Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail
Date: 2013-01-30
Institutions: European Commission
Subjects: award of contract, carriage of passengers, invitation to tender, means of public conveyance, national transport, rail transport, vehicle

EUROPEAN 
COMMISSION 

Brussels, 30.1.2013  
COM(2013) 28 final 

2013/0028 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1370/2007 concerning the opening of the market for 
domestic passenger transport services by rail 

(Text with EEA relevance) 

{SWD(2013) 10 final} 
{SWD(2013) 11 final} 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

1. 
In its 2011 White Paper on transport policy adopted on 28 March 20111, the Commission put 
forward its vision of a Single European Railway Area with an internal railway market where 
European  railway  undertakings  can  provide  services  without  unnecessary  technical  and 
administrative barriers.  

Several policy initiatives have recognised the potential of rail infrastructure as a backbone for 
the internal market and a driver of sustainable growth. The European Council conclusions of 
January  2012  highlighted  the  importance  of  unleashing  the  growth  potential  of  a  fully 
integrated  Single  Market,  including  measures  with  regard  to  network  industries.  The 
Commission  Communication  on  Action  for  Stability,  Growth  and  Jobs  adopted  on  30  May 
2012 stressed the importance of further reducing the regulatory burden and barriers to entry in 
the rail sector. Likewise, the Commission Communication on strengthening the governance of 
the Single Market2, adopted on 6 June 2012, stressed the importance of the transport sector. 

In  the  last  decade,  three  legislative  ‘railway  packages’  have  aimed  at  opening  up  national 
markets  and  making  railways  more  competitive  and  interoperable  at  EU  level.  Regulation 
1370/2007 on public passenger transport services by rail and by road, published in December 
2007, set out a framework for awarding public service contracts and compensating for public 
service  obligations  but  not  a  common  approach  to  awarding  contracts  for  rail  passenger 
transport.  Despite  the  new  EU  legislation,  the  modal  share  of  rail  in  intra-EU  transport  has 
remained modest.  

1.2 

Problems to be addressed 

Stakeholders  consider  that,  under  the  current  legal  framework,  rail  passenger  services  are 
underperforming  in  terms  of  quality  of  service  and  operational  efficiency.  54 %  of 
respondents  to  the  2012  Eurobarometer  survey  were  not  satisfied  with  their  national  and 
regional rail systems. Within the Consumer Scoreboard 20113 the overall satisfaction of train 
passengers  was  6.7/10,  well  below  of  the  most  consumer  goods  and  services.  Among 
consumers  rail  services  score  worse  than  all  other  transport  modes  (urban  transport  and 
airlines in particular scored better) and are ranked 27th out of 30 services markets. There are 
considerable gaps in operational efficiency between the best and the worst performing railway 
systems. These gaps reflect significant differences in asset utilisation such as rolling stock and 
infrastructure  as  well  as  labour  productivity.  These  operational  efficiency  gaps  lead  to  a 
substantial need of public funding compared to other economic sectors (leaving infrastructure 
funding aside) as many railway undertakings are loss making. 

There  are  a  number  of  obstacles  to  improving  railway  companies’  quality  of  service  and 
operational efficiency. These relate first of all to access to the market for domestic passenger 
services and the lack of competitive pressure. In many Member States this market is closed to 
competition,  which  not  only  limits  growth,  but  creates  disparities  between  those  Member 
States that have opened their markets and those that have not. Different national approaches to 
opening of the market for domestic passenger transport services by rail prevent the emergence 
of a genuine Internal Market for rail passenger services. 

White Paper : Roadmap to a Single European Transport Area – Towards a competitive and resource 

1 
efficient transport system ; COM(2011)144 
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Better Governance for the Single Market ; COM(2012)259 
http://ec.europa.eu/consumers/consumer_research/cms_en.htm;  

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However,  the  overwhelming  majority  of  domestic  passenger  services  is  not  provided  on  a 
commercial  basis,  and  is  therefore  performed  under  public  service  contracts.  Given  that  no 
common EU rules on the award of such contracts apply, some Member States have introduced 
competitive tendering for these contracts, while others award them directly. This patchwork 
of  regulatory  systems  in  the  EU  makes  it  difficult  for  railway  companies  to  exploit  the  full 
potential  of  operating  in  a  Internal  Market.  Therefore,  this  legislative  package  also  covers 
competition  for  public  service  contracts,  barriers  to  competition  such  as  the  availability  of 
suitable rolling stock for potential bidders for such contracts, and non-discriminatory access to 
information systems and integrated ticketing systems where they benefit the passenger. 

1.3 

General Objectives 

The main objective of the European Union’s transport policy is to establish an internal market 
for transport contributing to a high degree of competitiveness and the harmonious, balanced 
and sustainable development of economic activities. The 2011 Transport White Paper stated 
that  rail  should  account  for  the  majority  of  medium-distance  passenger  transport  by  2050. 
This  ‘modal  shift’  would  contribute  to  the  20 %  reduction  of  greenhouse  gas  emissions 
provided  for  in  the  Europe  2020  Agenda  for  smart,  sustainable  and  inclusive  growth4.  The 
White  Paper  concluded  that  no  major  change  in  transport  would  be  possible  without  the 
support of an adequate rail infrastructure and a smarter approach to using it. 

The overall objective of this proposal, as part of the Fourth Railway Package, is to improve 
the  quality  of  rail  passenger  services  and  to  enhance  their  operational  efficiency,  thereby 
improving the competitiveness and attractiveness of rail vis-à-vis other modes and developing 
further the Single European Railway Area. 

1.4 

Specific Objectives 

This  proposal  encompasses  common  rules  on  the  award  of  public  service  contracts  for 
passenger transport by rail, together with accompanying measures to increase the success of 
competitive tendering procedures. 

The objective of mandatory competitive tendering for public service contracts is to intensify 
competitive pressure on domestic rail markets, in order to increase the quantity and improve 
the  quality  of  passenger  services.  Competitive  tendering  for  rail  contracts  can  also  ensure 
better  value  for  money  spent  on  public  transport  services.  Common  rules  on  the  award 
procedure  contribute  to  creating  more  uniform  business  conditions  for  railway  companies. 
These  proposals  have  to  be  seen  in  connection  with  the  proposed  amendments  to  Directive 
2012/34/EU  of  the  European  Parliament  and  of  the  Council  of  21  November  2012 
establishing a single European railway area (recast)5, which introduce open access rights for 
railway  undertakings  and  strengthen  provisions  on  non-discriminatory  access  to  the  rail 
infrastructure. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

In order to support the Commission in the impact assessment process, an external consultant 
was  asked  to  prepare  a  support  study  and  to  undertake  a  targeted  consultation.  The  study 
started in December 2011 and the final report was delivered in September 2012. 

4 

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Communication from the Commission : Europe 2020 ; A strategy for smart, sustainable and inclusive 
growth, COM(2010) 2020 
OJ L 343of 14.12.2012, p. 32 

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To  gather  the  views  of  stakeholders,  a  broad  mix  of  targeted  consultation  methods  was 
preferred  to  an  open  consultation.  Between  1  March  and  16  April  2012,  tailored 
questionnaires were sent to 427 rail-related stakeholders (railway undertakings, infrastructure 
managers,  public  transport  ministries,  safety  authorities,  ministries,  representative  bodies, 
workers’ organisations etc.). The views of passengers were collected through a Eurobarometer 
survey  of  25 000  respondents  evenly  spread  over  the  25  Member  States  with  railways.  The 
network of the Committee of the Regions was used to reach local and regional authorities. 

Consultations were complemented by a stakeholder hearing held on 29 May 2012 (with some 
85  participants),  a  conference  (with  some  420  participants)  on  24  September  2012  and  by 
interviews with specific stakeholders throughout 2012. Commission staff met representatives 
from  Community  of  European  Railways  (representing  railway  companies),  the  European 
Passenger  Transport  Operators,  the  European  Transport  Workers  Federation,  the  European 
Passengers’  Federation,  the  European  Rail  Infrastructure  Managers  and  UITP  —  the 
International  Association  of  Public  Transport).  Dedicated  meetings  with  stakeholders  were 
also organised in France, Germany, Netherlands, Poland, Sweden and the United Kingdom. 

The majority of respondents (60 %) agreed that additional new open access rights, compulsory 
competitive  tendering  or  a  mix  thereof  could  stimulate  market  integration.  Open  access  for 
domestic  rail  passenger  transport  subject  to  an  economic  equilibrium  test  assessing  its 
possible impact on the viability of public service contracts was the most popular option (55 % 
of  respondents)  The  current  arrangements  were  viewed  very  negatively  (with  only  20 % 
supporting them).Workers representatives expect that any opening of the market for domestic 
passenger transport services by rail will result in worse working conditions and more strikes. 

Regarding compulsory competitive tendering, 45 % of respondents favoured flexible options 
akin to those of the negotiated procedure for public procurement and transitional periods for 
gradually putting all public service contracts out to tender (80% of respondents). 

The majority of respondents (60 %) agreed that the creation of rolling stock leasing companies 
would  help  to  improve  access  to  rolling  stock  and  a  large  majority  (75 %)  called  for  full 
access  to  technical  information  to  be  provided  by  the  infrastructure  manager.  As  regards 
integrated ticketing, there was a preference for non-binding provisions or enabling clauses for 
voluntary agreements rather than compulsory measures at EU level or at Member State level. 

The  Sectoral  Social  Dialogue  Committee  on  railways  was  consulted  on  26  March  and  19 
June, in particular on the options and the assessment of their social impact. 

Based  on  the  external  study  mentioned  above  and  on  the  conclusions  of  the  consultation 
process, the Commission made a qualitative and quantitative assessment of the impacts of the 
various options for modernising the existing regulatory framework. 

The impact assessment showed that a combination of the following would fare best in terms 
of economic, environmental and social impacts, generating a net present value of between €21 
and €29 billion from 2019 to 2035: 

– 

– 

– 

– 

broadly defined open access rights subject to a test of their impact on the economic 
equilibrium of public service contracts;  

competitively awarded public service contracts; 

voluntary national integrated ticketing systems; and 

an  obligation  on  Member  States  to  ensure  non-discriminatory  access  to  suitable 
rolling  stock  for  railway  undertakings  which  want  to  participate  in  a  public  tender 
procedure.  

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3. 

3.1 

LEGAL ELEMENTS OF THE PROPOSAL 

Definition of competent local authority (Article 2, point c) 

This  amendment  increases  legal  certainty  by  specifying  that  a  ‘competent  local  authority’ 
covers urban agglomerations or rural districts, not large parts of the national territory. 

Specifications on how competent authorities define public service obligations and the 

3.2 
geographical scope of public service contracts (Article 2, point (e) and new Article 2a) 

This Article provides a flexible but formalised and transparent procedure for defining public 
service  obligations  and  the  geographical  scope  of  public  service  contracts,  if  competent 
authorities consider that public intervention is necessary to ensure a politically desirable level 
of  mobility  in  the  territory  under  their  responsibility.  It  requires  competent  authorities  to 
establish  public  transport  plans  defining  the  objectives  of  public  passenger  transport  policy 
and supply and performance patterns for public passenger transport. It also requires competent 
authorities to justify the kind and extent of public service obligations they intend to impose on 
public  transport  operators  and  the  scope  of  the  public  service  contract  with  a  view  to 
achieving the objectives defined in the public transport plans. They must apply criteria based 
on general Treaty principles such as appropriateness, necessity and proportionality, as well as 
economic  criteria  such  as  cost-effectiveness  and  financial  sustainability.  This  Article  also 
requires the competent authority to ensure appropriate consultation of interested parties, e.g. 
passenger  and  employee  organisations  and  transport  operators.  For  rail  transport,  it  requires 
independent rail regulatory bodies to ensure legal review of the procedure. In addition, it sets 
a threshold for the maximum volume of passenger transport by rail under each public service 
contract, in a flexible manner, in order to ensure effective competition while taking account of 
the varying size and administrative structure of rail passenger markets in Member States. 

3.3 
Provision of operational, technical and financial information about passenger transport 
covered by a public service contract to be put out to tender (Article 4(6) and new Article 4(8)) 

This  new  provision  in  Article  4(8)  obliges  competent  authorities  to  provide  certain 
operational, technical and financial data to potential bidders for a public service  contract so 
that  they  can  make  a  well-informed  bid  and  hence  ensure  enhanced  competition.  The 
amendment of Article 4(6) clarifies that competent authorities have to clearly indicate in the 
tender  documents  whether  they  require  public  service  operators  to  comply  with  social 
standards or criteria. 

Upper limits for the direct award of small volume contracts and direct awards to small 

3.4 
or medium-sized enterprises (Article 5(4)) 

This provision introduces specific upper limits on the value of direct awards for small volume 
contracts for rail transport. The existing limits are geared to transport by bus and track-based 
transport  modes  other  than  rail.  The  proposed  limit  for  rail  follows  the  logic  of  permitting 
direct award if the cost of organising a tender procedure outweighs the expected benefits. The 
corresponding limit in terms of train-kilometres reflects the average unit cost of rail transport 
provision. 

3.5  Mandatory competitive award of rail contracts (Article 5(6) and Article 4) 

Deleting Article 5(6) denies competent authorities the option of deciding whether to award a 
public service contract for rail directly or based on a competitive tender. The general rule of 
competitive tendering will also apply to rail.  

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3.6 

Restrictions on award (new Articles 5(6)) 

In  order  to  enhance  competition  after  the  introduction  of  competitive  tendering  for  rail 
contracts,  this  provision  enables  competent  authorities  to  decide  that  contracts  for  rail 
passenger transport covering parts of the same network or package of routes will be awarded 
to different railway undertakings. To this end, the competent authorities may decide to limit 
the  number  of  contracts  to  be  awarded  to  the  same  railway  undertaking  following  a 
competitive tendering procedure. 

3.7 

Access to rail rolling stock (new Article 5a and new Article 9a) 

Introducing an obligation on Member States to ensure effective and non-discriminatory access 
to suitable rail rolling stock for operators wishing to provide public passenger services by rail 
addresses  a  major  barrier  to  effective  competition  for  public  service  contracts.  In  Member 
States  where  there  are  no  well-functioning  leasing  markets  for  rail  rolling  stock  it  is  up  to 
competent authorities to take measures to ensure access to rolling stock in order to open up 
the market. However, as the situation and needs may vary from country to country, the new 
provision  leaves  competent  authorities  broad  scope  to  choose  the  most  appropriate  ways  of 
achieving the objective, while indicating the most frequently used measures. The details of the 
procedure  and  measures  to  ensure  access  to  rolling  stock  shall  be  defined  in  implementing 
acts based on the examination procedure referred to in Article 9a of this Regulation. 

3.8 

Publication of certain information on public service contracts (Articles 7(1) and 7(2)) 

This  provision  obliges  competent  authorities  to  include  information  about  the  starting  date 
and duration of public service contracts in their annual reports on public service obligations as 
well  as  in  their  prior  information  notices  on  envisaged  tender  procedures.  This  additional 
information  and  the  obligation  on  Member  States  to  facilitate  access  to  the  annual  reports 
published  by  competent  authorities  will  increase  transparency  regarding  the  public  service 
contracts  awarded  and  likely  new  awards,  and  hence  help  transport  operators  prepare  for 
future tender procedures. 

3.9 

Transition period applied to competitive tendering (Article 8(2)) 

This provision makes it clear that the ten-year transitional period to 2 December 2019 applies 
only  to  Article  5(3)  on  the  obligation  on  competent  authorities  to  organise  a  competitive 
tendering procedure. All other provisions of Article 5 (e.g. on the option of making a direct 
award to an internal operator, for a small-volume contract or as an emergency measure, and 
legal review of the award decision) are immediately applicable. 

3.10  Transition period for existing directly awarded rail contracts (new Article 8(2a)) 

This provision introduces an additional transitional period for public service rail contracts that 
are  directly  awarded  between  1  January  2013  and  2  December  2019.  Those  contracts  may 
remain in  place until they  expire  but only up to 31 December 2022 at the latest. This gives 
those railway undertakings that have been directly awarded a public service contract sufficient 
time to adapt and prepare for competitive tendering procedures. 

3.11  Adaptions of provisions of Regulation 1370/2007 related to the exemption of state aid 
notification and the conditions of state aid compatibility due to Treaty requirements 

In its proposed draft amendments to Regulation (EC) No 994/98 (Enabling Regulation)6, the 
Commission  proposed  also  an  amendment  of  Regulation  (EC)  No  1370/2007  bringing,  in 

6  

Proposal  for  a  COUNCIL  REGULATION  amending  Council  Regulation  (EC)  No  994/98  of  7  May 
1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to 

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accordance with the procedures foreseen in Articles 108(4) and 109 of the Treaty, aid for the 
coordination of transport or reimbursement for the discharge of certain obligations inherent in 
the concept of a public service as referred to in Article 93 of the Treaty under the scope of the 
Enabling  Regulation.  The  Commission  currently  expects  a  consequential,  future  block 
exemption  Regulation  to  reproduce  the  substance  of  the  current  exemption,  except  to  the 
extent that Regulation 1370/2007 is amended by this legislative proposal relating to the rail 
sector.

certain  categories  of  horizontal  State  aid  and  Regulation  (EC)  No  1370/2007  of  the  European 
Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by 
road, COM(2012) 730 final of 5.12.2012 

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2013/0028 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

amending Regulation (EC) No 1370/2007 concerning the opening of the market for 
domestic passenger transport services by rail 

(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 
Article 91 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 Committee7,  
Having regard to the opinion of the Committee of the Regions8,  

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

Over the past decade, the growth of passenger traffic by rail has been insufficient to 
increase  its  modal  share  in  comparison  to cars  and  aviation.  The  6%  modal  share  of 
passenger  transport  for  rail  in  the  European  Union  has  remained  fairly  stable.  Rail 
passenger services have not kept pace with evolving needs in terms of availability and 
quality. 

The  Union  market  for  international  passenger  transport  services  by  rail  has  been 
opened to competition since 2010. In addition, some Member States have opened their 
domestic  passenger  services  to  competition,  by  introducing  open  access  rights  or 
tendering for public service contracts or both. 
In its White Paper on transport policy of 28 March 20119 the Commission announced 
its intention to complete the internal railway market, allowing railway undertakings of 
the Union to provide all types of rail transport services without unnecessary technical 
and administrative barriers.  

(4)  When  competent  authorities  organise  their  public  passenger  transport  services  they 
need  to  ensure  that  public  service  obligations  and  the  geographical  scope  of  public 
service contracts are appropriate, necessary and proportionate to achieve the objectives 
of the public passenger transport policy in their territory. This policy should be set out 
in  public  transport  plans  leaving  scope  for  market  based  transport  solutions.  The 

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OJ C , , p. . 
OJ C , , p. . 
White  Paper :  Roadmap  to  a  Single  European  Transport  Area  –  Towards  a  competitive  and  resource 
efficient transport system ; COM(2011)144 

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(5) 

(6) 

(7) 

(8) 

(9) 

process  of  defining  public  transport  plans  and  public  service  obligations  should  be 
made transparent to relevant stakeholders including potential market entrants. 

To ensure sound financing to meet the objectives of public transport plans, competent 
authorities  need  to  design  public  service  obligations  to  attain  public  transport 
objectives  in  a  cost-effective  manner  taking  account  of  the  compensation  for  the  net 
financial  effect  of  those  obligations  and  they  need  to  ensure  long-term  financial 
sustainability of public transport provided under public service contracts. 

It  is  particularly  important  that  competent  authorities  comply  with  these  criteria  for 
public  service  obligations  and  the  scope  of  public  service  contracts  if  the  market  for 
public  passenger  transport  by  rail  is  to  run  smoothly,  because  open  access  transport 
operations  need  to  be  well  coordinated  with  those  under  public  service  contract.  For 
this  reason,  the  independent  rail  regulatory  body  should  ensure  that  this  process  is 
correctly applied and transparent. 

A maximum annual volume of a public service contract for passenger transport by rail 
needs to be set to facilitate competition for such contracts while allowing competent 
authorities  some  flexibility  to  optimise  the  volume  according  to  economic  and 
operational considerations. 

To  facilitate  the  preparation  of  tenders,  and  hence  enhance  competition  competent 
authorities need to ensure that all public service operators interested in making such a 
submission  receive  certain  information  on  the  transport  services  and  infrastructure 
covered by the public service contract. 

Certain upper limits for the direct award of public service contracts need to be adapted 
for  rail  transport  to  the  specific  economic  conditions  under  which  tender  procedures 
take place in this sector. 

(10)  The  establishment  of  an  Internal  Market  for  passenger  transport  services  by  rail 
requires  common  rules  on  competitive  tendering  for  public  service  contracts  in  this 
sector to be applied in a harmonised manner in all Member States. 

(11) 

In view of creating framework conditions for enabling society to fully reap the benefits 
of effective opening of the market for domestic passenger transport services by rail it 
is important that Member States ensure an adequate level of social protection for the 
staff of public service operators. 

(12)  Where the market does not ensure it under suitable economic and non-discriminatory 
conditions, public service operators' access to rail rolling stock needs to be facilitated 
by competent authorities through adequate and effective measures. 

(13)  Certain key features of upcoming tender procedures for public service contracts need 

to be fully transparent to enable a better organised market response. 

(14)  Consistent with the internal logic of Regulation (EC) No 1370/2007, it should be made 
clear that the transitional period until 2 December 2019 refers only to the obligation to 
organise competitive tendering procedures for public service contracts. 

(15)  Preparing railway undertakings for mandatory competitive tendering for public service 
contracts  requires  some  extra  time  to  allow  effective  and  sustainable  internal 
restructuring of companies to which such contracts were directly awarded in the past. 
Transitional measures are therefore necessary for contracts directly awarded between 
the date of entry into force of this Regulation and 3 December 2019. 

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(16)  Once  opening  of  the  market  for  domestic  passenger  transport  services  by  rail  is 
achieved, as competent authorities may need to take measures to ensure a high level of 
competition  by  limiting  the  number  of  contracts  that  it  awards  to  one  railway 
undertaking, adequate provisions should be provided for. 

(17) 

(18) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  Article  5a  of  this 
Regulation,  implementing  powers  should  be  conferred  on  the  Commission.  Those 
powers should be exercised in accordance with Regulation (EU) No 182/2011 of the 
European  Parliament  and  of  the  Council  of  16  February  2011  laying  down  the  rules 
and general principles concerning mechanisms for control by the Member States of the 
Commission's exercise of implementing powers10. 

In  the  context  of  amendments  to  the  Regulation  (EC)  No  994/98  (Enabling 
Regulation)11,  the  Commission  proposed  also  an  amendment  of  Regulation  (EC)  No 
1370/2007  (COM(2012)  730/3).  In  order  to  harmonize  the  approach  to  block 
exemption regulations in the field of State aid and, in accordance with the procedures 
foreseen in Articles 108(4) and 109 of the Treaty, aid for the coordination of transport 
or reimbursement for the discharge of certain obligations inherent in the concept of a 
public  service  as  referred  to  in  Article  93  of the  Treaty  should  be  brought  under  the 
scope of the Enabling Regulation. 

(19) 

Regulation (EC) No 1370/2007 should therefore be amended accordingly,  

HAVE ADOPTED THIS REGULATION: 

Regulation (EC) No 1370/2007 is amended as follows: 

1. 

a) Point (c) of Article 2 is replaced by the following: 

Article 1 

"(c) "competent local authority" means any competent authority whose geographical 
area of competence is not national and which covers the transport needs of an urban 
agglomeration or a rural district;" 

b) Point (e) of Article 2 is complemented by the following: 

"The  scope  of  public  service  obligations  shall  exclude  all  public  transport  services 
that go beyond of what is necessary to reap local, regional or sub-national network 
effects.  

2. 

The following Article 2a is inserted: 

"Article 2a  

Public transport plans and public service obligations 

1. 

Competent  authorities  shall  establish  and  regularly  update  public  passenger 
transport plans covering all relevant transport modes for the territory for which 
they are responsible. These public transport plans shall define the objectives of 

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11  

OJ L 55, 28.2.2011, p. 13 
Proposal  for  a  COUNCIL  REGULATION  amending  Council  Regulation  (EC)  No  994/98  of  7  May 
1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to 
certain  categories  of  horizontal  State  aid  and  Regulation  (EC)  No  1370/2007  of  the  European 
Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by 
road, COM(2012) 730 final of 5.12.2012 

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public transport policy and the means to implement them covering all relevant 
transport modes for the territory for which they are responsible. They shall at 
least include: 

(a) 

the structure of the network or routes; 

(b)  basic  requirements  to  be  fulfilled  by  public  transport  offer  such  as 
accessibility,  territorial  connectivity,  security,  modal  and  intermodal 
interconnections  at  main  connecting  hubs,  offer  characteristics  such  as 
times  of  operation,  frequency  of  services  and  minimum  degree  of 
capacity utilisation;  

(c)  quality standards related to items such as equipment features of stops and 
of rolling stock, punctuality and reliability, cleanliness, customer service 
and  information,  complaint  handling  and  redress,  monitoring  of  service 
quality; 

(d)  principles of tariff policy; 

(e)  operational 

requirements  such  as 

transport  of  bicycles, 

traffic 

management, contingency plan in case of disturbances. 

In  establishing  public  transport  plans,  competent  authorities  shall  have  regard  in 
particular  to  applicable  rules  regarding  passenger  rights,  social,  employment  and 
environmental protection. 

The competent authorities shall adopt the public transport plans after consultation of 
relevant stakeholders and publish them. For the purpose of this Regulation, relevant 
stakeholders  to  be  taken  into  consideration  are  at  least  transport  operators, 
infrastructure  managers  if  appropriate,  and  representative  passenger  and  employee 
organisations. 

2. 

3. 

The establishment of public service obligations and the award of public service 
contracts shall be consistent with the applicable public transport plans.  

The specifications of public service obligations for public passenger transport 
and the scope of their application shall be established as follows: 

(a) 

(b) 

(c) 

they shall be defined in accordance with Article 2 (e); 

they shall be appropriate to achieve the objectives of the public transport 
plan;  

they shall not exceed what is necessary and proportionate to achieve the 
objectives of the public transport plan. 

The  assessment  of  appropriateness  referred  to  in  point  (b)  shall  take  into  account 
whether  a  public  intervention  in  the  provision  of  passenger  transport  is  a  suitable 
means of achieving the objectives of the public transport plans. 

For public passenger transport by rail the assessment of necessity and proportionality 
referred to in point (c) shall take into account the transport services provided under 
Article  10(2)  of  Directive  2012/34/EU  of  the  European  Parliament  and  of  the 
Council of 21 November 2012 establishing a single European railway area (recast)12 
and  consider  all  information  given  to  the  infrastructure  managers  and  regulatory 
bodies pursuant to the first sentence of Article 38(4) of that Directive. 

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4. 

The  specifications  of  public  service  obligations  and  the  related  compensation 
of the net financial effect of public service obligations shall: 

(a) 

(b) 

achieve  the  objectives  of  the  public  transport  plan  in  the  most  cost-
effective manner; 

financially  sustain  the  provision  of  public  passenger  transport  in 
accordance to the requirements laid down in the public transport plan in 
the long term. 

5.  When  preparing  the  specifications,  the  competent  authority  shall  set  out  the 
draft specifications of public service obligations and their scope, the basic steps 
of  the  assessment  of  their  compliance  with  the  requirements  laid  down  in 
paragraphs 2, 3 and 4, and the results of the assessment.  

The  competent  authority  shall  in  an  appropriate  manner  consult  relevant 
stakeholders such as a minimum, transport operators, infrastructure managers if 
appropriate and representative passenger and employee organisations on these 
specifications and take their positions into consideration. 

6. 

For public passenger transport by rail:  

(a) 

(b) 

compliance of the assessment and of the procedure set out in this Article 
shall be ensured by the regulatory body referred to in Art 55 of Directive 
2012/34/EU including on its own initiative.  

the  maximum  annual  volume  of  a  public  service  contract  in  terms  of 
train-km  shall  be  the  higher  value  of  either  10  million  train-km  or  one 
third  of  the  total  national  public  rail  passenger  transport  volume  under 
public service contract." 

3. 

Article 4 is amended as follows: 

(a) 

In paragraph 1, point (a) is replaced by the following: 

"(a) clearly define the public service obligations laid down in Article 2(e) and Article 
2a  with  which  the  public  service  operator  is  to  comply,  and  the  geographical  areas 
concerned;" 

(b)  The last sentence of paragraph 1, point (b) is replaced by the following: 

"In the case of public service contracts not awarded according to Article 5(3), these 
parameters  shall  be  determined  in  such  a  way  that  no  compensation  payment  may 
exceed  the  amount  required  to  cover  the  net  financial  effect  on  costs  incurred  and 
revenues  generated  in  discharging  the  public  service  obligations,  taking  account  of 
revenue relating thereto kept by the public service operator and a reasonable profit;" 

(c)  Paragraph 6 is replaced by the following: 

"Where  competent  authorities,  in  accordance  with  national  law,  require  public 
service  operators  to  comply  with  certain  quality  and  social  standards  or  establish 
social  and  qualitative  criteria,  these  standards  and  criteria  shall  be  included  in  the 
tender documents and in the public service contracts." 

(d)  The following paragraph 8 is added: 

"8.  Competent  authorities  shall  make  available  to  all  interested  parties  relevant 
information  for  the  preparation  of  an  offer  under  a  competitive  tender  procedure. 
This  shall  include  information  on  passenger  demand,  fares,  costs  and  revenues 
related  to  the  public  passenger  transport  covered  by  the  tender  and  details  of  the 

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infrastructure  specifications  relevant  for  the  operation  of  the  required  vehicles  or 
rolling stock to enable them to draft well informed business plans. Rail infrastructure 
managers shall support competent authorities in providing all relevant infrastructure 
specifications. Non-compliance with the provisions set out above shall be subject to 
the legal review provided for in Article 5(7)." 

4. 

Article 5 is amended as follows: 

(a)  Paragraph 4 is replaced by the following: 

"4. Unless prohibited by national law, the competent authorities may decide to award 
public service contracts directly:  

(a)  where  their  average  annual  value  is  estimated  at:  less  than  EUR  1  000 
000 or less than EUR 5 000 000 in the case of a public service contract 
including public transport by rail or, 

(b)  where they concern the annual provision of less than 300 000 kilometres 
of public passenger transport services or less than 150 000 kilometres in 
the case of a public service contract including public transport by rail. 

In the case of a public service contract directly awarded to a small or medium-sized 
enterprise  operating  not  more  than  23  road  vehicles,  these  thresholds  may  be 
increased to either an average annual value estimated at less than EUR 2 000 000 or 
to an annual provision of less than 600 000 kilometres of public passenger transport 
services." 

(b)  Paragraph 6 is replaced by the following: 

"Competent  authorities  may  decide  that,  in  order  to  increase  competition  between 
railway undertakings, contracts for public passenger transport by rail covering parts 
of  the  same  network  or  package  of  routes  shall  be  awarded  to  different  railway 
undertakings. To this end the competent authorities may decide before launching the 
tender procedure to limit the number of contracts to be awarded to the same railway 
undertaking." 

5. 

The following Article 5a is inserted: 

"Article 5a 

Rolling stock  

1.  Member  States  shall  in  compliance  with  State  aid  rules  take  the  necessary 
measures to ensure effective and non-discriminatory access to suitable rolling 
stock  for  public  passenger  transport  by  rail  for  operators  wishing  to  provide 
public passenger transport services by rail under public service contract. 

2.  Where rolling stock leasing companies which provide for the leasing of rolling 
stock  referred  to  in  paragraph  1  under  non-discriminatory  and  commercially 
viable  conditions  to  all  of  the  public  rail  passenger  transport  operators 
concerned do not exist in the relevant market, Member States shall ensure that 
the residual value risk of the rolling stock is borne by the competent authority 
in  compliance  with  State  aid  rules,  when  operators  intending  and  able  to 
participate  in  tendering  procedures  for  public  service  contracts  so  request  in 
order to be able to participate in tendering procedures.  

The competent authority may comply with the requirement set out in the first 
subparagraph in one of the following ways:  

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(a)  by acquiring itself the rolling stock used for the execution of the public 
service contract with a view to making it available to the selected public 
service operator at market price or as part of the public service contract 
pursuant to Article 4(1)(b), Article 6 and, if applicable, to the Annex,  

(b)  by  providing  a  guarantee  for  the  financing  of  the  rolling  stock  used  for 
the execution of the public service contract at market price or as part of 
the  public  service  contract  pursuant  to  Article  4(1)(b),  Article  6  and,  if 
applicable, to the Annex. Such a guarantee may cover the residual value 
risk while respecting the relevant state aid rules when applicable, 

(c)  by  committing  in  the  public  service  contract  to  take  over  of  the  rolling 

stock at the end of the contract at market price. 

In the cases referred to in points (b) and (c), the competent authority shall have 
the right to require the public service operator to transfer the rolling stock after 
the expiry of the public service contract to the new operator to whom a contract 
is  awarded.  The  competent  authority  may  oblige  the  new  public  transport 
operator  to  take  the  rolling  stock  over.  The  transfer  shall  be  done  at  market 
rates. 

If  the  rolling  stock  is  transferred  to  a  new  public  transport  operator  the 
competent  authority  shall  make  available  in  the  tender  documents  detailed 
information  about  the  cost  of  maintenance  of  the  rolling  stock  and  about  its 
physical condition.  

By  [18  months  after  the  date  of  entry  into  force  of  this  Regulation]  the 
Commission shall adopt measures setting out the details of the procedure to be 
followed  for  the  application  of  paragraphs  2  and  3  of  this  Article.  Those 
implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 9a(2)." 

3. 

4. 

6. 

In Article 6 paragraph 1 is replaced by the following: 

"1. All compensation connected with a general rule or a public service contract shall 
comply  with  Article  4,  irrespective  of  how  the  contract  was  awarded.  All 
compensation  of  whatever  nature  connected  with  a  public  service  contract  not 
awarded according to Article 5(3) or connected with a general rule shall also comply 
with the provisions laid down in the Annex. " 

7. 

Article 7 is amended as follows: 

(a)  Paragraph 1 is replaced by the following: 

"1. Each competent authority shall make public once a year an aggregated report on 
the  public  service  obligations  for  which  it  is  responsible,  the  starting  date  and 
duration of the public service contracts, the selected public service operators and the 
compensation  payments  and  exclusive  rights  granted  to  the  said  public  service 
operators  by  way  of  reimbursement.  The  report  shall  distinguish  between  bus 
transport  and  rail  transport,  allow  the  performance,  quality  and  financing  of  the 
public  transport  network  to  be  monitored  and  assessed  and,  if  appropriate,  provide 
information on the nature and extent of any exclusive rights granted. Member States 
shall  facilitate  central  access  to  these  reports,  for  instance  through  a  common  web 
portal." 

(b) 

In paragraph 2, the following point is added: 

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"(d) the envisaged starting date and duration of the public service contract." 

8. 

Article 8 is amended as follows: 

(a)  The first subparagraph of paragraph 2 is replaced by the following: 

"2.  Without  prejudice  to  paragraph  3,  the  award  of  public  service  contracts  by  rail 
with  the  exception  of  other  track-based  modes  such  as  metro  or  tramways  shall 
comply with Article 5(3) as from 3 December 2019. All public service contracts by 
other  track-based  modes  and  by  road  must  have  been  awarded  in  compliance  with 
Article 5(3) by 3 December 2019 at the latest. During the transitional period running 
until 3 December 2019, Member States shall take measures to gradually comply with 
Article  5(3)  in  order  to  avoid  serious  structural  problems  in  particular  relating  to 
transport capacity." 

(b)  The following paragraph 2a is inserted: 

"2a. Public service contracts for public passenger transport by rail directly awarded 
between 1 January 2013 and 2 December 2019 may continue until their expiry date. 
However they shall, in any event, not continue after 31 December 2022."  

(c) 

In paragraph 3, the last sentence of the second subparagraph is replaced by the 
following: 

"The contracts referred to in (d) may continue until they expire, provided they are of 
limited duration similar to the durations specified in Article 4."  

9. 

"The following Article 9a is inserted: 

Article 9a 

Committee procedure 

1. 

The  Commission  shall  be  assisted  by  the  Single  European  Railway  Area 
Committee established by Article 62 of Directive 2012/34/EU of the European 
parliament  and  of  the  Council  of  21  November  2012  establishing  a  single 
European railway area (recast)13. That committee shall be a committee within 
the meaning of Regulation (EU) No 182/2011. 

2.  Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 

182/2011 shall apply." 

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

Article 2 

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 

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