EP Transport Committee Fourth Railway Package - public hearing Brussels, 7 May 2013 Better governance of the railways – a freight perspective Tony Berkeley Chairman, Rail Freight Group (UK)

1. Conditions for growth in European rail 2. How does the 4 th RP achieve this in governance terms? 3. Conclusion Contents

Conditions for growth in European rail Competition with road Road freight is liberalised, competitive and innovative. Rail freight needs to be in the same position, to compete within the rail sector in order to compete with road. We need a single market in rail, which will enable rail to become more competitive, more efficient and more able to compete with road.

Conditions for growth in European Rail 1. Achieving a single market in rail There needs to be: Enough railway undertakings (RUs) to provide competition Fair competition between all RUs Lower start-up costs, with less risk to funders and shareholders

Conditions for growth in European Rail 2. Infrastructure Managers (IMs) to play a decisive role They must: Provide fair access to rail network, terminals and essential services therein Provide fair charging to all RUs Co-operate with other IMs to ensure seamless movement between networks

Conditions for growth in European Rail 3. There must be full interoperability: In operations, capacity allocation, standards, etc Common European standards managed and enforced by the ERA using NSAs as ‘subcontractors’.

H How does the 4th RP achieve this in governance terms - 1? Fair and transparent competition within the sector by: By ensuring that IMs will have full responsibility and control of all the elements needed to operate the infrastructure such as timetabling, capacity allocation, access to track and terminals, dealing with perturbations, maintenance and investment. By the IMs setting up co-ordination committees with its stakeholders and customers, and between IMs, including the Commission and governments.

How does the 4th RP achieve this in governance terms - 2? To create fair competition above track, we welcome the principal requirement for total separation of track and train. This will mean… No special priority in timetabling and access for incumbent’s trains Full transparency of IM from RUs to prevent hidden subsidies which might create unfair competition Total separation of staff, offices and IT systems Total separation of incumbent’s staff and systems from regulatory bodies. Independent regulatory bodies (RBs) with wide ranging powers to investigate and enforce non compliance, quickly and at low cost.

How does the 4th RP achieve this in governance terms - 3? We do not welcome the proposed continuation of the holding company model; should we eventually have no alternative, then the safeguards proposed to protect the IM’s independence and provide comfort to independent RUs are all the more important and must not be diluted. The RBs and the Commission must have the powers to enforce this. The procedure allowing member states (MS) to limit the rights of RUs which are part of vertically integrated holding companies to operate in their country (so called “retaliation clause”) is a useful idea, but needs strengthening to allow the Commission or Regulatory Bodies to limit this operation, and to allow RUs to make formal complaints to these bodies requesting enforcement action. It is unlikely that a MS will take such action on behalf of one of its local RUs, so the RU which suffers commercially should be able to complain wither to the EC or RB.

How does the 4th RP achieve this in governance terms - 4? An essential element in achieving growth and competition is the full interoperability and safety changes proposed. We believe that the ERA should have overall and sole responsibility for standards and authorisations, but should sub-contract much of this role to NSAs, whilst keeping an audit and appeal function. This would allow RUs to buy, sell, lease or transfer rolling stock between different parts of the European network with the minimum cost and delay, improving efficiencies, competitivitity and reducing costs. Retaining the mass of national standards and rules will help perpetuate the technical monopolies that so many MS and their incumbents still maintain, and prevent many new entrants from obtaining the equipment or approvals needed to run new services.

The 4 th RP has the potential to open the network and market to competition, which in turn will bring new ideas, new efficiencies, private investment and therefore growth. However, investors do not want to take the risk if there are technical or legal barriers imposed by MS to protect their incumbent operator, or if the IM gives such preferences to its holding company ‘relation’. Fair competition is already difficult or impossible in some MS with incumbents apparently having unlimited budgets to purchase competition. It is therefore essential that the measures in the 4 th RP should be implemented as a package, with no dilution of requirements that will encourage fair competition. Conclusion

Thank you! Tony Berkeley Chairman, Rail Freight Group UK