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Document 52013SC0013
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure
/* SWD/2013/013 final */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area, as regards the opening of the market for domestic passenger transport services by rail and the governance of the railway infrastructure /* SWD/2013/013 final */
COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the
European Parliament and of the Council amending
Directive 2012/34/EU of the European Parliament and of the Council of 21
November 2012 establishing a single European railway area, as regards the
opening of the market for domestic passenger transport services by rail and the
governance of the railway
infrastructure Lead DG: MOVE 1. Problem definition The Single European Railway Area as
defined in the 2011 White Paper on transport policy aims to create an internal
railway market where European railway undertakings (RU) can provide services
without unnecessary technical and administrative barriers. Despite existing
legislation, efficiency and competition problems still exist. Rail infrastructure is the backbone and
driver for the internal market but is also a natural monopoly due to its high
costs. Given growing pressure on public finances, improved efficiencies are
more crucial than ever to ensure optimal management and utilisation of the
shared infrastructure by different RUs. To allow sustainable growth the
barriers to entry in the rail sector need to be addressed. Strengthening the single market by optimising
the governance of infrastructure management, in particular by ensuring that the
infrastructure manager (a) performs a consistent set of functions coordinates
with its EU counterparts on cross-border issues and is responsive to the needs
of rail undertakings ("efficiency challenge"); and (b) allows for effective
non-discriminatory access to the infrastructure ("equal access
challenge"), is a way in which to assist such sustainable growth. Firstly, an efficiency challenge raises
because the current governance does not provide sufficient incentives and means
for infrastructure managers (IM) to respond to the needs of the transport
services market and to contribute to the optimisation of the performance of the
sector taken as a whole. While the Recast of the First Railway package has
introduced the obligation to IM to consult users and foresees use of perfomance
schemes and targets, these do not allow for a stuctured and continuous dialogue
with users. In addition, the distribution of different infrastructure
management function among different market players can lead to inconsistencies
in the management of infrastructure and increase coordination costs. Finally,
an important condition for completing the Single European Rail Area is to
improve the functioning of cross-border cooperation of IMs. Secondly, conflicts of interest in
vertically integrated railway holidngs naturally lead to protectionist
practices of historical incumbents which impair competition in rail services for
all other applicants and thus result in "equal access challenge". Experience
over the last decade has demonstrated that the implementation of current
separation requirements did not completely prevent the conflicts of interest
and discriminatory practices in respect of access to rail infrastructure and related
services. In addition, the existing legal framework has proven to be
insufficient to allow detection of and prevent cross-subsidisation from IMs to
incumbents. Even reinforced regulators' powers under the Recast cannot prevent
this, as the risk is inherent in the existing structure. The problems described above and the
measures to be proposed to address them will affect a large number of players
in the rail market including national authorities, IMs, RUs and indirectly also
passengers and users of rail freight services. 2. Subsidiarity Articles 58, 90 and 100 of the Treaty
extend to railways the objectives of a genuine internal market in the context
of an EU Common Transport Policy. Actions by Member States alone cannot
ensure the coherence of EU railway market and address the divergent
interpretation of the legislation, as persistence of national rules and
sub-optimal functioning of national institutions, acting as barriers to the
internal market, is in fact at the centre of the problem. Action at EU level
aims to ensure consistent implementation of the EU rail acquis, which
should lead to the creation of the Single European Railway Area with no
unnecessary administrative and technical barriers. 3. Objectives General objective: Strengthen further the governance of railway infrastructure,
thereby enhancing the competitiveness of rail sector vis-à-vis other modes and
developing further the Single European Rail Area. Specific objectives: Efficient management challenge: 1. Improve the IM ability to
manage efficiently the infrastructure in favour of users Equal access challenge: 2. Eliminate conflict of
interest and distortions of competition in infrastructure access Operational
objectives: Efficient management challenge: 1. Ensure better
coordination/alignment between the IMs and rail operators 2. Ensure coherence in the
management of the different IM functions 3. Ensure that the
cross-border and pan-European dimension of rail infrastructure is adequately
addressed Equal access
challenge: 1. Extend the scope of
"essential functions" to all IM activities which are potential
sources of conflicts of interest and distortions of competition 2. Apply appropriate
safeguard measure(s) preventing conflicts of interest and distortions of
competition to all the "essential functions" of IMs Figure 1 –
Mapping between Problems drivers, root causes and objectives 4. Policy
options To address the two main challenges of
efficiency and equal access in order to find an optimal governance structure five
groups of options were screened, each proposing measures to remedy the
different problem elements, such as market co-ordination, consistency of
function, cross-border interfaces, conflicts of interest and equal access. For
each group two to four options were developed in addition to baseline options. The
combination of all these options could create theoretically 576 scenarios. To
reduce complexity, for each set of measures, pre-screening was based on
stakeholder views, compliance with subsidiarity/proportionality principles,
effectiveness in terms of policy objectives and overall feasibility. The table
below shows the 11 options that have been retained including 5 baseline
scenarios of the 19 options assessed. Problem element || Respective category of options || Policy options considered || Retained Insufficient market orientation of IMs || C options: Coordination between IM and RUs || Option C0: Baseline – improvements as foreseen by the Recast || √ Option C1: RUs participation to IMs' board || Option C2: IMs-RUs coordination bodies || √ Option C3: Alignment through new financial incentives || IM functions managed in an inconsistent manner || F options: Consistent management of key functions || Option F0: Baseline – the content of existing essential functions is clarified by the ECJ || √ Option F1: New coordination mechanism between the various entities in charge of IM functions || Option F2: Unified IMs (all IM functions under IM responsibilities) || √ Cross-border cooperation between IM not sufficient || CB options: Cross-border IM management || Option CB0: Baseline - implementation of existing EU law (the Recast, regulation of rail freight corridors, etc.) || √ Option CB1: Establishment of an EU network of IMs || √ Option CB2: Creation of an EU structure integrating national IMs || Equal access needs to be assured to all key functions || SF options: Functions subject to the separation requirements || SF0: Baseline – separation requirements applying only to path allocation and track access charging || √ Option SF1: Current essential functions+ traffic management separated || Option SF2: Current essential functions +traffic management + maintenance separated || Option SF3: All IM functions separated || √ Conflicts of interests in the management of IM functions management || S options: Way of separation of IMs from RUs || Option S0: Baseline - existing separation requirements for the essential functions as interpreted in the forthcoming ECJ ruling || √ Option S1: Additional competences for regulatory bodies || Option S2: Clarify in EU law the concrete implications of existing separation obligations || √ Option S3: Institutional separation || √ Option S4: Compliance officer in integrated structures || After screening, only the following
scenarios and options have been retained: Category of options || Baseline Scenario || Scenario 1 || Scenario 2 || Scenario 3 Coordination between IM and RUs || Option C0: Improvements as foreseen by the Recast || Option C2: Coordination bodies || Option C2: Coordination bodies || Option C2: Coordination bodies Consistent management of key functions || Option F0: existing essential functions are clarified by the ECJ, but scope remains limited || Option F2: Unified IMs || Option F2: Unified IMs || Option F2: Unified IMs Cross-border IM management || Option SC0: implementation of existing EU law - the Recast, regulation of rail freight corridors. || Option CB1: establishment of an EU network of IMs || Option CB1: establishment of an EU network of IMs || Option CB1: establishment of an EU network of IMs Functions subject to the separation requirements || Option SF0: Only path allocation and track access charging separated || Option SF3: All IM functions separated || Option SF3: All IM functions separated || Option SF3: All IM functions separated Way of separation || Option S0: Existing separation requirements || Option S0: Existing separation requirements || Option S2: Clarify in EU law the concrete implications of existing separation obligations || Option S3: Institutional separation 5. Assessment of impacts Assessment was carried out on the main economic
impacts of the scenarios, derived from their impact on the railway sector. The
report focuses on direct impacts on the railway sector in terms of enforcement
costs, transaction costs, regulatory costs, the costs of discriminatory
practises, that of the cross-subsidisation, but also the impacts of separation
on the efficiency of infrastructure usage (including assessment of misalignment
costs). Assessment of induced impacts of the initiative, such as level of competition,
level of activity, investments, service quality, safety and SME impacts is also
presented. It also considers the wider indirect impacts on the European
transport system and economy. The analysis is mostly derived from qualitative
assessment of the policy options supported by quantitative elements where
possible. Furthermore assessement on environmental
impacts included climate change, pollution and noise, and social impacts such
as impacts on employment levels, safety and working conditions including wages
were considered. Assessment of direct impacts Impacts compared to the Baseline || Scenario 1 (only efficiency measures) || Scenario 2 (efficiency and enforcement of separation) || Scenario 3 (efficiency and institutional separation) Enforcement costs (one off) || 0/– || – – Potential scale of costs €0.17 billion || – Potential scale of cost €0.24 billion – Limited costs related to establishment of coordination bodies in many MSs and unifying IM functions in some MS. || Related to the costs of internal reorganisation necessary to put in place "Chinese walls". Impacts the MSs having integrated or holding structures. || ~0.9% of yearly operating costs. Impacts the MSs having integrated or holding structures. Transaction costs || + || – Potential cost range €0.05 bn and €0.16 bn per annum || – – Potential cost range €0.05 bn and €0.16 bn per annum Some improvement due to better coordination. Impacts to all MSs. || At least 0.15% of operating costs. Impacts the MSs having integrated or holding structures. || ~0.3% of operating costs. Impacts the MSs having integrated or holding structures. Regulatory costs || 0 || 0 || + It is not expected the costs of regulatory enforcement under Scenario 1 to be materially lower than those arising in the Baseline. || It is not expected the costs of regulatory enforcement under Scenario 2 to be materially lower than those arising in the Baseline. || Regulatory costs per train-kilometre could decline by up to 75% as a result of institutional separation. Impacts the MSs having integrated or holding structures. Other costs and benefits, linked to: Discrimination || 0 || 0/+ || ++ No impact || The scope of oversight of regulatory bodies is extended, but remains mostly reactive thus only partly evading discrimination related opportunity costs. || Full institutional separation would eliminate opportunity and motivation for discrimination. Cross-subsidisation || 0 || 0/+ || ++ No impact || Transparency issues and cross-subsidisation risks remain inherent in integrated and holding structures even if account separation requirements are in place. || Full institutional separation would provide necessary transparency and eliminate opportunity for cross-subsidisation. Efficiency || + || + || ++ Increasing competitive pressure and specialisation of the market players will have an additional positive effect on their productivity and efficiency. At the same time, as further explained under Annex V, there are risks of loss of synergies and economies of scope which can appear in cases of separation between IMs and a dominant RU. However, this is inherent in order to ensure a level playing field for all operators. These risks will be mitigated by the enhanced coordination between IMs and infrastructure users as well as full implementation of the financial incentives foreseen by the Recast (modulation of charges, incentive scheme and performance regime). Such measures will ensure adequate alignment of strategies and investments leading essentially to long term efficiency gains. Assessment of induced and indirect impacts Impacts compared to Baseline || Option 1 || Option 2 || Option 3 Economic impacts || || || - Impact on railway business Level of competition || + || ++ || +++ Level of activity of railway operators || + || ++ || +++ Level of investment || + || ++ || ++ Level of service quality and punctuality || 0/+ || + || ++ Level of rail safety || 0 || 0 || 0 Impact on SMEs || 0 || + || ++ - Impact on the transport sector Modal shift || 0/+ || + || + Efficiency of the transport system (congestion and travel times) || + || + || ++ European economy || + || + || + Impact on the European economy || + || + || + Environmental impacts || || || Climate change || 0/+ || + || + Pollution || 0/+ || + || + Rail noise || 0/+ || 0/+ || 0/+ Social impacts || || || Employment and working conditions in the railway sector || + || + || ++ Transport safety || 0/+ || 0/+ || 0/+ 6. Comparison
of options Taking into account all impacts, scenario 3
is considered to be the most beneficial where an IM users' coordination body is
created, functions are unified, an EU network of IMs is created and all IM
functions are subject to institutional separation requirements. In addition this scenario best meets the
general, specific and operational objectives, improves conditions for
competition and efficiency in the railway system. It facilitates economic
growth, enhances capacity utilisation and infrastructure performance, and
reduces obstacles and barriers to entry through the elimination of conflicts of
interest. It also ensures finacial transparency and reduces the cost of
regulation with limited enforcement costs. The overall results of the comparison of
scenarios are set out in the table below. || Effectiveness || || Efficiency || Coherence || Motivation SO1: Improve the IM ability to manage the infrastructure || SO2: Eliminate distortion of competition in infrastructure access || Operational IM efficiency || Enforcement costs || Regulatory costs || Transaction costs || Employment and working conditions || Environmental sustainability || || 0 || 0 || 0 || 0 || 0 || 0 || 0 || 0 || Scenario 0 Scenario 1 || ++ || +/0 || + || 0/- || 0 || + || + || 0/+ || Scenario 1 is expected to already have a substantial positive impact on IM efficiency. However, in terms of reduction of conflicts of interest, it will have only a limited impact resulting from the extension of the existing independence requirement to all IM functions. While existing transaction costs are impacted in a positive but limited manner by better alignment between IM and RUs, regulatory costs and enforcement costs increased moderately as efficiency measures imply a limited administrative burden. Social and environmental impacts are moderate but positive. Scenario 2 || ++ || ++ || ++ || -- || 0 || - || + || + || Scenario 2 will have the same positive impact than Scenario 1 on the IM ability to manage the infrastructure. However its operational efficiency will improve further with increasing competitive pressure on RUs. Scenario 2 removes conflicts of interest in infrastructure access but does not ensure optimal financial transparency and the absence of distortion of competition. Transaction costs increase with the number of new entrants and traffic growth. Both enforcement and regulatory costs are higher due respectively to the implementation of "Chinese walls" and the absence of financial transparency. Social and environmental impacts are moderate but positive. Scenario 3 || ++ || +++ || ++ || - || + || -- || ++ || + || Scenario 3 improves further the IM ability to manage the infrastructure thanks to the specialisation benefits on institutional separation. With full financial transparency, it eliminates completely risks of distortion of competition at a relatively low enforcement and regulatory cost. Transaction costs increase further despite the mitigating effect of better alignment between IMs and RUs. Traffic growth and efficiency generate the highest positive social and environmental impacts. 7. Summary of the results of
the 4th rail package initiatives The ultimate goal of
separation is to create a more competitive and efficient rail sector and thus
encourage a better service offer, while improving the use of public funds fed
via subsidises into railways. The table below summarises the financial benefits
for: 1. the separation initiative
only (column 1) 2. the domestic passenger
market opening only for two scenarios: Market Opening Scenario 1 - Focus on savings (column 2) - In this scenario it is assumed that
competent authorities would focus on cost savings, taking all the reductions in
PSC tender costs as cash savings and not reinvesting any of these in higher
rail quality or capacity. Market Opening Scenario 2 - Reinvestment (column 3)- In this scenario it is assumed that
competent authorities would not focus on cost savings but would instead
implicitly “reinvest” half the potential reductions in PSC tender costs by
specifying higher quality or capacity in PSCs. In terms of monetary impacts
this implies reduction in NPV, while the benefits appear in terms of increase
in passenger km-s. 3. combined impacts of both
initiatives separating two different outcome scenarios: Combined Impacts Scenario 1 – Focus on savings (column 4) Combined Impacts Scenario 2 – Focus on reinvestment (column 5) Combined core financial estimates of impacts of market opening and infrastructure governance policies All changes are illustrative estimates NPVs (bil €) to 2035, discounted at 4% to 2019 || Separation Scenario 3 || Market opening: Scenario 1 - Savings || Market opening: Scenario 2 - Reinvestment || Combined impacts: Scenario 1 - Savings || Combined impacts: Scenario 2 - Reinvestment || 1 || 2 || 3 || 4 || 5 Transaction costs (mean estimate) || -1.37 || -0.42 || -0.42 || -1.77 || -1.77 Domestic service benefits* || 5.86 || 29.85 || 21.46 || 43.07 || 33.71 International service benefits || 1.07 || || || 1.05 || 0.89 Freight benefits || 1.00 || 1.00 || 1.00 Total NPV || 6.56 || 29.44 || 21.04 || 43.35 || 33.83 The institutional
separation envisaged under Scenario 3 is an important precursor to the delivery
of the full benefits of market opening, as already implemented for rail freight
market and international passenger rail market. The two initiatives together result
in important synergies as demonstrated in the table below. Combined outcome range impacts of market opening and infrastructure governance policies All changes are illustrative estimates in euro per annum || Financial benefits (NPV, € bn) || Increase in passenger km (bn) || Increase in new entry market share (%) Scenario 1 –Focus on saving || || || Vertical separation alone || 6.56 || 0.8 || 0.5 Market Opening alone || 29.44 || 2.0 || 3.8 Combination of market opening and vertical separation || 43.35 || 3.8 || 6.4 Scenario 2 – Reinvestment || || || Vertical separation alone || 4.42 || 1.1 || 0.5 Market Opening alone || 21.04 || 8.4 || 3.7 Combination of market opening and vertical separation || 33.83 || 16.4 || 6.2 The first scenario focuses only on
financial benefits (consisting mostly of public savings) while the second
reinvestment scenario would allow provision of 16.4 billion additional
passenger-km (6% increase of passenger-km on top of the baseline developments)
and would enable an 6% increase in market share of new entrants to 25%. 8. Monitoring and evaluation The Commission will monitor and evaluate
the implementation of the specific objectives of this legislation and its
impacts through a set of indicators on an ongoing basis. In order not to
increase the burden on bodies responsible for providing data, these indicators
are aligned with those provided to the Commission as part of existing EU law
through the enhanced Rail Market Monitoring Scheme (RMMS), regulatory bodies
and the European Railway Agency. Indicators will include infrastructure
utilisation rates, traffic volumes, the number of new entrants, market share of
new entrants and complaints to regulators. Much of this information is already available
from the existing RMMS which involves all relevant stakeholders and the Recast
foresees enhancements to cover infrastructure charging, capacity allocation, investments
in railway infrastructure, pricing, quality of services, public service
contracts, licensing and the degree of market opening, harmonisation between Member States and employment and the related social conditions.