COMMISSION STAFF WORKING DOCUMENT SUMMARY OF THE IMPACT ASSESSMENT   Accompanying document to the   Proposal for a  DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL  establishing a single European railway area  (Recast)   {COM(2010) 475} {SEC(2010) 1042}
Date: 2010-09-17
Institutions: European Commission
Subjects: carriage of passengers, common transport policy, international transport, rail transport, transport safety

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EUROPEAN COMMISSION 

Brussels, 17.9.2010 
SEC(2010) 1043 final 

COMMISSION STAFF WORKING DOCUMENT 

SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing a single European railway area 

(Recast) 

{COM(2010) 475} 
{SEC(2010) 1042} 

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   EN 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
COMMISSION STAFF WORKING DOCUMENT 

SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing a single European railway area 

(Recast) 

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INTRODUCTION 

The first railway package1 is comprised of three Directives that include provisions that date 
back  as  far  as  1991.  Within  the  context  of  the  Commission's  programme  for  simplifying 
legislation2,  the  proposed  initiative  to  recast  the  first  package  will  involve  a  process  of 
codification of these Directives and their merging into one legislative instrument with a view 
to simplifying and consolidating.  

From a substantial point of view, the objective is to insert into this single act new provisions 
to simplify, clarify and modernise the existing regulatory framework to address weaknesses, 
ambiguities and gaps identified and thereby to meet the initial objectives of the legislation. 

1. 

PROBLEM DEFINITION 

This report sets out the impacts of measures to be included in the recast of the first railway 
package, which have been formulated to address three key problems in the railway market: 

•  Market access remains difficult for new entrants. The number of new entrants in 
the  rail  freight  market  is  still  very  limited  and  average  operating  costs  for  rail 
undertakings are high and increasing.  

•  The European rail market is still characterised by a high degree of fragmentation 
which compromises the functioning of the market and in particular affects railway 
undertakings.  

•  The quality of infrastructure continues to decline. This affects the performance 
of  rail  transport,  due  to  reduced  capacity  and  delays,  discourages  investment  in 
ancillary services and new technologies and compromises rail's ability to compete 
credibly with other transport modes.  

As  a  result,  rail  transport  is  still  an  unattractive  option  and  competitiveness  of  the  sector  in 
relation to other modes, notably road transport, is diminished.  

The  Commission  considers  there  are  three  dimensions  to  tackling  these  problems:  existing 
legislation  must  be  correctly  implemented  and  enforced;  existing  legislative  provisions  may 
need to be clarified to ensure harmonised application across all Member States; and finally, 
new measures may be necessary to address specific issues. 

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Directive 2001/12/EC of the European Parliament and of the Council of 26 February 2001 (OJ L 75, 
15.3.2001, p. 1, as amended); Directive 2001/13/EC of the European Parliament and of the Council of 
26 February 2001 (OJ L 75, 15.3.2001, p. 26, as amended); and Directive 2001/14/EC of the European 
Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity 
and the levying of charges for the use of railway infrastructure (OJ L 75, 15.3.2001, p. 29, as amended).  
See  COM(2005)  535  and  COM(2006)  690:  Implementing  the  Community  Lisbon  programme:  A 
strategy for the simplification of the regulatory environment. 

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2. 

DOES THE EU HAVE A RIGHT TO ACT? 

Treaty base 

In accordance with Title VI of the Treaty on the Functioning of the European Union (TFEU), 
the  EU  may  take  action  in  the  area  of  transport.  Article  90  of  the  TFEU  establishes  that 
objectives  of  the  Treaties,  which  include  establishing  a  common  market  and  developing 
common policies to promote a high degree of competitiveness and the harmonious, balanced 
and sustainable development of economic activities, shall be pursued within the framework of 
a common transport policy. 

Subsidiarity 

Problems  affecting  the  railway  sector  involve  trans-national  aspects  requiring  action  at  EU 
level. A lack of coordination between Member States and other actors reduces the efficiency 
of international rail transport, risking a shift from rail to road transport which would result in 
increased congestion and pollution. Clarification of the regulatory framework for rail market 
access  in  order  to  facilitate  market  entry  and  competition  as  well  as  to  develop  rail  service 
markets can be better achieved by the Union than by Member States individually. 

In  accordance  with  the  principle  of  subsidiarity,  as  set  out  in Article  5  of  the  Treaty  on  the 
European Union, the objective of revitalising Europe’s railway sector will be better reached 
by complementing action  already taken at  EU level and  by  Member States by EU action to 
recast the first railway package. 

3. 

OBJECTIVES 

The general objectives of this initiative are to facilitate rail market entry and competition as 
well as to integrate the market, in order to develop efficient and high-performing rail freight 
and passenger transport services. The initiative should build on, complement and strengthen 
existing measures adopted at EU level. 

Legal simplification through consolidation and merger is the first horizontal objective which 
underpins  this  recast  initiative.  Secondly,  clarification  of  some  provisions  of  rail  access 
legislation would facilitate a proper transposition and efficient implementation of EU law in 
all Member States. Finally, there is a need to modernise the  legislation  by eliminating  out-
dated  provisions  (historically  relevant  prior  to  full  market-opening)  and  by  introducing  new 
provisions which respond more appropriately to the functioning of the market today. 

The specific objectives of the initiative are to: 

•  Improve non-discriminatory access to service facilities 

•  Enhance transparency of the railway market's institutional framework 

•  Enhance co-operation and co-ordination to facilitate international rail transport  

•  Provide effective incentives for sound and sustainable financing 

•  Enhance regulatory body independence and competencies 

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4. 

POLICY OPTIONS 

The package considered for the recast includes 26 modifications.  

An  impact  assessment  was  deemed  necessary  for  modifications  which  introduce  9  new 
measures. For 4 measures, a prior impact assessment had been conducted by the Commission 
thus  only  5  measures  were  analysed.  Considering  the  limited  scope  of  the  measures,  the 
analysis has been conducted in qualitative terms in such a way as to allow a comparison of the 
effect of alternative policy options. Policy options for the 5 new measures and their impact are 
summarised below. Based on this analysis, one option was retained per measure.  

The  report  also  contains  a  quantitative  assessment  of  economic,  social  and  environmental 
impacts and administrative costs carried out on the whole package of modifications retained. 
These quantitative impacts are presented in Section 5. 

4.1. 

Supply of rail-related services 

The requirement that service facility management should be independent from rail transport 
provision  will  reduce  conflicts  of  interest  and  discrimination  in  access  to  services,  thus 
contributing to the business development of new entrants.  

Supply of rail-
related services 

Option 1 

Option 2 

Option 3 

Service facility 
operators independent 
in legal terms from 
firms or entities which 
hold significant 
market power in 
railway transport 
market 

Service facility 
operators independent 
in legal, organisational 
and decision-making 
terms from firms or 
entities which hold 
significant market 
power in railway 
transport market 

Service facility 
operators independent 
in legal, organisational 
and decision-making 
terms from all firms or 
entities active in 
railway transport 
market 

Under Option 1, conflicts of interest will still persist since independence is only legal and a 
service facility operator could be part of a holding company that also controls an incumbent 
railway undertaking. 

Option 2 will ensure adequate independence and will have an impact on the development of 
rail-related services because access to rail-related services for new entrants will be easier and 
cheaper. Administrative costs are lower than under option 1.  

Option 3 applies to all operators and is stricter and less effective than option 2. Investment in 
new  service  facilities  would  be  less  attractive  since  new  entrant  railway  undertakings  who 
have recently invested in and developed a service facility would be asked to sell the asset or to 
grant its management to a third party.  

Option 2 is the most promising option since it excludes possible conflicts of interest but does 
not discourage future investments in rail-related services by new entrant railway undertakings. 

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4.2. 

Availability of service facilities 

Specific provisions that create incentives for more effective use of existing assets will create 
additional infrastructure capacity with minimum investment. Increased availability of service 
facilities will contribute to removal of specific bottlenecks in the rail market. 

Option 1 

Option 2 

Option 3 

Availability of 
service facilities 

Financial penalty 
in the case of 
non-use  

Where service facility is 
not in use its owner shall 
publish operation of the 
facility for lease or rent. 

Where service facility is 
not in use its owner shall 
publish operation of the 
facility for sale. 

Option  1  will  not  always  be  effective  since  in  order  to  prevent  entry  of  new  competitors, 
operators may prefer to pay financial penalties rather than re-open a facility.  

The  impact  of  option  2  will  be  moderate.  New  service  providers  will  be  able  to  take  over 
previously  unused  service  facilities  and  a  growth  in  available  services  will  result  in  lower 
tariffs for new entrant railway undertakings. Option 2 will require higher administrative costs 
than option 1 due to new administrative processes for leasing or renting the assets.  

Option 3 imposes an obligation to sell the facility in the case of non-use. However, a facility 
owner interested in preventing entrance into the market of new railway undertakings may opt 
to sell to a real estate developer rather than another manager willing to run the facility. 

Option  2  is  the  most  promising.  While  administrative  costs  are  expected  to  be  higher  than 
under option 1, they are largely paid back by the benefits.  

4.3. 

Accounting separation 

Empowering  Regulatory  Bodies  to  audit  infrastructure  managers'  and  railway  undertakings' 
accounts  will  enable  them  to  supervise  account separation  compliance  and  identify  “unfair” 
behaviour or situations that need monitoring. A standard format and content for information 
would enable verification of compliance with charging principles. 

Option 1 

Option 2 

Option 3 

Accounting 
separation  

Oblige regular 
independent external 
audits and to deliver 
results to regulatory 
bodies 

Empower rail regulatory 
body to 

Empower rail regulatory 
body to  

carry out audits or 
initiate external audits to 
verify account separation 

carry out audits or 
initiate external audits to 
verify account separation 

and 

and 

require cost accounting 
data in aggregated and 
standardised format with 
recommended minimum 
data 

require cost accounting 
data in aggregated and 
standardised format with 
comprehensive unified 
set of data and template 

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Option 1 will reduce market distortions and improper use of state funds and increase internal 
competition.  However,  the  economic  impact  under  option  2  will  be  higher  as  better 
information will enable Regulatory Bodies to effectively monitor compliance of infrastructure 
managers with charging principles, leading to lower, more transparent infrastructure charges. 

While  ensuring  the  completeness  of  cost  accounting  data,  introducing  a  common  detailed 
template  in  Option  3  will  result  in  additional  administrative  costs  for  the  public  sector  and 
business, but will not substantially increase the option's effectiveness. 

Option 2 is preferred as it enables effective supervision by regulatory bodies of infrastructure 
managers and incumbent railway undertakings without high administrative costs of option 3.  

4.4. 

Support to operators in case of discriminatory treatment 

Extending the competencies of competition authorities or regulatory bodies to enable them to 
provide adequate support to operators in case of discriminatory treatment in access to service 
facilities  will  reduce  market  entrance  barriers  for  new  entrants,  trigger  the  development  of 
business activities and in some cases result in lower service prices. 

Option 1 

Option 2 

Option 3 

Support to 
operators in case of 
discriminatory 
treatment  

Recommend that 
Member States 
empower 
competition 
authority to carry 
out emergency 
procedures in the 
context of 
dominant-position 
cases  

Extend scope of 
regulatory bodies 
competences tocover 
Decisions related to 
Annex II of Directive 
2001/14 (rail-related 
services) 

Extend scope of 
regulatory bodies 
competences tocover 
Decisions related to 
Annex II of Directive 
2001/14 (rail-related 
services) 

Include fast track 
emergency procedures 
which allow ex ante 
intervention. 

The  introduction  of  emergency  procedures  in  option  1  for  dominant-position  cases  that  fall 
under the statutory scope of competition authorities will speed up access to service facilities 
for new entrants. However, a number of dominant position cases would remain and additional 
administrative costs are foreseen. 

Under option 2 competition authorities retain the power to intervene, but rail market players 
may  also  appeal  to  Regulatory  Bodies  on  matters  of  discriminatory  treatment.  This  will 
contribute more effectively than option 1 to reducing discrimination in access to rail-related 
services and in reducing market entrance barriers. 

Option 3 also empowers regulatory bodies to act ex-ante in the context of dominant-position 
cases,  but  risks  over-regulating  the  market  by  imposing  decisions  where  no  particular 
difficulties have been reported. 

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Option 2 is preferred since it will enable Regulatory Bodies to intervene in all cases in which 
operators feel discriminated against and to supervise matters that concern rail related services 
without the excessive administrative costs of option 3. 

4.5. 

Independence of Regulatory Bodies 

Additional  independence  requirements  between  Regulatory  Bodies  and  incumbent  railway 
undertakings  will  ensure  full  independence  of  their  decision-making,  thus  creating  grounds 
for fair competition in the rail market. 

Option 1 

Option 2 

Independence of Regulatory 
Bodies  

Make regulatory bodies 
independent in organisation, 
funding decisions, legal 
structure and decision-
making from any 
infrastructure manager, 
charging body, allocation 
body or applicant as well as 
the public authority that 
exercises ownership rights 
over the incumbent railway 
undertaking 

and 

functionally independent 
from any competent authority 
involved in award of a public 
service contract. 

Single national regulatory 
body to be established in 
each Member State as  

legally distinct and 
independent in 
organisational, functional, 
hierarchical and decision 
making terms from any other 
public authority,  

independent in organisation, 
funding decisions, legal 
structure and decision-
making from any 
infrastructure manager, 
charging body, allocation 
body or applicant 

and 

functionally independent 
from any competent 
authority involved in award 
of a public service contract. 

Option  1  will  eliminate  conflicts  of  interests  and  create  equal  administrative  capacity  of 
Regulatory Bodies across the EU, thus removing market entrance barriers by ensuring equal 
opportunity for all railway undertakings. 

Under  Option  2  Regulatory  Bodies  will  also  be  legally  distinct  and  independent  from  any 
other  public  authority  but  would  not  acquire  further  independence  from  the  infrastructure 
managers and incumbent railway undertaking as in option 1.  

Option 1 is preferred as it will ensure adequate independence for all Regulatory Bodies in the 
EU,  resulting  in  positive  economic,  social  and  environmental  impacts.  Administrative  costs 
will be reasonable. 

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5. 

QUANTITATIVE ANALYSIS OF IMPACTS FOR THE WHOLE PROPOSAL 

5.1. 

Economic impacts 

In terms  of  competition, implementation of the package of modifications will have a slight 
impact  on  freight  modal  share,  leading  to  a  stabilisation  or  earlier  inversion  of  the  baseline 
negative  trend.  As  regards  new  entrants,  modifications  proposed  in  the  package  should  be 
capable  of  generating  up  to  3-4%  more  new  railway  undertakings  and  up  to  2-3%  more 
market  share  for  non-incumbents.  From  a  quality  point  of  view,  fatalities  in  road  freight 
transport would be avoided but there would be a low or very low correlation between market 
opening and punctuality. Finally, operating costs could be reduced by about 6%.  

5.2. 

Administrative cost 

Two types of administrative cost have been taken into account: one-off administrative costs, 
defined as start up-cost or costs incurred when re-designing the way administrative obligation 
or  specific  action  are  met;  and  recurrent  administrative  costs,  defined  as  annual  costs. 
These  costs  primarily  consist  of  new  publication  requirements  for  Member  States  (charging 
rule framework  and medium/long-term development strategy), infrastructure  managers (new 
info  in  network  statement),  managers  of  terminals  (access  conditions)  and  licensing  bodies 
(license conditions). 

5.3. 

Social impacts 

As  regards  employment,  the  package  would  have  an  impact,  representing  over  1.700.000 
working hours equal to more than 1.000 additional workers. The modal shift from road to rail 
results in a slight decrease of employment in road transport. There would be general demand 
for more skilled personnel and a higher demand for training centres. 

5.4. 

Environmental impacts 

It is expected that implementation of the modifications will provide benefits in reduced CO2 
emissions and improved air quality. The package may be disadvantageous in terms of noise 
emissions  due  to  increased  traffic  but  this  is  off-set  by  noise-abatement  measures.  Benefits 
due to a reduction of energy consumption are expected to have maximum effect in the year of 
full  implementation  and  then  decrease  slightly  because  of  improved  energy  efficiency 
expected for heavy duty vehicles. 

6. 

MONITORING AND EVALUATION 

Information  in  the  existing  monitoring  systems  should  be  used  while  additional  indicators 
should  be  established.  Implementation  of  the  initiative  depends  on  the  joint  efforts  of  the 
Member States, thus it is crucial that monitoring systems are harmonised.  

Since  most  relevant  indicators  are  currently  monitored  through  the  Rail  Market  Monitoring 
Scheme (RMMS)3 the monitoring of this initiative could be carried out within RMMS.  

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See COM(2007) 609 and COM(2009) 676. 

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