COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to Article 294(6) of the Treaty on the Functioning of the European Union concerning the position of the Council on the adoption of a Regulation amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail
Date: 2016-10-24
Institutions: Directorate-General for Mobility and Transport, European Commission
Subjects: award of contract, carriage of passengers, invitation to tender, means of public conveyance, national transport, rail transport

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   EUROPEAN COMMISSION  Brussels, 24.10.2016  COM(2016) 689 final 2013/0028 (COD)   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT  pursuant to Article 294(6) of the Treaty on the Functioning of the European Union  concerning the position of the Council on the adoption of a Regulation amending Regulation (EC) No 1370/2007 concerning the opening of the market for domestic passenger transport services by rail (Text with EEA relevance)  
 
 
2013/0028 (COD) 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT 

pursuant to Article 294(6) of the Treaty on the Functioning of the European Union 

concerning the 

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

(Text with EEA relevance) 

1. 

BACKGROUND 

On  30  January  2013,  the  Commission  adopted  a  comprehensive  package  of  six  legislative 
proposals to deliver better quality and more choice in rail services in Europe. 

Improvements  in  service  quality  and  efficiency  are  needed  to  make  rail  a  more  attractive 
choice for passengers and to encourage modal shift. Better value for money and sustainability 
can be achieved for scarce public funds. 

The package also aims to encourage innovation in EU railways to meet user expectations. It 
does this in three different and interrelated ways by: 

(1) 

(2) 

(3) 

opening domestic passenger markets to competition and making tendering for public 
service contracts compulsory; 

strengthening the independence of infrastructure managers so that they control all the 
core functions of the rail network and ensuring fair access for all to the railway; 

strengthening the role of the EU Agency for Railways by making it a ‘one stop shop’ 
for issuing EU-wide vehicle authorisations for placing them on the market and EU-
wide safety certificates for operators. 

Date the proposal was sent to the European Parliament and to the 
Council 
(document COM(2013) 28 final — 2013/0028 COD): 

31 January 2013 

Date  of  the  opinion  of  the  European  Economic  and  Social 
Committee:  

11 July 2013 

Date of the opinion of the Committee of Regions:  

8 October 2013 

Date of the position of the European Parliament, first reading:  

26 February 2014 

Date of adoption of the position of the Council: 

17 October 2016 

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2. 

OBJECTIVE OF THE COMMISSION PROPOSAL 

The  general  objective  of  the  Commission  proposal  for  an  amendment  of  Regulation  (EC) 
1370/2007 is to improve the quality of rail passenger services and to enhance their operational 
efficiency. This should improve the competitiveness and attractiveness of rail vis-à-vis other 
modes of transport and develop further the single European railway area. 

To attain the general objective, the Commission proposed to introduce mandatory competitive 
tendering  for  public  service  contracts  to  intensify  competitive  pressure  on  domestic  rail 
markets.  The  aim  is  to  enhance  the  efficiency  and  to  improve  the  quality  of  rail  passenger 
services.  These  measures  are  accompanied  by  provisions  to  ensure  favourable  framework 
conditions for competitive tendering procedures, including rules on the access to rolling stock. 

The  Commission  proposal  is  closely  linked  to  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) introducing open access rights for railway 
undertakings  and  strengthening  provisions  concerning  the  governance  of  infrastructure 
management in view of enhancing non-discriminatory access to the rail infrastructure. 

3. 

COMMENTS ON THE COUNCIL POSITION 

The  position  at  first  reading  adopted  by  the  Council  on  17 October  2016  supports  the  main 
objectives  of  the  Commission  proposal  of  improving  the  quality  and  efficiency  of  public 
transport  services  by  rail  through  introducing  the  principle  of  mandatory  competitive 
tendering of public service contracts in rail. It equally supports proposed provisions ensuring 
favourable framework conditions for competitive tendering procedures.  

Although the Council position does not go as far as the Commission would have wished on a 
number of points, it should be pointed out that it is a meaningful step forward compared to the 
current Regulation (EC) No 1370/2007 for a number of reasons: 

 

 

The Commission proposed to align award rules for all modes of transport covered by 
the  Regulation  and  to  introduce  the  principle  of  mandatory  competitive  award  for 
public  service  contracts  in  rail.  The  Council  position  upholds  the  Commission's 
proposal as it introduces mandatory tendering of public service contracts in rail as a 
general  principle  by  eliminating  the  possibility  to  directly  award  the  public  service 
contract  in  rail  without  any  further  justification.  Even  though  it  allows  for  several 
exemptions, these exemptions are restrictive, precise and objectively formulated and 
contain  some  safeguards  to  prevent  an  abusive  circumvention  of  the  principle  of 
competitive award. Moreover, the text ensures that when directly awarded contracts 
are  awarded  under  the  exemption  linked  to  specific  market  structures,  the  public 
service  contracts  will  have  to  pursue  the  objectives  of  the  proposal,  i.e.  the 
improvement  of  quality  and  efficiency  of  public  transport  services  by  rail.  In  this 
respect the Council position follows the objective of the Commission to improve the 
quality of rail passenger services and to enhance their operational efficiency. 

The  Commission  proposed  more  stringent  rules  on  the  definition  of  public  service 
obligations  (PSOs).  They  aimed  at  requiring  competent  authorities  to  draw  up 
detailed  public transport plans defining  the objectives of public  passenger transport 
policy. Competent authorities were required, based on a set of criteria, to justify the 
kind and extent of PSOs 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.  The  Council  position  does  not  go  as  far  as  the 
Commission  proposal,  however,  the  Commission  recognises  that  it  still  contains 

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 

 

 

 

 

 

clearer rules on the definition and specifications of PSOs. The text also sets general 
criteria for competent authorities when defining PSOs, while allowing for flexibility 
when required.  

The  Council  position  also  ensures  the  fair  and  transparent  provision  of  relevant 
information  to  all  bidders,  which  safeguards  equal  treatment  during  the  tendering 
procedure. This new provision is in line with the Commission's proposal. 

The Commission introduced  specific upper limits on the value of direct awards for 
small volume contracts for rail transport. The Council position sets these upper limits 
higher. However the Commission considers that they still correctly reflect the logic 
of permitting direct awards if the cost of organising a tender procedure outweighs the 
expected benefits. 

The  Commission  proposed  the  obligation  for  competent  authorities  to  ensure  that 
non-discriminatory access to rolling stock is guaranteed since this is one of the main 
obstacles  for  railway  undertakings  to  participate  in  tendering  procedures.  The 
Council position does not introduce this obligation as it could have an adverse effect 
on the public finances. However, it sets up an obligation for competent authorities to 
assess in view of a competitive award procedure whether measures are necessary in 
order  to  ensure  non-discriminatory  access  to  rail  rolling  stock  and  to  publish  this 
assessment.  The  Council  position  also  offers  a  toolbox  of  measures  that  the 
competent authorities can use to ensure access by operators to the rolling stock. The 
Commission  acknowledges  that,  with  the  obligation  to  make  future  assessments  on 
access to rolling stock public, the Council position introduces an important basis for 
operators and the Commission to check whether the tendering procedures ensured an 
equal treatment of all operators. 

The Council position upholds relevant European Union and national social standards 
that must be respected when there is a change of public service operator executing a 
public  service  contract.  The  Commission  can  support  these  provisions  as  they  will 
clarify the existing applicable social rights and obligations.   

The Commission proposed swift entry into application of the principle of mandatory 
competitive  award.  The  Council  position  introduces  a  longer  transition  period 
postponing  the  deletion  of  the  possibility  of  unconditional  direct  awards.  The 
outcome is that the application of the principle of mandatory competitive tendering 
of public service contracts in rail will apply six years after the entry into force of the 
new Regulation. This postponement will delay the beneficial effects of the new rules, 
however  it  will  also  allow  Member  States  to  prepare  the  market  for  these  changes 
and thus avoid any structural problems that could arise. 

The Commission proposed that direclty awarded contracts based on the exception for 
rail  transport  should  expire  at  the  latest  by  31  December  2022.  The  Commission 
regrets that the Council position allows these contracts to run until their expiry. That 
will mean that public service contracts for rail directly awarded before the end of the 
transition  period  could  continue  until  December  2032,  which  is  a  long  transition 
period.  However,  at the same  time  the  Commission  notes  that  the  Council  position 
guarantees the protection of existing contractual rights and introduces safeguards for 
their legal continuity. 

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4. 

CONCLUSION 

The  Commission  considers  that  despite  the  shortcomings  of  the  Council  position,  the 
introduction of new and clearer provisions described above will provide more legal certainty. 
It will also constitute a solid basis for future enforcement of rail market opening under both 
transport policy rules and relevant competition rules. 

The  Commission  considers  that  amending  the  legislation  on  the  PSOs  in  transport  by  rail, 
introducing the principle of competitive award of rail public service contracts, and provisions 
on favourable framework conditions for such awards are an essential step towards improving 
the  quality  and  efficiency  of  public  transport  services  by  rail  in  the  EU.  Wider  use  of 
competitive tendering for rail contracts could also ensure better value for public money spent 
on public transport services. 

In a spirit of compromise, the Commission accepts the position adopted by the Council thus 
allowing  the  European  Parliament  to  adopt  the  final  text  in  a  second  reading.  Indeed,  the 
Commission considers that adopting both the market and technical pillars would maximise the 
benefits  in  terms  of  the  quality  of  service,  efficiency  and  the  competitiveness  of  the  rail 
transport industry. 

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