this 
is  desirable.  Therefore,  in  particular,  candidate  countries  for  accession  to  the 
Union  will  be  kept  informed  of  this  initiative.  Indeed  the  special  factors  which 
may  exist  on  routes  beyond  the  Community's  borders,  such  as very  long journeys 
and  the  existence  of  widespread  rail  networks,  may  make  Freeways  even  more 
attractive.  The extent to which these benefits  can  be captured  will depend  on  how 
much  of  the  overall  concept  can  be  implemented  on  routes  extending  beyond  the 
Community.  The  key  issue  to  be  resolved  is  likely  to  be  the  extent  to  which 
different 
train  operators  will  be  able  to  operate  across  the  borders  of  the 
Community.  This  is likely to require further  consideration  by the Commission  and 
the  Member  States.  The  Commission  has  been  informed  by  the  Transport 
Ministries  of  Switzerland,  Poland,  Hungary  and  the  Czech  Republic  that  they  are 
interested  in exploring further  the potential for Freight Freeways.  The Commission 
proposes  to  take  this  issue  actively  forward  in  the  context  of  the  pre-accession 
strategy.  The  High  Level  Group will  be  invited  to address  the  issues  arising  from 
the  extension  of  the  Freeways  beyond  the  current  Community  borders  in  the 
second half of  1997. 

6.4  The future  role of the Commission  and the High Level  Group 

The Commission  believes that the High Level Group has functioned  well  in its role 
of  shaping the  Freeway  concept  and  developing  a degree  of consensus.  With  the 
presentation  of this report to the Council the work does not come to a halt. Even  as 
work  gets  under  way  by  the  relevant  infrastructure  managers,  it  is  desirable  to 
attempt  to  ensure  that  incompatible  structures  are  not  newly  created,  while  of 
course  respecting  the  fact  that  the  creation  of  Freeways  is  voluntary.  Such  a  co 
ordinating  role  could  be  played  by  the  High  Level  group  as  well  as  monitoring 
progress and ensuring that any necessary amendments are discussed. 

21 

A  second  role  which  might  be  foreseen  is that of  acting  as  an advisory  group to 
discuss further measures in the rail sector.  The Commission  believes that it could 
be useful to discuss proposals for further studies and legislation in the sector (in the 
near  future,  in  particular  with  regard to  railway  infrastructure  charging  and train 
path allocation) with a group of experts and the High  Level  Group might provide 
such a group. 

22 

TRANS EUROPEAN RAIL FREIGHT FREEWAYS 

| 

Practical Work  Underway 

A.  o 

ISSN 0254-1475 

COM(97) 242 final 

DOCUMENTS 

EN 

07  08  10 

Catalogue number  :  CB-CO-97-260-EN-C 

ISBN  92-78-20747-0 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg 

2°\