Open letter to Members of the Transport and Tourism Committee of the European Parliament 15 November 2013


4th Railway Package - Governance part

Full transparency is necessary to attract private investment

We write as companies and associations who are concerned about the progress of the 4th Railway Package in the European Parliament and Council. We know it is complicated, and we appreciate how much time you and your colleagues have spent debating rail issues in recent years. We very much hope that the EP will manage to make good progress on the package by mid-April’s final plenary session.

We, who are interested in seeing rail passenger and freight traffic grow in a competitive market, are concerned about the risks to private investors of failing to complete the package and, in particular, if the Governance section of the Commission proposals fails to retain the full requirements of transparency in the ‘Chinese Wall’ part. Private investors are essential to the growth and efficiency of the rail sector, but there are unquantifiable ‘political’ risks if these investments are found to be subject to unfair competition.

Fair competition between state owned companies and private ones can only be achieved if there is full transparency of financial flows between the RU and IM in both directions.  Recently, the Commission challenged DB for alleged unfair financial transfers from DB Netz to their train operator, and there are similar concerns about lack of transparency in France and Austria which would seriously disadvantage new entrants and their investors without an effective Chinese Wall. 

So, after the original separation proposal (which we supported) from the European Commission was watered down, we believe that the only solution is to retain the full Chinese Walls as proposed by the Commission, ensuring that any financial flows between IM and RU, either directly or indirectly, are fully transparent and monitored by the regulatory body who must have full powers of enforcement.  Without transparency, regulators cannot do their job to make sure cross-subsidisation does not exist.

The retention of the full Chinese Walls will send a message to investors that the rail business is a good one, with known commercial risks but few unknown political ones.  Without this, we foresee no competition and service quality improvement on rail market.   It would result in a reversion to state owned companies having most, if not all, the rail business in the future; in fact reverting to before the First Railway Package in 1991!

We are sure that you will wish to see the completion of the Single Market in rail before the end of this session of the EP.  We therefore urge you to ensure that in the negotiations on amendments this important principle of transparency is retained.  We are at your disposal for further discussions or explanations.