CELEX: 62010CC0473
Language: en
Date: 2012-09-06 00:00:00
Title: Opinion of Mr Advocate General Jääskinen delivered on 6 September 2012. # European Commission v Hungary. # Failure of a Member State to fulfil obligations - Development of the Community’s railways - Allocation of railway infrastructure capacity - Levying of charges for the use of railway infrastructure - Directives 91/440/EEC and 2001/14/EC - Incomplete transposition. # Case C-473/10.

OPINION OF ADVOCATE GENERAL
      JÄÄSKINEN
      delivered on 6 September 2012 (
            1
         )
      Case C-473/10
      European Commission
      v
      
         Hungary
      
      ‛Action for failure to fulfil obligations — Directive 91/440/EEC — Development of the Community’s railways — Directive 2001/14/EC — Allocation of railway infrastructure capacity — Article 6(3) of, and Annex II to, Directive 91/440 — Article 4(2) and Article 14(2) of Directive 2001/14 — Infrastructure manager — Independence in the allocation of train paths — Independence in charging — Article 6(1) of Directive 2001/14 — Financial equilibrium of the infrastructure manager and incentives to reduce costs and charges — Article 7(3) of Directive 2001/14 — Establishment of charges on the basis of direct costs’
      I – Introduction
      
      
               1.
            
            
               By the present action, the European Commission seeks a declaration from the Court that Hungary has failed to fulfil its obligations under Article 6(3) of, and Annex II to, Council Directive 91/440/EEC, (
                     2
                  ) as amended by Directive 2001/12/EC, (
                     3
                  ) (‘Directive 91/440’), and Article 4(2) and Article 14(2), Article 6(1) and (2), Article 7(3), Article 8(1) and Article 11 of Directive 2001/14/EC, (
                     4
                  ) as amended by Directive 2004/49/EC (
                     5
                  ) (‘Directive 2001/14’). Hungary contends that the Commission’s action should be dismissed.
            
         
               2.
            
            
               This action is one in a series of infringement proceedings, (
                     6
                  ) brought by the Commission in 2010 and 2011, concerning the application by Member States of Directives 91/440 and 2001/14, in particular with regard to equitable and non-discriminatory access for railway undertakings to infrastructure, that is to say, the rail network. Those actions break new ground since they provide the Court with its first opportunity to rule on the liberalisation of railways within the European Union and, inter alia, to interpret what is known as ‘the first railway package’.
            
         II – Legal framework
      
      A – European Union law
      
      
               3.
            
            
               Article 6(3) of Directive 91/440 provides:
               ‘Member States shall take the measures necessary to ensure that the functions determining equitable and non-discriminatory access to infrastructure, listed in Annex II, are entrusted to bodies or firms that do not themselves provide any rail transport services. Regardless of the organisational structures, this objective must be shown to have been achieved.
               Member States may, however, assign to railway undertakings or any other body the collecting of the charges and the responsibility for managing the railway infrastructure, such as investment, maintenance and funding.’
            
         
               4.
            
            
               The list of essential functions referred to in Article 6(3), given in Annex II to Directive 91/440 reads as follows:
               
                        ‘–
                     
                     
                        preparation and decision making related to the licensing of railway undertakings including granting of individual licenses,
                     
                  
                        –
                     
                     
                        decision making related to the path allocation including both the definition and the assessment of availability and the allocation of individual train paths,
                     
                  
                        –
                     
                     
                        decision making related to infrastructure charging,
                     
                  
                        –
                     
                     
                        monitoring observance of public service obligations required in the provision of certain services.’
                     
                  
         
               5.
            
            
               According to the definitions given in Article 2 of Directive 2001/14, for the purpose of that directive:
               
                        ‘(a)
                     
                     
                        “allocation” means the allocation of railway infrastructure capacity by an infrastructure manager;
                     
                  …
               
                        (g)
                     
                     
                        “infrastructure capacity” means the potential to schedule train paths requested for an element of infrastructure for a certain period;
                     
                  
                        (h)
                     
                     
                        “infrastructure manager” means any body or undertaking that is responsible in particular for establishing and maintaining railway infrastructure. This may also include the management of infrastructure control and safety systems. The functions of the infrastructure manager on a network or part of a network may be allocated to different bodies or undertakings;
                     
                  
                        (i)
                     
                     
                        “network” means the entire railway infrastructure owned and/or managed by an infrastructure manager;
                     
                  …
               
                        (k)
                     
                     
                        “railway undertaking” means any public or private undertaking, licensed according to applicable Community legislation, the principal business of which is to provide services for the transport of goods and/or passengers by rail with a requirement that the undertaking must ensure traction;
                     
                  
                        (l)
                     
                     
                        “train path” means the infrastructure capacity needed to run a train between two places over a given time-period;
                     
                  
                        (m)
                     
                     
                        “working timetable” means the data defining all planned train and rolling-stock movements which will take place on the relevant infrastructure during the period for which it is in force.’
                     
                  
         
               6.
            
            
               Article 4(1) and (2) of Directive 2001/14 provides:
               ‘1.   … The determination of the charge for the use of infrastructure and the collection of this charge shall be performed by the infrastructure manager.
               2.   Where the infrastructure manager, in its legal form, organisation or decision-making functions, is not independent of any railway undertaking, the functions, described in this chapter, other than collecting the charges shall be performed by a charging body that is independent in its legal form, organisation and decision-making from any railway undertaking.’
            
         
               7.
            
            
               Article 5(1) of Directive 2001/14 is worded as follows:
               ‘Railway undertakings shall, on a non-discriminatory basis, be entitled to the minimum access package and track access to service facilities that are described in Annex II. The supply of services referred to in Annex II, point 2, shall be provided in a non-discriminatory manner and requests by railway undertakings may only be rejected if viable alternatives under market conditions exist. If the services are not offered by one infrastructure manager, the provider of the “main infrastructure” shall use all reasonable endeavours to facilitate the provision of these services.’
            
         
               8.
            
            
               Under Article 6 of Directive 2001/14:
               ‘1.   Member States shall lay down conditions, including where appropriate advance payments, to ensure that, under normal business conditions and over a reasonable time period, the accounts of an infrastructure manager shall at least balance income from infrastructure charges, surpluses from other commercial activities and State funding on the one hand, and infrastructure expenditure on the other.
               …
               2.   Infrastructure managers shall, with due regard to safety and to maintaining and improving the quality of the infrastructure service, be provided with incentives to reduce the costs of provision of infrastructure and the level of access charges.
               3.   Member States shall ensure that the provision set out in paragraph 2 is implemented, either through a contractual agreement between the competent authority and infrastructure manager covering a period of not less than three years which provides for State funding or through the establishment of appropriate regulatory measures with adequate powers.’
            
         
               9.
            
            
               Article 7(3) of Directive 2001/14 is worded as follows:
               ‘Without prejudice to paragraphs 4 or 5 or to Article 8, the charges for the minimum access package and track access to service facilities shall be set at the cost that is directly incurred as a result of operating the train service.’
            
         
               10.
            
            
               Article 8(1) of Directive 2001/14 provides:
               ‘In order to obtain full recovery of the costs incurred by the infrastructure manager a Member State may, if the market can bear this, levy mark-ups on the basis of efficient, transparent and non-discriminatory principles, while guaranteeing optimum competitiveness in particular of international rail freight. The charging system shall respect the productivity increases achieved by railway undertakings.
               The level of charges must not, however, exclude the use of infrastructure by market segments which can pay at least the cost that is directly incurred as a result of operating the railway service, plus a rate of return which the market can bear.’
            
         
               11.
            
            
               The first subparagraph of Article 13(2) of Directive 2001/14 provides:
               ‘The right to use specific infrastructure capacity in the form of a train path may be granted to applicants for a maximum duration of one working timetable period.’
            
         
               12.
            
            
               Article 14(1) and (2) of Directive 2001/14 provides:
               ‘… The infrastructure manager shall perform the capacity allocation processes …
               Where the infrastructure manager, in its legal form, organisation or decision-making functions is not independent of any railway undertaking, the functions referred to in paragraph 1 and described in this chapter shall be performed by an allocation body that is independent in its legal form, organisation and decision-making from any railway undertaking.’
            
         
               13.
            
            
               Under Article 29 of Directive 2001/14:
               ‘1.   In the event of disturbance to train movements caused by technical failure or accident the infrastructure manager must take all necessary steps to restore the normal situation. To that end he shall draw up a contingency plan listing the various public bodies to be informed in the event of serious incidents or serious disturbance to train movements.
               2.   In an emergency and where absolutely necessary on account of a breakdown making the infrastructure temporarily unusable, the paths allocated may be withdrawn without warning for as long as is necessary to repair the system.
               The infrastructure manager may, if he deems it necessary, require railway undertakings to make available to him the resources which he feels are the most appropriate to restore the normal situation as soon as possible.
               3.   Member States may require railway undertakings to be involved in assuring the enforcement and monitoring of their own compliance of the safety standards and rules.’
            
         
               14.
            
            
               Point 1 of Annex II to Directive 2001/14 reads as follows:
               
                        ‘1.
                     
                     
                        The minimum access package shall comprise:
                        
                                 (a)
                              
                              
                                 handling of requests for infrastructure capacity;
                              
                           
                                 (b)
                              
                              
                                 the right to utilise capacity which is granted;
                              
                           
                                 (c)
                              
                              
                                 use of running track points and junctions;
                              
                           
                                 (d)
                              
                              
                                 train control including signalling, regulation, dispatching and the communication and provision of information on train movement;
                              
                           
                                 (e)
                              
                              
                                 all other information required to implement or operate the service for which capacity has been granted.’
                              
                           
                  
         B – National law
      
      
               15.
            
            
               In 2004, Law XCV. of 1993 on Railways established a body independent of any railway undertaking, the Vasúti Pályakapacitás-elosztó Szervezet (‘the VPE’).
            
         
               16.
            
            
               Under Article 62 of Law CLXXXIII. of 2005 on Rail Transport (2005 évi CLXXXIII. törvény a vasúti közlekedésről (
                     7
                  ), ‘the Railways Law’), the functions of train path allocation and establishment of charges are assigned to the VPE.
            
         
               17.
            
            
               Article 28(1) of the Railways Law reads as follows:
               ‘On behalf of the State, the Minister shall, with the agreement of the Minister responsible for the budget, undertake in a contractual agreement to fund all expenditure recognised as justified, incurred in the management of the network by the railway undertaking responsible for management of the national rail network and its appurtenances, and of the regional railways and their appurtenances, that are not covered by the network access charge or by that undertaking’s other operations. The terms of that contractual agreement must be such that they provide an incentive for the network manager to reduce its management costs and network access charges without thereby jeopardising transport safety or the quality of the service.’
            
         
               18.
            
            
               Article 31(2)(b) of that law provides that ‘in the interests of the safety of rail traffic …, where a dangerous situation arises, until it is resolved, the infrastructure manager shall have the right to close the tracks or sections of track threatened by the danger and to withdraw the train paths allocated on the sections concerned and, where such closure affects a level crossing, shall inform the administration responsible for the route concerned, …’.
            
         
               19.
            
            
               Article 55(8) of the Railways Law provides:
               ‘Where it is anticipated that network access charges will not cover all the justified costs and expenditure of the manager of freely accessible infrastructure, the charge for the services described in Article 54(1) and (3) to (5) may be subject to an overall mark-up in an amount not exceeding that needed to cover all the justified costs and expenditure, which shall take into account productivity increases achieved by railway undertakings, the requirement for efficient use of infrastructure, competitiveness in international rail transit, the principle of transparency and equal treatment.’
            
         
               20.
            
            
               Regulation No 83/2007 (X.6) GKM-PM concerns the framework of the charging scheme for access to railway infrastructure and the fundamental rules for establishing the charge for access to infrastructure. (
                     8
                  )
            
         
               21.
            
            
               Article 23(1) of Regulation No 101/2007 (XII.22) GKM on the detailed rules for access to railway infrastructure (
                     9
                  ) provides:
               ‘Where an infrastructure manager has withdrawn a train path under Article 31(2)(b) of the Railways Law, the body responsible for allocating capacity shall, at the request of the operator concerned, offer that operator another train path from the capacity available.’
            
         
               22.
            
            
               Each year the VPE publishes network operating rules (Hálózati Üzletszabályzat). Point 4.3(9) of Network Operating Rules 2009-2010 provides:
               ‘[The VPE] shall inform the operators concerned, the infrastructure managers and the railway management body of its decisions allocating infrastructure capacity.’
            
         
               23.
            
            
               In point 4.8.1, entitled ‘Guidelines for restoring normal operation’, those rules provide:
               
                        ‘(a)
                     
                     
                        In the event of a departure from the normal schedule and timetable, the operational services directorate of the infrastructure manager shall take appropriate steps to end the disturbance and restore operation according to the schedule and timetable. …
                     
                  
                        (b)
                     
                     
                        Operators granted access to the rail network must have available at all times a contact person authorised to take decisions, or their own governing body, which the governing body of the infrastructure manager shall be required to notify in the event of disruption or danger, and their needs are to be taken into account when normal operating conditions are restored.
                     
                  
                        (c)
                     
                     
                        Force majeure and other extraordinary and unforeseen circumstances:
                        
                                 —
                              
                              
                                 The infrastructure manager shall be required, in the event of disruption to rail traffic caused by technical failure or an accident, to do everything in its power to restore normal operating conditions. To that end, it must draw up a contingency plan, which shall include a list of the bodies to be notified in the event of a serious accident or serious disturbance to rail traffic.
                              
                           
                                 —
                              
                              
                                 At the request of the network manager, a beneficiary of access to the rail network shall be required, in exchange for payment, to make available what are deemed be the most appropriate resources to bring about prompt restoration of normal operating conditions.
                              
                           
                                 —
                              
                              
                                 The infrastructure manager may, in the event of danger rendering the rail network temporarily unusable and provided it notifies all parties concerned, withdraw allocated train paths for the period of time needed in order to restore the situation to normal. At the request of the operator concerned, [the VPE] shall offer it, for that period of time, another train path from the capacity available.’
                              
                           
                  
         III – Pre-litigation procedure and procedure before the Court
      
      
               24.
            
            
               By letter of 26 January 2008, the Commission gave Hungary formal notice to submit to it its observations regarding failure to fulfil its obligations under Article 6(3) of, and Annex II to, Directive 91/440, and Articles 4(2) and 14(2) of Directive 2001/14, or its obligations under Articles 3, 6(1), 6(2) to (5), 7(3), 8, 11 and 30(3) of that directive. By letter of 22 August 2008, Hungary responded to that letter of formal notice. Hungary’s first letter was supplemented by further letters, including that of 10 June 2009.
            
         
               25.
            
            
               By letter of 8 October 2009, the Commission sent a reasoned opinion, in which it stated that Hungary had failed to fulfil its obligations under Article 6(3) of, and Annex II to, Directive 91/440, and Article 4(2) and Article 14(2) of Directive 2001/14, or its obligations under Articles 3, 6(1), 6(2) to (5), 7(3), 8, 11 and 30(3) of that directive. The Commission requested Hungary to take the measures necessary to comply with the reasoned opinion within two months of its notification. By letter of 16 December 2009, Hungary responded to the reasoned opinion and disputed the failure alleged by the Commission.
            
         
               26.
            
            
               Not being satisfied with Hungary’s reply, the Commission decided to bring the present action, which was lodged at the Court on 29 September 2010.
            
         
               27.
            
            
               By order of the President of the Court of 15 February 2011, the Czech Republic, the Republic of Latvia and the Republic of Poland were given leave to intervene in support of the form of order sought by Hungary. By order of the President of the Court of 4 April 2011, the Italian Republic was given leave to intervene in support of the form of order sought by Hungary, under Article 93(7) of the Rules of Procedure.
            
         
               28.
            
            
               By document lodged at the Court Registry on 6 June 2012, the Commission stated that it was withdrawing the sixth complaint of its action, based on Article 11(1) of Directive 2001/14, concerning the establishment of a scheme to improve the performance of the railway network.
            
         
               29.
            
            
               The Commission, Hungary, the Italian Republic and the Republic of Poland were represented at the hearing which took place on 23 May 2012.
            
         IV – The pleas and arguments of the parties
      
      A – The first complaint: independence in the allocation of train paths
      
      1. Arguments of the parties
      
               30.
            
            
               The Commission maintains that under Article 6(3) of Directive 91/440 a railway undertaking cannot take a decision with regard to the allocation of train paths, since the allocation of train paths is an essential function determining equitable and non-discriminatory access to infrastructure, which is listed in Annex II to Directive 91/440 and to which the independence requirement applies. The allocation of infrastructure capacity must therefore be carried out by an independent allocation body.
            
         
               31.
            
            
               Traffic management is part of path allocation and must therefore be carried out in Hungary by the VPE, which is a body independent of any railway undertaking, and not by MÁV Zrt. and GySEV Zrt., which although they are infrastructure managers are also railway undertakings.
            
         
               32.
            
            
               It states, first, that the traffic manager has to be aware of what capacity allocation decisions have been taken in order to carry out its management. Since in Hungary the infrastructure managers MÁV Zrt. and GySEV Zrt. are informed, under the operating rules, of any capacity allocation decision concerning their competitors, in essence they become involved in the process of capacity allocation.
            
         
               33.
            
            
               Secondly, according to the Commission, traffic management entails in the event of disruption to the service or danger, the traffic manager taking the steps necessary in order to restore normal operation. In such cases the traffic manager has no choice but to depart from the timetable previously scheduled and reallocate available train paths and network capacity. In Hungary, it is the two infrastructure managers which must take steps to deal with the disruption, taking into consideration the needs of the railway undertakings.
            
         
               34.
            
            
               The Commission does not deny that under normal circumstances the traffic manager merely implements decisions taken by the VPE, ensures that trains run according to timetable and has no influence over decision making with regard to the allocation of network capacity or train paths. However, the fact that the traffic manager takes steps locally to restore operation in the event of danger or disruption means, in the Commission’s view, that it takes decisions concerning the allocation of train paths and enjoys some discretion in that regard. Withdrawal of a path is also an action which is an essential function concerning path allocation for the purposes of Annex II to Directive 91/440.
            
         
               35.
            
            
               The Commission considers that a railway undertaking engaged in traffic management derives a competitive advantage from doing so since in order to be able to carry out the tasks pertaining to such management the undertaking concerned must necessarily have detailed knowledge of the services provided by the railway undertakings, and the volume and times of the services. It is contrary to Article 6(3) of Directive 91/440 and Article 14(2) of Directive 2001/14 for any railway undertaking to be able to acquire knowledge, through the activity of traffic management, of the use its competitors make of infrastructure or, in certain circumstances, take decisions as a consequence concerning the allocation of train paths or infrastructure capacity. The Commission adds that through drawing up timetables the traffic manager always exerts de facto influence over traffic and that competitors are aware only of published timetables and not of actual train movements.
            
         
               36.
            
            
               As regards the relationship between traffic management and infrastructure management, the Commission notes that the independence requirement applying to path allocation applies also where such allocation takes place in the context of traffic management. The latter encompasses numerous tasks clearly unrelated to path allocation, such as maintenance, the construction of tracks and other investment projects, which railway undertakings may undertake.
            
         
               37.
            
            
               The Hungarian Government maintains that under Article 6(3) of Directive 91/440 essential functions are the activities expressly listed in Annex II to that directive. The second subparagraph of Article 6(3) provides a non-exhaustive list of functions which, whilst they can be activities for the purposes of Annex II or be related to such activities, may also be carried out by railway undertakings.
            
         
               38.
            
            
               The Hungarian legislation does not allow the traffic manager to reallocate train paths, even in the event of danger or disruption. It is exclusively for the VPE, as an independent body, to allocate train paths and infrastructure capacity.
            
         
               39.
            
            
               First, the essential task of the traffic manager is to implement the VPE’s decisions concerning allocation of capacity and train paths. The traffic manager has no decision-making powers in that field and has no control over train paths or capacity allocated. In the context of the 24-hour emergency service, the VPE is in a position to receive and deal with requests for train paths at any time of day.
            
         
               40.
            
            
               Secondly, in the event of danger or disruption to the service the traffic manager does not moreover have the power to allocate capacity. In such cases, the traffic manager is in a position to intervene immediately to restore normal operation and takes steps to ensure as quickly as possible the use of the maximum number of train paths and maximum capacity from the paths and capacity allocated by the VPE.
            
         
               41.
            
            
               However, in the case of train paths which cannot be returned to service despite the steps taken, the infrastructure manager may withdraw a path, a right which is also provided for in Article 14(8) of Regulation No 913/2010 in certain cases. The Hungarian Government states that the option for the traffic manager to withdraw train paths is available only where a section of track becomes temporarily unusable and operation is in any event impossible. It is not therefore a case of a discretionary decision to prohibit the use of a track but of a temporary closure of a section of track for safety reasons, during which the VPE will try to make another path available to the railway undertaking concerned.
            
         
               42.
            
            
               According to the Hungarian Government, restoring trains to normal operation, which includes technical and rail safety measures, on the one hand, and the reallocation of train paths, which is the responsibility of the VPE, on the other hand, are two different activities.
            
         
               43.
            
            
               Therefore, according to the Hungarian authorities, the traffic manager has no influence over the allocation of train paths since that takes place before they come into operation. The infrastructure manager has an obligation to enter into a contractual agreement with the beneficiary of the right of access in respect of the path allocated and to ensure that the beneficiary’s train can run on that path, failing which the infrastructure manager is liable to incur the legal consequences provided for in the contractual agreement. Consequently, acquiring knowledge of a capacity allocation decision after it has been taken is not the same as taking a decision regarding path allocation.
            
         
               44.
            
            
               The Hungarian Government considers that traffic management is closer to infrastructure management, and so distinguishing between the two activities is unrealistic, which means this cannot be done in practice. The close relationship between traffic management and infrastructure management is, moreover, mentioned in Directive 91/440, Article 3 of which provides that operating the control and safety systems may form part of the infrastructure manager’s tasks.
            
         
               45.
            
            
               The Hungarian Government denies that the infrastructure manager derives a competitive advantage in the context of its traffic management activity, since it does not carry out any allocation of train paths even in the event of disruption or danger and it cannot become aware of the information referred to by the Commission until after decisions concerning the allocation of train paths have already been taken by the VPE. It agrees with the Commission that the traffic manager must necessarily have a detailed knowledge of the services provided by railway undertakings, and the volume and times of the services.
            
         
               46.
            
            
               The Polish Government supports the Hungarian Government’s argument that any intervention by the traffic manager in the event of disruption to the service or danger does not involve any reallocation of train paths. It is a matter of adopting an ad hoc response, for which only the entity which provides the day-to-day management of the rail service is prepared.
            
         
               47.
            
            
               The Polish Government also notes that Article 6(3) of Directive 91/440 requires only that the objective of equitable and non-discriminatory access to infrastructure must be attained. Recital 11 in the preamble to Directive 2001/14 refers to that objective. According to the Polish Government, the Commission has not adduced any factual or legal argument to show that Hungary has not attained that objective.
            
         
               48.
            
            
               In its observations on Poland’s statement in intervention, the Commission states that as the Hungarian legislation does not meet the requirement that the body allocating train paths must be independent there is no point in citing specific cases of improper conduct on the part of the infrastructure managers, since that requirement is intended specifically to ensure that, by putting in place appropriate structures, the aim established can generally be achieved.
            
         2. Examination of the first complaint
      a) Preliminary observations
      
               49.
            
            
               Directive 91/440, in its original version, initiated the liberalisation of rail transport by introducing a right of access to railway infrastructure for transport undertakings. The introduction of that right of access was accompanied by the principle of separation between infrastructure management and the activity of transport services. However, that separation principle applied not to structures but to functions, more particularly the accounting function. It is merely stated, as an option, that separation may be achieved by the creation of distinct divisions within a single undertaking or by entrusting infrastructure management to a separate entity. An integrated national model was not therefore called into question.
            
         
               50.
            
            
               The objective of Directives 95/18/EC and 95/19/EC, (
                     10
                  ) and subsequently of those of the first railway package, was to implement the right of access, by providing for the introduction of licencing for transport undertakings and rules for the allocation of capacity and the levying of infrastructure charges. In order to ensure non-discriminatory access, Article 6(3) of Directive 91/440 laid down the principle of the independence of the body entrusted with the essential functions thenceforth listed in Annex II to that directive.
            
         
               51.
            
            
               They are as follows: the licencing of railway undertakings, allocation of capacity, allocation of individual train paths, setting of charges to be paid by transport undertakings, and monitoring compliance with public service obligations. Article 6(3) of Directive 91/440 and Articles 4(2) and 14(2) of Directive 2001/14 refer, respectively, to the independence of a ‘body or firm’ providing access to the network, of a ‘charging body’ and of a capacity ‘allocation body’.
            
         
               52.
            
            
               Those essential functions are functions which may under no circumstances be performed by a railway undertaking. They may, however, be performed either by the manager, if it is independent from any railway undertaking, inter alia the incumbent operator, or, if that is not the case, by a ‘body’. All decisions of bodies entrusted with essential functions are open to challenge before an independent regulatory body introduced by Article 30(1) of Directive 2001/14.
            
         
               53.
            
            
               The essential function of allocating train paths is performed in Hungary by the VPE, which is a body independent of any railway undertaking. MÁV Zrt. and GySEV Zrt., however, are infrastructure managers but also railway undertakings. At the heart of the Commission’s first complaint is therefore the question whether traffic management is covered by the concept of infrastructure management, and if so whether it includes the allocation of train paths and must therefore be entrusted to a body that is independent of any railway undertaking. In order to answer those questions it is necessary to clarify the precise meaning of the terms ‘essential function’ and ‘train path’.
            
         b) Essential function and train path
      
               54.
            
            
               According to Annex II to Directive 91/440, the essential functions referred to in Article 6(3) include: ‘preparation and decision making’ related to the licensing of railway undertakings, ‘decision making’ related to path allocation, including ‘the allocation’ of individual train paths, ‘decision making’ related to infrastructure charging, and ‘monitoring’ observance of public service obligations required in the provision of certain services. Therefore, for the purposes of the European Union railways legislation, an essential function consists of activities of an administrative or quasi-administrative nature such as preparation and decision making or the monitoring of observance with obligations.
            
         
               55.
            
            
               However, according to point 1 of Annex II to Directive 2001/14, the minimum access package which the infrastructure manager is to supply to the railway undertakings comprises, inter alia, (d) train control including signalling, regulation, dispatching and the communication and provision of information on train movement, and (e) all other information required to implement or operate the service for which capacity has been granted. These are therefore services which, in my view, are covered by the concept of rail traffic management.
            
         
               56.
            
            
               According to Article 2(l) of Directive 2001/14, ‘train path’ means the infrastructure capacity needed to run a train between two places over a given time-period. The allocation of a train path by including it in the timetable or an ad hoc decision in accordance with Article 23 of Directive 2001/14 constitutes for the railway undertaking the right to use specific infrastructure capacity. From the legal view point, that corresponds to the grant of a licence or an administrative or quasi-administrative authorisation. That interpretation is supported by Article 13(2), which provides for ‘the right to use specific infrastructure capacity in the form of a train path’.
            
         
               57.
            
            
               Like all rights, rights in the form of a train path can also be exercised by their holder by performing activities failing within the scope of such rights. With regard to train paths, exercise consists of operating on the section in question during the period covered by the train path. It should be added that under-utilisation of a train path may, according to Article 27 of Directive 2001/14, incur the obligation to surrender it.
            
         
               58.
            
            
               On the basis of those reflections, it seems to me that traffic management consists of services that also fall within the scope of infrastructure management. According to Article 2(h) of Directive 2001/14, infrastructure management ‘may also include the management of infrastructure control and safety systems’.
            
         
               59.
            
            
               It is clear from the above considerations that traffic management activities do not include decision taking with regard to path allocation, but only the implementation of such decisions, either by adopting timetables or by ad hoc allocation of train paths. Rail traffic management is a factual activity intended to ensure the actual, safe exercise of rights to use capacity in the form of train paths. In other words, when the network manager gives a train a green signal, that action does not constitute a right to the train path. Similarly, a red signal operated by the network manager does not mean that the train path has been withdrawn. It is necessary therefore to avoid any confusion between the existence of rights and the exercise of those rights, since the schemes introduced to regulate the various forms of traffic through the granting of rights are on a completely different level from the day-to-day monitoring of the exercise of such rights by the competent authorities, such as the police, pilotage or rail traffic management.
            
         
               60.
            
            
               Traffic management does not therefore involve decision making for the purposes of the list of essential functions. Since it is clear from Article 6(3) of Directive 91/440 that Member States may assign to railway undertakings or to any other body the responsibility for managing railway infrastructure apart from the essential functions, traffic management may therefore be entrusted to railway undertakings such as MÁV Zrt. and GySEV Zrt.
            
         
               61.
            
            
               That conclusion is based on a literal, systematic interpretation of Directives 91/440 and 2001/14. I would add that it is scarcely conceivable that the legislature would have deliberately failed to mention a matter as important as traffic management in Annex II to Directive 91/440 if its objective had been to include it among the essential functions. It remains none the less to be examined whether the Commission’s teleological argument is capable of undermining that conclusion.
            
         
               62.
            
            
               According to the Commission, the traffic manager must be aware of what capacity allocation decisions have been taken in order to carry out its management, so that, since MÁV Zrt. and GySEV Zrt. are informed, under the operating rules, of any capacity allocation decision concerning their competitors, in essence those operators thus become involved in the process of capacity allocation.
            
         
               63.
            
            
               I am not convinced by that argument. In reality, capacity allocation consists either in drawing up regular working timetables for the network or in taking individual ad hoc decisions allocating train paths. In either case, Directive 2001/14 lays down detailed rules imposing procedural and substantive obligations on the allocation body managing infrastructure. I do not perceive the alleged link between the activities involved in traffic management and the tasks of the allocation body as described in Chapter III of Directive 2001/14.
            
         
               64.
            
            
               As regards the fact that MÁV Zrt. and GySEV Zrt. are necessarily informed of any capacity allocation decision concerning their competitors, the fact remains that such capacity allocation decisions are generally included in the regular working timetables, which are by their nature accessible to third parties. As regards ad hoc train path allocation decisions, it seems to me that the infrastructure manager, even if it were not responsible for traffic management, ought to be informed of them, in view of the possibility of maintenance work on the section concerned and the need to have access to services such as use of running track points and junctions.
            
         
               65.
            
            
               In accepting that infrastructure management, apart from essential functions, may be entrusted to railway undertakings or to any other entity, the European Union legislature necessarily conceded that, where the maintenance of the network is entrusted to a railway undertaking, the latter needs to have information concerning capacity allocation.
            
         
               66.
            
            
               There is still the need to examine the Commission’s argument that managing traffic involves, in the event of disruption to the service or danger, the traffic manager taking the necessary steps to restore normal operation. In such a case, the traffic manager has no choice but to depart from the timetable previously laid down and reallocate available train paths and network capacity. The fact that the traffic manager intervenes locally to restore operation in cases of danger or disruption means, in the Commission’s view, that it takes decisions concerning the allocation of train paths and enjoys discretion in that regard. Withdrawal of a path is also an action which is an essential function concerning path allocation for the purposes of Annex II to Directive 91/440.
            
         
               67.
            
            
               That argument seems to me to be based on confusion between the establishment of rights and the exercise of such rights. The allocation of rights to specified capacity in the form of train paths is an essential function which, in Hungary, is entrusted exclusively to the VPE. As the Hungarian Government has shown, that also applies in the case of disturbance to train movements caused by technical failure or accident, referred to in Article 29(1) of Directive 2001/14. (
                     11
                  ) It is the infrastructure manager which must take all the necessary steps to restore the situation to normal, a task which may include withdrawing train paths. On the other hand, the reallocation of train paths falls to the independent allocation body, in this case the VPE.
            
         
               68.
            
            
               Traffic management consists of measures taken by the manager so that rights to capacity can be exercised in the form of train paths. That type of decision cannot be likened to the allocation of train paths. If that were not the case a railway undertaking which had, for example, the right to the train path between towns A and B from 15 hours to 16 hours, would benefit from two train path allocations, the first corresponding to the adoption of the working timetable by the competent body, and the second at the moment the signal turned to green at the station of town A at 15 hours on the initiative of the traffic manager. Such an analysis cannot but fail.
            
         
               69.
            
            
               For that reason, decisions of the traffic manager withdrawing train paths in cases of absolute emergency and necessity must be regarded, not as reallocation of train paths but as emergency measures affecting their use. Given that, according to the wording of the first subparagraph of Article 29(2) of Directive 2001/14, that provision does not specify the entity empowered to decide on such emergency measures, unlike the cases referred to in Article 29(1) or in the second subparagraph of Article 29(2), it is not excluded that that entity may be the infrastructure manager, even where a railway undertaking or the police or civil protection authorities are involved.
            
         
               70.
            
            
               For those reasons, I propose that the Court should not uphold the Commission’s first complaint.
            
         B – The second complaint, concerning independence in the levying of charges
      
      1. Arguments of the parties
      
               71.
            
            
               The Commission claims that, under Article 6(3) of Directive 91/440 and Article 4(2) of Directive 2001/14, an entity providing rail transport services cannot take a decision concerning the determination of charges since such an entity can be empowered only to collect such charges. According to those provisions, the establishment and setting of charges must be done by an independent charging body.
            
         
               72.
            
            
               According to the Commission, the Hungarian legislation conflicts with those two provisions in so far as detailed invoices for the charges to be paid for the use of infrastructure are established by the infrastructure managers, MÁV Zrt. and GySEV Zrt., which are also railway undertakings.
            
         
               73.
            
            
               The Commission observes that the phrase ‘the determination of the charge for the use of infrastructure’ contained in Article 4(1) of Directive 2001/14 must be interpreted as meaning both the overall setting of charges, which consists in laying down in the operating rules the amount of the charge per kilometre for each section of track, and the specific calculation of the amounts payable by the various users according to the length of the section used. Under Article 4(2) of that directive, the option that a non-independent infrastructure manager may undertake the collecting of charges should be interpreted strictly, since that is an exception to the rule.
            
         
               74.
            
            
               The Commission is of the opinion that a railway undertaking which is responsible for establishing detailed invoices of charges derives a competitive advantage from this, in so far as such invoices necessarily refer inter alia to the services used by competing railway undertakings, the volume of such services and the times when they are used. Article 6(3) of Directive 91/440 expressly refers to the principle of equitable and non-discriminatory access.
            
         
               75.
            
            
               The Hungarian Government responds that infrastructure managers take decisions concerning the determination of charges in so far as they are responsible for invoicing in connection with the collection of charges, which is not an essential function within the meaning of Directive 91/440 that must be carried out by an independent body. Invoicing is only a technical means for recovering such charges.
            
         
               76.
            
            
               The Hungarian Government draws a distinction between the formulation of charges, the actual setting of charges and their collection. The first of those concepts corresponds to the establishment of the various charging rules, which is carried out by the Member State or by the infrastructure manager. The setting of such charges consists in setting the various individual charges which a given railway undertaking must pay in a particular situation, based on the services it has requested. It is for the VPE, as an independent body recognised by the Commission, to carry out the tasks associated with the formation and setting of charges. The collection of charges means the specific act of payment by which the charges that have been set are paid to the infrastructure manager. Invoicing is only the technical translation of the charges based on the calculations by the VPE and does not therefore relate either to the formation or specific setting of charges, but to the collection of charges.
            
         
               77.
            
            
               The Hungarian authorities doubt whether access to information obtained from detailed invoices would result in distortion of competition, since the infrastructure manager has no actual influence on the setting of network access charges. Furthermore, the infrastructure manager would necessarily be aware of that information from other sources, such as the contractual agreement it has entered into with the railway undertaking. Even where the infrastructure manager becomes aware of information of which it was previously unaware it must not in any event disclose it to the divisions providing rail transport.
            
         
               78.
            
            
               The Polish Government, like the Hungarian Government, contends that invoicing does not consist in determining the amount of charges or taking any sort of decision on matters connected with the collection of charges, but is an aspect of charging for the purposes of Article 4(2) of Directive 2001/14. Charging is a secondary activity intended, by means of mathematical operations, to establish a result on the basis of a predetermined rate, according to train paths previously allocated and the use made of those paths.
            
         2. Examination of the second complaint
      
               79.
            
            
               It should be noted first of all that the second complaint concerns the same issue as the first complaint in Case C-483/10 Commission v Spain, with regard to independence in respect of charging, but from the opposite perspective. In the latter case, the Commission’s complaint relates to interpretation of the term ‘determination’ of charges, in order to define the respective powers of the Member State and the infrastructure manager. (
                     12
                  ) In the present case, the issue of interpretation concerns the terms ‘collection’ or ‘recovery’, a function that may also be performed by an infrastructure manager which is not independent of any railway undertaking, unlike ‘determination of charges’, which is an essential function. In other words, the Court must define what is meant by the essential function ‘determination of charges’ at least in respect of non-independent players, whereas in Commission v Spain it is a matter of defining what that same essential function means at most in relation to the State.
            
         
               80.
            
            
               In that regard, it should be noted that under Article 4(1) of Directive 2001/14 Member States must establish a charging ‘framework’ and may also establish specific charging rules, while respecting the management independence of the infrastructure manager. It is the infrastructure manager which is responsible for determining the charge for the use of infrastructure and for collecting it. The latter task does not therefore constitute an essential function and may therefore be delegated to non-independent operators. In fact, according to Article 6(3) of Directive 91/440, Member States may assign the ‘collecting’ of charges to railway undertakings or any other body. (
                     13
                  )
            
         
               81.
            
            
               According to the Hungarian Government, a distinction may be drawn between the formation of charges, the actual setting of charges and their collection. I note that the Commission contends in Commission v Spain that the term ‘determination’ has a different meaning from the term ‘payment’, which is only a stage in the collection procedure and which must be considered to be covered by the term ‘collection’.
            
         
               82.
            
            
               It seems to me that Directive 2001/14 establishes, by use of the verb ‘determine’, an area reserved for the infrastructure manager as regards charging. In relation to the State, the upper limit of that area results from the requirement for flexibility within the charging framework in relation to the rules established by the State. Its lower limit – below which begins the area of ‘collection’ or ‘recovery’ – corresponds with regard to operators that are not independent, to the distinction between purely mechanical calculation, on the basis of objective data and criteria, and decisions involving choices and assessments concerning the factors included in such calculation. The latter limit is the one which creates the need for a separate charging body, where the infrastructure manager is not independent in its legal form, organisation or decision making.
            
         
               83.
            
            
               According to the Hungarian Government, invoicing is only the technical translation of charges based on calculations by the VPE and does not therefore relate either to the function of formation of charges or to that of specific setting of charges, but merely to the collection of charges. (
                     14
                  ) It seems to me that the Commission does not deny the mechanical nature of invoicing, but considers that ‘collection’ must, as an exception, be interpreted strictly, so that determination of charges includes specific calculation of the amounts payable by the various users according to the length of the section of track used.
            
         
               84.
            
            
               It seems to me therefore that the decisive factor from the Commission’s point of view is that a railway undertaking which is responsible for drawing up detailed invoices of charges derives a competitive advantage from this, in so far as it may thus have access to information concerning the services used by competing railway undertakings, the volume of such services and the times when they are used.
            
         
               85.
            
            
               I do not think that the Commission’s analysis provides an appropriate basis for the conclusion the Commission seeks to reach. I find it difficult to imagine a scheme for the ‘collection’ or ‘recovery’ of charges in which the body responsible for doing this – which, according to the European Union rules, may be a railway undertaking – does not obtain knowledge of the supporting information on which the invoices which it is collecting are based. From the point of view of the information to which the entity responsible for collection has access, there is no decisive difference between invoicing through the mechanical application of a calculation formula to data supplied to that entity, and the collection of amounts appearing on invoices prepared by a third party.
            
         
               86.
            
            
               Furthermore, as I stated above (see point 64), the infrastructure manager is necessarily aware of the capacity allocation. On the basis of that information, of other freely accessible information concerning rail services, and the amounts to be collected, it can easily draw the appropriate conclusions concerning its competitors’ services. (
                     15
                  )
            
         
               87.
            
            
               For those reasons, I consider that the Commission has not managed to establish that Hungary has failed to fulfil its obligations under Article 6(3) of Directive 91/440 in so far as the invoicing of charges is concerned.
            
         
               88.
            
            
               I conclude from this that the Commission’s second complaint must be rejected.
            
         C – The third complaint: the financial equilibrium of the infrastructure manager and incentives to reduce costs and charges
      
      1. Arguments of the parties
      
               89.
            
            
               The Commission criticises Hungary for not laying down conditions to ensure that the accounts of infrastructure managers are in balance, contrary to what is required by Article 6(1) of Directive 2001/14. It notes that Article 28(1) of the Railways Law provides that the minister responsible is to undertake in a contractual agreement to fund all expenditure recognised as justified, incurred in the management of the network by the railway undertaking responsible for infrastructure management. However, no such contractual agreement has so far been concluded.
            
         
               90.
            
            
               Similarly, the Commission maintains that the Hungarian legislation contains no incentives to reduce costs and charges, contrary to the provisions of Article 6(2) and (3) of Directive 2001/14. It refers to Article 28(1) of the Railways Law, which provides that the contractual agreement referred to in that article must provide incentives for infrastructure managers to reduce their management costs and charges for access to the network.
            
         
               91.
            
            
               The Hungarian Government argues in that regard that a draft contractual agreement within the meaning of Article 28(1) of the Railways Law is in the process of being prepared.
            
         
               92.
            
            
               In its reply, the Commission states that it has not yet received that draft contractual agreement and that it is therefore not in a position to assess whether those new provisions comply with Directive 2001/14.
            
         2. Examination of the third complaint
      
               93.
            
            
               With regard to the third complaint, concerning the financial equilibrium of the infrastructure manager and incentives to reduce costs and charges, suffice it to say that the Hungarian Government does not dispute that complaint. It merely contends that the draft contractual agreement referred to in Article 28(1) of the Railways Law, by which the minister responsible undertakes to fund expenditure incurred in the context of infrastructure management and which must provide incentives for infrastructure managers to reduce their management costs and access charges, is in the process of being prepared.
            
         
               94.
            
            
               It is settled case-law that the question whether there has been a failure to fulfil obligations must be examined on the basis of the position in which the Member State found itself at the end of the period laid down in the reasoned opinion. (
                     16
                  )
            
         
               95.
            
            
               I conclude from this that the Commission’s third complaint is well-founded.
            
         D – The fourth complaint, concerning the establishment of charges on the basis of direct costs
      
      1. Arguments of the parties
      
               96.
            
            
               In its application, the Commission claims that the Hungarian legislation does not comply with Article 7(3) of Directive 2001/14, in so far as is does not at the present time contain any provision ensuring application of the direct costs principle, contrary to what is required by that provision.
            
         
               97.
            
            
               In its defence, the Hungarian Government contends that the VPE drew up Regulation No 83/2007 (X.6) GKM-PM laying down the method for establishing charges, which entered into force on 12 December 2010 for a period of five years from the year 2010/2011.
            
         
               98.
            
            
               In its reply, the Commission states that the document approving the method for establishing charges has not yet been sent to it and contends, from its reading of the defence, that that method does not appear to meet the requirements of Article 7 of Directive 2001/14.
            
         
               99.
            
            
               The Polish Government notes that the Commission stated in its reasoned opinion that the direct costs referred to in Article 7(3) of Directive 2001/14 should be 35% of the total cost of maintenance of the infrastructure. According to the Polish Government, that statement has no basis in Directive 2001/14, since the latter does not define the concept of the cost that is directly incurred as a result of operating the train service and Member States have a certain amount of flexibility in establishing charges for access to infrastructure.
            
         2. Examination of the fourth complaint
      
               100.
            
            
               In so far as the fourth complaint must be understood as referring only to infringement of Article 7(3) of Directive 2001/14, establishing a failure in that regard does not raise any particular problems, since, on the expiry of the time-limit set in the reasoned opinion of 8 October 2009, the Hungarian legislation did not include any method for establishing charges on the basis of direct costs because that legislation entered into force on 12 December 2010.
            
         
               101.
            
            
               I conclude from this that the Commission’s fourth complaint must be considered to be well-founded.
            
         V – Costs
      
      
               102.
            
            
               Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
            
         
               103.
            
            
               As the Commission has claimed that Hungary should be ordered to pay the costs, this claim must be upheld if, as I propose, the action for failure to fulfil obligations is upheld for the most part.
            
         
               104.
            
            
               Under the first subparagraph of Article 69(4) of the Rules of Procedure, the Czech Republic, the Republic of Latvia and the Republic of Poland, which have sought leave to intervene in this case, are to bear their own costs.
            
         VI – Conclusion
      
      
               105.
            
            
               In the light of the foregoing considerations, I propose that the Court should:
               
                        ‘(1)
                     
                     
                        declare that Hungary has failed to fulfil its obligations
                        
                                 —
                              
                              
                                 under Article 6(1) of Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure, as amended by Directive 2004/49/EC of the European Parliament and of the Council of 29 April 2004, by failing to adopt measures to ensure the financial equilibrium of infrastructure managers;
                              
                           
                                 —
                              
                              
                                 under Article 6(2) of Directive 2001/14, as amended by Directive 2004/49, by failing to provide incentives for infrastructure managers to reduce the costs of provision of infrastructure and the level of access charges; and
                              
                           
                                 —
                              
                              
                                 under Article 7(3) of Directive 2001/14, as amended by Directive 2004/49, by failing to ensure that charges for the minimum access package and track access to service facilities are set at the cost that is directly incurred as a result of operating the train service;
                              
                           
                  
                        (2)
                     
                     
                        dismiss the action as to the remainder;
                     
                  
                        (3)
                     
                     
                        order Hungary to bear the costs of the proceedings;
                     
                  
                        (4)
                     
                     
                        order the Republic of Poland, the Republic of Latvia and the Czech Republic to bear their own costs.’
                     
                  
         (
            1
         )	Original language: French.
      (
            2
         )	Council Directive of 29 July 1991 on the development of the Community’s railways (OJ 1991 L 237, p. 25).
      (
            3
         )	Directive of the European Parliament and of the Council of 26 February 2001 (OJ 2001 L 75, p. 1).
      (
            4
         )	Directive of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification (OJ 2001 L 75, p. 29).
      (
            5
         )	Directive of the European Parliament and of the Council of 29 April 2004 (OJ 2004 L 164, p. 44). It should be noted that the title of Directive 2001/14 was amended by Article 30 of Directive 2004/49. Its title is now ‘Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure’.
      (
            6
         )	Cases pending before the Court C-483/10 Commission v Spain; C-512/10 Commission v Poland; C-528/10 Commission v Greece; C-545/10 Commission v Czech
         Republic; C-555/10 Commission v Austria; C-556/10 Commission v Germany; C-557 Commission v Portugal; C-625/10 Commission v France; C-627/10 Commission v Slovenia; C-369/11 Commission v Italy; and C-412/11 Commission v Luxembourg.
      (
            7
         )	Magyar Közlöny 2005/172.
      (
            8
         )	Magyar Közlöny 2007/134.
      (
            9
         )	Magyar Közlöny 2007/181.
      (
            10
         )	Council Directive 95/18/EC of 19 June 1995 on the licensing of railway undertakings (OJ 1995 L 143, p. 70), and Council Directive 95/19/EC of 19 June 1995 on the allocation of railway infrastructure capacity and the charging of infrastructure fees (OJ 1995 L 143, p. 75).
      (
            11
         )	The relevant national provisions are contained in Article 23 of Regulation No 101/2007 GKM (cited in point 21 above) and in paragraph 4.8.1 of the Network Operating Rules (cited in point 23).
      (
            12
         )	It should be added that that issue also arises in a different form in Case C-545/10, Commission v Czech Republic.
      (
            13
         )	I doubt whether the different terms used (‘perception’ and ‘recouvrement’) in the French versions of Directives 91/440 and 2001/14 reflect a legal distinction.
      (
            14
         )	The Government states in its rejoinder that the VPE sets the amount to be paid by individual users, calculated according to the length of the section of track which they wish to use, its characteristics and the services proposed in the context of operating on the track. The infrastructure manager merely sends that user an invoice based on the amount calculated in respect of the path allocation.
      (
            15
         )	See Article 8(3) of Directive 2001/14 (transparency of charging) and Annex I to that directive.
      (
            16
         )	See inter alia Case C-391/10 Commission v Belgium [2011] ECR, paragraph 8, and Case C-390/10 Commission v Luxembourg [2011] ECR, paragraph 11.
    ---documentbreak--- 
      
         
            
               Opinion of the Advocate-General
               
            
            Opinion of the Advocate-General
            I – Introduction 
            1. By the present action, the European Commission seeks a declaration from the Court that Hungary has failed to fulfil its obligations under Article 6(3) of, and Annex II to, Council Directive 91/440/EEC, (2) as amended by Directive 2001/12/EC, (3) (‘Directive 91/440’), and Article 4(2) and Article 14(2), Article 6(1) and (2), Article 7(3), Article 8(1) and Article 11 of Directive 2001/14/EC, (4) as amended by Directive 2004/49/EC (5) (‘Directive 2001/14’). Hungary contends that the Commission’s action should be dismissed.
            2. This action is one in a series of infringement proceedings, (6) brought by the Commission in 2010 and 2011, concerning the application by Member States of Directives 91/440 and 2001/14, in particular with regard to equitable and non-discriminatory access for railway undertakings to infrastructure, that is to say, the rail network. Those actions break new ground since they provide the Court with its first opportunity to rule on the liberalisation of railways within the European Union and, inter alia, to interpret what is known as ‘the first railway package’.
            II – Legal framework 
            A – European Union law 
            3. Article 6(3) of Directive 91/440 provides: 
            ‘Member States shall take the measures necessary to ensure that the functions determining equitable and non-discriminatory access to infrastructure, listed in Annex II, are entrusted to bodies or firms that do not themselves provide any rail transport services. Regardless of the organisational structures, this objective must be shown to have been achieved.
            Member States may, however, assign to railway undertakings or any other body the collecting of the charges and the responsibility for managing the railway infrastructure, such as investment, maintenance and funding.’ 
            4. The list of essential functions referred to in Article 6(3), given in Annex II to Directive 91/440 reads as follows:
            ‘– preparation and decision making related to the licensing of railway undertakings including granting of individual licenses, 
            – decision making related to the path allocation including both the definition and the assessment of availability and the allocation of individual train paths, 
            – decision making related to infrastructure charging,
            – monitoring observance of public service obligations required in the provision of certain services.’ 
            5. According to the definitions given in Article 2 of Directive 2001/14, for the purpose of that directive: 
            ‘(a) “allocation” means the allocation of railway infrastructure capacity by an infrastructure manager;
             … 
            (g) “infrastructure capacity” means the potential to schedule train paths requested for an element of infrastructure for a certain period; 
            (h) “infrastructure manager” means any body or undertaking that is responsible in particular for establishing and maintaining railway infrastructure. This may also include the management of infrastructure control and safety systems. The functions of the infrastructure manager on a network or part of a network may be allocated to different bodies or undertakings; 
            (i) “network” means the entire railway infrastructure owned and/or managed by an infrastructure manager; 
            …
            (k) “railway undertaking” means any public or private undertaking, licensed according to applicable Community legislation, the principal business of which is to provide services for the transport of goods and/or passengers by rail with a requirement that the undertaking must ensure traction;
            (l) “train path” means the infrastructure capacity needed to run a train between two places over a given time-period; 
            (m) “working timetable” means the data defining all planned train and rolling-stock movements which will take place on the relevant infrastructure during the period for which it is in force.’
            6. Article 4(1) and (2) of Directive 2001/14 provides:
            ‘1. … The determination of the charge for the use of infrastructure and the collection of this charge shall be performed by the infrastructure manager.
            2. Where the infrastructure manager, in its legal form, organisation or decision-making functions, is not independent of any railway undertaking, the functions, described in this chapter, other than collecting the charges shall be performed by a charging body that is independent in its legal form, organisation and decision-making from any railway undertaking.’
            7. Article 5(1) of Directive 2001/14 is worded as follows:
            ‘Railway undertakings shall, on a non-discriminatory basis, be entitled to the minimum access package and track access to service facilities that are described in Annex II. The supply of services referred to in Annex II, point 2, shall be provided in a non-discriminatory manner and requests by railway undertakings may only be rejected if viable alternatives under market conditions exist. If the services are not offered by one infrastructure manager, the provider of the “main infrastructure” shall use all reasonable endeavours to facilitate the provision of these services.’
            8. Under Article 6 of Directive 2001/14:
            ‘1. Member States shall lay down conditions, including where appropriate advance payments, to ensure that, under normal business conditions and over a reasonable time period, the accounts of an infrastructure manager shall at least balance income from infrastructure charges, surpluses from other commercial activities and State funding on the one hand, and infrastructure expenditure on the other.
            …
            2. Infrastructure managers shall, with due regard to safety and to maintaining and improving the quality of the infrastructure service, be provided with incentives to reduce the costs of provision of infrastructure and the level of access charges. 
            3. Member States shall ensure that the provision set out in paragraph 2 is implemented, either through a contractual agreement between the competent authority and infrastructure manager covering a period of not less than three years which provides for State funding or through the establishment of appropriate regulatory measures with adequate powers.’
            9. Article 7(3) of Directive 2001/14 is worded as follows: 
            ‘Without prejudice to paragraphs 4 or 5 or to Article 8, the charges for the minimum access package and track access to service facilities shall be set at the cost that is directly incurred as a result of operating the train service.’
            10. Article 8(1) of Directive 2001/14 provides:
            ‘In order to obtain full recovery of the costs incurred by the infrastructure manager a Member State may, if the market can bear this, levy mark-ups on the basis of efficient, transparent and non-discriminatory principles, while guaranteeing optimum competitiveness in particular of international rail freight. The charging system shall respect the productivity increases achieved by railway undertakings. 
            The level of charges must not, however, exclude the use of infrastructure by market segments which can pay at least the cost that is directly incurred as a result of operating the railway service, plus a rate of return which the market can bear.’
            11. The first subparagraph of Article 13(2) of Directive 2001/14 provides: 
            ‘The right to use specific infrastructure capacity in the form of a train path may be granted to applicants for a maximum duration of one working timetable period.’
            12. Article 14(1) and (2) of Directive 2001/14 provides:
            ‘… The infrastructure manager shall perform the capacity allocation processes …
            Where the infrastructure manager, in its legal form, organisation or decision-making functions is not independent of any railway undertaking, the functions referred to in paragraph 1 and described in this chapter shall be performed by an allocation body that is independent in its legal form, organisation and decision-making from any railway undertaking.’
            13. Under Article 29 of Directive 2001/14: 
            ‘1. In the event of disturbance to train movements caused by technical failure or accident the infrastructure manager must take all necessary steps to restore the normal situation. To that end he shall draw up a contingency plan listing the various public bodies to be informed in the event of serious incidents or serious disturbance to train movements. 
            2. In an emergency and where absolutely necessary on account of a breakdown making the infrastructure temporarily unusable, the paths allocated may be withdrawn without warning for as long as is necessary to repair the system.
            The infrastructure manager may, if he deems it necessary, require railway undertakings to make available to him the resources which he feels are the most appropriate to restore the normal situation as soon as possible.
            3. Member States may require railway undertakings to be involved in assuring the enforcement and monitoring of their own compliance of the safety standards and rules.’
            14. Point 1 of Annex II to Directive 2001/14 reads as follows: 
            ‘1. The minimum access package shall comprise: 
            (a) handling of requests for infrastructure capacity; 
            (b) the right to utilise capacity which is granted; 
            (c) use of running track points and junctions; 
            (d) train control including signalling, regulation, dispatching and the communication and provision of information on train movement; 
            (e) all other information required to implement or operate the service for which capacity has been granted.’
            B – National law 
            15. In 2004, Law XCV. of 1993 on Railways established a body independent of any railway undertaking, the Vasúti Pályakapacitás-elosztó Szervezet (‘the VPE’).
            16. Under Article 62 of Law CLXXXIII. of 2005 on Rail Transport (2005 évi CLXXXIII. törvény a vasúti közlekedésről (7), ‘the Railways Law’), the functions of train path allocation and establishment of charges are assigned to the VPE.
            17. Article 28(1) of the Railways Law reads as follows:
            ‘On behalf of the State, the Minister shall, with the agreement of the Minister responsible for the budget, undertake in a contractual agreement to fund all expenditure recognised as justified, incurred in the management of the network by the railway undertaking responsible for management of the national rail network and its appurtenances, and of the regional railways and their appurtenances, that are not covered by the network access charge or by that undertaking’s other operations. The terms of that contractual agreement must be such that they provide an incentive for the network manager to reduce its management costs and network access charges without thereby jeopardising transport safety or the quality of the service.’
            18. Article 31(2)(b) of that law provides that ‘in the interests of the safety of rail traffic …, where a dangerous situation arises, until it is resolved, the infrastructure manager shall have the right to close the tracks or sections of track threatened by the danger and to withdraw the train paths allocated on the sections concerned and, where such closure affects a level crossing, shall inform the administration responsible for the route concerned, …’.
            19. Article 55(8) of the Railways Law provides:
            ‘Where it is anticipated that network access charges will not cover all the justified costs and expenditure of the manager of freely accessible infrastructure, the charge for the services described in Article 54(1) and (3) to (5) may be subject to an overall mark-up in an amount not exceeding that needed to cover all the justified costs and expenditure, which shall take into account productivity increases achieved by railway undertakings, the requirement for efficient use of infrastructure, competitiveness in international rail transit, the principle of transparency and equal treatment.’
            20. Regulation No 83/2007 (X.6) GKM-PM concerns the framework of the charging scheme for access to railway infrastructure and the fundamental rules for establishing the charge for access to infrastructure. (8)
            21. Article 23(1) of Regulation No 101/2007 (XII.22) GKM on the detailed rules for access to railway infrastructure (9) provides:
            ‘Where an infrastructure manager has withdrawn a train path under Article 31(2)(b) of the Railways Law, the body responsible for allocating capacity shall, at the request of the operator concerned, offer that operator another train path from the capacity available.’
            22. Each year the VPE publishes network operating rules (Hálózati Üzletszabályzat). Point 4.3(9) of Network Operating Rules 2009-2010 provides:
            ‘[The VPE] shall inform the operators concerned, the infrastructure managers and the railway management body of its decisions allocating infrastructure capacity.’
            23. In point 4.8.1, entitled ‘Guidelines for restoring normal operation’, those rules provide:
            ‘(a) In the event of a departure from the normal schedule and timetable, the operational services directorate of the infrastructure manager shall take appropriate steps to end the disturbance and restore operation according to the schedule and timetable. …
            (b) Operators granted access to the rail network must have available at all times a contact person authorised to take decisions, or their own governing body, which the governing body of the infrastructure manager shall be required to notify in the event of disruption or danger, and their needs are to be taken into account when normal operating conditions are restored.
            (c) Force majeure and other extraordinary and unforeseen circumstances:
            – The infrastructure manager shall be required, in the event of disruption to rail traffic caused by technical failure or an accident, to do everything in its power to restore normal operating conditions. To that end, it must draw up a contingency plan, which shall include a list of the bodies to be notified in the event of a serious accident or serious disturbance to rail traffic.
            – At the request of the network manager, a beneficiary of access to the rail network shall be required, in exchange for payment, to make available what are deemed be the most appropriate resources to bring about prompt restoration of normal operating conditions.
            – The infrastructure manager may, in the event of danger rendering the rail network temporarily unusable and provided it notifies all parties concerned, withdraw allocated train paths for the period of time needed in order to restore the situation to normal. At the request of the operator concerned, [the VPE] shall offer it, for that period of time, another train path from the capacity available.’
            III – Pre-litigation procedure and procedure before the Court 
            24. By letter of 26 January 2008, the Commission gave Hungary formal notice to submit to it its observations regarding failure to fulfil its obligations under Article 6(3) of, and Annex II to, Directive 91/440, and Articles 4(2) and 14(2) of Directive 2001/14, or its obligations under Articles 3, 6(1), 6(2) to (5), 7(3), 8, 11 and 30(3) of that directive. By letter of 22 August 2008, Hungary responded to that letter of formal notice. Hungary’s first letter was supplemented by further letters, including that of 10 June 2009.
            25. By letter of 8 October 2009, the Commission sent a reasoned opinion, in which it stated that Hungary had failed to fulfil its obligations under Article 6(3) of, and Annex II to, Directive 91/440, and Article 4(2) and Article 14(2) of Directive 2001/14, or its obligations under Articles 3, 6(1), 6(2) to (5), 7(3), 8, 11 and 30(3) of that directive. The Commission requested Hungary to take the measures necessary to comply with the reasoned opinion within two months of its notification. By letter of 16 December 2009, Hungary responded to the reasoned opinion and disputed the failure alleged by the Commission.
            26. Not being satisfied with Hungary’s reply, the Commission decided to bring the present action, which was lodged at the Court on 29 September 2010.
            27. By order of the President of the Court of 15 February 2011, the Czech Republic, the Republic of Latvia and the Republic of Poland were given leave to intervene in support of the form of order sought by Hungary. By order of the President of the Court of 4 April 2011, the Italian Republic was given leave to intervene in support of the form of order sought by Hungary, under Article 93(7) of the Rules of Procedure.
            28. By document lodged at the Court Registry on 6 June 2012, the Commission stated that it was withdrawing the sixth complaint of its action, based on Article 11(1) of Directive 2001/14, concerning the establishment of a scheme to improve the performance of the railway network.
            29. The Commission, Hungary, the Italian Republic and the Republic of Poland were represented at the hearing which took place on 23 May 2012.
            IV – The pleas and arguments of the parties 
            A – The first complaint: independence in the allocation of train paths 
            1. Arguments of the parties
            30. The Commission maintains that under Article 6(3) of Directive 91/440 a railway undertaking cannot take a decision with regard to the allocation of train paths, since the allocation of train paths is an essential function determining equitable and non-discriminatory access to infrastructure, which is listed in Annex II to Directive 91/440 and to which the independence requirement applies. The allocation of infrastructure capacity must therefore be carried out by an independent allocation body.
            31. Traffic management is part of path allocation and must therefore be carried out in Hungary by the VPE, which is a body independent of any railway undertaking, and not by MÁV Zrt. and GySEV Zrt., which although they are infrastructure managers are also railway undertakings. 
            32. It states, first, that the traffic manager has to be aware of what capacity allocation decisions have been taken in order to carry out its management. Since in Hungary the infrastructure managers MÁV Zrt. and GySEV Zrt. are informed, under the operating rules, of any capacity allocation decision concerning their competitors, in essence they become involved in the process of capacity allocation.
            33. Secondly, according to the Commission, traffic management entails in the event of disruption to the service or danger, the traffic manager taking the steps necessary in order to restore normal operation. In such cases the traffic manager has no choice but to depart from the timetable previously scheduled and reallocate available train paths and network capacity. In Hungary, it is the two infrastructure managers which must take steps to deal with the disruption, taking into consideration the needs of the railway undertakings.
            34. The Commission does not deny that under normal circumstances the traffic manager merely implements decisions taken by the VPE, ensures that trains run according to timetable and has no influence over decision making with regard to the allocation of network capacity or train paths. However, the fact that the traffic manager takes steps locally to restore operation in the event of danger or disruption means, in the Commission’s view, that it takes decisions concerning the allocation of train paths and enjoys some discretion in that regard. Withdrawal of a path is also an action which is an essential function concerning path allocation for the purposes of Annex II to Directive 91/440.
            35. The Commission considers that a railway undertaking engaged in traffic management derives a competitive advantage from doing so since in order to be able to carry out the tasks pertaining to such management the undertaking concerned must necessarily have detailed knowledge of the services provided by the railway undertakings, and the volume and times of the services. It is contrary to Article 6(3) of Directive 91/440 and Article 14(2) of Directive 2001/14 for any railway undertaking to be able to acquire knowledge, through the activity of traffic management, of the use its competitors make of infrastructure or, in certain circumstances, take decisions as a consequence concerning the allocation of train paths or infrastructure capacity. The Commission adds that through drawing up timetables the traffic manager always exerts de facto influence over traffic and that competitors are aware only of published timetables and not of actual train movements.
            36. As regards the relationship between traffic management and infrastructure management, the Commission notes that the independence requirement applying to path allocation applies also where such allocation takes place in the context of traffic management. The latter encompasses numerous tasks clearly unrelated to path allocation, such as maintenance, the construction of tracks and other investment projects, which railway undertakings may undertake.
            37. The Hungarian Government maintains that under Article 6(3) of Directive 91/440 essential functions are the activities expressly listed in Annex II to that directive. The second subparagraph of Article 6(3) provides a non-exhaustive list of functions which, whilst they can be activities for the purposes of Annex II or be related to such activities, may also be carried out by railway undertakings.
            38. The Hungarian legislation does not allow the traffic manager to reallocate train paths, even in the event of danger or disruption. It is exclusively for the VPE, as an independent body, to allocate train paths and infrastructure capacity.
            39. First, the essential task of the traffic manager is to implement the VPE’s decisions concerning allocation of capacity and train paths. The traffic manager has no decision-making powers in that field and has no control over train paths or capacity allocated. In the context of the 24-hour emergency service, the VPE is in a position to receive and deal with requests for train paths at any time of day.
            40. Secondly, in the event of danger or disruption to the service the traffic manager does not moreover have the power to allocate capacity. In such cases, the traffic manager is in a position to intervene immediately to restore normal operation and takes steps to ensure as quickly as possible the use of the maximum number of train paths and maximum capacity from the paths and capacity allocated by the VPE.
            41. However, in the case of train paths which cannot be returned to service despite the steps taken, the infrastructure manager may withdraw a path, a right which is also provided for in Article 14(8) of Regulation No 913/2010 in certain cases. The Hungarian Government states that the option for the traffic manager to withdraw train paths is available only where a section of track becomes temporarily unusable and operation is in any event impossible. It is not therefore a case of a discretionary decision to prohibit the use of a track but of a temporary closure of a section of track for safety reasons, during which the VPE will try to make another path available to the railway undertaking concerned.
            42. According to the Hungarian Government, restoring trains to normal operation, which includes technical and rail safety measures, on the one hand, and the reallocation of train paths, which is the responsibility of the VPE, on the other hand, are two different activities. 
            43. Therefore, according to the Hungarian authorities, the traffic manager has no influence over the allocation of train paths since that takes place before they come into operation. The infrastructure manager has an obligation to enter into a contractual agreement with the beneficiary of the right of access in respect of the path allocated and to ensure that the beneficiary’s train can run on that path, failing which the infrastructure manager is liable to incur the legal consequences provided for in the contractual agreement. Consequently, acquiring knowledge of a capacity allocation decision after it has been taken is not the same as taking a decision regarding path allocation.
            44. The Hungarian Government considers that traffic management is closer to infrastructure management, and so distinguishing between the two activities is unrealistic, which means this cannot be done in practice. The close relationship between traffic management and infrastructure management is, moreover, mentioned in Directive 91/440, Article 3 of which provides that operating the control and safety systems may form part of the infrastructure manager’s tasks.
            45. The Hungarian Government denies that the infrastructure manager derives a competitive advantage in the context of its traffic management activity, since it does not carry out any allocation of train paths even in the event of disruption or danger and it cannot become aware of the information referred to by the Commission until after decisions concerning the allocation of train paths have already been taken by the VPE. It agrees with the Commission that the traffic manager must necessarily have a detailed knowledge of the services provided by railway undertakings, and the volume and times of the services.
            46. The Polish Government supports the Hungarian Government’s argument that any intervention by the traffic manager in the event of disruption to the service or danger does not involve any reallocation of train paths. It is a matter of adopting an ad hoc response, for which only the entity which provides the day-to-day management of the rail service is prepared.
            47. The Polish Government also notes that Article 6(3) of Directive 91/440 requires only that the objective of equitable and non-discriminatory access to infrastructure must be attained. Recital 11 in the preamble to Directive 2001/14 refers to that objective. According to the Polish Government, the Commission has not adduced any factual or legal argument to show that Hungary has not attained that objective.
            48. In its observations on Poland’s statement in intervention, the Commission states that as the Hungarian legislation does not meet the requirement that the body allocating train paths must be independent there is no point in citing specific cases of improper conduct on the part of the infrastructure managers, since that requirement is intended specifically to ensure that, by putting in place appropriate structures, the aim established can generally be achieved.
            2. Examination of the first complaint
            a) Preliminary observations
            49. Directive 91/440, in its original version, initiated the liberalisation of rail transport by introducing a right of access to railway infrastructure for transport undertakings. The introduction of that right of access was accompanied by the principle of separation between infrastructure management and the activity of transport services. However, that separation principle applied not to structures but to functions, more particularly the accounting function. It is merely stated, as an option, that separation may be achieved by the creation of distinct divisions within a single undertaking or by entrusting infrastructure management to a separate entity. An integrated national model was not therefore called into question.
            50. The objective of Directives 95/18/EC and 95/19/EC, (10) and subsequently of those of the first railway package, was to implement the right of access, by providing for the introduction of licencing for transport undertakings and rules for the allocation of capacity and the levying of infrastructure charges. In order to ensure non-discriminatory access, Article 6(3) of Directive 91/440 laid down the principle of the independence of the body entrusted with the essential functions thenceforth listed in Annex II to that directive. 
            51. They are as follows: the licencing of railway undertakings, allocation of capacity, allocation of individual train paths, setting of charges to be paid by transport undertakings, and monitoring compliance with public service obligations. Article 6(3) of Directive 91/440 and Articles 4(2) and 14(2) of Directive 2001/14 refer, respectively, to the independence of a ‘body or firm’ providing access to the network, of a ‘charging body’ and of a capacity ‘allocation body’. 
            52. Those essential functions are functions which may under no circumstances be performed by a railway undertaking. They may, however, be performed either by the manager, if it is independent from any railway undertaking, inter alia the incumbent operator, or, if that is not the case, by a ‘body’. All decisions of bodies entrusted with essential functions are open to challenge before an independent regulatory body introduced by Article 30(1) of Directive 2001/14.
            53. The essential function of allocating train paths is performed in Hungary by the VPE, which is a body independent of any railway undertaking. MÁV Zrt. and GySEV Zrt., however, are infrastructure managers but also railway undertakings. At the heart of the Commission’s first complaint is therefore the question whether traffic management is covered by the concept of infrastructure management, and if so whether it includes the allocation of train paths and must therefore be entrusted to a body that is independent of any railway undertaking. In order to answer those questions it is necessary to clarify the precise meaning of the terms ‘essential function’ and ‘train path’.
            b) Essential function and train path
            54. According to Annex II to Directive 91/440, the essential functions referred to in Article 6(3) include: ‘preparation and decision making’ related to the licensing of railway undertakings, ‘decision making’ related to path allocation, including ‘the allocation’ of individual train paths, ‘decision making’ related to infrastructure charging, and ‘monitoring’ observance of public service obligations required in the provision of certain services. Therefore, for the purposes of the European Union railways legislation, an essential function consists of activities of an administrative or quasi-administrative nature such as preparation and decision making or the monitoring of observance with obligations. 
            55. However, according to point 1 of Annex II to Directive 2001/14, the minimum access package which the infrastructure manager is to supply to the railway undertakings comprises, inter alia, (d) train control including signalling, regulation, dispatching and the communication and provision of information on train movement, and (e) all other information required to implement or operate the service for which capacity has been granted. These are therefore services which, in my view, are covered by the concept of rail traffic management.
            56. According to Article 2(l) of Directive 2001/14, ‘train path’ means the infrastructure capacity needed to run a train between two places over a given time-period. The allocation of a train path by including it in the timetable or an ad hoc decision in accordance with Article 23 of Directive 2001/14 constitutes for the railway undertaking the right to use specific infrastructure capacity. From the legal view point, that corresponds to the grant of a licence or an administrative or quasi-administrative authorisation. That interpretation is supported by Article 13(2), which provides for ‘the right to use specific infrastructure capacity in the form of a train path’. 
            57. Like all rights, rights in the form of a train path can also be exercised by their holder by performing activities failing within the scope of such rights. With regard to train paths, exercise consists of operating on the section in question during the period covered by the train path. It should be added that under-utilisation of a train path may, according to Article 27 of Directive 2001/14, incur the obligation to surrender it. 
            58. On the basis of those reflections, it seems to me that traffic management consists of services that also fall within the scope of infrastructure management. According to Article 2(h) of Directive 2001/14, infrastructure management ‘may also include the management of infrastructure control and safety systems’. 
            59. It is clear from the above considerations that traffic management activities do not include decision taking with regard to path allocation, but only the implementation of such decisions, either by adopting timetables or by ad hoc allocation of train paths. Rail traffic management is a factual activity intended to ensure the actual, safe exercise of rights to use capacity in the form of train paths. In other words, when the network manager gives a train a green signal, that action does not constitute a right to the train path. Similarly, a red signal operated by the network manager does not mean that the train path has been withdrawn. It is necessary therefore to avoid any confusion between the existence of rights and the exercise of those rights, since the schemes introduced to regulate the various forms of traffic through the granting of rights are on a completely different level from the day-to-day monitoring of the exercise of such rights by the competent authorities, such as the police, pilotage or rail traffic management. 
            60. Traffic management does not therefore involve decision making for the purposes of the list of essential functions. Since it is clear from Article 6(3) of Directive 91/440 that Member States may assign to railway undertakings or to any other body the responsibility for managing railway infrastructure apart from the essential functions, traffic management may therefore be entrusted to railway undertakings such as MÁV Zrt. and GySEV Zrt. 
            61. That conclusion is based on a literal, systematic interpretation of Directives 91/440 and 2001/14. I would add that it is scarcely conceivable that the legislature would have deliberately failed to mention a matter as important as traffic management in Annex II to Directive 91/440 if its objective had been to include it among the essential functions. It remains none the less to be examined whether the Commission’s teleological argument is capable of undermining that conclusion.
            62. According to the Commission, the traffic manager must be aware of what capacity allocation decisions have been taken in order to carry out its management, so that, since MÁV Zrt. and GySEV Zrt. are informed, under the operating rules, of any capacity allocation decision concerning their competitors, in essence those operators thus become involved in the process of capacity allocation.
            63. I am not convinced by that argument. In reality, capacity allocation consists either in drawing up regular working timetables for the network or in taking individual ad hoc decisions allocating train paths. In either case, Directive 2001/14 lays down detailed rules imposing procedural and substantive obligations on the allocation body managing infrastructure. I do not perceive the alleged link between the activities involved in traffic management and the tasks of the allocation body as described in Chapter III of Directive 2001/14.
            64. As regards the fact that MÁV Zrt. and GySEV Zrt. are necessarily informed of any capacity allocation decision concerning their competitors, the fact remains that such capacity allocation decisions are generally included in the regular working timetables, which are by their nature accessible to third parties. As regards ad hoc train path allocation decisions, it seems to me that the infrastructure manager, even if it were not responsible for traffic management, ought to be informed of them, in view of the possibility of maintenance work on the section concerned and the need to have access to services such as use of running track points and junctions.
            65. In accepting that infrastructure management, apart from essential functions, may be entrusted to railway undertakings or to any other entity, the European Union legislature necessarily conceded that, where the maintenance of the network is entrusted to a railway undertaking, the latter needs to have information concerning capacity allocation. 
            66. There is still the need to examine the Commission’s argument that managing traffic involves, in the event of disruption to the service or danger, the traffic manager taking the necessary steps to restore normal operation. In such a case, the traffic manager has no choice but to depart from the timetable previously laid down and reallocate available train paths and network capacity. The fact that the traffic manager intervenes locally to restore operation in cases of danger or disruption means, in the Commission’s view, that it takes decisions concerning the allocation of train paths and enjoys discretion in that regard. Withdrawal of a path is also an action which is an essential function concerning path allocation for the purposes of Annex II to Directive 91/440. 
            67. That argument seems to me to be based on confusion between the establishment of rights and the exercise of such rights. The allocation of rights to specified capacity in the form of train paths is an essential function which, in Hungary, is entrusted exclusively to the VPE. As the Hungarian Government has shown, that also applies in the case of disturbance to train movements caused by technical failure or accident, referred to in Article 29(1) of Directive 2001/14. (11) It is the infrastructure manager which must take all the necessary steps to restore the situation to normal, a task which may include withdrawing train paths. On the other hand, the reallocation of train paths falls to the independent allocation body, in this case the VPE.
            68. Traffic management consists of measures taken by the manager so that rights to capacity can be exercised in the form of train paths. That type of decision cannot be likened to the allocation of train paths. If that were not the case a railway undertaking which had, for example, the right to the train path between towns A and B from 15 hours to 16 hours, would benefit from two train path allocations, the first corresponding to the adoption of the working timetable by the competent body, and the second at the moment the signal turned to green at the station of town A at 15 hours on the initiative of the traffic manager. Such an analysis cannot but fail.
            69. For that reason, decisions of the traffic manager withdrawing train paths in cases of absolute emergency and necessity must be regarded, not as reallocation of train paths but as emergency measures affecting their use. Given that, according to the wording of the first subparagraph of Article 29(2) of Directive 2001/14, that provision does not specify the entity empowered to decide on such emergency measures, unlike the cases referred to in Article 29(1) or in the second subparagraph of Article 29(2), it is not excluded that that entity may be the infrastructure manager, even where a railway undertaking or the police or civil protection authorities are involved. 
            70. For those reasons, I propose that the Court should not uphold the Commission’s first complaint.
            B – The second complaint, concerning independence in the levying of charges 
            1. Arguments of the parties
            71. The Commission claims that, under Article 6(3) of Directive 91/440 and Article 4(2) of Directive 2001/14, an entity providing rail transport services cannot take a decision concerning the determination of charges since such an entity can be empowered only to collect such charges. According to those provisions, the establishment and setting of charges must be done by an independent charging body.
            72. According to the Commission, the Hungarian legislation conflicts with those two provisions in so far as detailed invoices for the charges to be paid for the use of infrastructure are established by the infrastructure managers, MÁV Zrt. and GySEV Zrt., which are also railway undertakings.
            73. The Commission observes that the phrase ‘the determination of the charge for the use of infrastructure’ contained in Article 4(1) of Directive 2001/14 must be interpreted as meaning both the overall setting of charges, which consists in laying down in the operating rules the amount of the charge per kilometre for each section of track, and the specific calculation of the amounts payable by the various users according to the length of the section used. Under Article 4(2) of that directive, the option that a non-independent infrastructure manager may undertake the collecting of charges should be interpreted strictly, since that is an exception to the rule. 
            74. The Commission is of the opinion that a railway undertaking which is responsible for establishing detailed invoices of charges derives a competitive advantage from this, in so far as such invoices necessarily refer inter alia to the services used by competing railway undertakings, the volume of such services and the times when they are used. Article 6(3) of Directive 91/440 expressly refers to the principle of equitable and non-discriminatory access.
            75. The Hungarian Government responds that infrastructure managers take decisions concerning the determination of charges in so far as they are responsible for invoicing in connection with the collection of charges, which is not an essential function within the meaning of Directive 91/440 that must be carried out by an independent body. Invoicing is only a technical means for recovering such charges.
            76. The Hungarian Government draws a distinction between the formulation of charges, the actual setting of charges and their collection. The first of those concepts corresponds to the establishment of the various charging rules, which is carried out by the Member State or by the infrastructure manager. The setting of such charges consists in setting the various individual charges which a given railway undertaking must pay in a particular situation, based on the services it has requested. It is for the VPE, as an independent body recognised by the Commission, to carry out the tasks associated with the formation and setting of charges. The collection of charges means the specific act of payment by which the charges that have been set are paid to the infrastructure manager. Invoicing is only the technical translation of the charges based on the calculations by the VPE and does not therefore relate either to the formation or specific setting of charges, but to the collection of charges. 
            77. The Hungarian authorities doubt whether access to information obtained from detailed invoices would result in distortion of competition, since the infrastructure manager has no actual influence on the setting of network access charges. Furthermore, the infrastructure manager would necessarily be aware of that information from other sources, such as the contractual agreement it has entered into with the railway undertaking. Even where the infrastructure manager becomes aware of information of which it was previously unaware it must not in any event disclose it to the divisions providing rail transport. 
            78. The Polish Government, like the Hungarian Government, contends that invoicing does not consist in determining the amount of charges or taking any sort of decision on matters connected with the collection of charges, but is an aspect of charging for the purposes of Article 4(2) of Directive 2001/14. Charging is a secondary activity intended, by means of mathematical operations, to establish a result on the basis of a predetermined rate, according to train paths previously allocated and the use made of those paths.
            2. Examination of the second complaint
            79. It should be noted first of all that the second complaint concerns the same issue as the first complaint in Case C-483/10 Commission  v Spain , with regard to independence in respect of charging, but from the opposite perspective. In the latter case, the Commission’s complaint relates to interpretation of the term ‘determination’ of charges, in order to define the respective powers of the Member State and the infrastructure manager. (12) In the present case, the issue of interpretation concerns the terms ‘collection’ or ‘recovery’, a function that may also be performed by an infrastructure manager which is not independent of any railway undertaking, unlike ‘determination of charges’, which is an essential function. In other words, the Court must define what is meant by the essential function ‘determination of charges’ at least in respect of non-independent players, whereas in Commission  v Spain  it is a matter of defining what that same essential function means at most in relation to the State. 
            80. In that regard, it should be noted that under Article 4(1) of Directive 2001/14 Member States must establish a charging ‘framework’ and may also establish specific charging rules, while respecting the management independence of the infrastructure manager. It is the infrastructure manager which is responsible for determining the charge for the use of infrastructure and for collecting it. The latter task does not therefore constitute an essential function and may therefore be delegated to non-independent operators. In fact, according to Article 6(3) of Directive 91/440, Member States may assign the ‘collecting’ of charges to railway undertakings or any other body. (13)
            81. According to the Hungarian Government, a distinction may be drawn between the formation of charges, the actual setting of charges and their collection. I note that the Commission contends in Commission  v Spain that the term ‘determination’ has a different meaning from the term ‘payment’, which is only a stage in the collection procedure and which must be considered to be covered by the term ‘collection’. 
            82. It seems to me that Directive 2001/14 establishes, by use of the verb ‘determine’, an area reserved for the infrastructure manager as regards charging. In relation to the State, the upper limit of that area results from the requirement for flexibility within the charging framework in relation to the rules established by the State. Its lower limit – below which begins the area of ‘collection’ or ‘recovery’ – corresponds with regard to operators that are not independent, to the distinction between purely mechanical calculation, on the basis of objective data and criteria, and decisions involving choices and assessments concerning the factors included in such calculation. The latter limit is the one which creates the need for a separate charging body, where the infrastructure manager is not independent in its legal form, organisation or decision making.
            83. According to the Hungarian Government, invoicing is only the technical translation of charges based on calculations by the VPE and does not therefore relate either to the function of formation of charges or to that of specific setting of charges, but merely to the collection of charges. (14) It seems to me that the Commission does not deny the mechanical nature of invoicing, but considers that ‘collection’ must, as an exception, be interpreted strictly, so that determination of charges includes specific calculation of the amounts payable by the various users according to the length of the section of track used.
            84. It seems to me therefore that the decisive factor from the Commission’s point of view is that a railway undertaking which is responsible for drawing up detailed invoices of charges derives a competitive advantage from this, in so far as it may thus have access to information concerning the services used by competing railway undertakings, the volume of such services and the times when they are used.
            85. I do not think that the Commission’s analysis provides an appropriate basis for the conclusion the Commission seeks to reach. I find it difficult to imagine a scheme for the ‘collection’ or ‘recovery’ of charges in which the body responsible f or doing this – which, according to the European Union rules, may be a railway undertaking – does not obtain knowledge of the supporting information on which the invoices which it is collecting are based. From the point of view of the information to which the entity responsible for collection has access, there is no decisive difference between invoicing through the mechanical application of a calculation formula to data supplied to that entity, and the collection of amounts appearing on invoices prepared by a third party. 
            86. Furthermore, as I stated above (see point 64), the infrastructure manager is necessarily aware of the capacity allocation. On the basis of that information, of other freely accessible information concerning rail services, and the amounts to be collected, it can easily draw the appropriate conclusions concerning its competitors’ services. (15)
            87. For those reasons, I consider that the Commission has not managed to establish that Hungary has failed to fulfil its obligations under Article 6(3) of Directive 91/440 in so far as the invoicing of charges is concerned.
            88. I conclude from this that the Commission’s second complaint must be rejected.
            C – The third complaint: the financial equilibrium of the infrastructure manager and incentives to reduce costs and charges 
            1. Arguments of the parties
            89. The Commission criticises Hungary for not laying down conditions to ensure that the accounts of infrastructure managers are in balance, contrary to what is required by Article 6(1) of Directive 2001/14. It notes that Article 28(1) of the Railways Law provides that the minister responsible is to undertake in a contractual agreement to fund all expenditure recognised as justified, incurred in the management of the network by the railway undertaking responsible for infrastructure management. However, no such contractual agreement has so far been concluded. 
            90. Similarly, the Commission maintains that the Hungarian legislation contains no incentives to reduce costs and charges, contrary to the provisions of Article 6(2) and (3) of Directive 2001/14. It refers to Article 28(1) of the Railways Law, which provides that the contractual agreement referred to in that article must provide incentives for infrastructure managers to reduce their management costs and charges for access to the network.
            91. The Hungarian Government argues in that regard that a draft contractual agreement within the meaning of Article 28(1) of the Railways Law is in the process of being prepared.
            92. In its reply, the Commission states that it has not yet received that draft contractual agreement and that it is therefore not in a position to assess whether those new provisions comply with Directive 2001/14.
            2. Examination of the third complaint
            93. With regard to the third complaint, concerning the financial equilibrium of the infrastructure manager and incentives to reduce costs and charges, suffice it to say that the Hungarian Government does not dispute that complaint. It merely contends that the draft contractual agreement referred to in Article 28(1) of the Railways Law, by which the minister responsible undertakes to fund expenditure incurred in the context of infrastructure management and which must provide incentives for infrastructure managers to reduce their management costs and access charges, is in the process of being prepared. 
            94. It is settled case-law that the question whether there has been a failure to fulfil obligations must be examined on the basis of the position in which the Member State found itself at the end of the period laid down in the reasoned opinion. (16)
            95. I conclude from this that the Commission’s third complaint is well-founded.
            D –  The fourth complaint, concerning the establishment of charges on the basis of direct costs 
            1. Arguments of the parties
            96. In its application, the Commission claims that the Hungarian legislation does not comply with Article 7(3) of Directive 2001/14, in so far as is does not at the present time contain any provision ensuring application of the direct costs principle, contrary to what is required by that provision.
            97. In its defence, the Hungarian Government contends that the VPE drew up Regulation No 83/2007 (X.6) GKM-PM laying down the method for establishing charges, which entered into force on 12 December 2010 for a period of five years from the year 2010/2011.
            98. In its reply, the Commission states that the document approving the method for establishing charges has not yet been sent to it and contends, from its reading of the defence, that that method does not appear to meet the requirements of Article 7 of Directive 2001/14. 
            99. The Polish Government notes that the Commission stated in its reasoned opinion that the direct costs referred to in Article 7(3) of Directive 2001/14 should be 35% of the total cost of maintenance of the infrastructure. According to the Polish Government, that statement has no basis in Directive 2001/14, since the latter does not define the concept of the cost that is directly incurred as a result of operating the train service and Member States have a certain amount of flexibility in establishing charges for access to infrastructure. 
            2. Examination of the fourth complaint
            100. In so far as the fourth complaint must be understood as referring only to infringement of Article 7(3) of Directive 2001/14, establishing a failure in that regard does not raise any particular problems, since, on the expiry of the time-limit set in the reasoned opinion of 8 October 2009, the Hungarian legislation did not include any method for establishing charges on the basis of direct costs because that legislation entered into force on 12 December 2010.
            101. I conclude from this that the Commission’s fourth complaint must be considered to be well-founded.
            V – Costs 
            102. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 
            103. As the Commission has claimed that Hungary should be ordered to pay the costs, this claim must be upheld if, as I propose, the action for failure to fulfil obligations is upheld for the most part.
            104. Under the first subparagraph of Article 69(4) of the Rules of Procedure, the Czech Republic, the Republic of Latvia and the Republic of Poland, which have sought leave to intervene in this case, are to bear their own costs.
            VI – Conclusion 
            105. In the light of the foregoing considerations, I propose that the Court should: 
            ‘(1) declare that Hungary has failed to fulfil its obligations 
            – under Article 6(1) of Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure, as amended by Directive 2004/49/EC of the European Parliament and of the Council of 29 April 2004, by failing to adopt measures to ensure the financial equilibrium of infrastructure managers;
            – under Article 6(2) of Directive 2001/14, as amended by Directive 2004/49, by failing to provide incentives for infrastructure managers to reduce the costs of provision of infrastructure and the level of access charges; and
            – under Article 7(3) of Directive 2001/14, as amended by Directive 2004/49, by failing to ensure that charges for the minimum access package and track access to service facilities are set at the cost that is directly incurred as a result of operating the train service;
            (2) dismiss the action as to the remainder; 
            (3) order Hungary to bear the costs of the proceedings; 
            (4) order the Republic of Poland, the Republic of Latvia and the Czech Republic to bear their own costs.’
            (1) . 
            (2)  –	Council Directive of 29 July 1991 on the development of the Community’s railways (OJ 1991 L 237, p. 25). 
            (3)  –	Directive of the European Parliament and of the Council of 26 February 2001 (OJ 2001 L 75, p. 1). 
            (4)  –	Directive of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification (OJ 2001 L 75, p. 29). 
            (5)  –	Directive of the European Parliament and of the Council of 29 April 2004 (OJ 2004 L 164, p. 44). It should be noted that the title of Directive 2001/14 was amended by Article 30 of Directive 2004/49. Its title is now ‘Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure’. 
            (6)  –	Cases pending before the Court C-483/10 Commission  v Spain ; C-512/10 Commission  v Poland ; C-528/10 Commission  v Greece ; C-545/10 Commission  v Czech Republic ; C-555/10 Commission  v Austria ; C-556/10 Commission  v Germany ; C-557 Commission  v Portugal ; C-625/10 Commission  v France ; C-627/10 Commission  v Slovenia ; C-369/11 Commission  v Italy ; and C-412/11 Commission  v Luxembourg .
            (7)  –	Magyar Közlöny  2005/172.
            (8)  –	Magyar Közlöny  2007/134.
            (9)  –	Magyar Közlöny  2007/181.
            (10)  –	Council Directive 95/18/EC of 19 June 1995 on the licensing of railway undertakings (OJ 1995 L 143, p. 70), and Council Directive 95/19/EC of 19 June 1995 on the allocation of railway infrastructure capacity and the charging of infrastructure fees (OJ 1995 L 143, p. 75).
            (11)  –	The relevant national provisions are contained in Article 23 of Regulation No 101/2007 GKM (cited in point 21 above) and in paragraph 4.8.1 of the Network Operating Rules (cited in point 23).
            (12)  –	It should be added that that issue also arises in a different form in Case C-545/10, Commission  v Czech Republic .
            (13)  –	I doubt whether the different terms used (‘perception’ and ‘recouvrement’) in the French versions of Directives 91/440 and 2001/14 reflect a legal distinction.
            (14)  –	The Government states in its rejoinder that the VPE sets the amount to be paid by individual users, calculated according to the length of the section of track which they wish to use, its characteristics and the services proposed in the context of operating on the track. The infrastructure manager merely sends that user an invoice based on the amount calculated in respect of the path allocation. 
            (15)  –	See Article 8(3) of Directive 2001/14 (transparency of charging) and Annex I to that directive.
            (16)  –	See inter alia Case C-391/10 Commission  v Belgium  [2011] ECR, paragraph 8, and Case C-390/10 Commission  v Luxembourg  [2011] ECR, paragraph 11.