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 Directive of the European Parliament and of the Council amending Directive 2012/34/EU 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: 2016-10-24
Institutions: Directorate-General for Mobility and Transport, European Commission
Subjects: carriage of passengers, free competition, harmonisation of standards, liberalisation of the market, provision of services, rail transport, services contract, technical standard, trans-European network, transport safety

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   EUROPEAN COMMISSION  Brussels, 24.10.2016  COM(2016) 691 final 2013/0015 (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 Directive of the European Parliament and of the Council amending Directive 2012/34/EU 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 (Text with EEA relevance)  
 
 
2013/0015 (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 Directive of the European Parliament and of 
the Council amending Directive 2012/34/EU 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 

(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) 30 final — 2013/0015 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 a Directive of the European Parliament 
and of the Council amending Directive 2012/34/EU (‘the Governance Directive’) is to further 
develop the single European railway area by opening up domestic rail passenger markets to 
competition  and  to  create  a  level  playing  field  for  all  railway  undertakings.  Increased 
competition  is  expected  to  improve  the  quality  of  rail  services  and  to  enhance  their 
operational efficiency, thereby improving the competitiveness and attractiveness of rail vis-à-
vis other transport modes. 

To attain this objective, the Commission proposed new rules to strengthen the independence 
of  infrastructure  managers,  prevent  cross-subsidies  from  infrastructure  management  to 
railway operations and improve coordination between different actors in the railway market. 

This  Commission  proposal  is  closely  linked  to  the  proposal  to  amend  Regulation  (EC) 
No 1370/2007 concerning the opening of the market for domestic passenger transport services 
by rail. The objective of the proposed Regulation is to introduce the principle of mandatory 
competitive  tendering  for  public  service  contracts  and  improve  the  conditions  for  effective 
tenders, for example through improved access to rolling stock. 

3. 

COMMENTS ON THE COUNCIL POSITION 

The  position  adopted  by  the  Council  at  first  reading  on  17 October  2016  endorses  the  main 
objectives of the Commission proposal. In particular, it provides for the opening of domestic 
rail passenger markets to competition and for improved governance rules on the management 
of infrastructure. 

Although the Council position does not go as far as the Commission would have wished on a 
number  of  points,  it  is  a  meaningful  step  forward  compared  to  Directive  2012/34/EC  for  a 
number of reasons: 

 

 

The  Commission  proposed  more  stringent  separation  requirements  between 
infrastructure managers and other entities of vertically integrated undertakings. The 
Council  position  provides  greater  flexibility  of  structures,  and  in  particular  the 
possibility  to  maintain  (or  revert  to)  a  vertically  integrated  model.  While  the 
Commission considers that vertical separation remains the most straightforward way 
to  ensure  the  non-discriminatory  treatment  of  new  entrants,  it  appreciates  that  the 
Council  position  introduces  a  number  of  new  safeguards.  These  are  designed  to 
ensure the impartiality of infrastructure managers, which include notably limitations 
on double mandates and the avoidance of conflicts of interest. 

The  Commission  proposed  rules  designed  to  protect  all  infrastructure  management 
functions from undue influence. The Council position restricts the application of the 
most stringent rules to the essential functions. For example, capacity allocation and 
determination  and  collection  of  track  access  charges  that  are  critical  for  the  non-
discriminatory access to the infrastructure of new entrants. The Commission regrets 
that  the  opportunity  to  introduce  broader  and  stricter  safeguards  applying  to  all 
infrastructure  management  functions,  in  particular  as  regards  vertically  integrated 
undertakings,  was  missed.  However,  it  also  notes  that  new general  rules  have  been 
introduced  to  ensure  transparency  and  impartiality  also  in  traffic  management  and 
maintenance planning. The original concept of ‘fully fledged infrastructure manager’ 
handling  all  functions  at  the  heart  of  the  railway  network  was  not  taken  up  by  the 
Council.  Instead,  the  Council  opted  for  a  more  flexible  approach,  where  Member 
States are free to explore the possible benefits arising from outsourcing and public-

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private  partnerships  for  infrastructure  management.  Given  the  current  budgetary 
constraints,  and  regardless  of  their  structural  model,  Member  States  considered  it 
important to be able to harness the contribution of private capital and to provide for a 
legal  framework  that  allows  innovative  forms  of  infrastructure  management.  The 
Commission  can  accept  this  more  flexible  approach,  in  the  light  of  the  provisions 
introduced  to  ensure  that  conflicts  of  interests  are  avoided  and  that  infrastructure 
managers  bear  full  responsibility  and  dispose  of  powers  of  supervision  over  any 
outsourced  functions.  The  changes  introduced  by  the  Council  have  altered  certain 
substantive elements of the framework proposed by the Commission. However, the 
Commission  considers  that  the  objective  of  impartial  and  effective  infrastructure 
management can still be met with the Council position, in particular in the light of a 
set of new provisions which constitute significant progress over the status quo. 

The Council position confirms stringent financial transparency rules. The provisions 
on  accounting  separation,  coupled  with  the  new  rules  on  intra-group  loans  and 
services,  use  of  infrastructure  managers’  dividends  and  full  regulatory  oversight  of 
financial  flows  within  vertically  integrated  undertakings  will  ensure  that  neither 
infrastructure charges nor public funds can be diverted from their destination in order 
to cross-subsidise activities carried out in competition with other undertakings. This 
will help create a level playing field. 

It  is  crucial  that  the  Council  position  also  requires  mandatory  cooperation  between 
infrastructure  managers  at  European  level  as  well  as  with  their  users.  This 
cooperation  is  expected  to  improve  infrastructure  managers’  performance  and 
customer orientation. 

The further reinforcement of regulatory  bodies’ powers  are another crucial  element 
of  the  package.  The  new  rules  will  allow  for  effective  enforcement  by  national 
regulatory bodies and the Commission. 

 

 

 

4. 

CONCLUSION 

While  the  Council  position  falls  short  of  the  wide-ranging  amendment  of  the  legislative 
framework proposed by the Commission in 2013, the amended proposal remains of overriding 
importance  to  further  develop  the  single  European  railway  area  without  further  delay  by 
ensuring that the remaining national monopolies on domestic passenger transport by rail are 
dismantled. The proposed rules will clarify and improve the legislative framework. They will 
create more favourable conditions for competition to flourish and for discriminatory practices 
to be prevented or redressed. 

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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