Evaluating the Recast Directive

The Recast Directive opens the single European railway area to competition. Competition is gradually emerging across the EU but there are obvious asymmetries among Member States, in particular in the commercial passenger sector, which includes high-speed services (see RMMS 2023, Figure 79). While some markets have vibrant competition in high-speed services, others have competition for the market in public service obligation services, yet in some markets no significant evolution has taken place. Barriers to entry in railway markets are particularly relevant. Rail infrastructure is a natural monopoly. Traditionally, infrastructure managers were vertically integrated and enjoyed exclusive rights to provide downstream rail services (freight, passenger, etc.). The elimination of these exclusive rights enables competition in commercial services and public service obligation (PSO) services. However, barriers to entry can deter newcomers. Access to infrastructure is a key factor, as in other network industries, as is access to service facilities. The Recast Directive aims to reduce the barriers to entry related to access to infrastructure: rules on capacity allocation, traffic management, temporary capacity restrictions, etc. Furthermore, it defines the basic principle of non-discrimination by infrastructure managers in favour of vertically integrated railway undertakings when vertical integration exists, and specific rules for the governance of vertically integrated undertakings. Article 63 of the Recast Directive requires the Commission to evaluate the impact of the Directive by the end of 2024, and in particular to draft a report assessing whether discriminatory practices or other types of distortion of competition persist in relation to infrastructure managers which are part of a vertically integrated undertaking, and in particular to evaluate the development of high-speed rail services and assess the existence of discriminatory practices regarding access to high-speed lines. The 25th Florence Rail forum, co-organised by the Transport Area of the Florence School of Regulation together with the European Commission’s DG MOVE, discussed the current situation of competition in the Single European Railway Area. Are there discriminatory practices or other types of distortion of competition in relation to vertically integrated infrastructure managers? What is the impact on the market? How is competition in high-speed evolving? Has vertical integration impacted the evolution of competition? How are the rules to govern vertically integrated infrastructure managers implemented? Are they effective? What new rules should be introduced?