Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL repealing Regulation (EEC) No 1192/69 of the Council on common rules for the normalisation of the accounts of railway undertakings
Date: 2013-01-30
Institutions: European Commission
Subjects: State aid, distribution business, rail transport, social-security benefit, standardised accounting system, transport company

EUROPEAN 
COMMISSION 

Brussels, 30.1.2013  
COM(2013) 26 final 

2013/0013 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

repealing Regulation (EEC) No 1192/69 of the Council on common rules for the 
normalisation of the accounts of railway undertakings 

(Text with EEA relevance) 

EN 

   EN 

 
 
 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

Regulation (EEC) No 1192/69 allows Member States to compensate 36 enumerated railway 
undertakings for the payment of obligations which undertakings of other transport modes do 
not have to support, such as special family allowances and pensions.  

When  the  rules  for  normalisation  are  correctly  applied,  such  State  support  is  considered 
compatible  with  the  internal  market  and  Member  States  are  exempted  from  State  aid 
notification  obligations,  although  Member  States  are  required  to  officially  publish  their 
compensation decisions. Today, only a few Member States rely on the Regulation in order to 
justify payments of compensation. 

The Regulation was adopted before the rail market was liberalised and when rail transport in 
Europe  was  developing  primarily  within  national  borders,  with  integrated  companies  both 
operating  rail  services  and  managing  rail  infrastructure.  In  the  context  of  this  monopolistic 
market,  the  objective  of  the  Regulation  at  the  time  was  to  put  railway  undertakings  and 
undertakings active in other transport modes on an equal competitive footing.  

Since  the  1990s,  a  series  of  legislative  measures  (known  as  the  railway  packages)  has  been 
adopted at European level with a view to reviving rail transport by gradually creating a single 
railway area integrated at a European level. These legal acts have opened up the rail freight 
and  international  rail  passenger  markets  to  competition  and  have  established,  by  way  of 
Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 
establishing  a  single  European  railway  area  (recast)1,  certain  fundamental  principles  which 
include  that  railway  undertakings  shall  be  managed  according  to  principles  that  apply  to 
commercial companies, that entities responsible for the allocation of capacity and charging for 
rail  infrastructure  shall  be  separate  from  entities  which  operate  rail  services  (separation  of 
essential  functions)  and  that  there  shall  be  a  separation  of  accounts  (to  prevent  cross-
subsidisation),  that  any  railway  undertaking  licensed  in  accordance  with  EU  criteria  should 
have access to railway infrastructure on fair, non-discriminatory terms, and that infrastructure 
managers may benefit from State financing.  

Regulation  (EEC)  No  1192/69  is  inconsistent  and  incompatible  with  legislative  measures 
currently in force for a number of reasons.  

i)  Since  railway  undertakings  must  be  managed  according  to  principles  that  apply  to 
commercial  companies,  no  State  compensation  for  insurance,  pensions,  or  other  operating 
expenditures  is  permissible  (except  in  the  case  of  compensation  for  the  provision  of  public 
services). Not only is this principle established broadly under Treaty State aid rules, but it is 
more  specifically  set  out  in  the  Guidelines  on  State  aid  for  railway  undertakings  (2008/C 
184/07). 

ii)  The  enumerated  list  of  railway  undertakings  eligible  for  compensation  under  the 
Regulation and the classification in the Regulation of types of compensation that can be paid 
to  railway  undertakings  presuppose  an  integration  of  infrastructure  management  into  the 
activities  of  railway  undertakings  which  is  inconsistent  with  the  principles  of  separation  of 
essential functions and separation of accounts.  

iii)  Regulation  1192/69  makes  only  36  railway  undertakings  eligible  for  compensation.  The 
Regulation  may  have  made  sense  when  incumbent  railway  undertakings  competed 

1 

OJ L 343, 14.12.2012, p. 32. 

EN 

2 

   EN 

                                                 
exclusively with other modes of transport and not with other railway undertakings, however, 
in  the  context  of  a  liberalised  market  where  railway  undertakings  compete  directly  with  the 
traditional monopolies, it is not appropriate to discriminate between different undertakings. If 
financial conditions differ for railway undertakings (as a consequence of the Regulation) new 
entrants are not ensured non-discriminatory access conditions. For example, new entrants may 
have difficulties to attract personnel from incumbent railway undertakings since the latter may 
be  able  to  offer  more  favourable  pension  conditions  through  subsidies  received  under  the 
Regulation. 

Payments  of  compensation  under  Class  IV  of  the  Regulation  (the  costs  of  level  crossing 
facilities)  are  costs  associated  with  the  functions  of  an  infrastructure  manager  who,  under 
Article  8  of  Directive  2012/34/EU,  may  benefit  from  State  financing.  Thus  while 
compensation payments under Class IV of the Regulation would be compatible with existing 
legislation, Class IV of the Regulation is also redundant. 

Therefore, the proposed initiative to repeal the Regulation will eliminate inconsistencies in the 
EU legal order and will contribute to simplification by eliminating a legal act which is now 
obsolete. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

2.1 

Consultation 

The  Commission  requested  information  from  Member  States  about  application  of  the 
Regulation in May 2010 and in June 2011. Responses revealed that between 2007 and 2010 a 
majority of Member States had not received applications from railway undertakings and had 
not  made  payments  of  compensation  under  the  Regulation.  A  majority  of  Member  States 
indicated  they  saw  no  ongoing  need  for  the  Regulation  and  some  explicitly  expressed  their 
support  for  repeal  or  their  opinion  that  the  Regulation  is  obsolete  or  out  of  date.  Some 
Member  States  were  in  favour  of  maintaining  relevant  classes  in  the  Regulation,  however 
given  that  compensation  payments  under  all  classes  except  Class  IV  are  incompatible  with 
other  legislation,  this  is  an  option  that  cannot  be  pursued.  Other  Member  States  were 
indifferent  or  expressed  no  opinion  on  the  ongoing  need  for  the  Regulation.  Only  three 
Member States (Belgium, Germany and Ireland) declared that they used the Regulation as a 
legal basis for payments of compensation during the period 2008-2010. 

Compensation payments in 2010 (estimated or actual) under Regulation 1192/69 as reported by MS (€ millions) 

Class I 

Loss or injury at 
work 

Class III 

Pensions 

Class IV 

Total 

Level Crossings 

Belgium 

Germany 

Ireland 

Total 

(0.322) 

- 

- 

(0.322) 

- 

- 

24.1 

24.1 

- 

72.8 

4.2 

77.0  

(0.322) 

72.8 

28.3 

100.8 

The  Commission  was  also  recently  informed  by  Poland  of  compensation  payments  to  PKP 
PLK (under Class IV) for the year 2012 in the order of €7.9 million.  

Only  three  classes  of  compensation  are  applied  by  Member  States  today  (I,  III  and  IV). 
Certain classes of compensation under the Regulation are no longer in force (V through VIII). 
None of the remaining classes of compensation (II and IX through XV) are applied.  

EN 

3 

   EN 

 
 
Except in the case of compensation for the provision of public services, payment by the State 
to railway undertakings of compensation is incompatible with the principles of management 
of railway undertakings according to principles that apply to commercial companies and EU 
rules  on  State  aid,  separation  of  accounts,  and  non-discriminatory  access  to  railway 
infrastructure. Class IV of the Regulation is redundant given that compensation payments by 
the  State  for  the  functions  of  infrastructure  managers  can  already  be  made  under  Directive 
2012/34/EU. Reducing the number of classes in the Regulation to those which are in line with 
existing  legislation  would  have  the  same  effect  as  the  repeal  option  –  eliminating 
incompatible  classes  yet  leaving  the  possibility  for  Member  States  to  provide  the 
infrastructure manager with financing consistent with its functions, including costs associated 
with level crossing facilities.  

2.2 

Impacts of the repeal 

On the basis of the data provided by Member States, it can be concluded that the impact of a 
repeal of the Regulation would be very minimal. 

Class I  

Between  2008  and  2010,  Belgium  received  applications  from  SNCB  Holding  under  Class  I 
(payments  which  railway  undertakings  are  obliged  to  make  but  which  for  the  rest  of  the 
economy are borne by the State, including payments in respect of loss or injury resulting from 
accidents  at  work).  In  2010,  a  negative  compensation  balance  of  €0.323  million  was 
calculated under the Regulation, to be paid back by SNCB Holding to the Belgian State.  

The  impact  of  a  repeal  of  Regulation  1192/69  would  be  negligible  as  regards  Class  I 
compensation  payments.  SNCB  would  have  to  join  the  existing  private  accident  insurance 
system and Belgium has indicated that it is considering this option. Any costs associated with 
switching  systems  would  be  more  than  offset  by  the  elimination  of  administrative  burdens 
associated with the annual receipt of applications and calculations of compensation under the 
Regulation.  

Class III  

Between 2008 and 2010, Ireland made payments to CIE under Class III (payments in respect 
of retirement and other pensions borne by railway undertakings on terms different from those 
applicable to other transport undertakings). In 2010, Class III compensation to CIE amounted 
to €24.1 million.  

The  impact  of  a  repeal  of  Regulation  1192/69  would  be  minimal  as  regards  Class  III 
compensation  payments.  Pension  payments  to  CIE  related  to  labour  costs  associated  with 
infrastructure management can be justified by Article 8 of Directive 2012/34/EU as financing 
for  functions  of  an  infrastructure  manager.  Pension  payments  to  CIE  related  to  labour  costs 
associated with public service obligations, can be justified as compensation for the discharge 
of  public  service  obligations  defined  in  accordance  with  Regulation  1370/2007  and  be 
exempted  from  the  State  aid  notification  requirement.  (Currently  100%  of  all  rail  passenger 
operations  are  under  public  service  obligation).  Pension  payments  to  CIE  for  labour  costs 
associated  with  rail  operations  that  do  not  fall  under  public  service  obligations  (in  other 
words,  freight  services)  would  be  subject  to  State  aid  notification.  Freight  activities  are 
estimated to represent around 5.2% of CIE's rail operation activities – this translates roughly 
to 3.4% of its employees. Thus, less than €1  million of pension related payments to CIE are 
associated  with  rail  freight  activities.  Only  these  payments  to  CIE  (and  payments  to  CIE 
related to rail passenger operations not under PSO – of which there currently are none) would 
be subject to State aid notification rules.  

EN 

4 

   EN 

Class IV 

Ireland,  Germany  and  Poland  have  made  payments  under  Class  IV  (costs  of  level  crossing 
facilities). In 2010 Ireland made payments to CIE of € 4.2 million under Class IV. Estimated 
payments  under  Class  IV  from  Germany  to  DB  Netz  AG  and  Usedomer  Bäderbahn  GmbH 
were  in  the  order  of  €72.8  million  for  2010,  of   which  less  than  0.5%  went  to  Usedomer 
Bäderbahn.  For  the  year  2012  Poland  will  make  compensation  payments  under  Class  IV  to 
PKP PLK in the order of € 7.9 million.  

The  impact  of  a  repeal  of  Regulation  1192/69  would  be  negligible  as  regards  Class  IV 
compensation  payments.  Payments  to  CIE,  DB  Netz  and  PKP  PLK  would  be  covered  by 
Article  8  of  Directive  2012/34/EU  as  financing  for  functions  of  an  infrastructure  manager. 
These  payments  can  continue  to  be  made  after  a  repeal  of  the  Regulation  and  the 
administrative  formalities  related  to  application  of  the  Regulation,  such  as  handling  annual 
applications  for  normalisation  from  undertakings,  assessing  financial  burden  or  benefit, 
determining the amount of compensation, adequately preparing decisions taken in pursuance 
of  the  provisions  of  the  Regulation  and  officially  publishing  those  decisions,  would  be 
eliminated. Payments to Usedomer Bäderbahn, which are minimal, would be subject to State 
aid notification rules.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

The proposal consists of a repeal of Regulation (EEC) No 1192/69.  

EN 

5 

   EN 

2013/0013 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

repealing Regulation (EEC) No 1192/69 of the Council on common rules for the 
normalisation of the accounts of railway undertakings 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 91 and 109 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 
Having regard to the opinion of the European Economic and Social Committee2,  
Having regard to the opinion of the Committee of the Regions3,  

Acting in accordance with a ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

Regulation  (EEC)  No  1192/69  allows  Member  States  to  compensate  36  enumerated 
railway  undertakings  for  the  payment  of  obligations  which  undertakings  of  other 
transport  modes  do  not  have  to  support.  Correct  application  of  the  rules  for 
normalisation  results  in  Member  States  being  exempted  from  State  aid  notification 
obligations. 

A  series  of  legislative  measures  has  been  adopted  at  European  level,  opening  up  the 
rail freight and international rail passenger markets to competition and establishing, by 
way  of  Directive  2012/34/EU  of  the  European  Parliament  and  of  the  Council  of 
21 November  2012  establishing  a  single  European  railway  area  (recast),  certain 
fundamental  principles  which  include  that  railway  undertakings  shall  be  managed 
according to principles  that  apply  to commercial companies, that entities responsible 
for the allocation of capacity and charging for rail infrastructure shall be separate from 
entities which operate rail services and that there shall be a separation of accounts, that 
any railway undertaking licensed in accordance with EU criteria should have access to 
railway  infrastructure  on  fair,  non-discriminatory  terms,  and  that  infrastructure 
managers may benefit from State financing.  

(3) 

Regulation  (EEC)  No  1192/69  is  inconsistent  and  incompatible  with  legislative 
measures currently in force. In particular, in the context of a liberalised market where 
railway undertakings compete directly with the enumerated railway undertakings, it is 

2 
3 

OJ C , , p. . 
OJ C , , p. . 

EN 

6 

   EN 

                                                 
no  longer  appropriate  to  discriminate  between  these  two  groups  of  different 
undertakings.  

(4) 

As  a  consequence,  it  is  appropriate  to  repeal  Regulation  (EEC)  No  1192/69  to 
eliminate  inconsistencies  in  the  EU  legal  order  and  this  will  contribute  to 
simplification by eliminating a legal act which is now obsolete. 

HAVE ADOPTED THIS REGULATION: 

Regulation (EEC) No 1192/69 is repealed. 

Article 1 

Article 2 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  its  publication  in  the 
Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

EN 

7 

   EN