In its report, the Monopolies Commission highlights where action is needed to move closer to the goal of effective competition and an attractive range of rail transport services.
The existing regulatory framework cannot satisfactorily ensure competition in the transport markets. Nor is the draft Rail Regulation Act currently under discussion suitable for significantly revitalising the stagnating development of competition. The draft bill is intended to transpose a European directive ‘one-to-one’. This approach to transposition leads to a high degree of legal uncertainty for all stakeholders, as well as a significant weakening of regulation and competition. The Monopolies Commission considers this step backwards to be a cause for concern and believes, on the contrary, that it is necessary to further develop the regulatory framework. The opportunity to do so has not yet been taken.
Admittedly, the introduction of incentive regulation and ex ante authorisation for infrastructure charges, as envisaged by the draft bill, is to be welcomed in principle. However, the specific plans for implementing these new regulations are unsatisfactory. For instance, incentive regulation is significantly weakened by the failure to take individual inefficiencies into account and by the possibility of stipulating so-called contractual productivity gains. Furthermore, the provisions stipulating that increases in charges are to be linked to the respective rate of increase in regionalisation funds prevent efficient charge setting.
Furthermore, the draft bill lacks the necessary powers of supervision and access to information for the regulatory authority. In addition, in many areas, the framework conditions need to be further developed beyond the scope of the draft bill.
A key obstacle to competition in the awarding of local rail passenger transport contracts is the difficulty private railway undertakings face in procuring and financing rolling stock. Contracting authorities have developed various ways of countering this problem. However, the Monopolies Commission views these activities by the contracting authorities with concern. A major problem is that this involvement does not address the root causes of the financing difficulties; on the contrary, it entrenches and exacerbates them. The establishment and further development of leasing and second-hand rolling stock markets are being permanently hindered. This has given rise to a self-reinforcing mechanism. The further public involvement is expanded, the more private-sector activity is squeezed out, and functioning markets cannot develop; this, in turn, makes the involvement of the public authorities appear all the more necessary. The Monopolies Commission urges that this process be broken by public authorities reducing their activities in vehicle financing.
The Monopolies Commission is convinced that effective and undistorted competition in the rail sector can only develop through a complete separation of the infrastructure and transport divisions of the integrated Deutsche Bahn AG group. This report highlights the opportunities for an integrated group to discriminate against competitors and the limits to which regulation is constrained in effectively preventing such behaviour. The Monopolies Commission has examined in detail the arguments for and against ownership unbundling. The assessment clearly shows that the positive macroeconomic effects of a separation outweigh the negative ones. Furthermore, to reduce existing inefficiencies in the short term, it is necessary to dismantle organisational interdependencies and separate the financial flows between the group’s divisions.
