Market & Competition - Deutsche Bahn AG

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Deutsche Bahn AG
Kommunikation
Potsdamer Platz 2
10785 Berlin
Subject to change without notice.
No liability accepted for the
accuracy of the information.
Correct at: March 2010
www.deutschebahn.com
Deutsche Bahn AG Competition Report 2010
Competition Report
2010

Photos Cover: Christian Bedeschinski, Michal Málek/DB AG; Photo this page: Matthias Lüdecke/DB AG
DB passes stress test in the economic crisis
Last year was defined primarily by the impact of the economic crisis. Declining
demand led to substantial surplus capacities in some segments, which in turn generated
increasing price competition and modal shifts. These trends are eminently
clear from the figures in this year‘s Competition Report. Rail lost market shares to
road haulage for the first time since 2002. In the passenger market, private motorised
traffic managed to raise its market share again after years of losses. This proves
that competition in the transport markets is working effectively.
DB AG fared very well in this difficult environment, especially when compared
with other major European railway undertakings. An EBIT of EUR 1.7 billion
combined with debt redemption of EUR 932 million confirm that the company is
on the right track to face the forthcoming challenges.
The direction taken by the transport markets and consequently the DB Group
over the next few years will be determined primarily by the regulatory frame work.
The long trans­European routes will be the key to the future of rail freight. In the
passenger segment, too, trans­European services and the expansion of the highspeed
networks will play an increasingly important role. However, for the environment­friendly
rail mode to exploit its potential, equal and fair market entry conditions
have to be ensured all over Europe. Moreover, an equal competitive playing
field has to be created for all transport modes. The Competition Report shows many
examples of where international action is still needed to achieve these conditions.
If it succeeds in providing suggestions for specific improvements, it will have fulfilled
its purpose.
Sincerely,
Dr. Rüdiger Grube
Foreword
Dr. Rüdiger Grube
Chairman of the Board of Management
and CEO of Deutsche Bahn AG
3

[16]
[28]
[10]
[06]
Photos: Terraxplorer/iStockphoto; Thomas Kierok/laif; Michael Neuhaus/DB Schenker AG; Bartlomiej Banaszak/DB AG
Contents
Market & Competition
Logistics industry faces a crisis 6
Crash affects all transport modes in Germany 10
Restrained growth in the rail passenger market 16
Many questions remain unresolved in the bus market 22
Timetable compilation becomes increasingly complex 25
Interview
Joachim Fried interviews Transport Minister Dr. Peter Ramsauer 28
Regulatory Policies
EU transport policy developments 32
In search of a balanced regulatory concept 40
France: the long hard road to an open transport market 46
Symposium “Competition and Regulation in the Rail Sector” 52
5

Market & Competition In 2009, the international
logistics markets suffered a record crash. In Germany,
total freight traffic performance by all transport
modes was down by twelve per cent. The passenger
transport market remained at almost the same
level year-on-year.
6
Photo: Andrey Volodin/iStockphoto
Logistics industry
faces a crisis
The global economic downturn in 2009 has severely affected
the international transport and logistics markets and the impact
is likely to remain noticeable for a long time to come.
In 2009, worldwide production was down by a good
two per cent year-on-year. Following the sharp decline
as from autumn 2008 as a result of the crisis in the financial
and property sector, the gradual recovery did
not set in until summer 2009, albeit starting from a
very low level. The primary factors for the turnaround
were the stabilisation of the financial markets following
massive intervention by the central banks, the
launch of government support schemes and guarantees
for the financial sector, all of which boosted investment
activities. The effects of economic stimulus
programmes also started to become apparent.
Asia was the region with the highest growth.
China suffered only a slight setback to gross domestic
product (GDP) growth, which was up by 8.7 per cent.
Economic stimulus programmes boosted domestic demand,
promoted imports and therefore also supported
world trade, which was nevertheless down by almost
11.5 per cent for the overall year. India’s GDP rose by
almost six per cent, which was again only an insignificant
decrease year-on-year. In Japan, the first signs
of a recovery from the recession did not emerge until
towards the end of 2009 and economic performance
was down by more than five per cent for the year as a
whole. Economic development in the USA benefited
from impetus generated by the economic stimulus
programme, the upturn in world trade and an end to
the liquidation of inventories, although there was no
significant impetus from private consumption or investment
activities. The US economy was down by
2.4 per cent for the year 2009 as a whole.
In the eurozone, the economy bottomed out in
the second quarter of 2009. The economic recovery
in this area was largely due to economic stimulus programmes
launched by the governments. However, as
there was practically no upturn in consumption and
investment activities remained severely restrained,
GDP fell sharply by a good four per cent. In Germany,
which depends to a great extent on exports, GDP was
down by five per cent, which was higher than the
eurozone average. Foreign trade and investments in
plant and equipment were substantially lower than
the previous year. Investments in public construction
projects on the other hand benefited from state investment
programmes and suffered only a moderate decline.
Only consumer spending provided slightly positive
impetus.
Markets suffer from slump in demand
and fierce competition
Service providers in the international transport and
logistics markets were faced with unprecedented
challenges in 2009. In addition to losses resulting
from the massive slump in demand, developments
were also impeded by increasingly fierce price competition
result ing from surplus capacities. Pressure
on costs also grew, not least because of the severe deterioration
in financing conditions. Business enterprises
responded with comprehensive countermeasures,
in particular by adjusting their personnel and
freight space capacities.
In 2009, the market volumes in international air
freight fell by around 10 to 12 per cent. An initial downturn
had already been noticeable in 2008 and this negative
trend continued until autumn 2009. Only in
the second half of the year did a certain stabilisation of
transport quantities become apparent. Asia, in particular,
boasted positive trends. During that same period,
massive capacities were taken out of the market in an
attempt to stop prices collapsing, as by summer rates
on some routes were down by more than 80 per cent
year-on-year. Altogether, the airlines immobilised approx.
10 per cent of their freight capacities.
7

Global economic developement 2008/2009
Global economy
1,6
-2,1
North America
0,4
-2,4
2008 (%)
2009 (%) provisional figures
South/Latin America
4,1
The downward trend in global container shipping continued
well into 2009, with worldwide container volume
down by almost ten per cent for the whole year.
Declining demand for container transports, combined
with the launch of new cargo capacities in the market,
led to a drastic reduction in freight rates up to autumn.
The average rates of around 45 per cent stated in the
2009 “Hamburg Index” drawn up by the Hamburg
Shipbrokers’ Association even fell far short of the record
low of 2002. There has consequently been a significant
increase in competition intensity, both in the
forwarding market and between the carriers, forcing
these players to cut costs. In addition to reducing transport
speeds or making detour routes to make better
use of capacities, a large number of ships were laid up.
At the end of the year, around 550 freight vessels – or
roughly ten per cent of the entire global fleet – were
still out of service. Approx. 200 vessels were scrapped,
a higher proportion of the transport capacity of
the worldwide container fleet to be scrapped in one
year than ever before. Another step taken by the shipowners
was to impose drastic increases in freight rates
as from mid-2009.
In 2009, all transport modes immobilised
huge volumes of transport capacities as a
result of the slump in demand.
-2,0
Eastern Europe
4,6
Western Europe
0,6
1)
-4,1
-6,2
India
7,3
5,7
China
9,6
8,7
1) Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia,
Hungary, Slovenia, Russia; 2) Australia, New Zealand
Asia
(excl. China)
1,0
Oceania 2)
1,9
0,5
-3,0
-1,2
Japan
-5,2
Correct at: 3/2010
In the European land transport market, the los ses
which were already noticeable at the end of 2008 continued
even more severely in 2009, with transport
performance for the whole year down by almost ten
per cent. Until autumn, the surplus capacities resulting
from declining demand led to a sharp drop in
freight rates, further aggravating the already aggressive
price competition. This was particularly evident
from the growing importance of the spot market, in
which transport orders are placed at short notice for
the freight rates applicable at the time, and which in
some cases change on a day-by-day basis. Spot freight
rates that were 30 per cent lower than the previous
year were no exception. The situation was further exacerbated
by the rising costs facing the operators as a
result of longer payment terms, an increasing number
of bad debts, poorer financing conditions, and the rise
in road tolls imposed in 2009. Road haulage companies
took comprehensive action to stabilise the situation,
most of which involved the adjustment of capacities.
In addition to short-time working schemes offered
by the government and redundancies, they also took
numerous trucks out of service. In October 2009, the
Federal Association of Road Haulage, Logistics and
Disposal reported that around 60,000 toll-paying
trucks – approx. 17 per cent of total capacity – had been
taken off the roads in Germany since the start of the
year. 30,000 drivers lost their jobs and thousands of
employees were working short time or had taken early
retirement. According to the latest information from
the Association, the number of insolvencies in the commercial
road haulage market had risen from 513 cases
in 2008 to 788 in 2009.
Revenues in the contract logistics/supply chain
management segment were down by approx. ten per
cent in 2009. This was primarily attributable to the
dramatic drop in sales in the automobile sector. The
In 2009, the declining global
economy caused sharp decrea -
ses in sales in the automobile
industry (far left). There was
a drastic drop in freight rates
for container shipping up to
autumn 2009 (right).
high-tech industry, which also works in close cooperation
with logistics service companies, was confronted
with substantially decreasing volumes. The trend for
consumer goods, on the other hand, proved relatively
stable. As a result of the economic crisis, however,
there was a noticeable trend towards re-insourcing
previously outsourced logistics services across all sectors
of industry. This is expected to be largely a temporary
measure taken by the customers to save jobs.
The outsourcing trend of recent years will pick up
again as the markets continue to stabilise.
No changes amongst the top ten
logistics companies in Germany
As in previous years, the Fraunhofer Society again
published a ranking of the companies with the highest
revenues in the German logistics market in 2009.
Deutsche Bahn defended its leading position from the
year before last in the “Top 100 Logistics Companies”
with logistics revenues of around EUR 7.4 billion in
Germany (2008). Second place went to DHL, the logistics
subsidiary of Deutsche Post, with EUR 6.9 billion,
while Kühne + Nagel came in third with revenues
of EUR 4 billion.
Despite the economic upheaval, there have
been no major changes in the ranking of the top players
since the last survey. Only Hapag Lloyd is no
longer included in the top ten in the latest survey.
Since spring 2009, Hapag-Lloyd belongs to a consortium
made up of the City of Hamburg, various insurance
companies and banks, and Kühne + Nagel,
which owns a share of 26.7 per cent. The logistics entrepreneur
Klaus-Michael Kühne personally holds a
15-per-cent stake in Hapag Lloyd. The company recently
announ ced that it intends to increase its influence
on its competitor even further.
Market & Competition
8 9
Photos: Günter Jazbec/DB AG; DB AG/Schenker
Logistics Top Ten, Germany
Logistics revenues in Germany 2008 (EUR billion)
Deutsche Bahn Group 1 7,39
Deutsche Post DHL 6,95
Kühne + Nagel 4,01
Dachser 2,38
Rhenus 1,80
UPS 1,50
arvato services 1,36
DPD 1,36
VW Logistics 1,26
Hellmann Worldwide 1,22
1) Rail Freight Transportation and Logistics Business Units
Source: Fraunhofer Society, “The Top 100 Logistics Companies”, 2009/2010 survey

Increases of previous years are reversed
(per cent; basis: traffic performance; figures rounded)
Crash affects all transport
modes in Germany
2009 saw a sharp increase in both inter- and intramodal
competition in the freight transport market. Traffic performance
was significantly down year-on-year.
The German freight transport market (rail, road,
inland shipping, long-distance pipelines) suffered an
unprecedented slump of almost 12 per cent in traffic
performance across all transport modes in 2009. The
crash hit inland shipping, and above all rail, much
harder than road. It was not until the last four months
of the year that the overall market began to pick up
again, albeit at a low level. Although all the transport
modes withdrew large volumes of freight space from
the market, the drastic drop in demand led to high
surplus capacities, which in turn triggered aggressive
intra- and intermodal price competition and corres-
ponding modal shifts. While road haulage succeeded
in raising its market share, rail lost market shares for
the first time since 2002. The drop of one percentage
point cancelled out the increases that had been made
since 2005.
Decline is determined by the freight structure
In the road haulage segment (German and foreign
trucks – inclusive of cabotage transports in Germany),
the decrease in tonne-kilometres amounted to approx.
10 per cent, which was lower than in the other
transport modes. Following the strong growth in
traffic performance by foreign road haulage companies
in preceding years, who had fared better than
their German competitors, the situation in 2009 was
reversed as a result of the poor foreign trade trends.
This is confirmed by the toll statistics published by
the Federal Office for Freight Transport. Truck-kilometres
by foreign transport companies on the toll
road network fell by 12.8 per cent, compared with
11.2 per cent for German companies. The far less severe
decline for road transport compared with rail is
due primarily to the different freight structure. The
comparatively low dependence of road on the coal
and steel industry, stable performance by the food
industry – one of the main customer groups for road
haulage – as well as the positive effects of economic
stimulus programmes in the construction sector all
helped to mitigate the downturn. Until autumn,
freight rates dropped drastically owing to the surplus
freight space available. Renegotiations and new tenders
that ended in high discounts were not uncommon.
This was particularly evident from the growing
importance of the spot market, in which transport
orders are placed at short notice for the freight rates
applicable at the time, and which in some cases change
on a day-by-day basis. In many cases, freight rates were
down 30 per cent or more year-on-year.
In 2009 traffic volumes for inland shipping
were down by a good 16 per cent year-on-year to
53.7 billion tonne-kilometres, the lowest level for
around twenty years. The severe winter weather at
the start of the year and the low water levels in autumn
2009 exacer bated the crisis-induced downturn.
With regard to overall performance by this segment,
it must be borne in mind that in 2009 the
Federal Sta tistical Office re vised the calculation methods
for establishing transport distances in inland
shipping. The decline would presumably have been
even worse without that special effect. As for the
whole market, the slump in demand led to excessively
high surplus cargo capacities, which caused a
drastic drop in prices. On some routes, the daily
freight rates at times amounted to only half the level
of the previous year. This also affected contract
freight, where high discounts were granted in new
invitations to tender and contract renewals.
Although the railways had achieved the strongest
average growth rates of all transport modes in the
preceding years, in 2009 they suffered the worst yearon-year
drop in traffic performance. At 95.8 billion
tonne-kilometres, traffic performance was down by a
good 17 per cent and almost as low as the 2005 figure.
Following decreases of up to approx. 30 per cent lasting
until late summer, the decline tailed off towards
the end of the year as the economy began to recover
and owing to the already poor performance in the last
quarter of 2008. The situation did not begin to improve
until December. The downturn was particularly
noticeable in the crisis-ridden coal and steel, automotive
and chemicals industries and also in container
traffic, which had enjoyed strong growth in the preceding
years. This sharper drop compared with road
can be attributed primarily to the different freight
structure, but also to a modal shift resulting from
increasingly fierce price competition. Surplus truck
capacities from Germany and abroad were offered on
the market with huge two-figure discounts, leading
to the corresponding distortions.
Railways affected to different extents
Whilst DB Schenker Rail suffered a downturn of almost
21 per cent in traffic performance in Germany,
non-DB railways fared better with a substantially lower
decrease of just 3.7 per cent. There are various reasons
for this. On the one hand, there are pronounced differences
in freight structure. While the segments of
coal/coke, ore, iron and steel, all of which were hit
hard by the crisis, make up more than 30 per cent of
DB Schenker Rail’s total performance, they account
for a share of only around 7 per cent for its competitors.
On the other hand, roughly two thirds of traffic
performance by non-DB railways refers to the segments
of combined transport and mineral oil products,
both of which enjoyed above-average growth. The
share of these transports at DB is “only” around 35 per
cent. Moreover, single wagonload traffic was affected
more severely than block train transports by the economic
crisis and the fierce competition with road haulage.
Single wagonload traffic in Germany is provided
almost exclusively by DB Schenker Rail, so that the
losses in this segment were insignificant for non-DB
railways. International transports, which suffered a
stronger decline than domestic transports owing to
the downturn in exports and imports, also contributed
to this trend. These transports make up more than half
of DB Schenker Rail’s traffic performance, compared
with a share of only around one third for non-DB railways.
The poorer trend for international transports
Traffic performance by
rail freight fell by 17
per cent in 2009, leading
to the lowest traffic
performance since 2005.
10 11
Photo: Daniel Schärer/www.trainpassion.ch
Market & Competition

therefore did not have such a significant effect on the
overall results. Intramodal shifts as a result of the noticeably
higher pressure on prices were a further factor.
These shifts were also caused by foreign railways and
their subsidiaries, some of which launched aggressive
price campaigns in the German market.
On the whole, non-DB railways achieved a noticeable
increase in their share of rail freight in Germany
to 24.6 per cent in 2009.
Severe decline also affects European
rail freight market
The trend for the European rail freight market shows
similarities to the situation in Germany. According
to DB’s calculations, traffic performance was down by
20 per cent, which was more than double the drop sustained
by road. Again, this was due to the different
freight structures of rail and road, and to modal shifts
resulting from increasingly aggressive competition
The drop in traffic performance
by rail in Europe was more than twice
as high as for road.
and surplus freight space. As in Germany, the traffic
performance trend was significantly weaker for the
incumbents than for their intramodal competitors,
who actually achieved growth in some countries.
Here, too, the focus on different sectors and business
areas played a central role. In 2009, crude steel production
in the EU27 was down by a total of almost
30 per cent year-on-year. Drastic decreases in production
were sustained by all the important steel-producing
countries, such as Germany (almost 29 per cent),
Poland (approx. 26 per cent), France (approx. 35 per
cent), Italy (approx. 28 per cent) and the Czech Republic
(approx. 28 per cent), all of which also rank
amongst the largest rail freight markets in Europe, and
the situation was directly reflected in performance
by the incumbents.
The liberalisation progress in the individual
Member States also affected overall performance by
the railways. In Germany and Poland, for instance,
where brisk competition on fair terms has evolved in
the last few years and where railways which compete
with the incumbents have already acquired a comparatively
strong market position, the positive performance
by these operators alleviated the overall
downturn for rail. The situation in France, however,
is different. Owing to the continuing market access
barriers, there are still only relatively few competitors
for Fret SNCF, the state-owned rail freight operator.
As a result, the positive trend for the DB subsidiary
Euro Cargo Rail, which actually achieved a significant
increase in traffic performance despite the difficult environment,
hardly impacted at all on overall performance
by rail freight in France.
Railways continue to expand their
international market activities
In 2009, the rail freight operators again expanded
their market activities in Europe. Customers increasingly
demand holistic international products with a
high standard of quality provided by one single source.
The market as a whole is also becoming increasingly
international, so that an international network is consequently
indispensable for rail to improve its compe-
The toll statistics published by the Federal
Office for Freight Transport showed a more severe
drop for foreign trucks than for their German
competitors (far left). Despite the crisis, there
were no mass redundancies in 2009 (left). The
coal/coke, ore, iron and steel industries were all
hit hard by the crisis. A large proportion of their
products are transported on rail (right).
titiveness and continue to grow. For some years now,
there has been a clear trend towards cooperation agreements
between rail freight operators, the formation
of joint ventures and production companies, mergers
and takeovers. The challenges facing the railways,
such as capacity utilisation, cost-effective operations
and more aggressive competition – which were even
more apparent during the economic crisis – are likely
to strengthen rather than impede this trend. In summer
2009, for instance, Fret SNCF took over the foreign
business activities of Veolia Cargo in the Netherlands,
Belgium, Germany, Italy and Switzerland, thus
consolidating its position in Europe. Following the
takeover of the Polish private railway undertaking
PCC Logistics, DB Schenker Rail has underpinned
its presence on the important East-West corridor and
expanded its international network to include the
second-largest rail freight market in Europe. It is the
major players who are forcing market consolidation.
The activities of DB Schenker Rail, Fret SNCF, Trenitalia,
Rail Cargo Austria and SBB Cargo outside their
home markets are changing the face of the European
competitive environment. This is evident from the graphic
on page 15 which shows the trends in the German
rail freight market.
Crisis necessitates comprehensive restructuring
In order to operate transports profitably despite the
high overheads, the railways launched comprehensive
savings and restructuring programmes in the course
of 2009. In an attempt to counteract the economic
crisis, the major players in the European rail freight
market cut back their rolling stock and human resources.
A large proportion of rail freight vehicles stood
idle in 2009. By the end of the year, around 25,000 DB
Schenker Rail wagons in Germany – roughly a quarter
Market & Competition
12 13
Photos: Langrock/Zenit/laif; Pablo Castagnola; Hartmut Reiche
Competitors increase market share by more than three per cent
Traffic performance in the rail freight market has dropped substantially
Traffic performance by rail freight
(billion tonne-kilometres, figures in brackets show
year-on-year change in per cent)
Market share of DB and its competitors
(per cent)

of the company’s total wagon fleet – were still out of
operation. Measures such as short time, using up outstanding
holiday leave and flexitime, as well as early
retirement schemes had a stabilising effect on human
resources. Moreover, in 2009 DB Schenker Rail was
able to reduce crisis-induced surplus personnel through
the integrated labour market of the DB Group, which
had the desired effect on job security. There was no
evidence of large-scale redundancies in the rail freight
market in 2009. However, as the economic recovery is
expected to make only slow progress and competitive
intensity remains high, the existing structures – as in
The railways launched comprehensive
savings and restructuring programmes in
the course of 2009.
all other sectors – will have to be adapted to the changing
conditions. In its report “Monitoring employment
conditions in the freight transport and logistics market
in 2009-I”, the Federal Office for Freight Transport
states that the number of unemployed truck drivers
in Germany rose by 30,000 between October 2008
and June 2009 alone. This issue will also affect the rail
freight segment all over Europe. In Romania, for exam
ple, the state-owned freight operator CFR Marfa
has announced plans to make around 6,700 employees
redundant in spring 2010. According to initial statements
in the media, the trade unions in France expect
the cutbacks in single wagonload traffic planned by
Fret SNCF to threaten between 4,000 and 6,000 of
the present 14,000 jobs.
Plans are being considered
at European and national
level to increase truck
sizes and weights. Trucks
would then be 25.25 me -
tres long and the smallest
version would have a gross
weight of 60 tonnes.
The future of single wagonload traffic in Europe
Single wagonload traffic allows rail to provide full geographical
coverage and can therefore rightly be described
as the backbone of the rail freight system. It
enables rail transports to be performed in areas which
do not produce sufficient freight volumes to justify
block trains. Owing to its complex structures, however,
this is the most cost-intensive production system on
rail. Single wagonload traffic competes directly with
road haulage and, as a result of the low margins, it can
be operated profitably only if it is subject to a continuous
improvement process. The importance of single
wagonload traffic for the future viability of rail was
high lighted in a study conducted by McKinsey on
behalf of the Community of European Railways and
Infra structure Companies (CER). Roughly half of all
European rail transports are carried in this system.
The transport of single freight wagons or small rakes
of wagons is simply indispensable in many sectors.
Every second freight wagon shipped by the German
steel industry, for example, is a single wagon. As a high
proportion of German steel production is destined
for foreign markets, the European network and interna
tional capacities of the railway play a key role. Single
wagonload traffic is also important for the automotive
industry. In 2009, these sectors were hit particularly
hard by the crisis, leading to an above average decline
in their demand for rail transport. The railways in some
countries, such as Spain, have long since discontinued
single wagonload traffic altogether, others are currently
planning drastic cutbacks. According to press releases,
the French freight operator Fret SNCF intends to discontinue
around 60 per cent of its single wagonload
services, and the Italian operator Trenitalia is planning
further substantial reductions of its single wagonload
network. Other countries, however, have declared
Photo: wikimedia commons
their commitment to supporting this segment and their
determination not only to comply with the wishes of
customers from many sectors of industry, but to make
systematic improvements. In February 2010, seven
European rail freight operators signed an agreement
aimed at strengthening international single wagonload
traffic. In addition to DB Schenker Rail, the freight
companies Green Cargo (Sweden), B-Cargo (Belgium),
CFL Cargo (Luxembourg), SBB Cargo (Switzerland),
Rail Cargo Austria (Austria) and CD Cargo (Czech
Republic) agreed to cooperate under the name Xrail to
make these transports in Europe more reliable, more
customer-friendly and thus more competitive against
truck transports. The new alliance sees itself as a production
company, and Xrail will not affect the customer
relations or pricing of the participating railways.
The aim is to offer harmonised quality standards which
will simplify and substantially improve processes. In
addition to far quicker submission of offers, customers
will automatically receive electronic information about
their consignments, which will arrive with a punctuality
factor of at least 90 per cent on routes inside the
Xrail network. The first test routes with selected customers
have already proved successful. This alliance
unmistakably signifies to the customers that the participating
railways have faith in the future of single
wagonload traffic.
Market environment for rail freight remains tough
Surplus freight space and high pressure on prices will
continue to define the competitive situation for rail for
a long time to come, especially for the single wagonload
and combined transport segments which com pete
directly with road haulage. Globalisation, the increasing
international division of labour, a higher proportion
of containerisation and the freight structure effect,
i.e. the shift of structures away from large-scale
bulk goods towards the small-scale shipment of higher
value goods, will continue to dominate the market.
Rail freight will continue to be confronted with great
challenges, such as the increasingly strict quality standards
demanded by the shipping industry and the
grow ing tendency to put contracts out for tender. This
is corroborated by an analysis of the medium- and longterm
sectoral development forecast, where the strongest
growth is predicted for “automotive, machinery,
semi-finished and finished goods”, in other words
exactly the sector in which road haulage already holds
a market share of around 80 per cent. But this is also
where a high proportion of rail’s single wagonload and
combined transport products could operate, so that a
further rise in competitive pressure on these transports
has to be expected. In view of the transport policy objective
of shifting more traffic onto rail, the general
increase in truck sizes and weights which is currently
under discussion at European and national level is
problematic. Raising the dimensions and weights permitted
to date harbours high risks for rail freight, with
the single wagonload and combined transport segments
likely to be severely impacted by such changes.
These networked transports can only be run cost effectively
if they carry a critical transport quantity.
Even slight losses could generate negative effects for
the entire rail freight sector, the impetus of which
should not be underestimated. This cannot be intended,
neither in terms of transport policy nor in view of
the present climate debate. The anticipated growth in
transport volumes can only be coped with by exploiting
the potential of all modes in an efficient and sustainable
overall transport system. Accordingly, a constructive
dialogue is essential to raise the efficiency
of road haulage and simultaneously promote the development
of rail freight within the framework of an
integrated cross-modal concept. The challenge is to
find solutions which strengthen the transport modes
and improve networking.
Market & Competition
Market consolidation in the German rail freight market
In recent years, the state railways have taken over numerous private competitors
(Source: DB data)
Fret SNCF
ITL-Cargo GmbH
Captrain (ehemals Veolia Cargo Deutschland GmbH)
Regiobahn Bitterfeld
Bayerische CargoBahn
Dortmunder Eisenbahn GmbH
Rail4Chem
SBB Cargo
SBB Cargo Deutschland GmbH
Hafen und Güterverkehr Köln AG (HGK)
14 15
Trenitalia
TX Logistik AG
Arriva Deutschland GmbH
Osthannoversche Eisenbahnen AG (OHE)
’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09

Restrained growth in the
rail passenger market
Faced with a difficult environment last year, rail failed to increase its share
in total passenger transport for the first time since 2002. Foreign state railways
account for a growing share of the German market.
Repeated negative headlines determined the pub-
lic’s image of the German rail passenger market in
2009. The problems with ICE axles that occurred after
the fracture of a wheel set axle at Cologne central station
severely curbed the availability of the affected
vehicle classes. The rapid transit services operated by
S-Bahn Berlin were also drastically restricted owing to
faults in wheel design and the need to conduct safety
tests on the brake cylinders. Because of delays in vehicle
approval by the Federal Railway Authority, several
of Deutsche Bahn’s competitors had to reduce
their services substantially when the new timetable
came into effect on 13 December 2009. In several cases,
Deutsche Bahn helped out by providing its own rolling
stock. Nevertheless, serious restrictions still occurred,
particular on the Maas-Rhein-Lippe network
operated by the SNCF subsidiary Keolis. From the
view point of the customers, who rightly expect railway
undertakings to get them to their destination safely
and punctually, it matters little which link in the chain
is ultimately responsible for the disruption. Consequently,
the public prosecutor’s statement that the
axle fracture in Cologne was caused by a manufacturing
fault did not attract much attention in the media.
On the other hand, most passengers are aware that rail
is an exceptionally safe means of transport. Last year,
it actually increased its lead in that respect: the risk of
dying in a car crash is 63 times higher than on a train,
the risk of injury is actually 96 times higher.
Slight deterioration in the framework
conditions for rail
In 2009, the general economic situation did not generate
any positive impetus for rail. The number of gainfully
employed, the disposable income of households
and the number of commuters were all stagnant. The
overall passenger transport market suffered a downturn
of just 0.2 per cent, almost maintaining the previous
year’s level. This was due above all to the fact that private
motorised traffic remained on the same level. This
segment benefited from fuel prices which were down
by eleven per cent compared with 2008 and high sales
of new vehicles as a result of the car-scrapping bonus
Competition in the long-
distance segment is on
the increase (left). Private
motorised traffic was the
only transport mode to
win market shares as a
result of the low fuel prices
and the car-scrapping
bonus (right).
16 17
Photos: Heiner Müller-Elsner/DB AG; Berthold Steinhilber/laif
offered by the government. As traffic performance by
all other transport modes was down year-on-year,
private motorised traffic actually succeeded in raising
its market share after years of losses.
In the public road transport sector, which includes
buses, trams and underground, the decline in
traffic performance continued according to DB estimates.
Despite lower numbers of schoolchildren and
a downturn in gainful employment, the figures for
regular bus services remained almost at the previous
year’s level. In comparison, non-scheduled bus services
declined substantially. Trams and underground
achieved relatively high growth, but that can be attributed
at least in part to the statistical effect of the
strike at Berliner Verkehrsbetrieben (BVG) in 2008
which lasted several weeks, and passenger shifts from
S-Bahn Berlin to BVG in 2009. Altogether, DB estimates
that traffic performance by public road transport
was down by approx. 0.5 per cent. The DB bus
companies, on the other hand, defied the trend and
boasted moderate growth.
Domestic German air traffic was worst hit by the
effects of the financial and economic crisis, with traffic
performance down by almost 4 per cent. The incipient
drop in demand in the second half of 2008 slumped
drastically at the start of the year. This referred particularly
to the business customer segment. The situation
did not stabilise until autumn, and the recovery
was due not only to the better economic forecasts but
also to a positive base effect, as the crisis had already
left its mark on the figures for that period in the preceding
year.
Road improves at the expense of rail
Demand for rail passenger services in Germany was
down by 1.2 per cent on 2008. Traffic performance by
Deutsche Bahn decreased by 1.6 per cent, whereas
performance by non-DB railways was actually up by
4.6 per cent. There were two crucial factors for this
development: on the one hand, DB’s competitors are
active above all in the stable regional transport market,
which has practically constant commuter figures. On
the other hand, Deutsche Bahn’s traffic performance
was adversely affected by technical restrictions relating
to some ICE classes and at S-Bahn Berlin.
The modal split for the entire rail passenger
market in Germany was slightly down for the first
time since 2002, by 0.1 percentage point to 9.9 per
cent; this also applied to public road transport, which
had a share of 9.7 per cent. Even if initially only to a
limited extent, the increase in private motorised traffic
was therefore achieved mainly at the expense of
environment-friendly public rail and bus services. That
trend is the result not least of fundamental po litical
decisions, such as the bonus for scrapping cars.
Market & Competition

At 2.3 per cent, traffic performance in the long-distance
segment suffered the sharpest decrease, to 34.7 billion
passenger-kilometres, despite successful special offer
campaigns such as the “Mauerfall-Spezial” ticket and
the DB Lidl ticket. The impact of the economic crisis
was particularly noticeable from the drop in the number
of passengers.
Existing and planned lines operated by competitors in Germany
Stop press: Keolis has not accepted the offered framework agreements and locomore rail
is not expected to operate on the Hamburg–Cologne route until after April 2011.
locomore as from 2010/11
Keolis 2011
InterConnex (existing)
Vogtland-Bahn (existing)
Source: press releases
In 2009, the economic
environment did not pro-
vide any positive impetus
for rail (left). Domestic
air traffic was worst hit
by the effects of the eco-
nomic crisis (right).
In the long-distance rail segment, competitors still
account for only a low market share of under one per
cent in terms of traffic performance. Once again, DB’s
principal competitor was Interconnex, a member of
the French Veolia Group. The company stated that it
earned its first operating profit last year and is consequently
considering expanding its product range.
Long-distance rail: will competition pick up speed?
SNCF elicited a comparatively strong response when it
announced that Keolis, in which the French state railway
holds the majority interest, plans to enter the longdistance
rail passenger market in Germany next year.
The train path applications submitted by Keolis attracted
public attention for the simple reason that Deutsche
Bahn is prevented from competing with SNCF in the
French rail passenger market, where SNCF still enjoys
a legal monopoly. Federal Transport Minister Ramsauer
has therefore announced his intention of campaigning
for more harmonised competitive conditions throug hout
Europe in future. The additional applications for
train paths also triggered heated debate in the regions
concerned, as they would disrupt regular-interval services
in regional transport, for example in the Central
Rhine Valley and rapid transit services in the Rhine-
Neckar region. Apart from Keolis, a high number of
appli cations for long-distance train paths have been
submitted by another railway undertaking, the newly
founded locomore rail, which is backed by an American
financial investor. locomore is planning to run trains bet
ween Cologne and Hamburg as from 15 August 2010,
followed by connections between Berlin and Frankfurt,
as well as Stuttgart and Hamburg a few months
later. To begin with, the company will deploy decommissioned
trains purchased from the Austrian state
railways, but will later replace these with new trains.
European Commission prepares opening of
the national passenger transport markets
From the Deutsche Bahn viewpoint, however, its major
competitors are road and domestic air traffic. A
positive aspect of the announced market entry plans
is that they will hopefully fuel the debate on the harmonisation
of access conditions in Europe. Demands
for a stric ter regulatory regime in Germany, as recently
called for by the Monopolies Commission in its
latest report on the rail sector, do not appear reasonable
as long as access to neighbouring markets, such as
the Netherlands or France, is still restricted. The applications
for long-distance train paths confirm that
this segment is also open to competition in Germany.
The divergent market shares of competitors in the different
market segments are due to market characteristics
which affect the risks and profits anticipated by
potential players.
In the meantime, there is also debate at European
level as to whether the national passenger transport
markets should also be opened, in addition to
rail freight and international rail passenger transport.
The European Commission has commissioned several
management consultant companies with the preparation
of a study on “Regulatory options for further
market opening in rail passenger transport”. Amongst
other things, this will examine how competition
has affected traffic performance and state financial
re quirements on the basis of three case studies on
Germany, the UK and Sweden, where the markets
are already open. Preliminary findings, which can
be downloaded from http://ec.europa.eu/transport/
rail/studies/rail_en.htm, imply that market opening
has a positive impact on the rail passenger markets,
just as it had on the rail freight market which was
opened earlier.
Market & Competition
18 19
Photos: Katja Hoffmann/DB AG; Hahn/laif
Share of private motorised traffic up after years of losses
(share of modal split in per cent; basis: traffic performance, figures rounded)
Competitor railways increase their market share
(train services in million train-kilometres)

Regional transport: stable growth for competitors
In the regional market with its ordered services, many
trends can be foreseen at an early stage owing to the
long preliminary procedures for contract award. The
share of non-DB railways in terms of train-kilometres
in 2009 rose by 10.4 per cent to approx. 128 million, in
accordance with the contracts they had won in competitive
procedures over the last few years. As the fees
paid by the ordering authorities make up the greater
part of the railway undertakings’ revenues and these
fees are based on operated train-kilometres, the share
of competitor railways in this market is generally
measured in terms of operated kilometres rather than
traffic performance. Last year, their share rose from
18.4 to 20.3 per cent, so that growth by non-DB railways
has now continued without a break for the last
15 years. In terms of traffic performance, DB’s competitors
also made good progress. Although the overall
market was slightly down, their performance was
up by five per cent. Their share of traffic performance
in the total regional rail market meanwhile amounts
to 12.1 per cent.
DB Regio was very successful in contract award
procedures in 2009, winning 62 million train-kilometres
– equivalent to a share of 77 per cent – of the
Anhaltendes Wachstum im SPNV
Sowohl die Deutsche Bahn als auch deren Wettbewerber konnten im Jahr
2007 bei der Verkehrsleistung zulegen. Der Anteil der externen Bahnen am
Traffic performance by non-DB railways up despite the crisis
SPNV betrug 2007 knapp zehn Prozent (Verkehrsleistung in Milliarden
Overall, traffic performance in the passenger market decreased
(billion passenger-kilometres)
40
30
20
10
2,3
38,9
5,7
3,9
40,3
8,9
Source: Federal Statistical Office
4,3
40,7
9,5
DB competitors market share of competitors (in per cent)
5,4
41,6
11,4
2005 2006 2007 2008
5,6
41,1
12,1
2009
approx. 80 million train-kilometres awarded by the
ordering authorities in various procedures. That figure
again confirms that the introduction of competition
is by no means a disadvantage for the incumbent. The
company was successful despite the deliberate favouritism
showed to third parties in some award procedures.
In Berlin-Brandenburg, for instance, DB Regio
in evitably had to lose a part of the services because the
contract award conditions stated that no single bidder
was to be awarded all the lots. It is interesting to note
that the reason given for this restriction of competition,
which ultimately meant that the only other bidder
won the contract regardless of the level of its bid,
was that it was intended to encourage “competition”.
Seen in that light, a tender won by DB Regio is not
competitive, whereas direct award to another undertaking
would always be competitive.
For years, the greater part of all regional transport
service contracts has been awarded in competitive
procedures, such as invitations to tender or formal
negotiation procedures with several railway undertakings.
Over the past five years, more than 80 per
cent of the competitive procedures took the form of
invitations to tender. DB Regio won more services
than its competitors regardless of the contract award
procedure. Between 2005 and 2009, new contracts
were awarded for more than 40 per cent of the total
regional transport services.
By the same token, the success of DB Regio in
other countries would not have been possible without
the intensive competition in Germany, which forces
the company to continuously improve its performance.
It has meanwhile won the first invitation to tender for
rail services in the Östergötland region in Sweden.
The contract is for a term of ten years, an initial volume
of 3.3 million, later rising to 3.8 million trainkilometres.
DB Regio UK will takeover operation of
the Tyne and Wear metro in the north-east of England,
initially for a period of seven years. The contract,
which can be renewed by a further two years, also includes
maintenance and modernisation of the approx.
90 metro trains of Nexus, the principal.
Ongoing consolidation
Not only Deutsche Bahn is active outside its home
territory: foreign state railways meanwhile account
for a growing share of the German market. In 2008,
for example, the Dutch railway Nederlandse Spoorwegen
(NS) purchased the entire shares in the Abellio
Group, which offers both urban and regional rail services
in Germany. Conversely, however, some parts
of the Dutch rail passenger market remain closed to
-
In terms of train-kilometres,
the share of orders
placed with competitors in
the regional rail seg ment
was up by 10.4 per cent to
approx. 128 million trainkilometres.
Deutsche Bahn and other competitors because NS
has an exclusive franchise for the entire core network.
The high-speed operator HSA, in which NS
holds a 90-per-cent share, is actually protected from
competition up to 2031. The situation is similar in
respect of the Swiss state railways SBB, whose sub sidiary
SBB Germany GmbH is also active in Germany,
albeit on a comparatively low scale. The French state
railway SNCF benefits from the open German market
through its majority stake in Keolis (Eurobahn),
whereas the national rail passenger market in France
is closed to other railways. The Danish state railways
DSB have also announced plans for long-term commitments
in Germany. In March 2010, they acquired
a 50-per-cent share in the Hesse-based Vias, which
operates the Odenwaldbahn, as a “bridgehead”. In
contrast to the other countries mentioned above,
however, entry is possible in principle in all segments
of the DSB home market.
In addition to the state railways, it is primarily
large, international corporations such as Arriva and
Veolia that are active in the German rail passenger
market. They frequently set up new companies in
cooperation with municipal or Federal Land-owned
railways to compete for public service contracts in the
region concerned. A typical example is Ostdeutsche
Eisenbahn GmbH (ODEG). 50 per cent of ODEG
shares are held by Prignitzer Eisenbahn, a subsidiary
of the Arriva Group. The remaining 50 per cent are
owned by BeNEX GmbH, 51 per cent of which in turn
belongs to Hamburger Hochbahn AG, a municipal
com pany. The remaining 49 per cent in BeNEX, which
bids for public service contracts throughout Germany,
belong to an investment company. The situation is
even more convoluted as regards ownership of the
company which claims to be the second-largest provider
of regional rail services after Deutsche Bahn (in
terms of traffic performance), Metronom Eisenbahngesellschaft
GmbH, which operates in the Hamburg-
Uelzen-Hanover-Bremen area. Together, the Federal
Land authorities of Hamburg, Bremen and Lower
Saxony, as well as various regional and local authorities,
own more than half the shares in the company.
Arriva holds a share of approx. 31.6 per cent, third parties
account for 17.4 per cent.
This involvement of the Federal Land and regional
authorities in the rail market would be reprehensible
only if the ordering authorities gave preference,
when awarding contracts, to companies whose shares
were wholly or partly owned by Laender, city or rural
district authorities which simultaneously held a stake
in the relevant ordering authorities.
Closer analysis of the frequently complicated relationships
between the railway undertakings that are
active in Germany reveals that there is actually a
comparatively small number of publicly owned companies
plus a few international corporations. Des pite
the formally large number of competitors in Germany,
there has already been considerable consolidation.
This trend will continue in 2010, with the
re solved merger of Transdev (e.g. Transregio), which
is indirectly owned by the French state, and Veolia
(Bayerische Oberlandbahn, NordWestBahn, Nord-
Ostsee-Bahn).
Market & Competition
Above all large and international
corporations have an increasingly large
share of the German market.
20 21
Photo: Gunter Weidanz

Many questions remain
unresolved in the bus market
The structure of the national competitive market is still highly diverse.
For the first time, a comprehensive study has analysed the effects of Hesse’s
tender system on regional market development.
Traffic performance in the total national public road
transport market again declined in 2009. As in 2008,
the market was down by half a percentage point, owing
to the declining number of schoolchildren and above
all the weak economic environment. Competition in
this market remains divided into two fundamental
groups: while the public service contracts for regional
bus transport are increasingly awarded in competitive
procedures, local authorities place most of the contracts
for urban public road transport services as inhouse
awards to their own companies. The greater
part of the overall market therefore remains closed to
competition. EC Regulation 1370/2007, which came
into force on 3 December 2009, will have little impact
on this practice. Although it fundamentally prescribes
competitive procedures for the award of public road
Tender awards in 2009
(per cent of awarded revenue-earning kilometres 1 )
other private companies 49,2 %
DB Stadtverkehr 21,3 %
Veolia 14,5 %
other municipal companies 8,5 %
other public-private 5,3 %
Transdev 0,8 %
BeNeX 0,4 %
1) Figures correct at 31.12.2009
Source: DB data
trans port contracts, it explicitly permits in-house award
under certain circumstances, for example provided that
the potential internal operator is subject to the same
control by the awarding authority as its subordinate
departments, and that the internal operator is not permitted
to participate in organised competitive award
procedures outside the competence of the authority.
The Regulation contains a further provision, which
applies to both in-house and competitive awards and
restricts performance by subcontractors, which is a
common feature of this market, stating that the operator
has to provide at least a “major part” of the services
itself. However, as it has not conclusively been stated
how high this share actually has to be, the market players
are still faced with uncertainty in this respect.
In preparation for implementation of the EU
Regulation, many municipal transport companies
con ducted restructuring processes and cancelled
contracts with their subcontractors in 2009 in order
to satisfy the requirements for in-house award pursuant
to the new legislation. There are accordingly
no signs that the local authorities are intending to
change over to competitive procedures for the award
of urban transport service contracts. One example
of this is Rhein-Neckar-Verkehr GmbH (RNV), which
changed its corporate structure with effect from
1 October 2009 so that the city authorities of Mann -
heim, Heidelberg and Ludwigshafen now directly
hold stakes in RNV. RNV’s subsidiaries are also to
withdraw from the competitive market outside the
remit of the stakeholding authorities.
Restrained activities of supra-regional competitors
The national competitive market still has a highly
heterogeneous structure. Alongside DB Stadtverkehr,
various supra-regional companies such as Abellio,
Arriva, BeNEX, Veolia and Transdev are also active
in the market. In contrast to the regional rail market,
however, many private regional companies also participate
in tenders.
In 2009, approx. 36 million revenue-earning
kilo metres (r-e km) were awarded in almost 80 competitive
procedures. In many cases, the contracts were
awarded to private companies, substantially raising
their share from roughly 20 per cent of total performance
awarded in 2008 to almost 50 per cent of the
total revenue-earning kilometres up for tender last
year. DB Stadtverkehr won a good 21 per cent of the
performance awarded, but that was not enough to
maintain its existing business, so that it ultimately
suffered a net loss in performance of approx. 2.4 million
r-e km. DB Stadtverkehr’s supra-regional competitors,
on the other hand, won hardly any tender
procedures in the preceding year. The only one worth
mentioning is Veolia, which won a contract in Frankfurt
am Main for 2.8 million r-e km up to 2012 and
three million r-e km as from 2013.
The aggressive market activities of supra-regional
competitors therefore tailed off dramatically in
2009. It remains to be seen whether this is a temporary
phenomenon linked to the economic and financial
crisis, or a general trend reversal. The fact remains
that in the past, it was above all large international
corporations which took part in tenders, sometimes
submitting ambitious prices. In one case last year, an
“emergency stop” had to be made: Abellio pulled out
of the public service contract for transport in the Limburg-Weilburg
rural district because it was not cost
effective. The competent ordering authority, Rhein-
Main Verkehrsverbund, then had to conduct new
tender procedures for the first four of the route bundles
returned by the Abellio subsidiary Verkehrsgesellschaft
Mittelhessen (VM).
The concentration process resulting from takeovers
by supra-regional competitors also eased off in 2009.
The largest transaction, involving just under 12 million
r-e km, was the takeover of Verkehrsbetriebe
Westfalen-Süd (VWS) by Transdev. Apart from that,
only BeNEX attracted much attention when it purchased
VBR-Verkehrsbetriebe- und Servicegesellschaft
as well as KVL-Kraftverkehr Lauterbach.
Focus on the “Hessian” system
It was not mere chance that it was the Federal Land of
Hesse in which Abellio had to return a public service
contract, as Hesse plays a special role in the tender
market in Germany. In contrast to the other Federal
Laender, Hesse has consistently invited tenders for
public service contracts for regional public road transport
throughout the entire region – albeit with a few
distinctive characteristics: firstly, the players criticise
that the detailed specifications prescribed by the ordering
authority leave them only little scope for entrepreneurial
freedom. The only area in which they have
any major leeway is usually in the level of wages. Moreover,
a decree enacted in Hesse in 2004 states that an
operated transport service is no longer deemed purely
commercial if the company receives equalisation payments
for the carriage of schoolchildren or the disabled.
In these cases, the services can therefore be approved
only after a Europe-wide invitation to tender.
This practice artificially creates public service transports
for which detailed plans have to be drawn up by
the public authorities, making transports initiated by
the operators increasingly difficult. The Federal Land
of Hesse will also uphold this unfortunate practice
from the players’ viewpoint in future, as the provisions
of the above decree are de facto continued in the
2009 recast of Hesse’s local public transport law. By
22 23
Photo: traffiQ Frankfurt am Main
Private companies
expanded their market
shares thanks to
successful performance
in competitive award
procedures.
Market & Competition

24
3.4 million passengers
used DB Stadtverkehr
services every day.
applying the present tender system, the Federal Land of
Hesse is acting in breach of a ruling of the Federal Administrative
Court of 29 October 2009, in which the court
rejected two appeals filed by Hesse against two rulings
of Kassel Administrative Court from the year 2008,
which stated that applications initiated by a trans port
company were always to be given priority. Nor are such
applications ruled out if the ordering authority has decided
to conduct – or has already conducted – a Eu ropewide
invitation to tender. The court also declared that a
purely commercial bid is not fundamentally precluded
by the fact that the company receives equalisa tion
payments for the carriage of schoolchildren or the disabled.
The ruling of the Federal Administrative Court
means that the “Hessian system” is likely to remain
the subject of heated debate over the coming year.
The special features of the public road transport
market in Hesse have made it the focus of attention. In
summer 2009, Emden University of Applied Sciences
published a study commissioned by the Federal Association
of German Bus Operators (bdo e.V.) and DB
Stadtverkehr GmbH “Ausschreibungspraxis im ÖSPV
– Ergebnisse aus Hessen” (Tender practices in public
road transport – the situation in Hesse), which takes
an in-depth look at market trends since the start of
these tender procedures.
Market shares of corporate categories in the tender market in Hesse
(including changeover from Wehnert to First; all figures refer to beginning of year)
market shares (in per cent)
50
45
40
35
30
25
20
15
10
5
0
DB Stadtverkehr
affiliates of large corporations
public companies
medium-sized companies
2002 2003 2004 2005 2006 2007 2008 2009
43,07 42,59 41,08 37,70 33,95 30,77 27,39 26,14
3,77 3,77 5,36 5,73 6,67 15,72 23,42 30,32
31,96 31,96 32,30 33,29 33,61 28,46 25,24 22,77
21,19 21,68 21,25 23,27 25,77 25,05 23,96 20,77
Source: conpronet (2009), “Ausschreibungspraxis im ÖSPV – Ergebnisse aus Hessen”
(Tender practices in public road transport – the situation in Hesse).
The study reveals that there has been a significant shift
in market shares in terms of approved operating performance
for bus services. DB Stadtverkehr in particular
has lost roughly 40 per cent of its market volume in
the tender market since 2003. Although medium-sized
enterprises achieved slight increases in their market
shares until 2006, from then onwards they suffered a
declining trend owing to sales, bankruptcies and also
failure to win tenders, so that these companies have
meanwhile lost substantial market shares compared
with their starting position. At the same time, the
share held by these medium-sized companies is divided
amongst an increasingly small number of players.
From 74 companies which provided services in the
tender market in 2003, the number of players had fallen
to just 29 by 2009. The major winners in terms of
market share are the international transport corporations,
whose market shares increased six-fold between
2004 and 2009, from five to 30 per cent.
The figures for the tender market in Hesse thus
differ fundamentally from the national trend, in which
regional private bus companies still continue to play
a central role.
Supporters of the Hessian system argue that it
enables substantial and sustainable cost savings for
public road transport. In fact, however, the Hessian
transport planning system entails high costs. After
a declining trend over the first three years, the rise
in the operating costs of public road transport is
meanwhile substantially higher than the rate of inflation.
Other cost drivers in public road transport
are the administration costs for organisation of the
services. Compared with the operating costs, the
administration costs account for a share of between
five and 20 per cent, and are consequently not an insignificant
factor for the cost effectiveness of public
road transport. There has been a substantial increase
in the administration costs of almost all ordering
authorities, which is hardly surprising considering
the framework conditions that apply to tenders and
the detailed specifications imposed by the ordering
authorities.
On the whole, the study concluded that the objectives
of the public road transport reorganisation in
Hesse as declared by the Federal Land Government
had not been achieved. The system has neither strengthened
the private transport industry, nor has it led
AG
to any sustainable reduction in public spending, as
confirmed by the recent cost trends. It is therefore no
surprise that the Federal Land of Hesse will provide Braum/DB
financing of EUR 3.2 billion for its three transport
Ralf
associations between 2010 and 2014, an increase of
more than 11 per cent on the previous phase. Photo:

Photos: Max Lautenschläger, Bernd Lammel/DB AG
Despite the technical
tools available, traffic
control at the Frankfurt
hub re mains an
enormous challenge.
Timetable compilation becomes
increasingly complex
When applying for train paths, DB Netz AG’s customers can increasingly
take planned infrastructure construction work into account. As from the 2011
working timetable, they can also apply for framework agreements.
Compiling the working timetable is an increasingly
complex process. DB Netz AG’s customers applied
for a total of more than 52,300 train paths for the 2010
working timetable, an increase of 6.2 per cent over the
preceding year. The reason for that increase is the substantial
rise in the number of restrictions caused by
construction work which have to be taken into account
when planning the timetable. As the users are informed
of these disruptions at an early stage and the anticipa-
ted consequences are discussed during the train path
negotiations, the RUs are able to include these measures
when applying for train paths. For instance, if a
railway undertaking plans to operate a freight train all
year round between Hamburg and Regensburg in
2010, it applies for a train path for that direct route. If,
however, the RU knows that three construction projects
are to be carried out on that line in 2010, it orders
additional train paths for the temporary diversions on
alternative routes.
The number of railway undertakings operat-
ing on the DB Netz AG infrastructure has remained
stable: in addition to DB Group companies, there are
323 competitors. 75 of these non-DB companies offer
passenger services, 153 are rail freight operators and
the remainder are construction companies or from the
rail industry. Broken down according to types of transport,
approximately 23 per cent of the train path applications
for the 2010 working timetable were for freight
traffic, roughly 72 per cent for regional passenger traffic
and around 5 per cent for long-distance passenger
traffic. In the long-distance passenger sector, non-DB
railway undertakings applied for a total of 113 train
paths, which was 16 more than in 2009. Applications
from competitors in the long-distance sector therefore
remained low. However, this situation could change as
from the next timetable, as Keolis – 56.7 of whose shares
are owned by the French state railway SNCF – and locomore
rail, a company founded in Berlin in 2007, have
announced that they plan to launch long-distance
passenger services in Germany as from 2011.
Compilation challenges
As with last year’s working timetable, this year
there were again conflicting applications for around
12,000 train paths, when RUs wanted to use the same
lines at the same time. When compiling the train paths
and in the course of its tried-and-tested coordination
Market & Competition
In future, German and
foreign competitors plan
to apply for more train
paths for long-distance
passenger services.
25

procedure, DB Netz managed to resolve all these conflicts
and find alternatives which were acceptable to all
parties in consultation with the RUs. The coordina tion
process could well become even more complicated fol-
Increase in performance by competitors despite the crisis
In 2009, the share of total operating performance by non-DB companies rose to
17.2 per cent (million train-path kilometres)
Source: DB data
lowing the liberalisation of the international rail passenger
market which came into effect on 1 January 2010.
In 2009, in anticipation of the liberalisation, the German
legislator amended the priority regulations which ap ply
to the award of train paths if the parties are unable to
reach an agreement during the coordination proce dure.
This was aimed at preventing individual international
transport products – especially freight trains – from disrup
ting integrated regular-interval national services.
The new legal regulations consequently grant integrated
regular-interval train paths higher priority than inter national
train paths in the conflict resolution procedure.
All international rail transports are now harmonised
in a separate process between the RUs concerned.
On completion of this harmonisation process, the RU
with overall responsibility submits applications for all
the train paths to one of the infrastructure managers
involved, or alternatively all the RUs involved in the
transport apply to the different infrastructure managers
for the individual train paths. The train paths for each
national network are allocated by the national infrastructure
manager concerned in conformance with the
applicable national regulations and applying the national
compilation systems. However, as part of the cooperation
between European infrastructure managers,
RailNetEurope (RNE) provides tools to facilitate communications
between the different parties. The RNE
members develop and optimise international processes
relating to sectors such as consultation procedures for
RUs and timetable compilation. For instance, RNE has
developed Pathfinder, an IT application which simplifies
the process for both RUs and infrastructure managers.
Keen interest in framework agreements
The period under report also included the application
procedure for periodic framework agreements. Applica-
No regular train services
can be operated while the
track bed is being renewed
(far left). The working
timetable takes this into
account (left) and provides
alternative train paths for
use by all RUs, including
Thalys (right).
tions can be submitted every five years, which corresponds
to the length of a framework timetable period.
Framework agreements can be concluded with RUs or
with other authorised users, such as ordering authorities,
forwarders and shipping companies, to ensure that
they have sufficient infrastructure capacities for at
least two consecutive working timetable periods. Under
the framework agreement, DB Netz AG guarantees
to provide the applicant with a train path within
an agreed capacity for the working timetable concerned
in case of conflicting applications. In other
words, the framework agreement comes into effect
when the working timetable is compiled every year.
In case of conflicting applications for train paths,
a customer who has signed a framework agreement
can be sure of receiving a train path within the agreed
capacity The process for awarding framework agreements
is identical to that of compiling the working
timetable, i.e. if the parties fail to reach an agreement
in the coordination process, DB Netz AG decides on
the conflicting applications on the basis of legally
specified criteria and procedural regulations.
In 2009, DB Netz AG received roughly 28,000 applications
for framework agreements for different
lengths of time. Applications for the rail freight sector account
for approximately 12 per cent, but by far the greater
majority – roughly two thirds – refer to regional rail passen
ger services. DB companies submitted approximately
15,600 applications for framework agreements and
7,800 came from other potential users. This was the first
time that authorised users who do not provide rail transport
services themselves exercised their right to ap ply
for framework agreements. DB Fernverkehr AG sub mitted
around 1,000 applications for framework agreements
for long-distance passenger services as from the 2011
working timetable, whilst non-DB long-distance passenger
RUs accounted for approximately 140 applications.
Whilst processing these applications for framework
agreements, DB Netz AG had to conduct numerous
coordination procedures. In around 30 cases, it had to
decide on conflicting applications on the basis of the
legally prescribed priority criteria. In approximately
50 other cases, the issue was decided on the basis of
the standard charges procedure. This was necessary
primarily because of the plans of new competitors to
launch long-distance products as from December 2011.
SNCF, for example, has announced that its subsi diary
Keolis will offer long-distance services in competition
with DB Fernverkehr AG during that timetable
period. Overlapping timetable applications from different
users and the need to specify exact departure
and arrival times all reduce the scope for coordination
and consequently the chances of finding acceptable
alternatives.
Market & Competition
26 27
Photos: Gustavo Alabiso, Heiner Müller-Elsner, Bartlomiej Banaszak/DB AG
Occasional services use ad-hoc train paths
Some capacities remain available after the timetable has been compiled.
These can be applied for all year round for use by occasional
traffic. In the 2009 working timetable, for example, DB Netz AG compiled
around 800,000 train paths for use by occasional transports,
most of which refer to freight trains. Short-term business models are
typical in the freight sector, which makes it more difficult to reach longterm
agreements for an entire working timetable year. These ad hoc train
paths are also used by other types of transport, such as homologation
runs, or transports required in connection with construction work. In
2009, such transports accounted for around 17,500 train paths.

28
Interview Dr. Peter Ramsauer outlines the trans-
port policy plans of the new Federal Government.
Photo: Bernd Roselieb
“I am in favour of fair
competition.”
Joachim Fried, Management Representative for Economic, Political
and Regulatory Affairs at DB AG, interviews Dr. Peter Ramsauer,
Federal Minister of Transport, Building and Urban Development.
The coalition agreement states that the new
Federal Government plans to intensify both
intermodal and intramodal competition – does
that aptly sum up your transport policies?
We have just suffered the worst financial and economic
crisis since the Federal Republic of Germany was founded.
Our transport policies are designed to promote
the present recovery process. Mobility is essential
for growth and prosperity, which is why the Federal
Government wishes to encourage mobility, not prevent
it. We shall be pragmatic in tackling the challenges that
face us – that is certainly better than becoming embroiled
in ideological debate. It is the job of the politicians
to create the proper framework conditions and
incentives for all transport modes. In doing so, we also
set reliable objectives for the economy.
Economic growth would not be possible without
competition. Stronger competition on rail, but also between
the different transport modes, is consequently an
important element of our transport policies. One thing
we do not want, however, is competition at any price.
I regard all transport modes as equally important.
They complement each other and have to be networked
as effectively as possible. As stated in the coalition agreement,
I support the continuing modal shift of traffic
onto rail wherever this makes sense. This is necessary
to minimise the environmental impact and reduce road
congestion. If we can ensure that a part of the anticipated
growth in freight traffic is transported on rail,
we will already have achieved a great deal. Our investments
in the rail network, the promotion of combined
transport as well as the encouragement of competition
on rail are all aimed at attaining that objective.
The rail reform that was launched back in 1994
created important conditions for allowing competition
in rail transport: the right to non­discriminatory
use of rail infrastructure and the regionalisation of the
local and regional rail passenger transport markets were
important steps towards the development of competition
on rail. This competition between the different
railway undertakings should be aimed at providing
better products and more service for rail customers,
encouraging innovations and ultimately improving
the cost­effectiveness of rail transport.
Moreover, the positive results in the regional
passenger market and also in rail freight show that
these expectations are justified. Wherever there is
functioning competition on rail, this has generated
additional traffic volume and innovation.
But I would also stress that if we are to continue
the developments that began successfully back in
1994, we need even more competition on rail. That is
why the coalition agreement also stipulated key elements
for strengthening competition.
Effective competition also requires infrastructure
that can cope with additional traffic. Which
investment projects aimed at eliminating existing
bottlenecks do you rate as high priority?
With regard to infrastructure investments, every euro
we spend today also has to yield a benefit for future
generations. Our investments enable the systematic
development and expansion of the rail network. A
piece meal approach has to be avoided at all costs. All
projects which are included in the plan setting out the
required infrastructure but on which work has not yet
started will be examined by the Federal Government
to verify that they will actually benefit the national
economy. The first findings are expected to be available
in the first half of 2010 and these will form the
basis for the future development of our rail network.
Moreover, the rail infrastructure managers of
Deutsche Bahn AG can dispose of the EUR 2.5 billion
per annum provided for the existing network by the
29

Federal Government as part of the Performance and
Financing Agreement as they see fit, to make any necessary
investments in infrastructure replacements
which will also help to eliminate bottlenecks.
In view of the present budgetary situation, how
can such a high investment level be maintained?
How do you plan to ensure that international
commitments that have already been undertaken
are not financed at the expense of national and
regional infrastructure projects?
For 2009 and 2010, we have funds of around EUR
12 billion for each of these years from the Federal
Government’s economic stimulus packages. Beyond
2010, the crucial factor will be to keep up a constant investment
volume of a good EUR 10 billion per annum.
“I am sure the present discrepancies will
be remedied once the passenger transport
market has been fully liberalised.”
This year, we shall be spending around EUR 4.3 billion
on Federal railway infrastructure. That sum inclu
des EUR 2.5 billion for rail infrastructure maintenance
as part of the Performance and Financing
Agreement. Further funds are available for the construction
of new railway lines and upgrading existing
ones, and there is also a special programme dedicated
to eliminating bottlenecks in the freight traffic links
to the seaports. These measures also include investments
to mitigate rail­induced noise. In addition to
the regular public funds, the two economic stimulus
packages launched by the Federal Government also
include a further EUR 1.395 billion for rail infrastructure
for the years 2009 to 2011.
As far as international plans are concerned, by
the end of 2010 we will know what additional funds
will be available from the European Union to promote
Trans­European Network projects.
DB AG believes that the political conditions
governing rail transport in Europe no longer offer
a level playing field. While Germany has in some
cases over­fulfilled European requirements and
opened up its railway market completely to
competition, some EU Member States still keep
their passenger transport markets completely
closed off. How do you plan to assert a level playing
field for railway undertakings in Europe?
The Federal Government supports the efforts of
the European Commission to liberalise rail markets
through out the entire European Union. This means
ensuring open access to rail infrastructure as well as
effective monitoring by national regulatory authorities.
That is the only way for competition to evolve. The
primary objective of the Federal Government, over
and above the achieved Europe­wide opening of the
freight transport network, is to make concrete progress
in libera lising the passenger transport markets (national
long­distance and regional transport).
In view of that situation, how do you rate the
current plans of SNCF – which enjoys a monopoly
in the rail passenger market that is guaranteed
by the French government – to enter the national
long­distance market in Germany?
The decisions regarding further liberalisation of rail
passenger transport and consequently the abolition of
monopolies in the individual EU Member States are
taken in Brussels. In Germany, we already paved the
way for liberalisation when we opened up our rail infrastructure
for use by other German companies as
part of the rail reform in 1994. As soon as a foreign railway
undertaking – such as SNCF – sets up a company
with a domicile in Germany, it is entitled to participate
in our long­distance transport market. I am sure that
the present discrepancies will be remedied once the
passenger transport market has been fully liberalised.
If necessary, this will have to be discussed again at top
political level. German undertakings have my full support
in this issue. I am in favour of free competition –
but only on fair terms for all sides.
In contrast to many other Member States, Germany
imposes a dual burden on electrically powered
Photos: Bernd Roselieb [2]
In an interview with Joachim
Fried, Management Representative
for Economic, Political
and Regulatory Affairs at
DB AG, Transport Minister
Dr. Peter Ramsauer confirms
that the Federal Government
is willing to support a further
modal shift to rail wherever
that makes sense.
rail transport, in the form of tax on electricity as
well as the emissions trading scheme. Are the
present energy policy instruments in the transport
sector capable of increasing the competitive
strength of rail?
At present there are no plans to change the already reduced
rate of tax on electric current for rail operations.
However, I am aware that electrically operated rail
transport is currently the only sector affected by this
situation. The combustion of fuels in the transport
sector is not subject to emissions trading.
The amendments to EU emissions trading legislation
are part of the Energy and Climate Package adop ted
in 2008. As from 2013, this will make electrically powered
rail transport more expensive if fossil fuels are
used to generate the current. However, the additional
costs will be reduced in line with the extent to which
electric railway operations increase their use of renewable
energies and consequently their CO2 emissions.
In other words, companies which operate electrically
operated rail transport can reduce the effect of emissions
trading by choosing the right current mix.
I welcome DB AG’s plans to increase the share
of renewable energies in its electrically powered
rail operations from presently 16 per cent to 30 per
cent by the year 2020. I also support the company’s
vision of enabling completely carbon­free rail travel
as from 2050.
The coalition wishes to revoke the protective
legislation for rail and permit regular­service longdistance
coach transport. How do you believe
the framework conditions have to be designed in
that respect?
The coalition’s objective is to enable competition
between railways and omnibuses in the long­distance
market, so that customers can choose between these
two transport modes. In other words, somebody who
has previously travelled by car would have another
environmentally friendly alternative in addition to
train. As yet, no concrete data is available regarding
the effects of this move on rail transport. The implementation
of the coalition mandate is currently being
reviewed, and in this regard, we are investigating the
question of whether there are different competitive
conditions between buses and trains.
How can it be ensured that individual companies
will not attempt to secure competitive advantages
in the regional market by paying extremely
low wages?
It is the responsibility of the wage­negotiating bodies
to prevent this happening. Management and em ployee
representatives are currently negotiating a collective
wage agreement for the industry, but no results have
as yet been achieved. It is otherwise up to the parties
who order regional transport services to assert acceptable
employment conditions.
We are very pleased that you support the
harmonisation of regulation at European level.
The EU has already submitted proposals for the
ongoing development of the European regulatory
framework. Would it not make more sense to include
the outcome of this EU legislation procedure in the
national decision­making process and therefore
postpone the plans for stricter regulatory laws in
Germany until then?
These two questions have to be considered together.
The European Commission has not yet submitted any
proposals for the ongoing development of the European
regulatory framework. It goes without saying that
we shall pay careful attention to developments in
Europe and take them into account.
30 31
Interview

32
Regulatory Policies The new EU Transport
Commissioner is expected to continue the major
initiatives launched by his predecessor. The new
Federal Government in Germany has redefined the
priorities for transport policies, including regulation.
France is currently preparing many rail transport
sectors for the market opening process in Europe.
Photo: Wijnbergh/Hollandse Hoogte/laif
EU transport policy
developments
The Commission is currently discussing the future of European
transport policies and planning comprehensive amendments to the
present legal framework for rail transport.
The new EU Commission, headed by President
Barroso, took up office in February 2010. The new
Transport Commissioner, Siim Kallas from Estonia, is
expected to continue important initiatives launched
by his predecessor, Antonio Tajani. Focal points of
future transport policies will be the development of
carbon-free transport, the internalisation of external
costs, as well as higher investments in infrastructure to
improve networking between the different transport
modes. In a hearing before the European Parliament,
the new Transport Commissioner also emphasised
the importance of strengthening competition and
liberalising the rail markets. A new “Climate Action”
department has been set up, highlighting the growing
importance of EU climate policies. The responsible
Commissioner Connie Hedegaard has declared her
plans to establish the protection of natural resources
and climate policies as cross-sectoral issues in all sectors
of EU politics and to submit a proposal for a transport
and climate protection package.
Objectives and focal points from 2010 to 2020
The Commission is currently drawing up a statement
of the future objectives and main areas of work of European
transport policy. In June 2009, it submitted a
Communication which triggered a widespread public
debate. This is the forerunner of a new Transport White
Paper which is to be presented in the second half of
2010 and which will serve as the basis for concrete
(legislative) measures by the Commission between
2010 and 2020. The last White Paper on European
trans port policy dates back to 2001.
Increasing global competition and the resulting
rise in transport volumes and adverse effects on the
environment will determine transport policies over
the next decades. In particular, climate protection and
improving the efficiency of our use of resources are to
be given top priority. The avowed aim of the EU is to
develop a carbon-free transport industry. To achieve
that objective, the Commission intends to give preference
to technical solutions. Over the long term, these
developments are aimed at improving Europe’s competitive
position in the world market. At the same time,
the Commission plans to improve integration of the
different transport modes and networks. To date, insufficient
attention has been paid to the contribution
that rail and public transport can make towards mitigating
these problems. The objective of a better integrated
transport system should be to boost environmentfriendly
alternatives to road. DB therefore welcomes
the Commission’s intention to opt to a greater extent
for pricing instruments, such as the internalisation of
external costs, to promote a more sustainable transport
system and encourage competition. Full liberalisation
of the national rail transport markets and the
development of a comparable regulatory level in all
Member States of Europe are essential to achieve fair
competition and are a prime concern of DB in European
transport policy. The Commission’s intention of
submitting a proposal for opening up the national rail
passenger markets can therefore only be endorsed.
Infringement proceedings move into next stage
In October 2009, the European Commission initiated
the second stage of infringement proceedings against
Germany and 20 further EU Member States, claiming
that they had failed to transpose the legal requirements
of the first railway package satisfactorily. If the
countries fail to remedy the alleged infringements, the
Commission will be entitled to take legal action against
the Member States before the European Court of Justice.
The main accusations levied by the Commission
33

efer to insufficient separation of infrastructure and
operations, as well as insufficient powers and independence
of the regulatory authority. It also criticises the
way in which numerous Member States determine infrastructure
charges, their lack of a performance regime
and the absence of incentives for the infrastructure
managers to reduce costs and infrastructure charges.
The Commission accuses Germany primarily of not
having taken adequate steps to ensure that the infrastructure
manager is independent of the railway holding
and the transport undertakings. The Commission
has levied the same allegation against France, Italy,
Poland, Belgium and Austria.
The new Federal Government has refuted this
criticism of the lack of independence of DB Netz AG,
upholding the previous position adopted by Germany.
Both the General Railway Act and the DB Group’s
inter nal regulations contain sufficient provisions to
ensure the necessary independence. European railway
law expressly provides for a holding structure as a
legitimate organisational form. Accordingly, it cannot
make this legal form de facto impossible by imposing
excessive demands relating to independence. The
accusation that Germany has not vested its regulatory
authority with adequate powers to force the disclo sure
of information is also unjustified. The Federal Network
Agency has comprehensive rights to demand information
and can assert these rights against the infrastructure
managers, if necessary by threatening a penalty.
Nevertheless, in accordance with the coalition
agreement, the Federal Government is planning to
strengthen the powers of the regulatory authority.
The Federal Government rejects the alle -
gations made by the European Commis sion
in the infringement proceedings.
In some cases, the allegations of the Commission
against other Member States in connection with their
regulatory authorities go much further. For example,
the Commission claims that the regulatory authorities
in France, the Czech Republic and Denmark generally
have insufficient powers to assert decisions. It further
maintains that the regulatory authorities in nine countries
– including France, Italy and Spain – are not sufficiently
independent. The accusation that there are no
incentives for the infrastructure managers to reduce
costs and infrastructure charges, which the Commis-
sion has filed against a total of eleven Member States,
likewise does not apply to Germany. At present, DB Netz
AG does not earn appropriate returns, and that alone
is sufficient incentive for it to manage its infrastructure
more efficiently. Sufficient incentives also follow
from the existing provisions of budgetary law as well
as the Performance and Financing Agreement concluded
between the Federal Government and the DB infrastructure
companies. Nevertheless, the new German
government is considering introducing a performance
regime for infrastructure and station charges.
Commission plans a recast of European railway law
Owing to the formation of the new European Commission,
the Commission’s plans to recast the provisions
of the first railway package were postponed until this
year. The recast is intended to simplify and modernise
the legal framework governing access to the railway
market. On the one hand, it will amalgamate the three
Directives of the first railway package into one law.
Secondly, it will adapt certain statutory regulations.
The plans envisage stricter regulation of access to
serv ice facilities such as terminals or stations. The
pow ers of the regulatory authorities are to be extended,
especially regarding the allocation of international
train paths and market observation. The Commission
is also planning to make the introduction of
noise-based infrastructure charges obligatory and to
prescribe detailed specifications for long-term financing
agreements. It also intends to impose stricter requirements
concerning separate accounting for infrastructure
and operations. The recast plans of the
Commission will thus provide a more detailed legal
framework for regulation of the rail sector. Such a recast
only makes sense once a comparable level of regulation
has been attained in all Member States and the
liberalisation of the European rail market has been accomplished.
Euro pean rail legislation still does not
provide for the opening of the national rail passenger
markets. The Commission has ordered a survey on
further market opening. We consider it essential that
the Commission’s recast plans include a proposal for
appropriate legislation.
Retrofitting rail freight wagons is a
crucial step in noise abatement
Fighting rail-induced noise is an issue which ranks
high on both the European and the national political
agenda. Politicians, railways and wagon keepers are all
agreed that equipping freight wagons with low-noise
composite brake blocks can play a central role in
Measurements have
proved that the use of
composite brake blocks
(far right) substantially
reduces noise.
achiev ing a sustainable reduction in the noise caused
by freight trains. The use of composite brake blocks substantially
reduces the rolling noise, which is the principal
source of noise emission by rail freight traffic.
Fitting almost the entire fleet with these brake blocks
could achieve a significant reduction in the perceived
noise. The main advantage of adapting the wagons
themselves is that this reduces noise throughout the
entire rail network, and not only locally, as is the case
with noise barriers, soundproof windows etc. That is
why DB has already purchased only freight wagons fitted
with low-noise brake blocks since 2001, that means
long before the statutory requirements for new rolling
stock came into force in 2006. Apart from these newly
purchased freight wagons, however, the freight wagon
fleet has not yet been fitted with low-noise brake blocks.
Many of the responsible politicians believe that
the introduction of noise-based infrastructure charges
would be a suitable incentive for companies to retrofit
their freight wagons and that these charges should reflect
whether the transport is performed with quiet or
noisy freight wagons. While Deutsche Bahn endorses
the use of market economy instruments and incentives
as a general principle, care has to be taken to ensure
that such models do not weaken rail’s intermodal competitive
position and encourage a modal shift to road
haulage. Most of the models for noise-based infrastructure
charges that have been discussed to date would
entail unreasonable costs, for instance for wagon identification
systems and complicated accounting processes
based on noise emissions.
In autumn 2009, KCW Berlin, Steer Davies
Gleave London and Technische Universität Berlin
pub lished a study conducted on behalf of the Commission
which presented proposals for the design of a
noise-based infrastructure charging system. The study
contains some good starting points, in particular the
recommendation of a simple model which offers a bonus
for all “quiet” freight wagons. However, such models
require further elaboration, especially in view of
the proposals announced by the European Commission
in connection with the recast. The suggestions put forward
by the rail sector itself should be considered and
integrated in a package of measures which would avoid
unnecessary burdens on the environment-friendly rail
mode and bring fast relief for line-side residents.
The German rail sector believes that in addition
to direct financial support for wagon retrofitting, as in
the current “Quiet Rhine” pilot project, the most advisable
approach would be a simple bonus system based
on the noise emission and kilometric performance
of the wagons. In other words, the wagon owners
should receive a kilometre-based bonus – paid from
public funds – for each freight wagon equipped/retrofitted
with a low-noise brake system. The technical
requirements already exist for such a system and the
financial resources should therefore be spent not on
complicated administrative systems, but on measures
which actually reduce noise.
Three freight transport corridors are
expected to run through Germany
The Commission’s initiative to establish European rail
freight corridors met with widespread support from
both the European Parliament and the Council of
Transport Ministers. It follows the right objective of
improving the quality and competitive ability of international
rail freight transport by streamlining the
major European rail corridors. As negotiations stand at
present, three corridors could potentially run through
Germany: Rotterdam-Genoa, Stockholm-Palermo and
Bremerhaven/Rotterdam-Berlin-Warsaw-Kaunas have
been proposed and corridor management companies
Regulatory Policies
34 35
Photos: Heiner Müller-Elsner/DB AG [2]

are to be set up within the next few years. The infrastructure
managers concerned are obliged to draw up
development plans for each of the corridors under
the supervision of the Member States. This is aimed
prima rily at ensuring better international coordination
of investment and construction site planning, as
well as capacity and traffic management. The terminal
operators and representatives of the railway undertakings
which would use the corridor are to be
consulted in this process.
Pursuant to the resolution adopted by the Council
in the first reading – and contrary to the Commission’s
original plans – freight traffic is not to be granted
universal priority. Instead, specific objectives are to be
defined. In case of any deviation from the timetable,
for example, the objective would have to be to minimise
the total delay in the network. The definition of
such objectives would enable the infrastructure managers
to draw up suitable solutions by mutual agreement
which take into account the individual regional,
national and specific circumstances in their own networks.
The crucial point in the next stage of this process
will be to ensure that the infrastructure managers
are granted the necessary entrepreneurial freedom to
make appropriate decisions. Sufficient flexibility is vital
to ensure optimum utilisation of infrastructure capacities
and guarantee an attractive range of regional and
long-distance passenger transport products.
More effective use of TEN-T funds
The Green Paper published in February 2009 formed
the basis for a public hearing on the reorganisation of
EU aid policies for the development of a Trans-European
Transport Network (TEN-T). Some 300 statements
were submitted, providing wide endorsement
of this initiative for the Commission. The majority were
Since 2009, an implementation
plan has ensured
the gradual introduction of
the ETCS European Train
Control System. ETCS en-
su res safe rail operations
and communication be-
tween locomotive and
traffic control centre (far
right). The track-mounted
Eurobalise (right) is a key
element of ETCS.
in favour of targeting the TEN-T policy more systematically
towards achieving a networked cross-modal
transport system. The climate objectives of the EU
should be a key criterion for the selection of which projects
are to be supported. The currently defined over all
TEN-T network, which is basically the sum of the national
transport networks of the Member States, is fundamentally
to be retained. This is deemed neces sary
because the European legal framework, for example the
regulations concerning technical harmoni sation, is directly
linked to the TEN-T. Intermodal in ter faces, such
as ports, airports and terminals, are to be included to
create an integrated core network, on which EU financial
resources could be more strongly concentrated in
future. In view of the limited EU resources for financing
the TEN-T, that approach is definitely to be endorsed.
In line with the climate policy objectives of the EU,
better networking of the different transport modes
should highlight the environmental and climate advantages
of rail in long-haul international transport. The
Commission has set up groups of experts to elaborate
on these initial concepts and, amongst other things, to
propose criteria for the selection of TEN projects which
are to be eligible for EU funding in future. The Commission
plans to pub lish a Communication on the basis of
the final reports of these expert groups in the second
half of 2010. DB believes that a European rail network
should form the backbone of the transport system and
that rail infrastructure projects should continue to
enjoy priority in the allocation of TEN funds.
Billions invested in the introduction of
the European Train Control System
A European implementation plan for ETCS (European
Train Control System) entered into force on 1 Septem -
ber 2009. ETCS is designated to replace the national
train control systems. Train control systems ensure
safe rail operations and communication between locomotive
and traffic control centre. The new plan obliges
the EU Member States to equip six European freight
corridors with ETCS. Major sections of the corridors
are to be equipped by 2015; by 2020, the entire corridors
are to be equipped with the ETCS version (3.0.0)
which will then be available. This particularly affects
Germany, as four of the six corridors run through this
country. The European implementation plan imposes
stricter requirements than the existing obligations to
equip these corridors in that it also prescribes the inclusion
of additional lines within a shorter period of
time. Under the present conditions, the EU plan would
entail investments of EUR 5.5 billion in line-side equipment
alone for Germany. Major cost drivers are retrofitting
or replacing the signalboxes and interlockings,
the installation of balises, and linking up the ETCS to
the GSM-R mobile radio network used by rail. Financing
the installation of ETCS equipment is the responsibility
of the Federal Government, which has signed
several international memoranda of understanding
obliging it to transpose the implementation plan. In
view of the lead time required to plan these measures,
financial agreements have to be concluded as soon as
possible if Germany is to satisfy its obligations by the
year 2015, as it could otherwise face the initiation of
infringement proceedings by the Commission.
The European Train Control System is intended
to achieve interoperability instead of the diversity of
the previous national train control systems and thus
simplify international transport and promote competition
on rail. In practice, however, various different
ETCS versions exist concurrently but are not compatible
with each other. Moreover, ETCS prices are still
so high that there is no incentive to purchase the system
from the business management viewpoint.
Unilateral approaches of the national
safety authorities should be avoided
The train accident in Viareggio, Italy, in June 2009
caused many deaths and casualties. One of the causes
was a broken axle on a freight wagon. Immediately
after the accident, the Italian safety authority ANSF
ordered the RU to submit comprehensive data about
the wheelset axles for freight wagons and to conduct
additional tests. It also imposed speed restrictions
and demanded supplementary safety systems. The EU
Commission then set up a task force at the European
Railway Agency (ERA) in September 2009 to review
the current safety regulations for the maintenance of
freight wagons and wheelset axles in order to find a
European solution to this European problem.
The European railways are well aware of their responsibility
for safety and therefore, in a concerted action
by the European Railway Associations, drew up an
effective package of measures for the ERA task force
which was adopted by the safety authorities and the
ERA in Viareggio in December 2009 and which is to be
implemented as from 2010. Key elements of the programme
include the Europe-wide implementation of
a visual inspection of wheelset axles, a programme
for in-depth analysis of sample axles from certain
fields of application, and a Europe-wide system for
Regulatory Policies
36 37
Photos: Stefan Warter, Christian Bedeschinski, Heiner Müller-Elsner/DB AG
In future, EU funding for TEN-T
should be concentrated more on an
integrated core network.

Emissions trading discriminates against rail
the traceability of axle maintenance data. This procedure
has also harmonised the existing national provisions.
Europe-wide acceptance of these measures
will ensure the safety of wheelset axles and alleviate
the need for isolated measures such as shorter inspection
intervals. Implementation of the programme will
be continuously evaluated by the task force in conjunction
with the safety authorities and adapted in
accordance with requirements.
This procedure will prevent uncoordinated mea sures
within the European context. Unilateral meas ures
imposed by the individual safety authorities would be
counterproductive to the EU’s endeavours to de velop
a single European market for rail transport and could
ultimately cause European international rail freight
to come to a complete standstill. Coordi nated procedures
by the safety authorities at European level are
therefore absolutely mandatory.
EU strengthens passenger rights
in all transport sectors
The new European Regulation No. 1371/2007 concerning
rail passengers’ rights entered into force on 3 December
2009. In particular, it contains comprehensive
provisions on compensation in case of delays. In Ger-
As from 2013, CO2 emissions trading will increase the cost of traction current and
consequently of rail transport. This will lead to a loss of passengers and freight for rail
(million passengers/million freight tonnes).
Source: ZEW “Folgen von Umweltpolitiken
im Verkehr” (Consequences of Environmental
Policies for Transport), 25.05.2009
many, passengers are now entitled to compensation
amounting to 25 per cent of the ticket price for delays of
60 minutes or more and refunds of 50 per cent for delays
of 120 minutes or more. To date, such comprehensive
regulations do not apply to any other transport
sector. The EU has meanwhile realised that harmonised
passenger rights for all transport modes are an essential
prerequisite for fair competitive conditions and is
consequently planning to introduce similar passenger
rights for the bus and shipping sectors.
Although a European Air Passenger Rights Regulation
has been in force for the aviation sector since
2004, it prescribes compensation only if the flight is
cancelled. Moreover, the Regulation is marked by a
substantial implementation deficit in practice. All over
Europe, numerous passengers complain about the lack
of pricing transparency, baggage loss, cancellations
and delays. The EU is therefore considering a comprehensive
reform of aviation legislation in order to
remedy these defects. The EU Commission intends to
issue a Communication on the current status of implementation
deficits in the first half of 2010.
The European Court of Justice (ECJ) also sees
urgent need for improvement in aviation legislation.
In its ruling of 19 November 2009, it strengthens passenger
rights by stipulating that they are entitled to
compensation if a flight arrives with a delay of more
than three hours. The ECJ has thus extended the
passenger rights granted by the existing Passenger
Rights Regulation. The ECJ stated that in case of severe
delays, the damage sustained by the passenger
in the form of a loss of time is tantamount to a cancellation.
Passengers are entitled to a lump-sum compensation
payment of EUR 250 for flights of less
than 1500 km, EUR 400 for intra-Community flights
of more than 1500 km and other flights between
1500 km and 3500 km, and EUR 600 for long-haul
flights of more than 3500 km. The above compensation
applies to scheduled flights and package tours,
irrespective of the ticket price.
Emissions trading distorts intermodal
competition in the transport sector
The revised Emissions Trading Directive 2003/87/EC,
which entered into force in May 2009, prescribes that
100 per cent of all CO2 emissions trading certificates
for electricity production are to be auctioned. This
would lead to a substantial increase in the cost of
traction current for electrically powered rail transport
as from 2013. Road and shipping are not subject
to emissions trading. Aviation inside the EU and to
and from Europe will be included in CO2 emissions
Rail can make its full
contribution towards im-
proving the environmental
impact of transport only
if it does not have to bear
excessive burdens result-
ing from emissions trading
and energy taxes.
trading as from 2012, but will only be obliged to acquire
15 per cent of its CO2 certificates by auction.
There appear to be no good reasons for this unilateral
discrimination against the climate-friendly rail mode.
Compared with road transport and aviation, rail generates
on average between three and ten times less
CO2 emissions. Moreover, rail transport in Germany
has reduced its specific CO2 emissions by 40 per cent
since 1990 and has also achieved a substantial reduction
of absolute emissions. In contrast, CO2 emissions
by the transport sector in Europe as a whole rose by
36 per cent during that same period. According to a
study by the ZEW Centre for European Economic Research,
the unsatisfactory design of the CO2 emissions
trading system will have a noticeable effect on the
modal split between the different transport modes in
favour of road and thus lead to a sharp increase in
transport-induced CO2 emissions. This shows how
important it is to define clear CO2 reduction targets
for the transport sector, which is already responsible
for around 20 per cent of the total CO2 emissions in
the EU, a trend which is still steadily rising. Until all
transport modes are obliged to participate in CO2 emissions
trading to the same extent, climate-friendly rail
should be entitled to compensation for the burdens
imposed on it by CO2 emissions trading. Granting
compensation for these burdens could avoid the
occurrence of a modal shift away from rail.
Harmonisation of the competitive conditions
between the different transport modes could be achieved
as part of the planned revision of the Energy Tax
Directive. The mandatory exemption of rail transport
from energy taxes would on the one hand bring it in
line with taxation on aviation and shipping. At the
same time, this would balance the unilateral CO2based
cost burdens compared with road transport.
Rail can only make its full contribution towards im-
proving the environmental impact of transport on the
basis of fair energy costs. As it is vital to achieve a substantial
reduction of transport-induced CO2 emissions,
rail transport should no longer have to bear
excessive burdens resulting from emissions trading
and energy taxes.
Public service contracts under scrutiny
The public service contract for regional transport
signed between DB Regio and the Federal Laender
of Berlin and Brandenburg and the contract between
S-Bahn Berlin and the Federal Land of Berlin are the
subject of complaints about state aids submitted to the
EU Commission. State aid proceedings concerning the
Berlin-Brandenburg public service contract were already
initiated in 2007 following a complaint filed by
Connex Regionalbahn GmbH, which claimed that
the fees paid to DB Regio by the ordering authorities
under the contract were too high and could therefore
be classified as inadmissible state aids. There is, however,
no justification whatsoever for this allegation.
The contract satisfies all the criteria of state aid legislation
which are defined for public service contracts.
However, the investigation by the Commission has
led to a great deal of legal uncertainty, also for a large
number of contracts in Germany and throughout
Europe, which were concluded in the belief that the
present legal situation was reliable. The Commission
is expected to announce its decision before the end
of the year. The EU Commission has also been asked
to examine the public service contract with S-Bahn
Berlin. The Bündnis 90/Die Grünen group in Berlin’s
parliament submitted a complaint relating to state
aids in October 2009. Again, however, the allegations
that the fees paid by the ordering authority are excessively
high are untenable.
Regulatory Policies
38 39
Photo: Georg Wagner/DB AG

In search of a balanced
regulatory concept
Despite the initiation of numerous proceedings and in some cases
far-reaching decisions, there are still no signs of universal solutions to
important regulatory issues in the near future.
The notices issued by the Federal Network Agency
on the station charging system as a whole and on one
central element of the infrastructure charging system,
the regional factor, mark a provisional culmination in
the investigation into the charging systems of the DB
infrastructure companies which began years ago.
The duration of the investigation alone confirms
that the regulatory authority has conducted an
in-depth analysis of the complex relationships between
the different objectives and interests in the rail
markets. This involves more than just reconciling
the interests of infrastructure managers and market
play ers. As the state – i.e. the Federal Government and
Federal Laender – assumes a major share of infrastructure
funding, its contribution also has to be taken into
account in the charging systems. Pursuant to the
Regionalisation Act, the Federal Laender receive substantial
funds for ordering regional rail passenger
services – funds which essentially determine the ordered
services market in this segment. As they evolved
over the years, the DB AG infrastructure charging
systems have taken the highly divergent interests
of the different parties into account. They have respected
and developed the legal financing mecha-
nisms and the prescribed allocation of burdens. In
particular the notice concerning the regional factors,
if it were to be upheld, would lead to drastic changes
in the allocation of burdens between the Federal
Laender and could ultimately necessitate a revision
of the Regionalisation Act. For the time being, however,
these notices have caused severe legal uncertainty
in the market, both as regards the future validity
of the charging systems, and the possibility that
the decisions could apply in retrospect.
User charges are a focal point
The DB infrastructure charging systems are the subject
of diverse administrative proceedings. The Federal
Network Agency declared the list of station prices
invalid as from 1 May 2010 and the regional factor – an
element of the infrastructure charging system – as from
12 December 2010 and ordered the infrastructure managers
concerned to calculate new charges. In both
cases, the complaints do not refer to the level of charges,
but to the differentiations within the system. DB
Netz and DB Station & Service have appealed against
these notices. DB Station & Service has also applied
Reviewing the present
regulatory framework is a
priority item in the Fede ral
Government’s transport
policy agenda. Amongst
other things, the plans
include the subjects of
traction current (left),
sales activities and service
facilities (right).
for summary legal protection; the suspensive effect of
the appeal was ordered by the court on 23 March 2010,
so that the notice presumably cannot be implemented
until conclusion of the formal investigation procedure.
The notice on the station charging system is sued
in summary proceedings before Münster Higher Administrative
Court contains fundamental statements
which lie between the legal position of the DB infrastructure
managers and the Federal Network Agency.
The court’s arguments will therefore influence not only
the outcome of further proceedings, but could potentially
point the way for general clarification of central
legal questions concerning assessment of the access
charging systems of the rail infrastructure managers.
The monitoring of charges pursuant to the
General Railway Act is essentially intended to rule out
abuse in connection with charging levels, in particular
unreasonable monopoly returns, as well as discrimination
against individual market players by applying
different charges. The DB infrastructure companies
and the Federal Network Agency are agreed on that
fundamental principle. In view of the general earnings
situation of the DB infrastructure managers, there has
been no allegation that they earn unreasonable monopoly
returns in the proceedings to date. There are,
however, crucial differences in the legal opinions
of the parties regarding the question of which cases
constitute discrimination and if so, who is responsible
for providing fair and objective justification for different
charges and on the basis of what criteria. The
Agency imposes stringent demands on the grounds
for price differentiation. In the past, it has in particular
demanded that grounds for differentiation must
be backed by full cost substantiation. The DB infrastructure
companies, on the other hand, have emphasised
their right to specify prices within the limits of
general statutory requirements and believe they are
obliged to provide detailed validation, substantiated
by costs, to justify price differentiation only if the
authority can substantiate reasons to suspect discrimination
in a specific case. Moreover, they claim that
apart from cost-based pricing, there are other admissible
differentiation criteria, such as the viability of
various market segments.
The court uses the station charging system as an
example of the potential discrimination potential of a
category-based charging system if there are or appear
to be no objective reasons for such a structure, but
concedes that the DB Station & Service criteria, i.e.
the station’s facilities and its importance in terms of
transport, are a suitable basis and could per se conform
to the requirements of railway law. Furthermore, in
investigation proceedings into charging systems, the
DB infrastructure managers are not obliged to submit
comprehensive cost accounting details to substantiate
price differentiations. Sufficiently objective validation
is, however, required to allow the regulatory authority
to dispel any existing reservations. Failure to present
specific competitive disadvantages for individual RUs
by the regulatory authority would contradict the immediate
enforceability of a notice. The matter – including
examination of whether sufficient validation has
been submitted – would then have to be decided in
the formal investigation procedure.
Regulatory Policies
40 41
Photos: Heiner Müller-Elsner, Christoph Busse/DB AG
The DB AG infrastructure charg ing
systems have respected and developed
the legal financing mecha nisms.

Based on these statements by the court, all the DB
infrastructure charging systems could fundamentally
comply with the requirements of the General Railway
Act because all differentiations are based on objective
features or can be attributed to objective reasons. The
station charging system differs between the individual
Federal Laender, for example, because of the different
aids provided by them, especially their contributions
to investments in stations. However, the individual
elements of the system have to be examined in detail
before it can be finally established that the systems can
continue to apply in their present form. There will be
no absolute certainty until either the Federal Network
Agency and/or the courts have examined and accepted
the validation in detail in the formal investigation
procedure. On the whole, the mediatory tenor of the
ruling of the Higher Administrative Court shows that
the present legal framework already permits appropriate
solutions for those charging issues which are currently
under discussion.
Federal Network Agency decisions cause
uncertainty amongst customers
However, the notices issued by the Agency and the potential
solution indicated by the Higher Administrative
Court illustrate a dilemma: until final clarification
of whether the individual charging systems can be validated
to the extent required by the regulatory authority
or the courts, it will remain uncertain as to whe ther
the players are obliged to pay these charges in full.
Accordingly, there is increasing uncertainty in market
and customers are now paying station and infrastructure
charges subject to reservation, making unilateral
reductions or demanding reimbursements.
These trends have led to an increasing number
of civil-law proceedings concerning the scope of the
A change in the load
dimensions for trucks
(left) and the admission
of nationwide scheduled
long-distance coach
services (right) would
entail severe competitive
disadvantages for rail.
obligations of the individual railway undertakings.
There is a risk that the civil courts will issue decisions
which contest some aspects of the charging systems or
the system as a whole. As civil court rulings are valid
only upon the litigating parties, there is therefore a
danger that the principle of equal treatment for all
market players subject to the same circumstances
could be suspended. Such an outcome would be neither
in the interests of the DB infrastructure companies
nor the Federal Network Agency. Accordingly,
there is good reason to reach conclusive findings
based on the investigation principles defined by the
courts in order to give the civil courts a sound basis
for their decisions. Irrespective thereof, however, it
fundamentally has to be asked if it is not necessary to
clarify that charging systems which have already been
investigated and found acceptable by the Agency
should serve as the basis for decisions by the civil
courts. This appears advisable for the simple reason
that European railway law prescribes specific pricing
criteria which could not be upheld if solely the equity
considerations of civil law were to be applied. This
refers in particular to the fundamental European law
principle of equal treatment of railway undertakings
subject to the same circumstances.
Special questions in connection with charging
systems refer to maintenance facilities (depots), as
well as the regulation of traction current. With regard
to the maintenance depots, the fundamental question
is whether facilities for on-site maintenance actually
constitute rail infrastructure and what consequences
that entails for the operators of such facilities. The
infrastructure companies are currently discussing
the exact design of the charging system for these facilities
with the Federal Network Agency. The dispute
about traction current refers to whether the charges
for use of the traction current transmission lines
have to be approved pursuant to the requirements
of the German Energy Management Act (EnWG) or
whether this supply is governed by the General Railway
Act. The Federal Network Agency and Düsseldorf
Higher Regional Court believe that EnWG should
apply. This is to be conclusively clarified by the Federal
High Court of Justice.
Further regulatory proceedings
focus on capacity allocation
Framework agreements are the subject of countless
proceedings. On 5 March 2010, the Federal Network
Agency objected to three framework agreements
which DB Netz planned to sign for the line to the
island of Sylt, contesting whether DB Netz was actually
permitted to allocate capacities in the scope
covered by the framework agreements. At present,
the Agency has objected to an application from a
DB company for a framework agreement with aterm
of more than 5 years. In March 2009, the Federal
Network Agency attempted to oblige DB Netz as a
fun damental principle to offer framework agreements
“with a deferred commencement date” and is
currently trying to enforce the conclusion of deferred-commencement
framework agreements with a
non-DB railway undertaking.
The proceedings on charging systems have ruled
on charge reductions, maintenance depots and traction
current lines.
All these proceedings show that many points
still have to be clarified in connection with the new
instrument of framework agreements and that the
clarification process has to find a balance between the
infrastructure managers’ interest in securing full utilisation
of their capacities for as long as possible and the
transport companies’ interest, in view of the high invest-
ments required for durable capital goods, in obtaining
contractual security for their investment risks. This
will inevitably lead to a conflict of interests: newcomers
in particular wish to obtain such security at as
low a cost as possible and to have the option of withdrawing
without having to pay any significant compensation,
whilst infrastructure managers wish to
be able to market their capacities flexibly or at least
obtain a satisfactory cancellation fee for a train path
which has been reserved in a framework agreement
but is not actually used. Again, DB Netz AG has presented
objective reasons for its decisions. It remains to
be seen whether these reasons are deemed sufficiently
plausible. On the whole, it is a question of not making
practical handling more difficult for the parties by endless
interpretative disputes and thus thwarting the
intended objectives. Moreover, as framework agreements
are of practically no significance in the rest of
Europe, there is also a risk that the national regulatory
framework would be disjunct from practice in neighbouring
countries.
Disputed obligation to maintain inactive stations
Distribution of the risk of capacity utilisation and the
avoidance of maintenance costs are the subject of further
proceedings concerning inactive stations which
Regulatory Policies
The proceedings on charging systems have
ruled on charge reductions, maintenance
depots and traction current lines.
42 43
Photos: Kögel Trailer GmbH & Co. KG; Deutsche Touring GmbH

are no longer operated and which offer no transport
services. The Federal Network Agency had complained
that such stations were not included in the published
infrastructure specifications. DB Station & Service
thereupon applied to the Federal Railway Authority
(EBA) for a reduction of the scope of approval required
under railway law for the infrastructure management
of 567 stations. In 156 cases, this was rejected and the
company was ordered to maintain infrastructure
management. DB Station & Service has meanwhile
sought relief from the court. If DB Station & Service is
obliged to include inactive stations in its infrastructure
specifications and maintain safety of operations,
it would have to adapt the station charging system to
compensate for these higher costs, even though there
is no demand whatsoever for the stations.
Conditions for opening the operations centres
In February 2010, more than three years after the proceedings
began, the Federal Network Agency and the
Federal Railway Authority inally issued two decisions
concerning the opening of DB Netz AG operations
centres. The authorities claim that the mere presence
of employees of DB Group RUs at the operations centres
could constitute discrimination against other RUs
and have consequently forced DB Netz AG to offer
existing workplaces to any interested RUs as from
September 2010 and to provide comprehensive anonymised
information about the speed, stops, scheduled
The Federal Network Agency makes
increasing use of the scope provided by
the present regulatory framework.
timings and train-path products for all trains. Moreover,
all RUs are to be kept permanently informed
about disruptions. In April 2009, DB Netz AG had already
proposed opening up the operations centres for
non-DB RUs of its own accord. The authorities however
promptly imposed stricter demands, in particular
about the disclosure of information, and have ordered
their implementation. These demands lead to high administrative
expenses. In contrast to the proposal made
by DB Netz AG, which closely reflects market prac tice,
the solution ordered and administrated by the authorities
will make it more difficult to adapt the concept
in line with the experience acquired.
The Federal Network Agency makes increasing use
of the scope provided by the present regulatoryframework.
Unbundling proceedings continue before
the Federal Railway Authority
Important progress has been made in the “company
lawyer” proceedings which have been pending since
2006 concerning the admissibility of the provision of
legal consulting services on regulatory law issues for
DB Netz AG by the DB Group legal department. In
2007, DB Netz AG appealed to Münster Higher Administrative
Court against the rulings of Cologne Administrative
Court which had confirmed the Federal
Railway Authority’s prohibition of this practice. In
May 2009, Münster Higher Administrative Court confirmed
that the present practice is legally permissible.
The notice issued by the Federal Railway Authority
and the subsequent ruling of Cologne Administrative
Court were revoked. The court in Münster ruled that
the employees of the legal department are not involved
in decisions concerning the working timetable, the
allocation of occasional train paths and infrastructure
charges pursuant to Section a (1) Sentence 2 No. 3 General
Railway Act. It is evident from the expressions
‘legal consulting’ and ‘representation in court’ that
this does not involve participation in such decisions.
The present internal DB rules and regulations ensure
that the lawyers are bound by the instructions of
DB Netz, whose employees could make the relevant
decisions themselves. The Federal Railway Authority
has filed an appeal with the Federal Administrative
Court against the Münster ruling.
In the proceedings on the “transfer of public
funds”, in which the Federal Railway Authority demanded
information from DB Netz AG in 2008 on the deployment
of the funds received including their apportionment
within the Group, Cologne Administrative
Court has dismissed the appeal against the notice. The
court followed the authority’s opinion that no grounds
for suspicion are required for a notice demanding information,
as this would unduly restrict the authority’s
rights of inspection regarding internal corporate procedures.
DB Netz AG has appealed against the ruling.
Existing railway law permits efficient regulation
In retrospect, the increasing regulatory intensity during
the preceding year shows that demands for wider
powers of intervention are not supported by practice.
The ruling of Münster Higher Administrative Court
imposed considerable onus of presentation on the rail
In numerous proceedings,
regulation has to find
the right balance between
the utilisation, allocation
and flexible handling of
infrastructure capacities.
infrastructure managers, whereas the requirements
imposed on the regulatory authority to prove discrimination
were restricted. In the light of this decision,
there are no grounds whatsoever for the reference
to supposedly higher powers of intervention of
the Federal Network Agency in other sectors. The
powers granted pursuant to the General Railway Act
differ from the statutory provisions in the telecommunications,
post and energy sectors, but offer infrastructure
users an equivalent level of protection. Although
the charges and conditions of use are not subject to
formal ex-ante approval pursuant to General Railway
Act, so that the Federal Network Agency can order
amendments only with future effect, the General
Railway Act allows the authority – in contrast to other
sectors – to make conditions of use and charges which
have already been inspected ex-ante subject to an
ex-post inspection at any time and without any further
prerequisites, such as the existence of new facts.
Nor is it bound by any formal time requirements.
This system can be explained primarily by the maximum
contract term of one year which is usual in the
rail sector. Instead of an expensive annual ex-ante
inspection, the Federal Network Agency can instigate
direct investigations if it suspects any breach of the
General Railway Act and order amendments for the
next contract term. A reform which harmonised the
law of regulatory procedures in all sectors would not
be appropriate.
Coalition agreement stipulates the transport
policy objectives of the new government
The new Federal Government presented the rudiments
of its transport policy objectives in the coalition
agreement. In the rail sector, the focus is on the ongoing
development of the regulatory framework and
reviewing the structure of the DB Group. As regards
the regulatory framework, the coalition refers to the
increased powers of the Federal Network Agency,
thus confirming that it intends to pursue the path embarked
on around five years ago with the recast of the
General Railway Act and the transfer of access regulation
to the Agency. In some cases, the objectives
include items which are already the subject of investigation
procedures by the Agency and legal disputes
before the courts, such as the introduction of a performance
regime, the regulation of access to service
facilities, the purchase of traction current, and sales
in the passenger transport sector. Some statements in
the coalition agreement refer to demands by the Agency
and/or the Monopolies’ Commission. Their implementation
would again substantially expand the regulatory
framework in Germany, which is already far
more comprehensive than in almost all Member States
of the EU. In the coalition agreement, the Federal
Government further states that it intends to campaign
for competitively-neutral implementation of EU law
in general, full opening of the railway markets in all
Member States and fair competitive conditions in that
sector. It remains to be seen where it will focus its
attention. This is especially important as the EU Commission
is also planning radical changes to rail regulatory
legislation as part of the recast, so that coordination
of these processes in terms of timeframe and
contents appears crucial from the viewpoint of the
market players.
Drastic changes are also imminent not only as
regards the regulatory framework. The coalition agreement
also outlines other projects, such as the admission
of nationwide scheduled long-distance coach
services, changes to the load dimensions for trucks
and abolishing the rail bonus, which will substantially
impact competition in the transport markets.
Regulatory Policies
44 45
Photo: www.stefanbock.de

France: the long hard road to
an open transport market
French rail transport benefits from ambitious sustainability objectives.
Massive investments are planned to remedy infrastructure defects.
As regards market liberalisation, however, France lags behind.
President Sarkozy convened an environmental summit
entitled “Grenelle de l’environnement” shortly
after his election in 2007, at which he stated that transport
would play a major role in achieving the country’s
ambitious sustainability objectives and consequently
announced massive investments in that sector. The
plans envisage the construction of 2,000 kilometres
of new high-speed lines for rail transport alone, includ
ing a link between Paris and the port of Le Havre.
Revitalisation of the freight terminals at the French
seaports is another component of the new sustainability-driven
transport policy. Further targets include
shifting a transport volume of approx. two million
trucks to the more environment-friendly rail mode by
the year 2020 and construction of the corresponding
new rail freight lines.
On 16 September 2009, the French government
presented a national freight transport plan for implementation
of the Grenelle objectives (“Engagement
national pour le fret”), which involves funding of EUR
7.2 billion over a period of ten years and which is to be
supplemented with a further billion from SNCF. The
plan defines nine priority measures: upgrading “rolling
roads”, doubling the volume of combined transport,
improving the quality of block trains, upgrading rail
freight connections to the seaports, launching highspeed
freight traffic services between airports, founding
regional service providers for the post-rail distribution
of single wagonload traffic, establishing special
rail freight corridors, eliminating infrastructure bottlenecks
– especially around the cities of Lyon, Nîmes
and Montpellier – and improving the customer-friendliness
of the French rail infrastructure manager Réseau
Ferré de France (RFF).
In order to commit RFF to various quality improvements,
for example regarding infrastructure and
the financing model, the French government signed a
performance agreement with RFF on 3 November
2009. Progress will be monitored on the basis of specifically
defined indicators. The agreement is aimed
particularly at preparing the French rail market for the
opening process.
Rail suffers from inefficiencies in
infrastructure management
The politicians and market players state different
causes for the defects in French rail transport. On the
one hand, the institutional separation of SNCF and
RFF has been criticised as inefficient, especially after
the report published by the French state audit office.
RFF has been responsible for the management of rail
infrastructure since 1997, but has largely delegated
that task to SNCF, which manages transports, technical
facilities, safety installations and maintenance
in accordance with the instructions of RFF. A law enacted
in December 2009 now provides for the formation
of a separate department at SNCF, the “Direction
de la Circulation Ferroviaire” (DCF), which is to handle
infrastructure management independently of the
transport operations of SNCF. The head of the new
department will be appointed by the Prime Minister
on the recommendation of the Minister of Transport.
However, it remains dubious as to whether DCF will
be able to work independently if it is not organised as
a separate legal division.
Following the decision of the French parliament
in 2009 to grant greater independence to passenger
stations, SNCF also set up a new division, “Gares &
Connexions”, which has separate accounting. It is responsible
for operating passenger stations and serves as
a contact for third parties. The French competition authority
subsequently launched an ex officio investigation
into this decision. In a notice of 4 November 2009
The government is plan-
ning to expand the French
high-speed rail network
by 2,000 kilometres.
concerning the operation of stations by SNCF, the authority
criticised the SNCF corporate structure (no legal
and operational separation) and the risk that SNCF
could abuse its dominant market position. It also speaks
out in favour of tenders as the contract award procedure
for station fittings and fixtures. However, the
notice is not binding upon SNCF.
Another central issue is infrastructure maintenance.
A study commissioned by RFF in 2005 and
conducted by EPFL Federal University of Applied
Sciences in Lausanne warned against a steady deterioration
of rail infrastructure in France and recommended
renewal and maintenance programmes, rather
than the new investments which had been mainly conducted
until then. At the time, the total programme
was estimated at approx. EUR 13 billion over a period
of 20 years, which would have meant additional finan-
cial requirements of up to EUR six billion. In May
2007, RFF and SNCF signed an operating agreement
which obliges SNCF to raise its maintenance and productivity
targets by three per cent per annum until
2010. Up to 2008, however, RFF’s income was consistently
lower than the costs of maintenance charged
by SNCF. RFF is faced with huge debts of approx.
EUR 27 billion and infrastructure charges are its only
source of income apart from state subsidies for infrastructure
renewal, debt clearance and equalisation
pay ments for infrastructure costs in regional transport.
RFF has never been granted one-off full debt
relief, contrary to DB Netz AG, which was declared
debt-free as part of the rail reform.
In 2007, the French Ministry of Finance therefore
recommended that the infrastructure charging system
be restructured so that the charges would provide
better coverage of the infrastructure costs. Following
approval by the French parliament, RFF amended the
system in 2008 and resolved to increase infrastructure
charges by EUR 60 million per annum up to 2012. In
2009 it announced a further increase in infrastructure
charges for high-speed lines up to 2013. According to
SNCF, the RFF plans would mean an increase of 140
per cent for high-speed train paths compared with
2008. Such a substantial increase in the cost of highspeed
traffic would be a serious economic barrier for
the operation of international services in France. Moreover,
RFF has stated that the level of the increase is
not yet final, as it will also have to take into account
the costs of infrastructure maintenance, which SNCF
charges to RFF on the basis of an agency agreement
between the parties. As the present agreement expires
in 2010, RFF does not yet know how these costs will
develop after 2011. RFF is therefore urgently request ing
SNCF to provide it with more planning certainty and
transparency as regards maintenance costs, which
are an important component in designing an adequate
infrastructure charging system.
According to RFF, by 2009 competitors had increased
their market share to 14 per cent of total traffic performance
since the rail freight market was first opened in
April 2006. However, this is attributable less to the
good performance of the newcomers than to the chronic
problems of SNCF Fret, the SNCF freight transport
division. For the last ten years, the company has
made losses, latterly amounting to EUR 600 million.
46 47
Photo: Bartlomiej Banaszak/DB AG
Regulatory Policies
According to SNCF, the RFF plans to
raise infrastructure charges for high-speed
traffic by 140 per cent.

If depreciation is taken into account, the figure is actually
EUR 1 billion. Traffic performance decreased from
57.7 billion tonne-kilometres in 2000 to 40.6 billion
tonne-kilometres in 2008. Immediately after the French
government announced its national freight transport
The legal framework makes it unprofitable
for foreign competitors to operate
in the French long-distance market.
plan, SNCF presented its own reform plans as the “last
chance” for SNCF Fret. On the one hand, these plans
focus on the redevelopment and restructuring of single
wagonload traffic by setting up four new divisions:
Automotive and Chemicals, Containers, Agricultural
Products and Ores, and Steel. The trade unions have
alleged that SNCF could be planning to slash a total of
4,000 to 6,000 jobs.
Concealed barriers make it difficult
to enter the rail freight market
The DB subsidiary ECR is the second-largest player
in the French rail freight market, with a current share
of approx. 10 per cent. The company has to strug -
gle with substantial competitive barriers. In October
2009, ECR complained to the French competitive
authority about several aspects of SNCF practice.
Firstly, it accused SNCF of abusing its dominant
market position: SNCF charges extremely low prices
for block trains. If, however, customers indicate their
intention of transferring block train transports to
competitors, SNCF warns them of price increases for
single wagonload transports. As the owner of sites
with rail sidings which are used by industrial and
commercial companies, in some cases SNCF makes
the use of these premises by the companies conditional
upon their exclusive cooperation with Fret
SNCF. Secondly, there are problems in connection
with SNCF as infrastructure manager. Competitor
railways applying for train paths have to give longer
periods of notice than Fret SNCF. Once competitors
have been given a train path, they subsequently have
only restricted access to the information required
for train operations – for example, whether the tracks
are damaged or cannot be used owing to adverse
weather conditions. Train paths are sometimes of
poor quality, are awarded without any alternative
and at short notice, which makes it difficult for operators
to plan their operations with any reliability.
Finally, SNCF obstructs access to rail infrastructure
for other RUs by ordering train paths that it does
not actually need and subsequently failing to cancel
these train paths, so that these capacities cannot be
used by other RUs.
Furthermore, in November 2009 ECR initiated
summary proceedings against RFF for legal protection,
protesting against a decision by the infrastructure
manager concerning the award of safety certification
(“compatibility certificates”). In January 2009,
ECR had applied for certificates to use its own locomotives
on certain lines. In October, ECR was granted
only temporary certificates for selected lines. In the
summary proceedings, ECR requested certification
for the remaining lines, as this would otherwise delay
commissioning of the locomotives, which in turn
would entail financial losses of up to EUR 20 million.
The court sustained the complaint and ordered RFF to
allocate all the certificates by the end of 2009.
Photos: Olivier Jardon/Hoa-qui/Eyedea Illustration/laif; SNCF-CAV-Ludovic Gra; Parlement Europeen/REA/laif
The port of Le Havre is to
be linked up to the high-
speed rail network (far
left). Fret SNCF, the freight
transport division, has
been reporting losses for
the past ten years (left).
France is very slow to
transpose the requirements
of EU legislation
for the liberalisation of rail
transport (right).
The absence of an efficiently functioning regulatory
authority constitutes a further barrier to market entry.
Pursuant to a law adopted in December 2009, France
will now set up an independent regulatory authority
with strong powers. The “Autorité de régulation des
activités ferroviaires” is intended to enable fair competition
on the French rail network in future by better
monitoring of non-discriminatory access to infrastructure
and, in particular, of the charges levied
by the infrastructure manager. Like the Federal Network
Agency in Germany, it will be vested with sufficient
human resources (up to 60 employees) and
financial resources (a budget of approx. EUR eight
million). A team of seven commissioners will be
authorised to make ex-ante, ex-post and even ex-offi-
cio decisions. Furthermore, the authority will be entitled
to issue immediately enforceable notices and
impose penalties of up to three per cent of revenues.
In contrast to the German regulatory framework,
French law does not oblige the infrastructure man -
ager to give the regula tory authority advance notification
if it plans to refuse applications for the use of
infrastructure. However, four months after the law
came into force, neither the President nor the commissioners
have been appointed and the authority has
still not commenced work.
Incipient liberalisation of the
French rail passenger market
Since 1 January 2010, the EU Member States have
been obliged by Community law to open up their rail
passen ger markets for international transports. This
gives RUs the right to offer their customers transport
on purely national sections in the Member States.
How ever, the European legislator grants Member
States options for restricting the opening of their rail
passenger markets: to protect transports offered as a
public service, for example, the competent authorities
in the Member States can restrict access to the national
rail passenger market. The authorities are further
entitled to demand equalisation payments from RUs
which provide parallel transport services if this impairs
the economic balance of a connection ordered
as a public service.
The French legislator has amended national law
to conform to EU requirements and opened up the
French rail network for international transports. However,
the scope for restriction is exploited in full. Such
restrictions have no longer existed in Germany since
1994. French law, for example, prescribes an equalisation
payment from RUs which provide parallel transport
services if this impairs the economic balance of a
connection ordered as a public service. The demarcation
between national and international transports is also
highly restrictive: international transport is defined
by the number of national passengers between two
French stations, the revenues earned and possibly also
by the distance between the two stations which are
furthest apart in France. In the final analysis, the combination
of these measures means massive competitive
distortion in favour of SNCF, so that there is no
financial incentive for players to enter the market in
competition with SNCF.
Regulatory Policies
The absence of an efficiently working
regulatory authority constitutes a further
barrier to market entry.
48 49

Guillaume Pepy, Chief
Executive of SNCF and
President of Eurostar.
EC Regulation 1370/2007 concerning regional public
transport, which contains provisions governing the
award of public service contracts, came into force on
3 December 2009. The Regulation fundamentally demands
that the authorities conduct competitive proceedings
which must be open to all operators, transparent
and non-discriminatory. However, a prerequisite
for such proceedings is that other operators have to
have access to the market in the first place. And yet,
pursuant to French law as it stands SNCF has a monopoly
in the domestic passenger transport market and
there are no plans to abolish this situation even the
above Regulation has entered into force. On the contrary,
the French legislator has amended the law so
that the monopoly of the Parisian regional transport
company, Régie autonome des transports parisiens
(RATP), is guaranteed until the end of 2039 for underground
and rapid transit services, until the end
of 2029 for trams, and until the end of 2024 for bus
services. SNCF’s legal monopoly is irreconcilable with
Community law which has been in force since 3 December
2009. The provisions concerning contract
award procedure are of no consequence as long as only
one RU has access to the market.
For the time being, the French government is
planning only a test opening of the regional rail passenger
market in order to analyse the impact. A working
group, made up of the relevant stakeholders, has
been set up to prepare this process, and the findings
are to be presented in spring 2010. The French state
audit office supports the project because it expects it
to boost efficiency. In a report of 26 November 2009
the office had criticised the high costs of regional transport,
claiming that SNCF had not improved productivity,
there had been only a slight modal shift onto
rail and that the average passenger load factor on
trains was only 26 per cent.
As from June 2010
InterCity and night trains
are to be classified as
public service transports
in France (left). The legal
monopoly of the Parisian
regional transport com-
pany, Régie autonome
des transports parisiens
(RATP), is likely to
obstruct competition for
decades (right).
Guillaume Pepy, Chief Executive of SNCF, publicly
states that he is fundamentally in favour of market
opening, but also points out the competitive disadvantages
facing his state-owned company, such as
the immense inherited debts, pension commitments
and its obligation to operate unprofitable lines which
serve only regional planning purposes. To prevent its
social commitments from becoming a competitive
disadvantage, SNCF recently proposed that all RUs
should sign an industry-wide collective labour agreement
which conforms to SNCF standards. It further
recommended that competitors in the regional market
should take over the regional personnel of SNCF.
If these conditions are implemented, the market opening
is unlikely to lead to the advantages hoped for
by the state audit office.
In December 2009, the French government
made concessions to SNCF’s demands and announced
that it would classify InterCity and night trains
as public service transports from June 2010 at the
latest. SNCF has thus finally enforced a long-standing
demand. InterCity and night trains have been
generating losses of approx. EUR 100 million per
annum for many years. Future contracts are to be
funded by levying a tax on the ticket price for highspeed
traffic, but without raising ticket prices. Within
the context of opening the international transport
market, it is assumed that competitors will focus
predominantly on high-speed lines and will therefore
contribute towards financing the InterCity and
night trains.
State backs the French transport industry
SNCF is systematically pursuing the target imposed
by President Sarkozy of evolving into a leading worldwide
mobility provider. The company’s freight trans-
port division SNCF Fret continues to expand despite
its high losses. In the domestic French market, SNCF
Fret consolidated its dominant market position in
combined transport by increasing its capital shares
in the company Novatrans to 85.05 per cent and in
Naviland Cargo to 99.94 per cent in October 2009,
deals which were approved by the French antitrust
authority. SNCF Fret also expanded its international
market position by taking over the foreign business
activities of Veolia Cargo in Germany, Italy, Belgium
and the Netherlands. The French activities of Veolia
Cargo have been taken over by Europorte, the rail
freight subsidiary of Eurotunnel, which operates
the Channel Tunnel. Finally, on 22 January 2010, the
European Commission approved the takeover of the
Swiss Financière Ermewa by Transport et Logistique
Partenaires SA (TLP), a subsidiary of the French SNCF
Group. Approval was subject to the condition that
the company sold Ermewa’s European wagon leasing
company and the division responsible for the organisation
of on-rail grain transports.
In the rail passenger market, on 13 January 2010,
the French antitrust authority approved the increase
in SNCF’s share in the capital of Keolis from 45 to
56.7 per cent. This gives SNCF a controlling interest
in Effia, a service provider which is responsible for
management of large parts of the stations, such as
the car parks.
The French government is actively restructuring
the French local transport market. The central role
is currently played by regional transport undertaking
Transdev, 25.6 per cent of which was to date owned by
RATP, 69.6 per cent by the French state investment
bank (Caisse des Dépôts et Consignations) and 4.8 per
cent by the Italian bank Intesa SanPaolo. The RATP
share has now been transferred to Veolia with the help
of the French government and is intended to establish
a new regional transport company with a workforce of
120,000 and revenues of approx. EUR eight billion;
Veolia Environnement, the holding company of Veolia
Transport, will act as the industrial operator and La
Caisse de Dépôts as strategic shareholder, each holding
a 50 per cent stake.
In the French regional transport market there are
consequently three major large-scale players which
enjoy national protection, which are expanding internationally
and in which the French state holds a direct
stake: SNCF with its subsidiary Keolis, RATP and,
as from now, Veolia/Transdev with the subsidiaries
Eurailco/Transregio. All three companies are active
in the German regional rail passenger market. Keolis
has operated approx. 7.4 million train-kilometres per
annum in Germany since 1999, Eurailco/Transregio
approx. three million train-kilometres per annum
since 2004, whilst the volume operated by Veolia is
as high as 34.8 million train-kilometres per annum.
French competitors thus account for a market share
of almost 7 per cent. Through their membership of
interest groups, all three undertakings complain
bitterly about the supposedly poor competitive conditions
in Germany, whereas France, almost 16 years
after the rail reform and opening of the rail transport
market in Germany, still protects the monopoly positions
of the incumbent.
Regulatory Policies
Although French companies are active
in the German regional transport market,
they still enjoy a monopoly in France.
50 51
Photos: Hoa-qui/laif Hoa-qui/laif; Elodie Grégoire/SNCF; Bollendorff/Oeil Public/laif

Frank discussion
Joachim Fried, Senior
Executive Vice President
Economic, Political Affairs
and Regulation at DB AG,
puts a question to one
of the speakers at the
symposium.
A central topic at the fourth symposium “Competition and Regulation in
the Rail Sector” held on 28 January 2010 was the question of whether the
divergent market access conditions in Europe should be harmonised.
In his opening address, Enak Ferlemann, Parliament
ary Under Secretary of State at the Federal Ministry
of Transport, presented the objectives of the Federal
Government‘s transport policy. Referring to the present
imbalance in the conditions of access to the rail
passenger market, he announced that the Federal
Gov ernment intended to campaign for opening of the
foreign markets. Dr. Iris Henseler­Unger, Vice­President
of the Federal Network Agency, also stressed
that equal competitive conditions are vital for the
creation of a harmonised European rail market. However,
that was no reason to deny users of rail infrastructure
in Germany the benefits of competition today.
Dr. Johannes Ludewig, Executive Director of the
Community of European Railways CER, pointed out
that the introduction of competition alone was no
guarantee for success and that rail could increase its
operating performance and make market entry more
attractive only if it were competitive with other transport
modes, such as road.
The panel discussion clearly showed that many
countries are apprehensive about permitting competition
in the rail market. Pierre Cuneo, representative
of the French state railway SNCF, stated that his company
had not been cleared of its debts and was faced
with high costs owing to the special social standards it
offered. Fair competition would therefore mean that
all competitors had to satisfy comparable standards.
Michel Quidort (Veolia Transport), on the other hand,
criticized the slow progress in opening the French
rail markets.
Professor Wolfgang Ballwieser (Ludwig Maximilian
University, Munich) gave a presentation explaining
the methods for calculating the costs of capital.
These are a key point of reference for determining regulated
access charges. One of the main conclusions was
that the return on capital targeted by the DB infrastructure
companies was below the level which the
British regulatory authority considered permissible.
The following paper by Professor Burkhard Pedell
(Stuttgart University) dealt with the principles of consistent,
i.e. non­contradictory regulation. Professor
Pedell stressed the importance of consistency for infrastructure
managers when planning investments. The
final presentation by Dr. Stephan Gerstner (Redeker
Sellner Dahs & Widmaier) looked at the question of
whether infrastructure charges which have already
been monitored by the regulatory authority can subsequently
be examined as to their fairness and reasonableness
or investigated by the antitrust authorities
after they have entered into force. Dr. Gerstner emphasised
the need for harmonised procedures when weighing
the different interests and concluded by rejecting
the competence of the civil courts in such matters.
Photo: Hartmut Reiche
Publishing Details
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(responsible for content)
Editorial Board
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Political Affairs and Regulation
Coordination
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52 53