COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure
Date: 2013-01-30
Institutions: European Commission
Subjects: carriage of passengers, free competition, liberalisation of the market, national transport, provision of services, rail transport, services contract, transport infrastructure

EUROPEAN 
COMMISSION 

Brussels, 30.1.2013  
SWD(2013) 13 final 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Directive of the European Parliament and of the Council amending  
Directive 2012/34/EU of the European Parliament and of the Council of 21 November 
2012 establishing a single European railway area, as regards the opening of the market 
for domestic passenger transport services by rail and the governance of the railway  
infrastructure 

{COM(2013) 29 final} 
{SWD(2013) 12 final} 

EN 

   EN 

 
 
 
 
  
 
COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Directive of the European Parliament and of the Council amending  
Directive 2012/34/EU of the European Parliament and of the Council of 21 November 
2012 establishing a single European railway area, as regards the opening of the market 
for domestic passenger transport services by rail and the governance of the railway  
infrastructure 

Lead DG: MOVE 

1. 

PROBLEM DEFINITION 

The  Single  European  Railway  Area  as  defined  in  the  2011  White  Paper  on  transport  policy 
aims  to  create  an  internal  railway  market  where  European  railway  undertakings  (RU)  can 
provide  services  without  unnecessary  technical  and  administrative  barriers.  Despite  existing 
legislation, efficiency and competition problems still exist. 

Rail  infrastructure  is  the  backbone  and  driver  for  the  internal  market  but  is  also  a  natural 
monopoly  due  to  its  high  costs.  Given  growing  pressure  on  public  finances,  improved 
efficiencies  are  more  crucial  than  ever  to  ensure  optimal  management  and  utilisation  of  the 
shared infrastructure by different RUs. To allow sustainable growth the barriers to entry in the 
rail sector need to be addressed.  

Strengthening the single market by optimising the governance of infrastructure management, 
in  particular  by  ensuring  that  the  infrastructure  manager  (a)  performs  a  consistent  set  of 
functions coordinates with its EU counterparts on cross-border issues and is responsive to the 
needs  of  rail  undertakings  ("efficiency  challenge");  and  (b)  allows  for  effective  non-
discriminatory  access  to  the  infrastructure  ("equal  access  challenge"),  is  a  way  in  which  to 
assist such sustainable growth. 

Firstly,  an  efficiency  challenge  raises  because  the  current  governance  does  not  provide 
sufficient  incentives  and  means  for  infrastructure  managers  (IM)  to  respond  to  the  needs  of 
the transport services market and to contribute to the optimisation of the performance of the 
sector  taken  as  a  whole.  While  the  Recast  of  the  First  Railway  package  has  introduced  the 
obligation to IM to consult users and foresees use of perfomance schemes and targets, these 
do not allow for a stuctured and continuous dialogue with users. In addition, the distribution 
of  different  infrastructure  management  function  among  different  market  players  can  lead  to 
inconsistencies in the management of infrastructure and increase coordination costs. Finally, 
an  important  condition  for  completing  the  Single  European  Rail  Area  is  to  improve  the 
functioning of cross-border cooperation of IMs. 

Secondly,  conflicts  of  interest  in  vertically  integrated  railway  holidngs  naturally  lead  to 
protectionist practices of historical incumbents which impair competition in rail services for 
all  other  applicants  and  thus  result  in  "equal  access  challenge".  Experience  over  the  last 
decade has demonstrated that the implementation of current separation requirements did not 
completely prevent the conflicts of interest and discriminatory practices in respect of access to 
rail infrastructure and related services. In addition, the existing legal framework has proven to 
be insufficient to allow detection of and prevent cross-subsidisation from IMs to incumbents. 

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Even reinforced regulators' powers under the Recast cannot prevent this, as the risk is inherent 
in the existing structure.  

The problems described above and the measures to be proposed to address them will affect a 
large  number  of  players  in  the  rail  market  including  national  authorities,  IMs,  RUs  and 
indirectly also passengers and users of rail freight services. 

2. 

SUBSIDIARITY 

Articles 58, 90 and 100 of the Treaty extend to railways the objectives of a genuine internal 
market in the context of an EU Common Transport Policy.  

Actions  by  Member  States  alone  cannot  ensure  the  coherence  of  EU  railway  market  and 
address the divergent interpretation of the legislation, as persistence of national rules and sub-
optimal functioning of national institutions, acting as barriers to the internal market, is in fact 
at the centre of the problem. Action at EU level aims to ensure consistent implementation of 
the  EU  rail acquis,  which  should  lead  to  the  creation  of  the  Single  European  Railway  Area 
with no unnecessary administrative and technical barriers. 

3. 

OBJECTIVES 

General  objective:  Strengthen  further  the  governance  of  railway  infrastructure,  thereby 
enhancing the competitiveness of rail sector vis-à-vis other modes and developing further the 
Single European Rail Area.  

Specific objectives: 

Efficient management challenge: 

1. 

Improve the IM ability to manage efficiently the infrastructure in favour of users  

Equal access challenge: 

2. 

Eliminate conflict of interest and distortions of competition in infrastructure access 

Operational objectives: 

Efficient management challenge:  

1. 

2. 

3. 

Ensure better coordination/alignment between the IMs and rail operators 

Ensure coherence in the management of the different IM functions  

Ensure  that  the  cross-border  and  pan-European  dimension  of  rail  infrastructure  is 
adequately addressed 

Equal access challenge: 

1. 

2. 

Extend  the  scope  of  "essential  functions"  to  all  IM  activities  which  are  potential 
sources of conflicts of interest and distortions of competition 

Apply  appropriate  safeguard  measure(s)  preventing  conflicts  of  interest  and 
distortions of competition to all the "essential functions" of IMs  

EN 

3 

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Figure 1 – Mapping between Problems drivers, root causes and objectives 

Operational objectives

Root causes

Drivers

Specific

EFFICIENT M ANAGEM ENT CHALLENGE

OO1: Ensure better 
coordination/alignment 
betw een the IMs and 
rail operators

OO2: Ensure 
coherence in the 
management of the 
different IM functions

IMs are not 
sufficiently  
market oriented

Suboptimal 
structure of IM 
portfolios

OO3: Ensure that the 
cross-border and pan-
European dimension of 
rail infrastructure is 
adequately addressed

Insufficient cross-
border 
cooperation of 
IMs

EQUAL ACCESS CHALLENGE

OO4: Extend the scope 
of "essential functions" 
to all IM  activities w hich 
are potential sources of 
conflict of interest and 
distortion of competition

OO5: Apply 
appropriate safeguard 
measure(s) preventing 
conflicts of interest and 
distortions of 
competition to all the 
"essential functions" of 
IMs

Functions not 
covered by 
separation rules 
also result in 
discrimination

Existing 
separation rules 
are partly 
ineffective

inefficiencies in 
infrastructure 
m anagement

SO1: Improve the IM 
ability to manage 
efficiently the 
infrastructure

Access barriers  to 
infrastructure

SO2: Eliminate IM 
conflict of interest 
and distortions of 
competition 

4. 

POLICY OPTIONS 

To address the two main challenges of efficiency and equal access in order to find an optimal 
governance  structure  five  groups  of  options  were  screened,  each  proposing  measures  to 
remedy the different problem elements, such as market co-ordination, consistency of function, 
cross-border  interfaces,  conflicts  of  interest  and  equal  access.  For  each  group  two  to  four 
options were developed in addition to baseline options. The combination of all these options 
could create theoretically 576 scenarios. To reduce complexity, for each set of measures, pre-
screening  was  based  on  stakeholder  views,  compliance  with  subsidiarity/proportionality 
principles, effectiveness in terms of policy objectives and overall feasibility. The table below 
shows the 11 options that have been retained including 5 baseline scenarios of the 19 options 
assessed. 

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Policy options considered 

Retained

Problem 
element 

Respective 
category of 
options 

Insufficient 
market 
orientation of 
IMs 

C options: 
Coordination 
between IM and 
RUs 

IM functions 
managed in 
an 
inconsistent 
manner 

F options: 
Consistent 
management of 
key functions 

Option C0: Baseline – improvements as foreseen by 
the Recast 

Option C1: RUs participation to IMs' board 

Option C2: IMs-RUs coordination bodies 

Option C3: Alignment through new financial incentives  

Option F0: Baseline – the content of existing essential 
functions is clarified by the ECJ 

Option F1: New coordination mechanism between the 
various entities in charge of IM functions 

Option F2: Unified IMs (all IM functions under IM 
responsibilities) 

Cross-border 
cooperation 
between IM 
not sufficient 

CB options: 
Cross-border IM 
management 

Option CB0: Baseline - implementation of existing EU 
law (the Recast, regulation of rail freight corridors, 
etc.) 

Equal access 
needs to be 
assured to all 
key functions  

SF options: 
Functions 
subject to the 
separation 
requirements  

Option CB1: Establishment of an EU network of IMs 

Option CB2: Creation of an EU structure integrating 
national IMs 

SF0: Baseline – separation requirements applying only 
to path allocation and track access charging 

Option SF1: Current essential functions+ traffic 
management separated 

Option SF2: Current essential functions +traffic 
management + maintenance separated  

Option SF3: All IM functions separated 

Conflicts of 
interests in 
the 
management 
of IM 
functions 
management 

S options: Way 
of separation of 
IMs from RUs 

Option S0: Baseline - existing separation requirements 
for the essential functions as interpreted in the 
forthcoming ECJ ruling 

Option S1: Additional competences for regulatory 
bodies 

Option S2: Clarify in EU law the concrete implications 
of existing separation obligations 

Option S3: Institutional separation 

Option S4: Compliance officer in integrated structures 

After screening, only the following scenarios and options have been retained: 

√ 

√ 

√ 

√ 

√ 

√ 

√ 

√ 

√ 

√ 

√ 

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Category of 
options 

Baseline 
Scenario 

Coordination 
between IM and 
RUs 

Option C0: 
Improvements as 
foreseen by the 
Recast 

Consistent 
management of 
key functions 

Cross-border IM 
management 

Option F0: existing 
essential functions 
are clarified by the 
ECJ, but scope 
remains limited 

Option SC0: 
implementation of 
existing EU law - 
the Recast, 
regulation of rail 
freight corridors. 

Functions subject 
to the separation 
requirements 

Option SF0: Only 
path allocation and 
track access 
charging separated 

Way of separation  Option S0: Existing 

separation 
requirements 

Scenario 1 

Scenario 2 

Scenario 3 

Option C2: 
Coordination bodies 

Option C2: 
Coordination bodies 

Option C2: 
Coordination bodies 

Option F2: Unified 
IMs 

Option F2: Unified 
IMs 

Option F2: Unified 
IMs 

Option CB1: 
establishment of an 
EU network of IMs 

Option CB1: 
establishment of an 
EU network of IMs 

Option CB1: 
establishment of an 
EU network of IMs 

Option SF3: All IM 
functions separated 

Option SF3: All IM 
functions separated 

Option SF3: All IM 
functions separated 

Option S0: Existing 
separation 
requirements 

Option S3: 
Institutional 
separation 

Option S2: Clarify 
in EU law the 
concrete 
implications of 
existing separation 
obligations 

5. 

ASSESSMENT OF IMPACTS 

Assessment  was  carried  out  on  the  main  economic  impacts  of  the  scenarios,  derived  from 
their impact on the railway sector. The report focuses on direct impacts on the railway sector 
in terms of enforcement costs, transaction costs, regulatory costs, the costs of discriminatory 
practises, that of the cross-subsidisation, but also the impacts of separation on the efficiency 
of infrastructure usage (including assessment of misalignment costs). Assessment of induced 
impacts of the initiative, such as level of competition, level of activity, investments, service 
quality, safety and SME impacts is also presented. It also considers the wider indirect impacts 
on  the  European  transport  system  and  economy.  The  analysis  is  mostly  derived  from 
qualitative  assessment  of  the  policy  options  supported  by  quantitative  elements  where 
possible. 

Furthermore  assessement  on  environmental  impacts  included  climate  change,  pollution  and 
noise,  and  social  impacts  such  as  impacts  on  employment  levels,  safety  and  working 
conditions including wages were considered.  

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6 

   EN 

 
Assessment of direct impacts 

Impacts compared to the 
Baseline 

Scenario 1 (only 
efficiency measures) 

Enforcement costs (one 
off) 

0/– 

Limited costs related to 
establishment of 
coordination bodies in 
many MSs and unifying IM 
functions in some MS. 

Transaction costs 

+ 

Regulatory costs 

Some improvement due to 
better coordination. 
Impacts to all MSs. 

0 
It is not expected the 
costs of regulatory 
enforcement under 
Scenario 1 to be materially 
lower than those arising in 
the Baseline. 

Other costs and benefits, linked to: 
Discrimination 

0 
No impact 

Cross-subsidisation 

0 

No impact 

Efficiency 

+ 

Scenario 2 (efficiency 
and enforcement of 
separation) 
– – 
Potential scale of costs 
€0.17 billion 

Related to the costs of 
internal reorganisation 
necessary to put in place 
"Chinese walls". 
Impacts the MSs having 
integrated or holding 
structures. 

– 
Potential cost range 
€0.05 bn and €0.16 bn 
per annum 
At least 0.15% of 
operating costs. 
Impacts the MSs having 
integrated or holding 
structures. 

0 
It is not expected the 
costs of regulatory 
enforcement under 
Scenario 2 to be 
materially lower than 
those arising in the 
Baseline. 

0/+ 
The scope of oversight of 
regulatory bodies is 
extended, but remains 
mostly reactive thus only 
partly evading 
discrimination related 
opportunity costs. 
0/+ 

Transparency issues and 
cross-subsidisation risks 
remain inherent in 
integrated and holding 
structures even if 
account separation 
requirements are in 
place. 
+ 

Scenario 3 (efficiency 
and institutional 
separation) 
–  
Potential scale of cost 
€0.24 billion – 

~0.9% of yearly 
operating costs.  
Impacts the MSs having 
integrated or holding 
structures. 

– – 
Potential cost range 
€0.05 bn and €0.16 bn 
per annum 
~0.3% of operating 
costs. 
Impacts the MSs having 
integrated or holding 
structures. 

+ 
Regulatory costs per 
train-kilometre could 
decline by up to 75% as 
a result of institutional 
separation. 
Impacts the MSs having 
integrated or holding 
structures. 

++ 
Full institutional 
separation would 
eliminate opportunity 
and motivation for 
discrimination. 

++ 

Full institutional 
separation would provide 
necessary transparency 
and eliminate 
opportunity for cross-
subsidisation. 

++ 

Increasing competitive pressure and specialisation of the market players will have 
an additional positive effect on their productivity and efficiency. At the same time, 
as further explained under Annex V, there are risks of loss of synergies and 
economies of scope which can appear in cases of separation between IMs and a 
dominant RU. However, this is inherent in order to ensure a level playing field for 
all operators. These risks will be mitigated by the enhanced coordination between 
IMs and infrastructure users as well as full implementation of the financial 
incentives foreseen by the Recast (modulation of charges, incentive scheme and 
performance regime). Such measures will ensure adequate alignment of strategies 
and investments leading essentially to long term efficiency gains. 

EN 

7 

   EN 

 
 
 
 
 
Assessment of induced and indirect impacts 

Impacts compared to Baseline 

Option 1 

Option 2 

Option 3 

Economic impacts 

- Impact on railway business 

Level of competition 

Level of activity of railway operators 

Level of investment 

Level of service quality and punctuality 

Level of rail safety 

Impact on SMEs 

- Impact on the transport sector 

Modal shift 

Efficiency of the transport system (congestion 
and travel times) 

European economy 

Impact on the European economy 

Environmental impacts 

Climate change 

Pollution 

Rail noise 

Social impacts 
Employment and working conditions in the 
railway sector 

Transport safety 

6. 

COMPARISON OF OPTIONS 

+ 

+ 

+ 

0/+ 

0 

0 

0/+ 

+ 

+ 

+ 

0/+ 

0/+ 

0/+ 

+ 

0/+ 

++ 

++ 

++ 

+ 

0 

+ 

+ 

+ 

+ 

+ 

+ 

+ 

+++ 

+++ 

++ 

++ 

0 

++ 

+ 

++ 

+ 

+ 

+ 

+ 

0/+ 

0/+ 

+ 

0/+ 

++ 

0/+ 

Taking into account all impacts, scenario 3 is considered to be the most beneficial where an 
IM users' coordination body is created, functions are unified, an EU network of IMs is created 
and all IM functions are subject to institutional separation requirements. 

In addition this scenario best meets the general, specific and operational objectives, improves 
conditions  for  competition  and  efficiency  in  the  railway  system.  It  facilitates  economic 
growth,  enhances  capacity  utilisation  and  infrastructure  performance,  and  reduces  obstacles 
and  barriers  to  entry  through  the  elimination  of  conflicts  of  interest.  It  also  ensures  finacial 
transparency and reduces the cost of regulation with limited enforcement costs.  

The overall results of the comparison of scenarios are set out in the table below.  

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Effectiveness  

Efficiency 

Coherence 

Motivation 

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Scenario  1  is  expected  to  already  have  a 
substantial positive  impact on IM efficiency. 
However,  in  terms  of  reduction  of  conflicts 
of interest, it will have only a limited impact 
resulting  from  the  extension  of  the  existing 
IM 
requirement 
independence 
functions.  While  existing  transaction  costs 
are  impacted  in  a  positive  but  limited 
manner  by  better  alignment  between  IM 
and  RUs,  regulatory  costs  and  enforcement 
costs  increased  moderately  as  efficiency 
measures  imply  a  limited  administrative 
burden.  Social  and  environmental  impacts 
are moderate but positive.  

to  all 

++ 

++ 

++ 

-- 

0 

- 

+ 

+ 

Scenario  2  will  have  the  same  positive 
impact  than  Scenario  1  on  the  IM  ability  to 
manage  the  infrastructure.  However  its 
operational  efficiency  will  improve  further 
with  increasing  competitive  pressure  on 
RUs.  Scenario  2  removes  conflicts  of 
interest  in  infrastructure  access  but  does 
not  ensure  optimal  financial  transparency 
of 
and 
competition. Transaction costs increase with 
the  number  of  new  entrants  and  traffic 
growth.  Both  enforcement  and  regulatory 
costs  are  higher  due  respectively  to  the 
implementation  of  "Chinese  walls"  and  the 
absence  of  financial  transparency.  Social 
and  environmental  impacts  are  moderate 
but positive. 

distortion 

absence 

the 

of 

++ 

+++ 

++ 

- 

+ 

--  ++ 

+ 

on 

Scenario 3 improves further the IM ability to 
manage  the  infrastructure  thanks  to  the 
specialisation  benefits 
institutional 
separation.  With  full  financial  transparency, 
it eliminates completely risks of distortion of 
competition  at  a  relatively  low  enforcement 
and  regulatory  cost.  Transaction  costs 
increase further despite the mitigating effect 
of  better  alignment  between  IMs  and  RUs. 
Traffic  growth  and  efficiency  generate  the 
highest  positive  social  and  environmental 
impacts. 

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7. 

SUMMARY OF THE RESULTS OF THE 4TH RAIL PACKAGE INITIATIVES 

The  ultimate  goal  of  separation  is  to  create  a  more  competitive  and  efficient  rail  sector  and 
thus  encourage  a  better  service  offer,  while  improving  the  use  of  public  funds  fed  via 
subsidises into railways. The table below summarises the financial benefits for: 

1. 

2. 

the separation initiative only (column 1) 

the domestic passenger market opening only for two scenarios: 

Market  Opening  Scenario  1  -  Focus  on  savings  (column  2)  -  In  this  scenario  it  is 
assumed  that  competent  authorities  would  focus  on  cost  savings,  taking  all  the 
reductions  in  PSC  tender  costs  as  cash  savings  and  not  reinvesting  any  of  these  in 
higher rail quality or capacity. 

Market Opening Scenario 2 - Reinvestment (column 3)- In this scenario it is assumed 
that  competent  authorities  would  not  focus  on  cost  savings  but  would  instead 
implicitly “reinvest” half the potential reductions in PSC tender costs by specifying 
higher  quality  or  capacity  in  PSCs.  In  terms  of  monetary  impacts  this  implies 
reduction in NPV, while the benefits appear in terms of increase in passenger km-s. 

3. 

combined impacts of both initiatives separating two different outcome scenarios: 

Combined Impacts Scenario 1 – Focus on savings (column 4) 

Combined Impacts Scenario 2 – Focus on reinvestment (column 5) 

Combined  core  financial  estimates  of  impacts  of  market  opening  and  infrastructure 
governance policies 

changes 

All 
estimates 

are 

illustrative 

NPVs (bil €) to 2035, discounted at 
4% to 2019 

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Transaction costs (mean estimate) 

-1.37 

-0.42 

Domestic service benefits* 

5.86 

29.85 

International service benefits 

Freight benefits 

Total NPV 

1.07 

1.00 

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-0.42 

21.46 

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43.07 

1.05 

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-1.77 

33.71 

0.89 

1.00 

6.56 

29.44 

21.04 

43.35 

33.83 

The  institutional  separation  envisaged  under  Scenario  3  is  an  important  precursor  to  the 
delivery of the full benefits of market opening, as already implemented for rail freight market 
and  international  passenger  rail  market.  The  two  initiatives  together  result  in  important 
synergies as demonstrated in the table below.  

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Combined outcome range impacts of market opening and infrastructure governance policies 
All changes are illustrative 
estimates in euro per annum 

Increase in 
passenger km (bn) 

Financial benefits 
(NPV, € bn) 

Increase in new entry 
market share (%) 

Scenario 1 –Focus on saving 

Vertical separation alone 

Market Opening alone 

Combination of market opening and 
vertical separation 
Scenario 2 – Reinvestment 

Vertical separation alone 

Market Opening alone 

Combination of market opening and 
vertical separation 

6.56 

29.44 

43.35 

4.42 

21.04 

33.83 

0.8 

2.0 

3.8 

1.1 

8.4 

16.4 

0.5 

3.8 

6.4 

0.5 

3.7 

6.2 

The  first  scenario  focuses  only  on  financial  benefits  (consisting  mostly  of  public  savings) 
while  the  second  reinvestment  scenario  would  allow  provision  of  16.4  billion  additional 
passenger-km (6% increase of passenger-km on top of the baseline developments) and would 
enable an 6% increase in market share of new entrants to 25%.  

8. 

MONITORING AND EVALUATION 

The Commission will monitor and evaluate the implementation of the specific objectives of 
this legislation and its impacts through a set of indicators on an ongoing basis. In order not to 
increase the burden on bodies responsible for providing data, these indicators are aligned with 
those  provided  to  the  Commission  as  part  of  existing  EU  law  through  the  enhanced  Rail 
Market Monitoring Scheme (RMMS), regulatory bodies and the European Railway Agency. 

Indicators  will  include  infrastructure  utilisation  rates,  traffic  volumes,  the  number  of  new 
entrants, market share of new entrants and complaints to regulators. 

Much  of  this  information  is  already  available  from  the  existing  RMMS  which  involves  all 
relevant stakeholders and the Recast foresees enhancements to cover infrastructure charging, 
capacity allocation, investments in railway infrastructure, pricing, quality of services, public 
service  contracts,  licensing  and  the  degree  of  market  opening,  harmonisation  between 
Member States and employment and the related social conditions.  

EN 

11 

   EN