- Shortcomings in the development of competition in the rail sector persist.
- Designing a funding framework that promotes fair competition requires a thorough analysis of the costs and benefits of rail, road, air and maritime transport.
- The Monopolies Commission recommends amendments to the Railway Regulation Act.
- Structures relating to fare setting and ticket sales are hindering competition in the transport markets.
Competition in the German railway markets remains inadequate and is determined by the special position of Deutsche Bahn AG. This is the conclusion reached by the Monopolies Commission in its sixth special report on the development of competition in the railway markets, entitled ‘Rail 2017: Areas for Improvement in Competition Policy’, which was submitted to the Federal Government today. The analysis of the German rail sector shows that the Rail Regulation Act should be amended for the benefit of rail customers. Furthermore, the Monopolkommission considers it necessary to draw up a transparent cost-benefit analysis for the railways and the modes of transport competing with them, so that public funds are actually deployed where they yield the best return.
Competition between rail and other modes of transport, such as road transport, is largely determined by state funding measures. “At present, however, there is a lack of evidence on how, for example, subsidies for road and rail construction, vehicle tax or a bus toll affect this competition. The Monopolies Commission therefore recommends the most comprehensive analysis possible of the costs and benefits of the various modes of transport, as has been carried out in Switzerland, for example,” said the Chairman of the Monopolies Commission, Professor Achim Wambach. In particular, environmental impacts should also be taken into account. Decisions on charges and taxes for the individual modes of transport should be made on the basis of such a cost-benefit analysis. This is the only way to ensure that public funds are allocated where they generate the greatest benefit. In this way, the Federal Government will also fulfil its statutory duty to ensure fair competition between modes of transport.
The efficiency gains sought under the new Railway Regulation Act, which are intended to lead to lower ticket prices, are not being achieved. This is because the incentive mechanisms are inadequately designed and are not resulting in cost reductions that could be passed on to customers. In order to achieve efficiency gains and cost reductions in the infrastructure, the costs set out in the service and financing agreement between the Federal Government and Deutsche Bahn AG, as well as station charges, would also need to be subject to incentive-based regulation.
To enable customers to use trains from different operators on a single ticket, railway undertakings must cooperate on fares and sales. However, the terms of these fare partnerships are dictated by Deutsche Bahn AG, which can significantly restrict competitors. Granting competitors a greater say in fare levels and revenue sharing could remove these barriers to competition. In long-distance transport, the few competitors to Deutsche Bahn have not even had the opportunity to enter into fare and distribution partnerships to date. As access to Deutsche Bahn AG’s sales channels is of particular importance to competitors, Deutsche Bahn AG should not be able to unilaterally reject such cooperation arrangements.
