Competition Report 2006 - Deutsche Bahn AG

Deutsche Bahn AG
Communications
Potsdamer Platz 2
10785 Berlin
www.db.de
Deutsche Bahn AG Competition Report 2006
Offi cial mobility and
logistics provider
Competition Report 2006

“Nowhere else in Europe are so
many competitors active on the
rail network.”
Hartmut Mehdorn,
Chairman of the Management Board
and CEO of Deutsche Bahn AG
Over the last decade, Deutsche Bahn has undergone radical changes. It was founded
in 1994 as a merger between two defi cit-ridden state-owned railways. Today,
Deutsche Bahn AG is a global player which booked its most successful year ever
in 2005. Amongst other things, this is the result of a corporate strategy which
has extended DB’s rail freight and passenger transport activities and now off ers
comprehensive services along the entire mobility and logistics chains. Rail activities
in Germany, however, still are and will remain the backbone of the company.
This Competition Report presents the current status of competition on the rail
network. One conclusion is already clear: contrary to a widely held prejudice,
competition in Germany continues to increase. In the fi ercely contested regional
transport sector, the competitors of DB had a market share of 13 per cent. In the
year under review, they won 65 per cent of the tendered train kilometres. In just
one year, DB’s competitors in the freight sector booked a substantial growth in
market share, from 10 to 15 per cent.
In a nutshell, railways in Germany can do business in a market and regulatory
framework which is conducive to competition. Non-discriminatory access to rail
infrastructure has been systematically implemented. In the third amendment of
the General Railway Act, the legislator greatly extended the powers of the regulatory
authority, far surpassing the standards demanded by European law. Since the
beginning of this year, the Federal Network Agency has also been responsible for
the rail market, in addition to the electricity, gas, telecommunications and post
markets. This means there is a strong and independent regulatory authority that
has already proved its ability to ensure eff ective competition in other sectors of
industry.
The market results in Germany speak for themselves. Nowhere else in Europe
are so many competitors active on the rail network. Competition thus works
effi ciently in the existing structures here in Germany. We should be delighted if
we had even remotely the same opportunities in the rest of Europe that our European
competitors have in this country.
Foreword
1

2
Impressum
Published by
Deutsche Bahn AG
Potsdamer Platz 2, 10785 Berlin
Oliver Schumacher, Group Spokesman (responsible for the contents)
Editorial Board
Joachim Fried, Corporate Representative for European Aff airs,
Competition and Regulatory Aff airs
Coordination
Alexandra Bals, Competition and Regulatory Aff airs
Consultant
Alexandra Weiß, Head of Corporate Print Media
Copy Editor
Bettina von Gaisberg, Corporate Communications
External Editor
Stephan M. Götz
Photos
DB AG, except: Alexander Louvet (Interview),
Michael Stähle (P. 3, 35), SBB (P. 5), Hupac (P. 6), idea Kommunikation
(P. 20), ecb/Claudio Hils (P. 32), studio-koslowski.de (P. 39)
Design and Layout
Kircher Burkhardt, Editorial & Corporate
Communication GmbH, Berlin (002404)
Lithography
highlevel gmbh, digitale mediaproduktion, Berlin
Printers
DB Services Technische Dienste GmbH, Karlsruhe
Please submit any suggestions or comments on this report to
wettbewerbsbericht@bahn.de
All information correct at March 2006

Market and Competition
Dynamic Developments in an Attractive Market
Market trends and new legal framework 5
High demand for train paths 10
Rail transport still on a successful course 12
Positive trends in the long-distance sector 14
Dynamic competition in regional transport 16
Public road transport under pressure 20
Ongoing positive trend for freight transport 22
Logistics – Germany’s strong boom industry 26
Interview
In Dialogue with a Scientifi c Expert
“Sustainable and durable growth cannot be realised with an ineffi cient
transport system” 29
Regulatory Policies
Equal Rules for Opening the Transport Markets
Fair competition remains a central issue 33
Equal conditions for all modes are vital 34
New national regulatory framework 36
Cartel Offi ce has its sights on market structure 43
Special Areas of Discussion
Movement in the European Rail Market
British rail reform under scrutiny 45
Fair prices safeguard infrastructure 48
EU initiative for public transport reform 52
Germany-wide maintenance depot network 53
Overview of Companies 54
More competitors operate in
the German rail market than
anywhere else in Europe.
3

4
Dynamic Developments in
an Attractive Market
The high level of demand for train paths and continuing keen interest of both national
and international railway undertakings confi rm that in terms of market opening, the
German rail transport market holds a leading role worldwide. The railway undertakings
in the diff erent markets are faced with new challenges in view of the dynamic
developments and divergent regulatory practice in Europe.

With market shares of approx. 80 per cent of passenger and approx 70 per cent of
freight transport volumes, road continues to dominate the market. However, the
volume of private motorised traffi c fell by 1.5 per cent in 2005. Traffi c performance
in the public road transport sector declined by 0.5 per cent, whereas inner-
German air traffi c increased by 2.5 per cent, and rail by 3.5 per cent.
In the freight transport market, traffi c performance rose by a total of 2.7 per
cent according to the provisional data available. The highest growth was achieved
by rail, at 4.7 per cent. Road traffi c performance increased by 2.5 per cent, inland
shipping by 0.8 per cent.
The growth in performance by all transport modes can be attributed to the
increasing transport distances, with rail booking the largest growth in average
transport distance – from 279 kilometres in 2004 to the present fi gure of 292
kilo metres. By contrast, the freight volume (in tonnes) dropped by 0.2 per cent
in 2005 according to the Federal Statistical Offi ce. Only inland shipping achieved
growth in freight quantities.
In 2005, the freight transport market was aff ected primarily by the sharp increase
in energy costs. The introduction of truck tolls did not lead to any signifi -
cant shift of freight to rail or inland shipping. According to surveys conducted by
the Federal Offi ce for Freight Transport, the market players believe that the toll
levels are generally too low to achieve the intended modal shift.
Both intermodal and intramodal competition remained intense in the rail
freight market in 2005, thus keeping up the pressure on prices. There is fi erce
competition between the railways especially on the high-volume north and southbound
routes. Furthermore, the trend towards internationalisation continued in
2005. The freight railways expanded their European networks further and are also
increa singly tapping into the transport markets of Central and Eastern Europe.
Logistics companies have continued to grow in size. In 2005, numerous forwarding
and logistics companies optimised their corporate size by way of mergers
and acquisitions, building up networks which enable them to participate in the
growing international fl ow of goods.
Regulation in tandem with liberalisation
The ongoing European liberalisation agenda has provided transport undertakings
with new market potential. Freight transport will be the fi rst sector to benefi t
from market opening for cross-border and domestic transports in the years 2006
and 2007. This is sure to lead to even more intensive competition. The European
passenger transport market will not be opened until much later. The fi rst liberalisation
measures are not expected before 2010, and even then they will remain
behind what is already standard practice in Germany. All EU Member States have
meanwhile formally notifi ed Brussels that they have transposed the First EU Rail-
Market and Competition
Market trends and new legal framework
In 2005, the transport and logistics markets again benefi ted from steadily growing world trade, the
enlargement of the EU and the progress made in European liberalisation. A study conducted by IBM
was the fi rst to investigate the infl uence of regulation on the rail markets.
Liberalisation in Europe means
new market opportunities for
transport undertakings.
5

6
Keen competition and the trend towards internationalisation are defi ning features of the rail freight market.
In the transposition of the
EU Package divergent regulatory
practices are emerging in
the diff erent countries.
way Infrastructure Package. However, it is already apparent that the diff erent
transposition models in the individual countries will lead to divergent regulatory
practice. The German legislator transposed the European directives into national
law by amending the General Railway Act (AEG) and the Railway Infrastructure
Usage Regulations (EIBV). The new statutory regulations refer to non-discriminatory
access to rail infrastructure, which also includes stations and service facilities
such as stabling sidings, fuel stations and loading lanes.
Initial experience with European rail regulation
A central instrument used by the EU to enforce market opening is the compulsory
introduction of national regulatory authorities in the individual Member States.
Article 30 of Directive 2001/14/EC obliges all EU states to establish an independent
regulatory body which ensures non-discriminatory access to rail infrastructure
and resolves potential confl icts between railway undertakings and infrastructure
managers. In Germany, the Federal Network Agency took over this task from
the Federal Railway Offi ce at the start of 2006. Apart from rail, the Agency is also
responsible for regulation of the electricity and gas networks, and for the post and
telecommunications markets.
Regulation is necessary, especially as market opening progresses, because infrastructure
per se involves a natural monopoly. In the interests of entitled users, it
is on the one hand the duty of the regulatory body to provide the infrastructure
managers with incentives for ensuring non-discriminatory and cost-effi cient access
to its services. Vice versa, the regulator should also support the infrastructure
managers by ensuring that user fees remain stable and can be planned over the
long term, as the infrastructure managers are dependent on such income in view
of the long payback period and the high risk of achieving adequate capacity utilisation.
In addition to the Rail Liberalisation Index which has been prepared regularly
since 2002, IBM Business Consulting Services has now devoted a separate
study to rail regulation in Europe. Based on data captured from 60 regulatory
bodies, market players and other experts, it examined how the EU Member States,
Switzerland and Norway have transposed the requirements of Article 30. The
study investigated the institutional design of the regulatory bodies, but did not
judge the diff erent regulation methods.

As benchmarks for an effi cient regulatory body, the study used a number of bestpractice
criteria. These are based on generally accepted principles such as independence,
expertise, responsibility and adequate legal resources for enforcing
decisions. In addition, it also took into account practical empirical values, such
as a transparent, objective working method, competent employees and, not least,
the extent to which the authority regards itself as a customer-friendly service
provider, which is easy to contact and which publishes reports on its decisions
and methods of operation.
Correlation between market opening and regulation model
The study revealed three typical organisational forms. In the “Ministry” model,
the regulatory body is not a separate entity. Instead, the Ministry of Transport
relies on a committee which meets as necessary to advise on regulatory issues.
Twelve of the countries investigated belong to this category and thus satisfy only
the minimum legal requirements. Seven countries can be allocated to the “Railway
Offi ce” model, in which the regulatory tasks have been entrusted to a conventional
authority which otherwise deals with technical and safety-relevant aspects.
Only six countries have a separate regulatory authority staff ed with specialists
Eff ective regulatory bodies where market opening is advanced
The progress made in liberalisation of the rail markets is refl ected in the design of the regulatory bodies.
Degree of Liberalisation 2004
On Schedule
Delayed
Pending Departure
Rail Regulation Models 2006
Separate Regulatory Authority
National Railway Offi ce
Ministry
Source: Comparison of the regulation of access to rail infrastructure in EU 25, Switzerland and Norway, IBM Business Consulting Services 2006
Market and Competition
7

8
who have the power to make decisions. Of that group, the IBM study concludes
that Germany, Austria and the UK comply most closely with the best-practice
principles. These are simultaneously the countries which already have signifi cant
practical experience of rail regulation.
A comparison of these fi ndings with the Rail Liberalisation Index 2004 shows
that those states in which market opening is well advanced have also given their
regulatory bodies particularly strong powers. The number of confl icts in those
countries is by no means a sign of poorly functioning competition; on the contrary,
it is proof of the dynamic market development. Conversely, other countries
have only a few or even no cases of confl ict simply because in some, market access
is not at all possible – so that no confl icts can arise. Most of these states have
opted for a “weak” regulation model which is unlikely to bring about any change
in that situation, as it does not off er a point of contact for potential newcomers.
Particularly strict regulation in Germany
Germany’s leading position in Europe in terms of the regulation intensity of the
rail sector is proven: on the one hand, the German legislator has vested the regulatory
authority with considerable powers of intervention based on the amendment
of AEG and EIBV, which in some cases far surpass the EU requirements. On
the other hand, on assuming its new duties, the Federal Network Agency profi ted
from the fact that German rail infrastructure began to be opened up as part of the
rail reform back in 1994. Many employees of the Federal Railway Offi ce, which
was initially responsible, have transferred to the new regulator, which thus has
recourse to well developed structures and practical experience. The Network
Agency can also draw on its own experience of regulating other sectors (telecommunications,
post, energy). Although the regulation methods used in those sectors
can only be applied to rail to a limited extent, certain market liberalisa tion patterns
nevertheless exhibit clear parallels.
Regulatory authority has to proceed judiciously
The specifi c experience acquired in other network industries is evident in the
survey: the railway undertakings confi rm that the German regulatory authority is
easily accessible and has reliable communication structures. Its working methods
and decisions are regarded as transparent. Other positive comments are that the
Agency is run in accordance with corporate governance regulations and provides
regular information about its decisions and pending procedures.
However, whether the quality – which was not assessed in the study – of the
regulation decisions based on the new legislation confi rm these positive impressions
will not become apparent until several months have elapsed. In view of the
far-reaching legal powers vested in the Agency, the risk of over-regulation in
par ticular has to be avoided, as that would ultimately harm the entire market.
Initial experience gives reason to hope that the Federal Network Agency will take
a pragmatic approach and use the resources at its disposal judiciously.

Regulation of infrastructure access is particularly intensive in Germany
Results of a recent study comparing regulation of access to rail infrastructure in EU 25, Switzerland and Norway.
Rail network in km ‘000
(Source: UIC)
No. of licensed RUs1) (Source: EU)
Where is the regulatory body
located in organisational terms?
Does the regulatory body
fully examine the network
statement?
Is the regulatory body obliged
to conduct investigations on
request by an RU?
Source: Comparison of the regulation of access to rail infrastructure in EU 25, Switzerland and Norway, IBM Business Consulting Services 2006
Can it take both ex-post and
ex-ante decisions? 2)
Are its decisions immediately
enforceable despite objections/
legal action? 3)
Market and Competition
Can the regulatory body
enforce compulsory measures?
Are both rail expertise and
responsibility for decisions
in the same hands?
Austria 5.7 15 RA + + – – + + 10 +
Belgium 3.5 5 MI + – + + + – 6 –
Switzerland 3.0 44 NRO – + + – – + 7 –
Czech Republic 9.5 17 NRO – + + – + + 4 +
Germany 36 361 RA + + + + + + 46 4) +
Denmark 2.4 25 MI – – – + – + 5 –
Estonia 1.0 28 MI + + – – + – 6 –
Greece 2.4 4 MI + – – – – – 0 –
Finland 5.8 1 MI – + – – – – 0 –
France 29 4 MI + – – – – – 7 –
United Kingdom 17 54 RA + – + + + + 35 +
Hungary 7.7 6 NRO – – – + + + 9 –
Ireland 2.0 1 MI – – – – – – 0 –
Italy 16 40 RA + + + + – + 10 +
Lithuania 1.8 1 MI – + – – – – 8 –
Luxembourg 0.3 2 MI – – – – – – 0 –
Latvia 2.3 9 RA + + – – + + 3 +
Netherlands 2.3 16 RA + + + – + + 10 +
Norway 4.0 6 MI * – * * + – 5 *
Poland 20 60 NRO + + – – + + 10 +
Portugal 3.0 2 NRO * * * * * + * *
Sweden 9.9 15 NRO + – + – – + 8 +
Slovenia 1.2 1 MI + * * – + – * *
Slovakia 3.7 18 NRO + + + – + + 12 –
Spain 13 3 MI + + – – – – 6 –
1) Railway undertakings; 2) i.e. reviewing decisions or measures taken by the infrastructure manager before (ex-ante) or after (ex-post)
they come into force or are applied; 3) without a suspensive eff ect; 4) currently 21 employees, a further 25 new positions are planned for
the near future
+ criterion satisfi ed; – criterion not satisfi ed or not clearly satisfi ed; * no data available
RA=separate regulatory authority, NRO=National Railway Offi ce, MI=Ministry
How many employees
deal with rail regulation?
Do they include experts
who deal with regulatory
issues full time?
9

10
The attractiveness of the German market is also refl ected in the growing volume of non-DB operating performance.
High demand for train paths
The trend towards continually growing operating performance by non-DB railway undertakings on the
German rail network continues steadily. Nevertheless, almost all customer applications for train paths
could be satisfi ed in the 2006 timetable.
Operating performance by non-DB railways on the
Deutsche Bahn network rose by almost a quarter in
2005 once again, as it did in 2004. The present level
of 109.8 million train-path kilometres is eight times
higher than in 1998.
Additional demand thanks to World Cup and new lines
Train path applications from non-DB railways in the
2006 annual timetable rose from 8,707 to 10,310 yearon-year
(+ 18.4 per cent). Despite that substantial increase,
with the exception of 101 cases DB Netz was
able to satisfy all train path applications or reach amicable
solutions in coordination proceedings. The growing
number of satisfi ed non-DB applications confi rms
the attractiveness of the German market as well as the
fairness and non-discriminatory nature of infrastructure
allocation. The number of train path applications
submitted by all railway undertakings (including DB)
for the 2006 annual timetable amounted to 48,617, an
increase of 4.9 per cent year-on-year.
One reason for this increase is rising demand owing
to the World Cup. Moreover, attractive and effi cient
new lines will go into operation on inauguration of
the North-South tunnel in Berlin and the Nuremberg –
Ingolstadt (– Munich) new-build line in summer 2006.
The share of non-DB train paths in the total number
of applications already amounts to 21.2 per cent in
the timetable year 2006. A total of 101 train path appli
cations could not be met for the following reasons:
Owing to a total engineering work blockade on the
Berlin – Rostock line (Lalendorf Ost – Kavelstorf) and
the resulting diver sions via the Schwaan – Güstrow –
Lalendorf Ost line, DB Netz was unable to off er any
train path at all in 28 cases and make only a restricted
off er in 20 cases. The timetable compilers had informed
the customers in good time before the train
path applications were submitted, so that they could
take the above closure into account in their plans.
As one of the railway under takings was either unable
or unwilling to accept the diversion, DB Netz had to
re fuse its applications.
In 53 cases, the train path applications from railway undertakings
could not be satisfi ed because they were incompatible
with other applications (26 cases in the Hamburg
area and 27 cases on the Elmshorn – Westerland route).
The coordination proceedings failed to reach an amicable
solution between the parties in volved. DB Netz therefore
ruled on the basis of the valid priority criteria for the timetable
period 2006 in accordance with the General Terms
and Con ditions for the Use of Rail infrastructure.

In com pliance with its reporting obligation pursuant to
Section 14 d No. 1 AEG, DB Netz informed the Federal
Railway Offi ce (EBA), the competent regulatory authority
at the time, that it intended to refuse the train
path applications. The authority thereupon initiated
infrastructure access proceedings in six cases.
DB Netz appealed and in summary proceedings,
Cologne Administrative Court overruled the order of
the EBA owing to obvious unlawfulness. A complaint
fi led by the EBA with the Higher Administrative Court
in Münster did not yield any diff erent decision. In the
meantime, DB Netz has drawn up alternative solutions
in consultation with the railway undertakings involved
– for instance by changing the station of departure.
The railway undertakings have already been using the
resulting train paths since the 2006 timetable came
into force.
Double compilation of the 2006 timetable
The working timetable is a highly complex system
which has to take far-reaching reciprocal eff ects into
account. The timetables have to satisfy the train path
wishes of the railway undertakings, the infrastructure
available and also meet high quality standards.
The lengthy and complicated coordination process
required to do so lasted from April until May. The solutions
that were fi nally reached do justice to the diverse
requirements of the customers. The train path com pilers
were faced with a very special challenge: they had to
prepare large sections of the timetable in duplicate, as
widespread changes will take place when several newbuild
lines go into operation in May 2006 and in view of
the additional trains required for the World Cup.
As in previous years, DB Netz examined the feasibility
of the required timetable slots at an early stage on
request by its customers, thus enabling them to submit
qualifi ed train path applications.
Market and Competition
Share of non-DB railways continuously increasing
The openness of the German rail network is impressively clear
rom the constant growth rates of non-DB railways.
(Figures in million train-path kilometres, growth rates in per cent)
120
100
80
60
40
20 13.3
20.4
+53%
26.0
+27%
39.0
+50%
Change from previous year; Source: DB data
50.1
+28%
70.3
+40%
87.8
+25%
109.8
+25%
1998 1999 2000 2001 2002 2003 2004 2005
Almost all train path applications feasible in 2006
Although the number of applications from non-DB railways has
increased by 61 per cent compared with 2003 and new, complex
infrastructure will be inaugurated in 2006, the share of train paths
which cannot be fully or partly realised is still very low.
50,000
40,000
30,000
20,000
10,000
46,045
39,642
2.1%
6,403
2003
46,782
39,139
1.9%
7,643
2004
46,283
37,576
1.1%
8,707
2005
Applications by non-DB railways Applications by Deutsche Bahn
Share of non-realised train paths for non-DB railways
Source: DB data
48,617
38,307
1.3%
10,310
2006
11

12
Del dit loreet ametum etum quipit lor sendionum ipit delisi bla feugait prat. Non ent lut la conum vel ipis nostru.
Of all the competitors in the German passenger transport market, rail has maintained a successful position.
Rail transport still on a successful course
In an overall market which showed lower growth than in 2004, rail freight transport continued to
grow in 2005 and increased its market share to a good 16 per cent. In the passenger transport sector,
rail performance increased in a generally declining market, benefi ting from the rise in fuel prices.
In 2005, gross domestic product in Germany rose by
0.9 per cent in real terms, which was far weaker than
the previous year (1.6 per cent). Amongst other things,
this poor growth was attributable to the steady decline
in building investments and, in particular, consumption
by private households, which remained stagnant at the
2004 level.
The repeated increase in oil prices meant that
consumers in Germany had to spend an even greater
proportion of their disposable income on energy. Moreover,
consumer spending was very cautious in view of
the political uncertainty. Positive factors for the economic
development were the export sector, thanks to the
stable world economy, and increasing investments in
plant and equipment.
Rail passenger transport expands its market share
The German passenger transport market covers private
motorised traffi c, rail, public road transport, including
tram and underground, and inner-German air traffi c.
2005 saw a downturn of roughly one per cent in traffi c
performance (in passenger-kilometres) for the overall
market. 1 According to Deutsche Bahn AG fi gures, the
passenger transport market thus declined for the sixth
year in succession. As in previous years, this drop can
be at tributed primarily to the negative trend in private
motorised traffi c (–1.5 per cent). The principal causes
were stagnant real income and correspondingly stagnant
con sump tion. The recent sharp rise in fuel prices
has also curbed the demand for private motorised
traffi c to the advantage of rail, which could increase
its traffi c performance by 3.5 per cent against the
previous year. Rail thus expanded its share of the total
market to nine per cent.
Demand for public road transport dropped by around
0.5 per cent, a trend which was due predominantly to
the declining volume of occasional bus traffi c. Demand
in the scheduled traffi c sector, on the other hand, in
particular for tram and underground, showed a slight
increase. Inner-German air traffi c performance rose
in 2005, with demand a good 2.5 per cent up on the
previous year.
This means that, by comparison, development for
inner-German lines had less dynamic than for international
air traffi c. There has been a sharp increase
in costs for passengers at some airlines, resulting in
par ticular from the higher costs of kerosene. This eff ect
is, however, not always noticeable, as some low-cost
carriers continue to advertise low fares, but have in
fact reduced the proportion of low-cost seats available
to passengers.

Freight traffi c growth roughly halved
In the year under review, there was less positive impetus
from the economic environment than in 2004,
which led to a more moderate increase in traffi c performance
in the overall German market (rail, inland
shipping, pipelines and road 2 ).Growth totalled approx.
2.7 per cent, based on provisional data, and is thus
around only half the previous year’s level (5.9 per cent).
After an increase of 8.2 per cent in 2004, traffi c performance
in the rail freight market rose by 4.7 per cent
in the year under review. This means that rail enjoyed
better growth than all other transport modes and
succeeded in expanding its market share for the third
year in succession. For the non-DB railways in Germany,
this increase in traffi c performance soared to
approx. 55 per cent, so that their market share of rail
freight transport has increased once again, and now
accounts for around 15.1 per cent.
In the road haulage market, traffi c performance grew
by only an estimated 2.5 per cent against 4.8 per cent in
2004. The reason for this slower growth is again less impetus
from the economic environment. Compared with
their German competitors, foreign trucks booked a far
steeper increase in traffi c performance, again expanding
their market share. Both intra- and intermodal competitive
pressure and pressure on prices remained high.
In the year under review, inland shipping achieved
only a slight increase of 0.8 per cent, far lower than in
2004 (+ 9.5 per cent). Following substantial growth
rates in the fi rst half of the year as part of the recovery
process after the eff ects of the low water in 2003, performance
by inland shipping dropped substantially in
the following months. In addition to declining impetus
from the economy, the fi gures were adversely aff ected
by the extremely low water levels during the last
quarter.
1) Taking into account the review of traffi c performance calculation
by the German Institute of Economic Research (DIW), the
trend for private motorised traffi c, and thus in the overall market,
have been far better since 1994 than previously indicated in the
offi cial statistics. However, owing to several methodological weaknesses
in the calculation of traffi c performance by DIW, the
un revised fi gures still serve as a basis.
2) Road inclusive of local traffi c performance by German trucks
and excluding cabotage traffi c by foreign trucks in Germany.
Market and Competition
Rail expands its passenger transport market share
Economic environment: low positive impetus. (Change from 2004
in per cent)
Gainfully employed*
Disposable income
– nominal
Private consumption – real
Fuel price – nominal
Modal Split: shares of rail and public road transport rose again
at the expense of private car traffi c. (Figures in per cent, basis:
traffi c performance, fi gures rounded)
8.2
8.3
8.6 9.0
100
80
1.0 1.1 1.1 1.1
60
40
20
82.2
8.7
8.9 9.0 9.0
2002 2003
2004 2005**
Rail expands its freight transport market share
Economic environment: slight downturn from previous year.
(Change from 2004 in per cent)
Manufacturing industry
Automotive industry
Crude steel (in tonnes)
Building investments –2.3
81.7
3.1
81.3
4.0
3.6
–4.0
–3.4
80.9
2004 2005*
Modal Split: rail increased at the expense of inland shipping
and road. (Figures in per cent, basis: traffi c performance,
fi gures rounded)
100 15.0 15.5 15.8 16.1
80
60
40
20
0.4
0.6
2004
rail air private car public road
2005**
* new defi nition as from 2005, e.g. including “one-euro jobs”; ** prov. fi gures
Sources: Federal Statistical Offi ce and DB data
69.5 70.3 69.6 69.5
3.9
4.0
12.6 3.0 11.3 3.0 11.7 3.0 11.4 3.0
2002 2003
2004 2005*
*Estimate; Sources: Fed. Statistical Offi ce, Fed. Offi ce for Motor Traffi c and DB data
2.2
rail inland shipping road pipelines
4.4
–0.3
0.0
1.4
8.1
13

14
More and more passengers use Deutsche Bahn long-distance trains.
Positive trends in the long-distance sector
DB Fernverkehr continued the positive trend with traffi c performance up by 4.1 per cent. The main
reasons for this development are amongst other things the attractive off ers and targeted marketing
activities.
DB Fernverkehr growth was up again in 2005: including
night trains and motorail services, traffi c performance
rose to 33.6 billion passenger-kilometres (2004: 32.3
bn). At 4.1 per cent, growth was higher than 2004 (2.2
per cent). Taking into account fl uctuations in product
volume, growth in traffi c performance units per opera-
DB Fernverkehr increases traffi c performance
Taking operating performance into account, the fi gures have
reached a new record. (Figures for traffi c performance in billion
passenger-kilometres)
35
30
25
20
15
10
5
36.2
206
2000
35.3
219
2001
33.2
213
2002
31.6
204
2003
32.3
210
2004
traffi c performance traffi c performance per operating performance unit
(in pkm/t-p km) Source: DB data
33.6
224
2005
ting performance unit was actually seven per cent.
With approx. 224 passenger-kilometres per train-path
kilometre in 2005, DB Fernverkehr booked the highest
fi gures since the rail reform. This parameter is more
reliable for comparisons in view of the constantly
changing train products off ered in the non-subsidised
long-distance sector.
This positive development can be attributed to a
number of diff erent factors. Some major upgrading
projects that have been executed over the past few
years are starting to bear fruit. The Cologne – Rhine/
Main and Hamburg – Berlin new-build and upgraded
lines brought substantial growth. In the corridor
between Cologne and the Rhine-Main area, longdistance
traffi c performance has risen by almost
20 per cent since inauguration of the high-speed line
in December 2002.
Traffi c performance between Hamburg and Berlin
actually increased by 29 per cent in the fi rst year after
inauguration of the upgraded line. DB also undoubtedly
benefi ted from the high petrol prices, although the
company itself con sumes large energy quantities and
consequently suff ers from the high fuel costs. Many
customers switched to rail not only because of the high
petrol prices, but in response to the long-distance rail
marketing and pricing policies. Special campaigns have

Higher traffi c performance and revenues
In 2005, DB Fernverkehr again increased traffi c performance and
fare revenues, although specifi c fare revenues were still below the
record level of 2002. (Figures for DB Fernverkehr scheduled daytime
125 services in per cent, index 100 = 1998)
120
115
110
105
100
95
1998 1999 2000 2001 2002 2003 2004 2005
traffi c performance per operating unit (p km/t-p km)
average revenue rate (euro cent/p km)
Source: DB data
drawn the attention of more and more passengers who
would other wise rarely or never travel by rail. Some
special off ers actually led to an increase in passengers
of almost 60 per cent. DB Fernverkehr was equally successful
with its regular customers. BahnCard holders
rose by approx. 10 per cent in 2005 compared with
2004. The Mobility BahnCard 100 boasted the strongest
growth, with sales up almost 30 per cent year-onyear.
The introduction of the bahn.bonus programme
on 1 September 2005 also contributed to the positive
trend in both traffi c performance and revenues.
Arriva joins the long-distance market
Last year, another railway undertaking joined the
German long-distance market: Vogtlandbahn, which
belongs to the British company Arriva. It operates
one train pair which runs daily between Hof and Berlin.
Market and Competition
High-speed line boosts growth pace
Since inauguration of the Cologne – Rhine/Main high-speed
line, long-distance traffi c performance on this route has risen
by 19 per cent.
(Figures in million passenger-kilometres)
3.000
2.500
2.000
1.500
1.000
500
2,312
910
1,402
2003
+19%
2,583
915
1,668
2004
Rhine valley lines Cologne – Rhine/Main HS line
Source: DB data
2,748
921
1,827
2005
This has led to the interesting situation that three longdistance
trains run by diff erent railway under takings
(Connex, Arriva and Deutsche Bahn) now depart from
Leipzig central station for Berlin in the space of just
eight minutes. Connex already fears a drop in passenger
quantities between Leipzig and Berlin owing to the
competition from Vogtlandbahn and will fi nd it diffi cult
to maintain the less busy Gera – Leipzig section over
the long term.
According to Deutsche Bahn estimates, its competitors
achieved hardly any growth in long-distance
traffi c performance last year, despite the new product
off ered by Vogtlandbahn, and in contrast to the rising
fi gures for DB Fernverkehr. This is borne out by the
fact that Connex again changed train movements and
running days. The market share of DB’s competitors in
the long-distance market is therefore likely to remain
below one per cent.
15

16
The high number of operators indicates the attractiveness of the German regional rail markets.
Dynamic competition in regional transport
Last year, Deutsche Bahn competitors achieved substantial growth in both train services and traffi c
performance. These other railways are increasingly operating lines with strong demand.
Abellio has made a surprisingly rapid ascent to become one of the most serious competitors of DB.
Despite declining train services, last year DB was able
to increase its traffi c performance in the regional transport
sector (DB Regio and DB Stadtverkehr) from 37.9
to 38.9 billion passenger-kilometres. This corresponds
to a growth of 2.6 per cent. The decline in train services
results from lost tenders over the past few years.
The market share of other railways in ordered train
services (in train-kilometres) rose from 11.9 per cent
in 2004 to 13.2 per cent in 2005, although the total
ordered volume remained virtually constant.
For 2006, DB forecasts the market share of other
railways at 15 per cent. In terms of traffi c performance
(in passenger-kilometres), the share of other railways
rose from 6.3 to 6.8 per cent. Over the past six years,
Deutsche Bahn’s competitors have thus obtained an
average of 17 per cent growth in train services and
23 per cent in traffi c performance, clear proof of the
dynamic pace of competition in the German regional
transport market.
The rise in traffi c performance per train service unit
(passenger-kilometres per train-kilometre) also confi
rms the rapid growth of DB’s competitors. Compared
with 2001, that fi gure had risen by almost 30 per cent
by 2005. This huge growth can be explained by the fact
that other railways have increasingly taken over highdemand
lines, e.g. Munich to Oberstdorf, or between
Hamburg, Bremen and Uelzen. This trend is likely to
become even more pronounced as soon as other long
routes, such as Hamburg to Sylt or Uelzen to Göttingen,
go into operation.
In 2005, the Federal Laender and orderers awarded
contracts for 22.9 million train-kilometres following
invitations to tender. Deutsche Bahn won only three
of these tenders, with a volume of 7.9 million trainkilometres
per annum – a success rate of 35 per cent.
In 2005, DB Regio, Rheinisch-Bergische Eisenbahn,
NordWestBahn and Rhenus Keolis signed a total of
13 contracts outside the scope of formal award
pro cedures pursuant to Section 15 (2) AEG. These
contracts have an initial volume of 40 million trainkilometres,
of which 34.6 million train-kilometres
went to DB Regio. On the cut-off date of 31 December
2005, seven part networks with a volume of approx.
23 mil lion train-kilometres were up for tender. The
contract award decision is still pending in each case.
Regional transport as capital investment
The regional transport company Abellio has found a
strong fi nancial backer for its expansion policy. In June
2005, the British investment fund Star Capital Partners,
which is owned by banks such as The Royal Bank

of Scotland and the Spanish Santander Central Hispano,
took over 75 per cent of the Abellio shares. Until
that takeover, Abellio had been owned by Essener
Versorgungs- und Verkehrsgesellschaft, the municipal
utilities and transport company. Within just six
months, Abellio has won three tender procedures with
a volume of 8.7 million train-kilometres and has thus
become one of the major competitors of Deutsche
Bahn in the regional transport sector. This commitment
by Star Capital Partners is clear evidence that the
German re gional transport market can be a worthwhile
propo sition for investors.
Supplements on regional transport fares
On taking over Marschbahn regional transport services
(Hamburg – Westerland) in December 2005, Nord-Ostsee-Bahn
(NOB) announced that it would charge a supplement
of three euros per person on DB long-distance
tickets as from April 2006. NOB justifi ed that step on
the grounds of the declining fare curve charged by DB
Fernverkehr. However, NOB had been aware of that situation
when it submitted its bid. It is thus reasonable
to assume that NOB had planned to levy a supplement
on DB tickets right from the start or that its calculation
of the potential fare revenues had been wrong. This
last alternative seems plausible as NOB had based its
bid for the Marschbahn contract on far higher fare
revenues than DB Regionalbahn Schleswig-Holstein,
which failed to win the tender.
The fare agreement between NOB and DB shows
that the railway undertakings are nevertheless willing
and able to negotiate fare cooperation agreements
with out intervention from the authorities and thus
satisfy their legal obligation to cooperate in order to
achieve consistent fare systems. It is therefore neither
necessary to set up a fare authority nor to prescribe
standard fares for all railway undertakings.
Market and Competition
5-stage model ensures transparency
In future, all contracts for regional transport services
pursuant to Section 15 (2) AEG are to be
awarded in accordance with the “5-stage paper”.
The 5-stage model guarantees full compliance
with all the requirements of European primary
law which could aff ect the orderers as a result
of the recent rulings by the European Court of
Justice. These rulings state that contract award
procedures which are not covered by public
procurement law nevertheless have to be nondiscriminatory
and transparent. Under the 5stage
model, the orderers must principally
1. invite Europe-wide statements of interest for
the intended contract award,
2. review these statements of interest,
3. select the further negotiation partner(s) on a
non-discriminatory basis,
4. enter into negotiations,
5. publish the contract award decision after the
contract has been signed.
Good price/quality ratio in Germany
In the passenger market, German regional and local rail
services off er the best value for money anywhere in Europe,
stated a study conducted by IBM Business Consulting
Services which compared regional and local rail fares and
fare struct ures in nine European countries. The fi ndings
revealed that Germany off ers the best quality and, after
adjustment for infl ation, has had the third-lowest fare increases
of all the countries (2.7 per cent per annum) since
1999. The study found that the fares for long routes in
the leisure transport sector are particularly low, where as
ticket prices within the transport associations are comparatively
high in relation to the other countries.
17

18
Market share of other railways increases further
In an overall market which remains virtually unchanged, the
market share of DB competitors is steadily rising.
(Train services in million train-kilometres)
700
600
500
400
300
200
100
599
49
550
8.2%
2001
604
52
552
8.6%
2002
619
61
558
9.9%
2003
628
2004
Deutsche Bahn
Source: DB data
competitors market share of competitors
75
553
11.9%
632
84
549
13.2%
2005
Three railways win 70 per cent of all contracts
Abellio won three tenders and has evolved into one of the major
railways within a year. (Success rates in tender procedures, fi gures
in per cent, rounded)
other railways 17.6
Hamburger
Hochbahn 3.9
Hessische
Landesbahn 4.2
Arriva 4.3
Abellio 7.6
Connex 17.2
Train services by bidding syndicates/joint ventures allocated to the groups in
accordance with their shares. Basis: 131.7 million train-kilometres 1995–2005;
Source: Federal Statistical Offi ce and DB data
0.20
DB Regio 45.1
DB Regio raises traffi c performance
Deutsche Bahn has raised its regional transport traffi c
performance despite lower contract volume.
(Figures in billion passenger-kilometres)
40
30
20
10
40.4
1.3
39.1
38.2
1.5
39.6 40.5 41.8
1.7 2.6 2.8
36.7 37.9 37.9 38.9
3.2% 3.9% 4.3%
6.3%
6.8%
2001 2002 2003 2004 2005*
Competitors thronging onto high-demand lines
Trends in traffi c performance per train service. (Figures in
passenger-kilometres per train-kilometre; index 100 = 2001)
130
120
110
100
2001 2002 2003 2004 2005*
*Estimate; Source: Federal Statistical Offi ce and DB data
European comparison of passenger market fares and regional transport quality
Germany comes off best in the comparison. (Fares* in EUR/kilometre, quality rated from 1.0 [low] to 4.0 [high])
EUR/Kilometre
0.15
0.10
tendency towards
poorer price/quality
level
1.0 1.5 2.0 2.5 3.0 3.5 4.0
Source: IBM Business Consulting Services; *fares adjusted for infl ation and on all regional transport routes
Deutsche Bahn competitors market share of competitors
* Estimate; Source: Federal Statistical Offi ce and DB data
tendency
towards better
price/quality
level
Quality

Still fi erce competition
Regional transport contract award in 2005.
Contract
awarded in
Jan 05
Jan 05
Contract award procedure
Federal
Land Procedure Network/Routes Previous operator Operator
HE,
BW
NI,
HB,
NW
Jan 05 NI
Mar 05
NW,
NI
Market and Competition
New contract
million
train km Begins
Tender Odenwaldbahn DB Regio Vias 1.8 Dec 05 10
Discretionary
award
Discretionary
award
Part network Weser-Ems NordWestBahn NordWestBahn 4.1 Dec 05 12
DB lines in the greater
Braun schweig (ZGB) SPA
area
Tender Teutoburger-Wald-Netz
DB Regio DB Regio 5.9* Jan 03 12
DB Regionalbahn
Westfalen
Westfalenbahn 4.0 Dec 07 10
Apr 05 NI Tender Leer – Grenze DB/NS DB Regio Arriva 0.1 Dec 05 15
Apr 05 NW
Apr 05 SN
Jun 05
HE,
BY
Jun 05 NW
Jun 05 NW
Jun 05 NW
Jun 05 NW
Jun 05 NW
Discretionary
award
Discretionary
award
Mettmann – Kaarst
DB lines in the Oberlausitz-
Niederschlesien (ZVON)
SPA area
Tender Kahlgrundbahn
Discretionary
award
Discretionary
award
Discretionary
award
Discretionary
award
Discretionary
award
DB lines in the Münsterland
(ZVM) SPA area
DB lines in the Verkehrsverbund
Ostwestfalen-Lippe
(VVOWL) SPA area
DB lines in the Westfalen
Süd (ZWS) SPA area
DB lines in the Paderborn-
Höxter (NPH) SPA area
DB lines in the Ruhr-Lippe
(ZRL) SPA area
Rheinisch-Bergische
Eisenbahn
Rheinisch-
Bergische
Eisenbahn
1.2 Dec 05 3
DB Regio DB Regio 2.6* Jan 05 10
Kahlgrund Verkehrs
gesellschaft
Hessische
Landesbahn
0.3 Dec 05 10
DB Regio NRW DB Regio NRW 5.3* Dec 04 11
DB Regio NRW DB Regio NRW 3.7* Dec 04 11
DB Regio NRW DB Regio NRW 1.6* Dec 04 11
DB Regio NRW DB Regio NRW 2.0* Dec 04 11
DB Regio NRW DB Regio NRW 8.2* Dec 04 11
Jun 05 NW Tender Ruhr-Sieg-Netz DB Regio Abellio 3.7 Dec 07 12
Jul 05
BE,
BB
Tender Ostbahn DB Regio
Niederbarnimer
Eisenbahn
Jul 05
NW,
NI
Sep 05 NW Tender Emscher-Münsterland-Netz DB Regio NordWestBahn
1.0 Dec 06 8
Tender Haller Willem NordWestBahn NordWestBahn 0.8 Dec 06 7
1.0
0.6
Dec 06
Dec 06
Nov 05 BY Tender Nuremberg diesel network DB Regio DB Regio 3.2 Dec 08 10
Nov 05 BY Tender
Nov 05 BY Tender
Nov 05
MV,
SH,
HH
Nov 05 HB
Nov 05 HE
Nov 05 BY
Munich – Hof/ Furth im
Wald
Nuremberg – Ingolstadt
– Munich
DB Regio Regentalbahn 1.8 Dec 07 10
– DB Regio 1.7 Dec 06 7
Tender Baltic coast DB Regio DB Regio 3.0 Dec 07 12
Discretionary
award
Discretionary
award
Discretionary
award
DB lines in Bremen DB Regio DB Regio 2.4* Jan 03 10
DB lines in Mittelhessen DB Regio DB Regio 2.4 Dec 06 5
Hof – Regensburg DB Regio DB Regio 0.5 Dec 05 12
Discretionary
Dec 05 RP
Alzey – Kirchheimbolanden Rhenus Keolis Rhenus Keolis 0.2 Dec 05 9
award
*Performance volume drops owing to cancellations during contract term
SPA = Special purpose association
The criterion “discretionary award” includes contracts which were awarded in an informal procedure after direct contact
with a capable potential operator
Source: DB data
Term
(years)
12
2
19

20
Unresolved legal issues and a diffi cult fi nancial position defi ne the public road transport environment.
Public road transport under pressure
Competition drivers in the local road transport market are currently the legal developments in Germany and
Europe, as well as continuing scant fi nancial resources from the public purse. Hesse is the only Federal Land
to award transportation contracts solely in the form of tender procedures.
The transport undertakings and orderers are constantly
faced with new challenges, whether an unforeseen high
rise in the cost of diesel, increasingly scarce fi nancial
resources or the growing quantities of traffi c performance
up for tender. This is aggravated by the unresolved
legal issues, such as the debate on permissible
award mechanisms for these services. National courts
have to issue rulings governing the details of the re-
Municipal companies booked the highest growth
Results of tenders in 2004/2005: international groups have also
had high growth. (Figures in thousand bus kilometres)
6,000
4,000
2,000
Source: DB data
5,875
–2,000
–4,000
–10,311
–6,000
–8,000
–10,000
DB Stadtverkehr municipal
–2,074
Land-owned
5,163
international
1,954
private
quirements defi ned by the European Court of Justice 1
relating to the fi nancing of local public transport. Appeal
proceedings which have been pending before the
Federal Administrative Court 2 since November 2005
may fi nally clarify the situation.
OVG Koblenz 3 ruled that the re-award of line concessions
was inadmissible in one case in which a municipal
company – in line with common practice – received
payments from the owner as part of the municipal tax
arrangements for public service conglomerates. That
judgement has restricted the scope for municipal
authorities to award transportation contracts to their
own companies. The European Court of Justice has
issued similar rulings governing the conditions of
contract award by municipal authorities to their own
companies without competition. This increases the
pressure on municipal transport undertakings to seek
more commercially viable solutions for urban transport.
The formation of ordering organisations following the
separation of the duty holders’ remit (orderers) and
ownership of transport undertakings (providers) has
promoted market opening even more. Approx. 46 million
bus kilometres have been awarded in Germany to
date in tenders for transportation contracts. The highest
numbers of tender procedures are currently held in the
Federal Laender of Hesse, Schleswig-Holstein and in

some rural districts of Bavaria. Initial tenders involve
a drastic drop in prices of 20 to 30 per cent.
Hesse still pursuing its own course
Hesse is the only Federal Land which has opted for
open tender procedures as the sole method of contract
award, and has done so since 1998. The eff ects of that
decision on the transport market are meanwhile apparent.
Those companies which are owned by municipal
or Land authorities won 31 per cent of the total volume
in 2004/2005. However, almost the only services
up for tender to date have been the regional bus services
previously operated by private and DB-owned
companies.
Other characteristic features of the tender procedures
to date are that central elements of the value
added chain such as marketing or sales are prescribed
in absolute detail, so that the operators cannot impose
their own commercial policies. In many cases, there is
little or no incentive to attract more passengers, as the
railway undertakings rarely participate in fare revenues.
Other typical eff ects of this price-focused competition
are drastic pay reductions for the bus drivers. In
some cases, these are calculated on the wage agreements
specifi ed in the temporary manpower hire sector.
With this type of competition, the company’s product
competence is no longer in demand; there is
consequently a risk that valuable expertise will be lost,
which it will not be possible to regain over the short
term. At the start of the large wave of tenders in 2004,
Competition for shareholdings now consolidating
Only a few providers dominated the transactions market in 2004/2005.
NDA: no data available; Source: DB data
Market and Competition
municipal transport undertakings in particular submitted
low-priced bids. Kraftverkehr Kinzigtal in Bad Hersfeld,
for example, won the tender at a price that was
25 per cent below the bid submitted by the incumbent
and 15 per cent lower than DB Stadtverkehr. Meanwhile,
criminal proceedings are pending against the
responsible managers, accusing them of deliberately
undercalculating. The risk of undercalculated bids now
appears to have been recognised: in 2005, contracts
were awarded to municipal companies in just four of
28 procedures in Hesse. Hesse’s Ministry of Transport
rates the results of its strict tender policy as a success,
referring to savings of approx. EUR 6 million in the bus
sector. The transport undertakings, however, fear that
a “competition bureaucracy” will become established,
eating into funds that could be used to provide local
transport services.
As regards the competition for shares in companies,
only a few providers dominate the current transactions.
These shareholdings enable international corporations
to enter the market or expand their market
position. In 2005, the transaction volume was slightly
down on previous years.
1) Eur. Court of Justice, ruling of 24.07.2003,
Rs. C-280/00 Altmark Trans
2) Fed. Admin. Court, decision of 24.11.2005, 3 B 17.05
(3 C 33.05)
3) Koblenz Higher Admin. Court, decision of 04.11.2005,
7 B 11329/05.OVG (fi nal).
Company/bidding syndicate purchased share in with a transport volume
of (in million bus-km)
Rhenus Keolis GmbH & Co. KG Niederrheinische Verkehrsbetriebe AG 13
Regionalbus Oberlausitz GmbH 8.2
Stadtwerke Bonn GmbH/ Verkehrsbetriebe Westfalen-Süd GmbH 12
SZ Verkehrsbetriebe GmbH & Co. KG Ahrweiler Verkehrs-GmbH 1.5
Hamburger Hochbahn AG Wiesbadener Busgesellschaft mbH 12
Ingolstädter Verkehrsgesellschaft mbH Kieler Verkehrsgesellschaft mbH 8.3
DB Stadtverkehr GmbH Husumer Verkehrsgesellschaft mbH 0.9
Heider Stadtverkehr GmbH 2.4
Eisenhüttenstädter Personenverkehrs GmbH 1.3
Fa. Omnibusverkehr Nölte NDA
Connex Verkehr GmbH Niederschlesische Verkehrsgesellschaft mbH 3.3
Personenverkehr GmbH Müritz NDA
Autobus Oberbayern GmbH Kahlgrund Verkehrsgesellschaft mbH 2
Verkehrsholding Nord GmbH & Co. KG Verkehrsbetriebe des Kreises Schleswig-Flensburg 1.9
Arriva plc. Autobus Sippel GmbH NDA
Star Capital Partners Ltd. Abellio GmbH NDA
Abellio GmbH Kraftverkehrsgesellschaft Dreiländereck mbH NDA
Abellio GmbH/Hallesche Verkehrs-AG /Vetter GmbH Omnibusbetriebe Saalkreis mbH NDA
Regionalbus Braunschweig GmbH Haller Busbetrieb GmbH NDA
21

22
Fair framework conditions are vital to attract more freight from road onto rail.
Ongoing positive trend for freight transport
2005 again saw an increase in competition in the rail freight sector. The market shares held by the
competitors of Railion Deutschland AG reached record values and the freight railways are steadily
expanding their European business.
With a volume of approx. 90.5 billion tonne-kilometres,
freight transport performance by the railways in Germany
is expected to be 4.7 per cent up year-on-year.
The competitors of Railion Deutschland again achieved
far above average growth rates, with an increase of approx.
55 per cent. Their market share is now 15.1 per
cent, which is eight times higher than the 2000 level.
As well as keen intramodal competition, continuing
high intermodal competitive pressure has left its mark
on the rail freight market. The electronic truck toll system
introduced at the start of 2005 failed to change
that situation. At an average of 12.4 euro cents per kilo-
Other railways achieve above average growth
The total rail freight transport volume on rail in 2005 rose by
almost fi ve per cent. (Change from previous year in per cent,
basis: traffi c performance in tonne-kilometres)
Total rail
Railion
Deutschland
Other railways
Source: DB data
2004
Actual
8.2
5.0
49.2
2005
Estimate
4.7
–1.0
55.0
metre, the truck toll rate in Germany is too low to shift
any noticeable quantities of freight from road to rail.
The railways still suff er from discrimination compared
with road haulage: while the use of all railway tracks
and assets is subject to payment, truck tolls apply only
on German motorways and only to trucks with a gross
weight of twelve tonnes or more. The levels and scope
of application of the present tolls are insuffi cient and
can thus only be a fi rst step towards fair allocation of
infrastructure costs based on the “user-pays” principle.
German market especially attractive
The development of traffi c and competition confi rms
that the German rail freight market is one of the most
attractive in Europe. In 2005, the activities of foreign
railways increased once again. During the fi rst six
months, SBB Cargo Deutschland almost trebled its traffi
c performance on the German sections of the northsouth
corridor. The Italian company Trenitalia increased
its shareholding in the German company TX
Logistik AG to 51 per cent in 2005 and is planning a
full takeover by 2011. British EuroCargo Rail has also
announced plans to join the German market. As a
transit country, Germany is not only interesting for
the expansion of north and southbound routes, but

increa singly also for east- and westbound traffi c. The
German market has already attracted two Polish railways:
the state-owned PKP Cargo, and also the private
freight railway CTL, which is expanding its business
with bulk freight and special transports: “Our target is
to be one of the leading private providers of rail-bound
freight transport and ancillary logistics services in
Germany within three years,” states Jaroslaw Pawluk,
CEO of CTL.
Rail networks in Europe continue to open up
Ongoing liberalisation of the European rail markets –
for cross-border freight transports since 2006 and domestic
transports as from 2007– provides the freight
railways with new opportunities in the international
transport market. Particularly attractive routes include
the high-volume European corridor from the ARA ports
(Antwerp – Rotterdam – Amsterdam) to the Ruhr area
and on to Italy. The Eastern European market will become
even more interesting for freight railways, as a
great deal of freight is handled by rail despite increasing
intermodal competition.
France is seen as one of the most diffi cult railway
markets in Central and Western Europe. The most common
obstacles for newcomers are administrative barriers:
it is extremely expensive and time-consuming, for
example, to obtain all the necessary safety certifi cates.
Moreover, licensing a locomotive in France costs more
than in any other European country.
Ongoing expansion of European networks
Rail customers expect Europe-wide transport management
of high quality and at a competitive price in relation
to road haulage. In 2005, the railways consequently
again expanded their international and logistics
activities, in the form of cooperation agreements and
takeovers. Foreign business meanwhile accounts for almost
60 per cent of Railion’s transport performance.
With the foundation of the national company Railion
Italia, the DB subsidiary is now in a position to off er
continuous freight trains from Italy to Germany, Scandinavia
and the Netherlands as a one-stop shop.
Thanks to cooperation with SNCF Fret, freight trains
between Germany and France have been interoperable
since 2005. Journeys are noticeably shorter, as there is
Market and Competition
Rail traffi c performance has grown since 2002
The market share of DB’s competitors is now over 15 per cent.
Traffi c performance (Figures in billion tonne-kilometres)
100,000
80,000
60,000
40,000
20,000
Market share (Figures in per cent)
100
80
60
40
20
1.5
+43.3
76.8
+7.4
2000
* Estimate; Source: DB data
2.2
+49.7
74.4
–3.1
2001
3.9
+73.6
72.4
–2.7
2002
Railion Deutschland Other freight railways
1.9
98.1
2000
2.9
97.1
2001
5.1
94.9
2002
Railion Deutschland Other freight railways
5.9
+52.6
74.0
+2.1
2003
92.6
2003
8.8
+49.2
77.6
+5.0
2004
13.6
+55.0
76.8
–1.0
2005*
no more border stop, no change of locomotive or
driver. By cooperating with the Swedish freight railway
Green Cargo, Railion also plans to increase the volume
of rail freight transport on the busy route between
Sweden – Germany – Italy while simultaneously improving
the transport quality. Railion’s main competitors
on the north-south corridor – SBB Cargo and Trenitalia
– have also increased their cross-border transport
perform ance. At SBB Cargo, cross-border transports
meanwhile account for almost 70 per cent of total
7.4
10.2
89.8
2004
15.1
84.9
2005*
23

24
performance, while the fi gure for Trenitalia is nearly
50 per cent. To date, the Swiss have concentrated on
setting up their own subsidiaries in their target markets.
In 2006, they are also planning to launch a joint
ven ture with SNCF Fret, the Belgian SNCB Cargo and
the Luxembourg CFL. The focus is on the two northsouth
corridors via Germany and via France. By acquiring
a majority share in TX Logistik, Trenitalia has
Toll levels infl uence the modal split
Scenarios for quantity and market share trends for the railways.
Toll level
Present level
Present level
EUR/km 0.20
(as in France)
EUR/km 0.49
(as in Switzerland)
Restructuring
no
yes
yes
yes
Long-term quantities
–50/–70%
–30/–40%
–20/–30%
Transport quantity today
completed its network on the north-south corridor.
France and Germany are the focal points of the internationalisation
strategy of Connex Cargo Logistics. In
2005, Connex was the fi rst private freight railway to
off er its own full cross-border transports to France.
European Bulls is an alliance of fi ve European private
railways from Germany (Rail4chem), Spain, Italy, Austria
and the Czech Republic, which has now launched
+10/+20%
Share of rail
freight
4%–7%
8%–10%
10%–11%
16%–17%
*additional 40-tonne trucks at 90% capacity utilisation and 125,000 km kilometric performance per annum, in thousands; Source: McKinsey&Company 2005
Highly divergent toll levels
Road toll levels in Europe. (Figures in euro cent per kilometre)
50
40
30
20
10
49.0
27.3
Source: McKinsey&Company, 2005
21.0 20.0
16.5
Switzerland
Austria
Spain
France
Portugal
Germany
12.4 10.0
7.2 6.5
Compared with 14% today
Additional trucks
on the roads*
+35/+50
+20/+30
+15/+20
–7/–15
1.0 1.0 1.0 1.0 0.6 0.4 0.2 0 0 0 0
Italy
Ireland
Greece
Belgium
Denmark
Luxembourg
Netherlands
Hungary
Czech Republic
Slovakia
Finland
Poland
Sweden
UK

The freight railways are focusing on internationalisation.
its services in the European rail transport market.
This alliance plans to handle 35 per cent of the total
European transport volume by the year 2015.
Fair intermodal competitive framework is vital
Unless fair intermodal framework conditions are
achieved, the market position of the freight railways
will deteriorate over the coming years: that is the
conclusion drawn by the recent study “The Future of
Rail Freight in Europe” by McKinsey. Owing to the drop
in margins for block-train transports, it is increasingly
diffi cult to uphold the less profi table single-wagonload
transports (SWLT). In order to raise their economic
viability, the railways will have to give up unprofi table
SWLT. As most of the combined and block-train transports
are, however, dependent on SWLT over the last
mile, freight volumes will be lost in that sector, which
will in turn lead to a downward spiral: the economic situation
of the railways will deteriorate, as declining volumes
mean that the contribution margins required to
fi nance the high overheads (30 to 50 per cent) will be
Market and Competition
lacking. Although the railways can alleviate that trend
by way of rationalisation, they will certainly not be
able to stop it. The study concludes that the market
share of rail in EU 15 could fall from the present 14
per cent to 8 or 10 per cent unless the detrimental
framework conditions change. Suffi ciently high road
tolls could harmonise the competitive conditions
between road and rail and thus help to revert that
trend. “A Europe-wide toll system like the Swiss one
would give the European railways a future,“ comments
Michael Cramer, Member of the European Parliament.
This would enable the railways to achieve growths
of between 10 and 20 per cent in volume, raising the
market share to 16 or 17 per cent in EU 15. A toll level
of 20 cents per kilometre (as in France) could only
stabilise the market shares at 10 to 11 per cent. Both
these scenarios clearly show that despite its own
restructuring eff orts to reduce costs, rail can only
be competitive if infrastructure charges are allocated
fairly. Without a standardised Europe-wide toll system
which also includes external costs, competition
between rail and road will remain distorted.
25

26
By using all the diff erent transport modes, the logistics industry can off er a full range of services.
Logistics – Germany’s strong boom industry
The globalisation of production processes and commerce generates increasing demand for international
logistics services. As a business location, Germany profi ts from its well developed infrastructure and hub
function at the centre of the enlarged EU.
The growing world market and increasing international
division of labour mean that more and more goods
have to be transported. To attract global players as
customers, a company has to have a worldwide network.
Customers demand logistics services far beyond
the mere transport of goods – ideally handled by just
one company. Contract logistics are one of the largest
growth areas in this sector of the economy. Transport
and logistics companies are thus expanding their range
BAX Global – facts and fi gures
Headquarters: Irvine, California, USA
Worldwide workforce: 12,000
Worldwide offi ces: 500
National agencies: 136
Revenues 2004: EUR 2.06 billion
Profi ts 2004: EUR 35 million
Core business: air and seafreight forwarding,
transport services, supply chain management
Strong customer base in the automotive, healthcare,
electronics and consumer goods sectors
Source: DB data
of products and now handling additional tasks such as
assembly, complete warehouse management and distribution.
This harbours attractive growth prospects for
logistics services providers and returns which are far
higher than the margins available from pure transport.
Forecast is for further growth
Asia is now one of the largest growth drivers of international
trade. In recent years, China in particular has
built up immense production capacities and now sells
goods the world over. The inner-European fl ow of
goods is also increasing, not least because of the EU
enlargement to the East. As Germany evolves into the
hub of European freight transport, it becomes more
and more interesting as an investment location. Deutsche
Post is currently building a central European cargo
handling terminal for its logistics subsidiary DHL at
Leipzig/Halle airport for an investment volume of EUR
300 million.
With revenues of some EUR 150 billion and a workforce
of approx. 2.7 million, the logistics industry is
one of the strongest sectors of the German economy.
The latest forecasts show that this growth trend is set
to continue. A study by Bundesvereinigung Logistik
(Federal Association of Logistics) shows that three

quarters of all German industrial and commercial
companies expect their international clientele to
grow over the next few years. Two thirds of German
industrial companies and slightly over half the
commercial companies expect to use an increasing
number of interna tional suppliers.
Trend towards consolidation picks up speed
Any company wishing to secure a successful position
in the international logistics business has to have
recourse to a close-meshed, worldwide network. However,
ensuring suitable capacity utilisation of such
networks calls for corresponding order volumes, which
in turn are only possible with a broad customer base.
This explains the concentration process in this sector.
Mergers and acquisitions enable companies to optimise
their corporate size and supplement their networks. In
terms of revenues, Deutsche Post has now assumed a
leading role amongst the world’s largest logistics companies
following the takeover of the British contract
logistics fi rm Exel. Kühne + Nagel has consolidated its
market position in the contract logistics sector after
purchasing the French company ACR Logistics, while
TUI subsidiary Hapag-Lloyd also improved its rating in
East Asia and Latin America by purchasing the British-
Canadian shipping company CP Ships.
From a very early stage, Deutsche Bahn opted for a
strategy of off ering complete logistics chains. The takeover
of Schenker in 2002 transformed the rail carrier
into a logistics services provider. The DB forwarding
subsidiary has a worldwide network: it not only operates
European routes, but also holds a good position
in North America and Asia.
Following the purchase of the American company
BAX Global, DB has now obtained an even stronger
base in the USA. BAX is particularly well equipped to
cope with transports from North America to the
booming markets of Asia, so that Deutsche Bahn can
Market and Competition
BAX has put DB in eighth place worldwide
The largest companies in the worldwide transport and logistics
market. (Total revenues* 2004 in EUR billion)
US Postal Service
DHL Exel
UPS
AP Moeller – Maersk – P&O
Fedex
Groupe La Poste
Russische Eisenbahnen
DB Logistics
*Incl. courier, express and parcel services
Source: DB data
13.7
Royal Mail Group 13.2
Nippon Express
12.7
19.9
18.7
18.2
Post/KEP Rail Shipping Freight forwarding
29.5
27.7
46.7
55.6
now serve the entire triad of America – Europe – Asia
even better than before. In the air freight sector, DB
now ranks in second place worldwide together with
BAX, and comes third in the seafreight sector. This excellent
position in the logistics markets is also intended
to benefi t rail. Goods that come to Europe as air freight
or by sea, for example, can be transported onward by
rail. This inclusion in integrated international logistics
chains can strengthen rail’s market position. “If we steer
the logistics business cleverly, we can also bring more
freight onto rail. The networks feed each other,” explains
Dr. Norbert Bensel, Head of the Transporta tion
and Logistics Division at Deutsche Bahn.
27

28
In Dialogue with a
Scientifi c Expert
Professor Marc Ivaldi, respected industrial economist and internationally sought
expert in questions of competition, is interviewed by Joachim Fried, Deutsche Bahn
Competition Offi cer.

Fried: The mid-term review of the White Paper “European Transport Policy for
2010” is a good reason to take a look at the present situation and the possible
future development of European rail freight transport. In order to improve
the competitiveness of the rail mode, the focus in the past has been to open
up the markets and introduce competition between the railways. What eff ects
has this competition had on the railway undertakings?
Ivaldi: Large-scale changes in the regulatory framework, as well as technological
progress and international competition, have led to a comprehensive restructuring
process of the European railway sector. This process is still continuing. Therefore,
it might be too early for a fi nal assessment of the evolution of this industry. But
the limited data already clearly prove considerable gains in effi ciency regarding
the incumbents of EU 15. Furthermore, modern management and marketing
structures focussed on customer needs and quality can be observed. The diversity
in some parts of Europe is striking. The aim has to be to realise a balanced level
and to tap the full potential of effi ciency and profi tability in the rail sector.
How can the diff erent business models of the railways be described?
Within the restructuring process, two main business models can be distinguished.
On the one hand we have incumbents that are national leaders, which play a crucial
role in the required European cooperation. These fi rms develop international
strategies to encompass the whole logistic chain. The typical example is Deutsche
Bahn, of course. On the other hand, we have a diversity of entrants that often
operate quite effi ciently, and are generally organised privately. They can be international
players with a global strategy aiming to provide a full complete service
to the customer, or they can be players pointing at some niche or downstream
markets, in relation to specifi c upstream industry or a group of customers. As
the fi gures in your Competition Report show, this leads to intense intramodal
competition within some parts of the German network.
Intramodal competition is developing in particular in the block-train segment
and on certain routes. This has led to substantially declining margins for the
railways. The loss of profi table block-train transports means that the railways
have lost an important segment which supported single-wagon transports.
There is consequently a risk that in future 1/3 of all rail freight transports will
no longer be commercially viable. How do you assess these developments?
It is a diffi cult situation which bears the risk that the railways will lose more and
more transport volumes and market shares. On the short-distance market, trucks
are more fl exible and cheaper. Although rail should be cost effi cient and economically
profi table over long distances and for large-volume shipments, even on
this market trucks are able to compete because of their advantage on the shortdistance
market. Therefore, a look at the overall freight transport market, parti-
Interview
“Sustainable and durable growth cannot be
realised with an ineffi cient transport system.”
What has to be done to strengthen the competitiveness of the rail mode? Marc Ivaldi, industrial economics
expert, calls for a change in the framework conditions and a system for charging infrastructure use that
takes all external costs into account.
“The European railway sector
is undergoing a comprehensive
restructuring process.”
Marc Ivaldi
29

30
Joachim Fried, born 1948, is a
fully qualifi ed lawyer. Since
1983, he has held various positions
dealing with questions of
competition and European law;
he has held various executive
positions at DB AG since 1997
and has been Corporate Representative
for European Aff airs
and Competition since June
2004. His remit has also included
Regulatory Aff airs since
September 2005.
cularly at the state of competition and the diff erent cost structures in relation to
road haulage is essential. In the competition between diff erent transport modes,
the main drivers are diff erences in terms of productivity or performance, quality
as well as reliability, and the framework conditions of intermodal competition.
In our opinion, the framework conditions are discriminatory for the railway in
several aspects, such as the diff erent social and safety standards, the lack of
liberalisation in Europe and diff erent regulations as regards the allocation of
infrastructure costs. What developments can be expected for rail freight
transport if the framework conditions remain unchanged in that respect? Do
you believe that truck tolls can promote a more effi cient division of labour
between the diff erent transport modes?
If the framework conditions remain unchanged, it will not be possible to brake the
downward spiral of railways in many countries. Using trucks on long distances is a
priori suboptimal. If market mechanisms do not lead to an optimal solution, economists
declare this a market failure. The optimal solution means using rail as the
more effi cient transport mode on longer distances. Therefore a political decision
about the right infrastructure charging system across all transport modes is of
crucial importance to reach this optimal solution. Road tolls can aff ect the modal
split in the right direction. However, my opinion is that improvements in the effi -
ciency of the rail system should be considered when determining the level of road
tolls. In other words, the tolls should be returned to fi nance rail infrastructure in
relation to the improvement of productivity of the rail freight services.
Apportioning external costs would ultimately increase the prices of transport.
Is that bad for the consumers and the national economy? What is your opinion?
Clearly the right charging system must take into account all infrastructure costs,
including external costs such as noise, congestion, pollution, accident costs, local
development. However, if tolls refl ect all these costs, they could be too high in the
eyes of the consumers because they usually cannot perceive the gains for themselves
from a reduction of externalities. The right way to proceed, for the infrastructure
operator, is to price the use of infrastructure as any business manager
would do for a private service, that is to say, by setting up a price that provides a
margin – a profi t – corresponding to what the infrastructure user is ready to pay.
Prices must be adjusted, however, to account for the fact that the infrastructure
creates externalities for society as a whole. This adjustment must also comprise
the costs that the government incurs to raise and manage the tolls. If all infrastructures
were priced in this way, this would have a productive macroeconomic
eff ect. Sustainable and durable growth cannot be realised with an ineffi cient transport
system. In a market eco nomy, the prices of transport systems have to refl ect
the external costs, if not, at some point society would have to pay for the costs.
Therefore, I would say the sooner the better.

Where do you place rail in the overall transport mode system? Especially
when taking into account the demands made by the customers in view of the
changing European economy and production systems?
The European transport market is growing. Europe’s geographical dimensions, and
the growing internationalisation of customers, as well as decentralising production
to locations with cost advantages clearly provide opportunities for railway services.
But the right framework conditions have to be set up. Public investment for
improving interoperability and intermodality as well as a priority network for
freight in the sense of separating passenger and freight transport are crucial. In
my view, there is a demand here, and the customer will benefi t from further
cooperation and competition between railways.
Complete liberalisation of the rail freight markets will be in force as from
1.1.2007. In the past, you have investigated the question of market equilibrium
in network industries based on the example of the American rail freight
market. What is the experience there?
It is quite early to anticipate what will happen, but it is interesting to learn from
the US experience. The Staggers Act was the fi rst liberalisation policy for a network
industry anywhere in the world. Basically it introduces competition between
vertically integrated companies. Apart from a soft price regulation, the industry
is mainly regulated by competition law. Since 1980, the US freight industry has
experienced several waves of mergers. Concentration has increased a lot. The
number of main train operators has decreased to seven companies from more
than thirty in 1980. The US authorities have approved all these mergers.
How would you judge such a development from the viewpoint of competition
policies? What market balance do you expect to see in Europe?
The US competition authorities were right. We have proved that the effi ciency
gains brought about by these mergers have outweighed the increase in market power.
So consumer welfare has increased. Although the US case is quite diff erent
from the European situation, this demonstrates fi rstly that competition between
vertically integrated fi rms can be welfare enhancing, secondly that a competitive
outcome can be achieved even with a small number of fi rms, and thirdly that it is
extremely important to have an interoperable market.
Should the Commission continue to force unbundling or respect the diff erent
models of integrated and separated systems?
Concerning the lively debate among economists as to vertical integration and
unbundling issues, there is no clear-cut reply. In a nutshell, there is a trade-off
between the gains from transparency that a separated system could bring to
out siders and the costs in terms of technical complementarities and risk management.
My opinion is that we should be pragmatic in this regard. Instead of requiring
that all member states follow the same regime, we could benefi t from
the comparison of diff erent policies. What matters after all, what should be our
objective, is to improve the welfare of European citizens.
Interview
Prof. Marc Ivaldi, Ph.D, born
1955, began his scientifi c career
at the University of Pennsylvania.
He now teaches and
conducts research at Institut
d’Economie Industrielle in
Toulouse, the world’s foremost
institute of industrial economics.
Amongst other things, he
advises the EU Commission on
questions of competition policies.
Since 2003, he has also
been Programme Director for
Industrial Organization at the
Centre for Economic Policy
Research in London.
31

32
Equal Rules for Opening
the Transport Market
Liberalisation of the European rail markets is accompanied by comprehensive
legislation and intensive regulation at national and European level. However, not
all the provisions are geared to strengthening the position of rail. The demand for
equal and fair framework conditions for all transport modes is consequently still
on the agenda.

Fair competition remains a central issue
On transposition of the liberalisation provisions of the Second Railway Package,
the entire European cross-border rail freight market was opened up to competi
tion in January 2006. As from 2007, the domestic rail freight sector will also be
open to competition. As the market in Germany has long since been open to other
players, this is a milestone on the way to creating equal access conditions throughout
the whole of Europe. However, for the future development of rail freight transport,
it is also vital to abolish the administrative barriers – such as vehicle homologation
– that still exist, so that genuine free market access actually becomes
possible in practice.
Discussion of the Third Railway Package makes progress
Not all the proposals currently under discussion by the Council and the European
Parliament are geared to strengthening the competitive position of rail. The
Commission and Council plan to open up the market for cross-border rail passenger
transport as from 1 January 2010. Railway undertakings would then also be
permitted to pick up and set down passengers along international routes.
This is a crucial factor for the economic viability of international rail passenger
transport services. At the same time, however, the plans envisage far-reaching
options for restricting access to the rail network in order to protect the interests
of public passenger transport. These provisions lag behind the market opening
status in Germany.
The current European legislative procedure has already led to decisive improvements
to the proposal on passenger rights, which is of immense importance from
the economic viewpoint. For instance, the cost-driving proposals for unlimited
liability for consequential damage for delays have been abandoned. This is a key
issue, as it would have led to unacceptable fi nancial burdens for the railways.
Even so, the compensation provisions for delays which apply to rail are still discriminatory
compared with air and road transport.
The proposal to introduce a European train driver’s licence has met with general
approval and should facilitate cross-border deployment of personnel. A further
positive development is that both the Parliament and the Council have rejected
the ill-advised proposal for a regulation governing the quality of rail freight
transport.
The amendment of the Eurovignette Directive adopted in December 2005 provides
a framework under European Community law which governs the levying of
road haulage tolls on the principal European corridors. However, the provisions
do not go nearly far enough where the scope and the inclusion of external costs
are concerned. The Commission is therefore still being called upon to present a
model for the calculation of external costs and a strategy to implement them for
all transport modes.
Regulatory Policies
While the volume of rail legislation continues to grow, the European Union failed to use the opportunity to
create fair conditions for intermodal competition between the diff erent transport carriers when amending
the Eurovignette Directive.
According to information
from the International Rail
Transport Committee, the
volume of European legislation
in the transport sector
has more than doubled within
just fi ve years.
Source: CIT Info,
December 2005
33

34
The unequal treatment of the diff erent transport modes distorts competition at the expense of rail.
Equal conditions for all modes are vital
The pace of liberalisation in Europe still varies widely. In Germany, competition has long since been well
established. This is also refl ected in various proceedings pending before the Commission. At the same time,
however, opportunities to harmonise competition between the transport modes are neglected.
The direct eff ects of the distortion
of competition on the railway
undertakings are severe.
It is the Commission’s task to ensure fair competitive conditions in the European
Single Market. To do so, it uses the instruments of regulation of state aids and of
competition. The following proceedings took place during the period under review:
Aid approved for SNCF freight transport
In its ruling of 2 March 2005, the Commission approved state aid amounting to
EUR 1.5 billion for Fret SNCF. The SNCF rail freight company, which has been in
fi nancial diffi culties for some years, is to undergo comprehensive restructuring
aimed at restoring its economic viability. The approved fi nancial aid is to be used
to modernise the company’s rolling stock and overhaul its fi nancial structure.
Approval of the fi nancial aid is linked to certain obligations which will ensure that
the aid does not constitute a barrier to the development of other operators.
Fret SNCF will be obliged, for example, to reduce its traffi c volume during the
restructuring phase and an earlier date has been set for opening the French rail
freight market.
Court ruling on tax exemption for kerosene is imminent
In April 2006, the European Court of First Instance will decide on an action fi led by
Deutsche Bahn on tax exemption for kerosene. In contrast to many other European
Union countries, railways in Germany are obliged to pay mineral oil tax on diesel
and electricity tax on electric traction energy. Kerosene, on the other hand, is
exempt from mineral oil tax, a factor which distorts competition at the expense
of rail. A direct consequence of this has been a decline in passenger numbers and
loss of revenues by rail on long-distance routes. Deutsche Bahn has fi led a lawsuit
contesting the inaction on the part of the Commission, which is responsible for
ensuring fair competition.

Criticism of contract award in the regional and local rail sector
As already described in the last Competition Report, the Commission initiated an
infringement procedure against Germany in 2004. The case involves the method
practised by the Federal Laender in awarding regional and local rail transportation
contracts. The allegations in the case in question refer to the circumstances
govern ing the award of transportation contracts to Deutsche Bahn companies in
Baden-Württemberg, Berlin, Brandenburg, Rhineland-Palatinate and Thuringia.
The crux of the matter is the degree to which plans for tenders have to be brought
to the attention of potential bidders pursuant to EU law and to what extent the
authorities are obliged to invite companies to participate in tenders. It is undisputed
that EU public procurement law is not applicable to rail services. The
proceedings are still in progress and an amicable solution appears possible.
Admissibility of compensation payments in regional and local rail transport
Another special aspect is in dispute in connection with the Berlin/Brandenburg
transportation contract. In February 2005, the Commission announced that it had
initiated a preliminary (state aid) investigation because of the contractual payments
to DB Regio for providing transport services in Berlin/Brandenburg. This
move was in response to a complaint by Connex. There had already been national
review proceedings in which the Veolia subsidiary had unsuccessfully contested
the transportation contract in question. Amongst other things, Connex alleges
that the payments to DB Regio constitute unlawful state aid. Deutsche Bahn – like
the Federal government – believes that these constitute contractual payments
pursuant to Article 14 Regulation 1191/69 and not unlawful state aid within the
meaning of Article 87 (1) EC. The admissibility of the payments is governed solely
by the provisions of Regulation 1191/69 and there is no apparent infringement of
these provisions.
Proceedings for the provision of locomotives dismissed
Since 2002, the Commission has conducted proceedings based on Article 82 EC
Treaty to examine whether Deutsche Bahn has a dominant position in the market
for the provision of locomotives. In parallel proceedings, it has also reviewed the
market position of the Italian state railway Ferrovie dello Stato (FS). The proceedings
were initiated in response to a complaint by a railway undertaking which
off ers both inner-German and cross-border tourist transport services. The railway
undertaking demanded that Deutsche Bahn should provide traction, and that FS
should also provide a train driver with relevant route knowledge. The case against
DB was formally and unconditionally dismissed in May 2005. FS had already been
ordered to provide the requested services in August 2003. In contrast to Germany,
vehicle availability in Italy had been very limited prior to the ruling of the
Commission.
Regulatory Policies
In Germany there are numerous
alternatives for railway
undertakings to lease rolling
stock.
35

36
New national regulatory framework
The Third Act amending Railway Legislation came into eff ect at the end of April 2005. New Railway Infrastructure
Usage Regulations have been in force since August. With this “Third Amendment of the General
Railway Act” [AEG], the German legislator goes well beyond the requirements of the EC Infrastructure Package.
Pending proceedings
The Federal Network Agency
has taken over a large number
of pending proceedings.
120
90
60
30
2
2001
18
2002
24
2003
61
2004
130*
2005
* proceedings pending at the end of 2005;
Source: DB data
The AEG amendment is intended to ensure fair and non-discriminatory access to
rail infrastructure in Germany. The legislator has thoroughly revised the previous
regulations governing access to rail infrastructure and the internal structure of
integrated railways. The competence of the diff erent authorities has also been
restructured.
Stricter regulation of infrastructure access
In addition to railway undertakings, other “authorised users” can now also submit
applications for train paths. This benefi ts the orderers, the Federal Laender, their
local transport companies and special-purpose associations and companies wishing
to have goods transported by rail. All authorised users are entitled to demand that
the rail infrastructure managers provide non-discriminatory access to infrastructure
and related services. Access is still provided on the basis of private-law contracts
(negotiated access). New regulations governing infrastructure usage, user fees,
timetable compilation and decision criteria in case of confl ict are intended to rule
out unequal treatment. The AEG amendment does not aff ect proceedings initiated
by the Federal Railway Offi ce (EBA) pursuant to the former laws. The fi rst proceedings
held under the new legislation have revealed that the new regulations are
frequently ambiguous, so that certain aspects have to be clarifi ed in court. The DB
infrastructure companies, for instance, had to submit the planned revised network
statement and other railway infrastructure usage regulations to the Federal Railway
Offi ce (as the regulatory authority) for preliminary review. The Offi ce has initiated
several cases to clarify the conditions which have to be fulfi lled before the revised
regulations may be submitted to it. It has also objected to certain individual
clauses. The most important of these cases could be resolved by mutual agreement
following negotiations in good time before the start of the timetable compilation
period.
Unclear regulations on user fees
The “regulatory character” of the rules governing infrastructure access is particularly
evident in the calculation of the infrastructure user fees. The train path
prices levied by the infrastructure managers for the use of infrastructure are in
future to be determined by the costs sustained in connection with the provision
of (essential) services for the use of infrastructure. While the law allows various

The latest decisions by the legislator on railway law entail fundamental changes for the railways.
options for designing these charges, the total train path prices must not exceed
the full costs (plus the customary rates of return in this market). The fees for the
use of other rail infrastructure, on the other hand, only have to satisfy the principles
of non-discrimination and non-abuse.
Organisational requirements for the DB Group
Alongside the new regulations on infrastructure access, requirements have also
been imposed on the organisational structure of vertically integrated railways.
Although there are as yet no restrictions on the existence of integrated companies,
all public railways are nevertheless subject to specifi c accounting requirements:
they thus have to keep separate accounts for train operations and infrastructure
management. They are also required to have a separate infrastructure
management company, whose independence as regards certain decisions must be
guaranteed. The DB Group already essentially satisfi ed these legal requirements
before the third AEG amendment. By means of organisational changes and other
internal corporate regulations, the Group has ensured that DB Netz (the track
operator) can make independent decisions on the working timetable, allocation
of train paths during the year, and infrastructure user fees.
New procedural law entails a shift of power
Since January 2006, the regulation of railway infrastructure access has no longer
been the responsibility of the Federal Railway Offi ce, but of the Federal Network
Agency for Electricity, Gas, Telecommunications, Post and Railways. As from now,
all regulatory decisions are immediately enforceable, which means that they have
to be obeyed until fi nal clarifi cation is obtained before the courts. Any objections
fi led by the parties concerned have a suspensive eff ect only if this is ordered by a
court. The fi nancial risks resulting from any incorrect decisions therefore have to
be borne by the company concerned throughout the entire duration of the proceedings.
The powers of the regulatory authority have been substantially extended,
which is likely to lead to an increase in regulatory activities. This is also the conclusion
drawn by the authors of the January 2006 study “Privatisation Variants for DB
AG with and without Infrastructure” commissioned by the Federal government.
Regulatory Policies
The authors of the expert
opinion on privatisation also
predict an increase in the
regulatory activities of the
new Federal Network Agency.
37

38
The position of the infrastructure
companies of the DB
Group have been confi rmed in
important decisions by the
courts.
German railway law has the highest regulation intensity
The immediate enforceability of regulatory decisions is one of the provisions of
the third AEG amendment with which the German legislator has gone beyond the
mere implementation of EC law. Other examples are the preliminary review by the
regulatory authority (e.g. of amendments or revisions of the network statement or
other railway infrastructure usage regulations) and the need to seek approval if
lines are to be closed down in order to reduce capacity or to release them from
railway operations purposes (reclassifi cation). In a European comparison, German
railway law ranks among the leaders in terms of regulatory intensity. This is also
confi rmed by the IBM study on the regulation of access to rail infrastructure
(cf. p. 6 ff .).
Procedures based on the former legal situation still relevant
In 2005, the Federal Railway Offi ce concluded twelve infrastructure access cases.
The accusation of discrimination was not upheld in any case. On the contrary, the
DB infrastructure companies successfully defended the admissibility of the conditions
governing access to and use of their infrastructure by third parties in all
the proceedings. In particular, Cologne Administrative Court approved the DB Netz
train path allocation procedures for the annual timetable in several summary decisions.
These cases involved the application of certain priority criteria which the EBA
had deemed as granting inadmissible “grandfather rights”. This was the fi rst time
that the authority had acted in ex-ante review proceedings, as introduced under the
AEG amendment, in which DB Netz had given prior notice that it intended to refuse
the train paths. DB Netz sought legal redress against the EBA objections from Cologne
Administrative Court, which endorsed the application of the priority criteria.
One key decision on the former legal situation will remain important even after
the new AEG has come into force: Münster Higher Administrative Court had to
decide whether DB Netz was entitled to refuse access to the infrastructure if the
user permanently failed to pay the user fees in full or in part. In the case in question,
DB Netz had terminated the existing infrastructure usage agreement and
was willing to enter into a new agreement only if the user settled its substantial
arrears. The EBA had objected to this supposed “denial of access”. The Higher
Administrative Court has now clearly ruled that defaulting debtors are not entitled
to demand access to infrastructure even if they (subjectively) believe that the
debts claimed (by DB Netz) do not in fact exist. The sole criterion is whether the
authorised user is (objectively) obliged to pay infrastructure user fees. If that is
the case and the company nevertheless fails to pay, access to infrastructure can
be denied. The authorised user can avert this situation by making a conditional
payment.
The decision of the Higher Administrative Court is of crucial importance for
future cases. Under the amended AEG, those authorised users who pay their fees
punctually cannot be expected to bear their share of the bad debts caused by
their defaulting competitors. In future, too, it should not be possible to obtain a

competitive advantage simply by disputing payment demands. The fundamental
considerations on which the court based its decision can be applied in full to
future cases in which access is refused, not least because the reasons for the
decision refer to the new legal situation at many points.
First proceedings under the new law
Following the reallocation of responsibility for rail regulation, the Federal
Network Agency has taken over all unresolved regulatory proceedings from the
Federal Railway Offi ce. This involves a large number of unfi nished proceedings
in which suspected discrimination could not be confi rmed. Moreover, the Federal
Network Agency has also taken over the fi rst pending regulatory proceedings
under the new railway law.
These proceedings referred to the revised versions of the network statement of
DB Netz (railway tracks and service facilities), the railway infrastructure usage
regulations of DB Station&Service (passenger stations) and DB Energie (railway
fuel stations) presented for the purpose of preliminary review. DB had fi rst initiated
summary court proceedings to contest the objections raised by the Federal
Railway Offi ce to individual clauses of these regulations. Cologne Administrative
Court regarded the central legal issues as so complex that in the fi rst instance, it
chose not to order the suspensive eff ect of the objections to the decisions of the
Federal Railway Offi ce.
In parallel with the ongoing court proceedings, DB entered into negotiations
with the Federal Network Agency in order to fi nd an amicable solution to the legal
issues in dispute. The objections to the railway infrastructure usage regulations
would have involved considerable risks for the entire rail transport in Germany. In
the worst-case scenario, important provisions would not have come into force, a
situation which could have jeopardised compilation of the 2007 working timetable.
On the basis of its experience of other network industries, the Federal Network
Agency acknowledged the need for a pragmatic and phased approach to the regulation
of rail infrastructure and drew up solutions to the controversial legal issues
at short notice in consultation with DB. To avoid jeopardising compilation of the
2007 working timetable, the authority ordered the DB infrastructure companies to
put the new regulations, modifi ed by mutual agreement, into operation by the
beginning of the train path compilation phase. The validity of the modifi ed regulations
has been restricted to one year to enable the parties to gather experience
with these radically amended regulations governing the use of infrastructure and
stations. Once the regulatory authority’s legal reservations had been dispelled,
most of the pending proceedings could be closed. The new regulations mean in
particular that authorised users can sign framework agreements for a longer term
than one working timetable period and thus secure their infrastructure capacities.
Within the framework of the legal regulations, these capacities enjoy priority in
train path compilation. The fi rst framework timetable period covers the working
timetables for the period 2006 to 2010. The fi rst framework agreements can be
concluded with eff ect for the 2007 working timetable.
Regulatory Policies
The decisions of the Federal
Network Agency have safeguarded
the 2007 timetable.
39

40
EBA proceedings in the year 2005
Twelve infrastructure access cases were concluded in
2005. The Federal Railway Offi ce handed over a
number of unresolved cases from previous years to the
Federal Network Agency, many of which are to be
judged on the basis of the former legal situation, prior
to amendment of the AEG and the new EIBV.
Twelve concluded EBA proceedings involving DB
EBA Reference No. Parties Subject Results
15 Nz 038-04 RSE Obligation to process a train path application Subject of dispute
on the non-negotiable Prien – Obing line meanwhile settled
15 Nz 042-04 undisclosed RU Admissibility of licence for deployment Suspected discrimiof
construction vehicles nation was not confi rmed
15 Nz 512-04 Schneider Admissibility of licence for deployment Suspected discrimiund
Schneider of construction vehicles nation was not confi rmed
15 Nz 014-05 NOB Infrastructure and timetable data Subject of dispute
from the RuT-K system meanwhile settled
15 Nz 014-05 NOB Train path confl ict in the annual timetable, Subject of dispute
Hamburg – Westerland line meanwhile settled
15 Nz 019-05 NOB Train path confl ict in the annual timetable, Subject of dispute
Hamburg – Westerland line meanwhile settled
15 Nz 020-05 NOB Train path confl ict in the annual timetable, Subject of dispute
Hamburg – Westerland line meanwhile settled
15 Nz 021-05 NOB Train path confl ict in the annual timetable, Subject of dispute
Hamburg – Westerland line meanwhile settled
15 Nz 022-05 DB Fernverkehr/ Train path confl ict in the annual timetable, Subject of dispute
DB Autozug Hamburg – Westerland line meanwhile settled
15 Nz 023-05 DB Fernverkehr/ Train path confl ict in the annual timetable, Subject of dispute
DB Autozug Hamburg – Westerland line meanwhile settled
15 Nz 026-05 DBG Train path refused Suspected discrimination
was not confi rmed
15 Nz/23-1000 Bahnbetriebswerk Conclusion of an infrastructure connection Mutual solution
Krefeld agreement (IAV) at reasonable costs agreed
30 pending EBA proceedings involving DB
EBA Reference Parties Subject Legal Situation
No. old new
Infrastructure use in general
15 Nz 007-05 undisclosed RUs Information on delays for purposes
of compensation
X
15 Nz 008-05 ODEG Conclusion of an IAV at Eberswalde station X
15 Nz 029-05 undisclosed RUs Distribution of Group Directives X
15 Nz 032-05 undisclosed RU Train path application periods for occasional traffi c X
15 Nz 039-05 DB Netz Cooperation with rail infrastructure managers – X
coordination of train path application periods

Regulatory Policies
EBA Reference Parties Subject Legal Situation
No. old new
15 Nz 040-05 ITL Advance payment in case of obvious intention
of debt relief/accession to debt/conclusion of an
Infrastructure Usage Agreement (INV)
X
15 Nz 042-05 Pfalzbahn Charges for changes and cancellation fees for
train path applications
X
15 Nz 044-05 Rail4chem Train path application procedures for
cross-border transports to and from Poland
(occasional traffi c)
X
15 Nz 047-05 DB Netz Procedures for the conclusion of framework
agreements
X
15 Nz 501-05 DKB Adjustment of former agreement to new station
usage agreement
X
15 Nz 505-05 UEF Use of stations without prior application
and agreement
X
Ref. No. unknown undisclosed RU
Access to Infrastructure
Costs of diversion owing to maintenance work X
15 Nz 027-04 Vogtlandbahn Use of infrastructure only against payment/
termination of INV
X
15 Nz 034-04 Brohltalbahn Use of closed-down DB Netz operating
facilities at Brohl station
X
15 Nz 028-05 Eifelbahn Use of track 5 at Linz am Rhein station X
15 Nz 033-05 undisclosed RUs Use of tracks / depot areas at
Neuaubing-München repair depot
X
15 Nz 036-05 AKN/S-Bahn Hamburg Train path confl ict Hamburg
(Eidelstedt/Hamburg central station)
X
15 Nz 051-05 various RUs Announcement of the intention to refuse fi ve
applications for train path allocation
X
15 Nz 509-05 HWB, SBE Security deposit for access to fuel stations X
15 Nz 511-05 GVG Annual timetable 2005, train path off ered
diff ers from application
X
15 Nz 512-05 RSE Track access to Stromberg-Morbach line X
15 Nz/75- Vossloh Technical requirements for access to X
1500#1-1 infrastructure by diesel traction units
EBA 15 Nz HWB Non-negotiable section of the X
80-1500
Conditions of use
Langenlonsheim – Morbach line
15 Nz 006-05 undisclosed RUs General conditions concerning the Usage
of DB Inrastructure ABN
X
15 Nz 041-05 DB Station & Service Reporting obligation pursuant to Section 14d AEG X
15 Nz 043-05 DB Energie Objection to terms of use for rail fuel stations X
15 Nz 045-05 DB Netz Reporting obligation pursuant to Section 14d AEG X
15 Nz 048-05 DB Netz Contractual right to object to ABN X
15 Nz 050-05 DB Netz Objection to the Network Statement (SNB) 2006 X
15 Nz 052-05 DB Station & Service Objection to Conditions governing the Use of Rail- X
way Infrastructure at Passenger Stations (ABP) 2006
41

42
Cartel Offi ce has its sights on market structure
In 2005, the Federal Cartel Offi ce gave the go-ahead for two key planned mergers in the rail freight sector.
A recent decision by the Federal High Court of Justice will have profound impact on the regional and local
passenger market. Mergers in the regional and local transport sector involving DB met with reservations.
Even under the strict standards
of the Federal Cartel
Offi ce, DB is entitled to
expand its corporate portfolio
by means of mergers.
The purpose of merger control is to keep markets open, preventing unfair scope
for some companies to act in a non-competitive way and ensuring comprehensive
protection of freedom of action for other companies. The Federal Cartel Offi ce has
sole responsibility for controlling the national market structure in Germany. It
dealt with the following proceedings during the period under review:
RBH purchase by Railion unobjectionable
In a decision of 30 September 2005, the Federal Cartel Offi ce approved the
purchase of RAG Bahn and Hafen GmbH (RBH) by Railion Deutschland AG, as the
transaction did not give reason to assume any impairment of the market situation.
Pursuant to the German Act against Restraint on Competition, a merger has to be
prohibited if it would create or strengthen a dominant market position of a company.
The takeover of RBH by Railion did not meet that criterion.
The Federal Cartel Offi ce based its decision on the assumption that the merger
essentially aff ected the national supply market for the transport of dry bulk
goods. The authority explicitly refused to include the sector of high-volume truck
transport of dry bulk goods in its decision. On the other hand, the Cartel Offi ce
believes that the takeover transaction in a market which is defi ned as above does
not entail any strengthening of the – alleged – dominant position of Railion.
According to the authority’s investigations, Railion will gain only a minimal additional
market share when it takes over those transports which RBH currently provides
on behalf of third parties. Moreover, the merger will neither protect market shares
in an anti-competitive way nor generate an increase in resources which are relevant
for competition. The Federal Cartel Offi ce consequently approved the merger.
Lead decision for the regional and local transport market by BGH
In its decision of 7 February 2006, the Federal High Court of Justice (BGH) ruled
that merger control provisions also apply to mergers between companies which
provide transport services in the sector of regional and local rail passenger transport
or local public road transport. As reasons for its decision, the court stated
that neither the fact that local transport cooperative ventures are exempt from
the ban on cartels nor that the provision of scheduled transport services has to be
approved by the authorities and can, under public law, be imposed on a company

Reservations against mergers in the German market are decided upon by the Federal Cartel Offi ce.
or awarded by contract, are reasons to rule out the application of merger control
provisions. The case in question referred to the purchase of a share in üstra intalliance
by DB Regio, which was sanctioned by the Federal Cartel Offi ce subject to
certain conditions. Both the parties involved in the merger and a competitor had
objected to the decision. The Federal High Court of Justice referred the case back
to Düsseldorf Higher Regional Court, which now has to examine whether the merger
create or strengthen a dominant a market-dominant position.
Cartel Offi ce approves takeover of VTG
In December 2005, the Federal Cartel Offi ce approved the takeover of the rail
logistics activities of TUI AG by foreign investment funds during the fi rst examination
phase. That decision by the authority was the go-ahead for the purchase of
VTG Vereinigte Tanklager- and Transportmittel GmbH (VTG) by Compagnie Européenne
des Wagons S.à.r.l. (CEW). The New York-based investment company WL
Ross formed CEW, a holding based in Luxembourg, for the specifi c purpose of
purchasing VTG. When the application was fi led with the Cartel Offi ce, WL Ross
held all the shares in CEW and managed a joint venture (IPE Ross) in cooperation
with one other investment company (IPE, based in Paris). IPE, together with
SNCF, in turn controls the Ermewa Group, which is also active in the rail logistics
business.
The companies involved in the merger modifi ed the purchase transaction following
reservations with regard to the potential structural interdependence of the VTG
purchaser with the Ermewa Group, which is itself interdependent with SNCF: in the
modifi ed transaction, VTG will no longer be purchased by IPE Ross – as originally
planned – but by CEW, which is controlled solely by WL Ross. However, the plans
still envisaged that IPE with its structural interdependence with the Ermewa Group
would become a fund shareholder of CEW, the purchasing company. The
Federal Cartel Offi ce nevertheless approved the merger in its modifi ed form without
any further examination, as it believed that the planned transaction would not lead
to a link between VTG and Ermewa which would be problematic in terms of competition
law. Time will tell whether this assessment proves accurate. In particular, it
remains to be seen whether IPE will in fact not have any infl uence at all on the
management of CEW – as alleged by the parties involved in the merger.
Regulatory Policies
43

44
Movement in the
Euro pean Rail Market
More and more topics which are of crucial importance for the future of rail are now
being discussed and decided at European level. This has revealed that the endeavours
to harmonise the rail market have to take into account the diff erent national
conditions and established structures.

British rail reform under scrutiny
Special Areas of Discussion
2005 saw heated debate on both sides of the Channel about the British rail system.
The experience acquired following privatisation in the UK also provides important fi ndings
for analysis of the situation in Germany.
In the UK, rail infrastructure and transport were separated in 1994. Transport services
are now provided by private “train operating companies”. The infrastructure
sector (Railtrack) went public in 1996. However, after the company’s insolvency
in 2002, it was reorganised in Network Rail, which has the legal status of a not for
dividend corporation with state-guaranteed solvency.
To assess the extent to which the British have achieved the targets of the rail
reform – relieving the taxpayer and shifting more traffi c onto rail – and establish
what factors played an infl uential role, various aspects have to be examined. Four
key parameters aff ect the development of rail transport and are therefore important
when analysing rail reforms and privatisation: the actual privatisation,
intermodal competition conditions, the extent to which the market is open to
competition on rail, and the organisation of the rail system.
Growth from a low starting level
Transport statistics show that rail traffi c performance in the UK rose between
1994 and 2005 (see chart on page 46). Rail also booked a slight increase in its
share of the modal split. The (absolute and relative) starting fi gures for the UK,
however, were noticeably lower than in Germany, although growth in traffi c
performance was similar in both countries throughout the entire period under
consideration. Germany has also achieved an increase in both its freight and
passenger transport sectors since 1994. In the German modal split, the market
share of rail freight fell slightly, as it did not profi t in full from the strong growth
of the overall market. The rail passenger sector, however, achieved similar growth
to that in the UK.
Between 1994 and 2004, the UK state payments for rail infrastructure and
transport virtually doubled, after adjustment for infl ation. The savings made at
the outset of the reform proved not to be sustainable – neither in terms of the
necessary infrastructure state fi nancing nor in the level of orderer fees. These
state payments per traffi c performance unit have risen by 27 per cent since 1994.
The state payments for rail transport and infrastructure in Germany, however,
have been reduced by almost 35 per cent since the start of the rail reform,
pro viding relief for the taxpayer. The fi nancial burden in terms of traffi c performance
unit has been reduced by 45 per cent.
One of the positive consequences of privatisation in the UK was the substantial
amount of private capital which was invested in rail – although losses were
sus tained by many investors when Railtrack became insolvent. A modernised fl eet
and wider range of products attracted more passengers onto rail. In many cases,
investments were specifi ed as an integral obligation under the transportation
contracts, which also envisaged expansion of the product range during the term of
the contract.
Rail Modal Split
Germany maintained its high
starting level. The UK booked
growth in the rail share.
(All fi gures in per cent)
Passenger transport
1994
2004
8.4
5.0
6.4
Freight transport
1994
2004
Germany UK
5.9
7.4
8.6
Source: Department for Transport,
Federal Statistical Offi ce
16.8
15.8
45

46
The excellent economic
development in the UK is the
driving force behind transport
growth. In Germany, rail
has grown despite economic
stagnation.
Growth trend continues for freight railways in both countries
Rail freight traffi c performance in Germany and the UK.
(Figures in billion tonne-kilometres)
100
80
60
40
20
80
71.4 70.3 68.6 73.4 74.1 72.5 78.3 76.7 76.3 79.8
13.0 13.3 15.1 16.9 17.4 18.2 18.1 19.4 18.7 19.0 20.6 22.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005**
Germany UK*
UK catches up, Germany achieves growth once again
Rail passenger traffi c performance in Germany and the UK.
(billion passenger-kilometres)
70
60
50
40
30
65.2
28.7
71.0
30.0
71.7
32.1
72.4
34.7
72.7
36.3
73.8
71.4 71.3
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005**
75.4
38.5 38.2
75.8
39.1 39.7
86.4
72.9
90.5
75.5
40.9 41.7 43.0
Germany UK*
*Figures refer to the British fi scal year, from April to March of the following year in each case; **Estimate
Sources: Department for Transport, Offi ce of Rail Regulation, Strategic Rail Authority, Federal Statistical Offi ce and DB data
The framework conditions for rail in the UK also improved greatly between 1994
and 2004. Fuel costs for automobile transport increased by 34 per cent in real
terms (Germany: 26 per cent). A positive economic climate boosted transport
growth in all sectors. Growth in gross domestic product in the UK was twice as
high in real terms as in Germany over the same period (33 vs. 16 per cent). Rail,
in particular, benefi ted from this trend because road has already reached the
limits of its capacity, especially in the Greater London Area.
Intramodal competition with similar market structures
Almost all passenger transport contracts in the UK are awarded on a franchise
basis for between seven and ten years. The freight transport sector has open
access. The situation in Germany for regional and freight transport is similar, but
here in Germany there is also completely open access to the long-distance rail
market. Only four rail companies – EWS, Freightliner, GB Railfreight and Direct
Rail Services – off er freight transport services in the UK, whereas more than 100
freight railways operate in Germany. It is remarkable that the market shares of the
largest service provider in each country, i.e. Railion and EWS, are similar. Despite
the diff erent market models, competition on rail obviously leads to similar market
results for the traditional major service providers, although the intramodal market
structure in Germany is more dynamic.
Rail reform is assessed controversially in the UK
Several recent studies – including one by the Adam Smith Institute entitled “No
Way to Run a Railway – Lessons from British Rail Privatisation“ (August 2005) –
have come to the conclusion that the British rail reform would have been more

successful if it had followed a diff erent organisational model. The British government
has meanwhile taken action to reduce the interfaces between the various
parties. Nevertheless, state infl uence on rail infrastructure has continued to increase.
In mid-2005, for example, the government transferred responsibility for
passenger transport from the Strategic Rail Authority, whose remit covered not
only ordering passenger transport services, but also aspects of strategic infrastructure
development, to the Department for Transport. At the same time, Network
Rail, the state-owned infrastructure manager, was entrusted with overall
responsibility for infrastructure development.
Conclusion: twelve years after the separation of infrastructure and operations
in the UK, competition in the rail market is no more dynamic than it is in Germany.
In an intermodal comparison, the share of rail in the UK is lower than in
Germany. Those in favour of separation, on the other hand, claim that rail would
benefi t more than other transport modes from the implementation of separation.
A comparison of market development in Germany and the UK supports the view of
the study “Privatisation variants for Deutsche Bahn AG with and without infrastructure”,
which claims that factors other than the organisational form are more
important for the market share of rail.
State support increasingly similar
Public funds for rail transport and infrastructure in Germany and the UK.
(Figures in EUR billion based on 1994 prices)
12
10
8
6
4
2
11.3
2.8
11.7
0.7
10.7 10.1
1.7
9.0
9.6
2.8 2.4 2.1 1.8
9.0 9.0 8.7 8.3
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Comparatively high government spending in the UK
Budget burden per traffi c performance unit.
(Figures in EUR per passenger-tonne-kilometre based on 1994 prices)
0.10
0.08
0.06
0.04
0.02
Germany * UK **
0.083 0.083
0.067
0.016
0.076
0.035
0.069
0.055
0.062 0.066
0.045
0.038
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
2.7
0.058 0.059
0.033
0.047
3.8
0.065
0.059
5.2
0.087
0.055
Germany * UK **
* Excl. funds provided by Federal Railway Property Offi ce
** Figures refer to the British fi scal year, from April to March of the following year in each case, exchange rates valid on
01.01.02 (date of changeover to EUR)
Sources: Department for Transport, Offi ce of Rail Regulation, Strategic Rail Authority and DB data
Special Areas of Discussion
7.3
5.4
0.085
0.046
Market trends in Germany
and the UK suggest that the
ownership structure is not
decisive for the development
of competition.
47

48
Train path pricing in the EU Member States is based on diff erent economic concepts.
Fair prices safeguard infrastructure
There are many diff erent models in force in the European Union for train path pricing and infrastructure
fi nancing. The role played by the state in its function as provider of public services diff ers signifi cantly in
terms of infrastructure fi nancing.
The European Union is keenly interested in creating framework conditions which
simplify free freight and passenger traffi c across national borders. The European
Conference of Ministers of Transport (ECMT) consequently commissioned a study 1
to compare the train path prices charged for the use of rail infrastructure and the
bases for calculation of these prices in the diff erent Member States. The focus
was on divergent defi nitions of the various cost factors on which train path
pricing is based.
One important fi nding of the study is that either a full-cost or a marginal cost
concept may be a suitable basis for train path pricing. Diff erent models may be
more appropriate to refl ect the individual framework conditions in diff erent market
environments. According to the study, for example, a full-cost approach is
more workable in the Baltic states than in Western Europe. At the same time, it
recommends distinguishing between transport categories. Thus the prices for international
freight transports, it claims, should be based on marginal costs, while
other services should be charged full costs. On the whole, the ECMT is aiming to
achieve standardised calculation methods for access charges based on precisely
defi ned criteria.
No harmonisation at the expense of fair market prices
This recommendation for a Europe-wide harmonisation of the price bases can be
seen from two viewpoints: on the one hand, it makes sense to draw up common
standards, for instance by specifying uniform cost defi nitions. On the other hand,
the benefi ts of harmonisation always have to be weighed against the disadvantages
of the reduced leeway for charging market-oriented prices which refl ect the
actual circumstances, as the calculation of effi cient train path prices depends on a
number of market factors which diff er from country to country. The study refers,
1) “Railway Reform and Charges for the Use of Infrastructure: Conclusions and Recommendations”,
April 2005

for example, to supply characteristics such as infrastructure density and quality,
demand characteristics such as user structure, price fl exibility, infrastructure
usage and regulatory conditions. Both the level and the structure of the train path
prices have to pay due attention to these characteristics. This is particularly important
in view of the highly divergent public transport infrastructure fi nancing
concepts in the diff erent Member States. Uniform rules for the fair allocation of
infrastructure costs between the diff erent transport modes and for compulsory
state contributions to rail infrastructure fi nancing have a far greater infl uence on
the train path prices than any standards prescribed for their calculation. The
distortion resulting from such diff erent fundamental situations consequently cannot
be remedied by standardising the train path pricing basis. Although the study
accurately depicts this interdependency between access charges and the input of
public funds, it underestimates its signifi cance.
The comparison between the Member States shows no clear connection
between the diff erent economic concepts for cost-driven pricing and infrastructure
access charges. Uniform pricing methods do not necessarily lead to uniform
train path prices. In addition to the above market factors which determine the
cost levels of the individual infrastructure managers, the study claims that these
diff er ences can also be attributed to inconsistent defi nitions of the term “marginal
costs”. Some Member States take a long-term view, basing their prices on “average
marginal costs”, i.e. not only the short-term costs resulting from train operations,
but also operating and maintenance costs, and in part also the cost of wear and
tear related investments. This reduces the gap to the full-cost coverage. This
divergent interpretation of the term “marginal costs” is an additional reason why
the comparison of the Member States does not show any pronounced correlation
between the chosen cost model and the train path price level. Moreover, it also
distorts the discussion on the correct economic approach.
Full cost coverage is vital for sustainable infrastructure provision
According to economic theory, the short-term marginal cost approach guarantees
effi cient infrastructure usage. In rail infrastructure provision, however, which involves
a high proportion of fi xed costs, it generally does not cover total costs. In
view of the intermodal competitive pressure, customers are only willing to pay
higher prices to a limited extent. It is therefore not possible to charge train path
prices which guarantee full cost coverage. In contrast to other regulated network
industries (electricity, gas, water etc.), there is hardly any risk that an infrastructure
manager in the rail market could skim off monopoly profi ts from the user
charges. On the contrary: as long as the degree of cost coverage from train path
revenues in Germany remains at 60 per cent and the average train path price is
somewhere in the middle price bracket of the compared countries, the focus has
to be on sustaining infrastructure upkeep over the long term. This requires the
satisfaction of two conditions: fi rstly, market-driven pricing which pays due attention
to both intramodal and intermodal competitive developments. This can only
be eff ected by the competing companies and also presupposes a certain leeway –
within the prescribed statutory limits – away from rigidly prescribed marginal or
full cost methods. Secondly, it has to be ensured that any resulting fi nancial shortfalls
will be met by the public purse. Any evaluation of diff erent train path pricing
concepts has to consider both these aspects.
DB’s own funds increasingly important for co-fi nancing
Deutsche Bahn develops its infrastructure in close consultation with the Federal
government. The Federal Transport Infrastructure Plan and the list of 66 priority
Special Areas of Discussion
The prices for access to rail infrastructure
have to refl ect the
diff erent market circumstances
in the individual Member States.
That is the only way for
rail to succeed in competition
with other transport modes.
49

50
Important new-build lines will
be inaugurated in Germany in
2006. However, future projects
are faced with strong prioritisation
pressure in view of increasingly
scant resources.
projects in the Requirement Plan are important instruments for expansion measures.
The Nuremberg – Ingolstadt (– Munich) new-build line and the North-South
tunnel line in Berlin are two projects to be inaugurated in 2006. Trains between
Berlin and Leipzig will in future be able to travel at speeds of 200 instead of the
previous 160 km/h. Railway undertakings thus have access to new and attractive
lines which are integrated in national and European concepts.
In terms of investments in infrastructure, Germany rates at best in the European
average. According to a study by the “Pro Rail Alliance”, a sum of just
EUR 39 per head of the population was invested in German rail infrastructure
(construction and maintenance) in 2004. This fi gure is on the same level as in
France, but substantially lower than, for instance, the fi gure in Italy (EUR 112) or
Sweden (EUR 124). Germany’s investments in rail in 2004 were also 35 per cent
lower than investments in road. The “Pro Rail Alliance” consequently submitted a
demand to the new Federal government that it should start a “race to catch up
with the leading European railways”.
Deutsche Bahn is forced to fi nance more and more investments in rail infrastructure
from its own funds. Owing to the high re-investment requirements,
government funds now enable only limited upgrading and new-build projects.
How ever, Deutsche Bahn can only increase its own fi nancial contribution if this
is viable in terms of intermodal competition. In view of the still highly divergent
allocation of infrastructure costs compared with road transport, the EU decision
not to levy adequate toll charges for trucks means that an important opportunity
has just been missed.
DB invests more equity capital than envisaged by the rail reform
Infrastructure investment fi nancing according to state and DB funds.
(Figures in EUR billion)
60
50
40
30
20
10
4.3
30.5
18.7
Budget
1994–2003*
10.9
11.3
30.9
Actual
1994–2003
Equity capital interest-free loan net** construction grant
12.5
11.2
34.7
Actual
1994–2004
*Model calculation of the rail reform dated 1993; **redemption by DB AG deducted; Source: DB data

Train path prices cover costs only in the Baltic
Railways in the new EU states in particular are dependent on train path prices which cover costs.
(Cost coverage 2004, per cent).
100
80
60
40
20
Source: European Conference of Ministers of Transport, 2005
Special Areas of Discussion
N S NL SI I B DK P A CH SK UK RO CZ D F BG H PL EE LV LT
Comparatively attractive train path prices in Germany
Average train path price in passenger and freight transport 2004.
(EUR, per train-kilometre)
10
8
6
4
2
S N NL F B P CH I SI D SF DK A UK CZ BG RO H EE LT LV PL SK
Freight trains Passenger trains
Source: European Conference of Ministers of Transport, 2005
Court settles traction current dispute
DB Energie is currently fi ghting a court case with BASF
subsidiary Rail4Chem, a rail freight company, for outstanding
payment demands for the use of traction current.
The crux of the dispute is the legal admissibility
of the discount provisions off ered in the DB Energie
price lists, which apply to all customers in the same
way. The case is currently pending at Frankfurt Higher
Regional Court. The outcome will depend largely on
whether DB Energie succeeds in furnishing satisfactory
grounds for the discounts. The court is expected to
reach a decision before the end of the year.
Action by MKB dismissed
In October 2005, Frankfurt Regional Court (Ref 3/12 O
42/05) dismissed an action fi led by Mindener Kreisbahnen
(MKB) against DB Netz for the refund of train
path prices amounting to approx. EUR 15,000. MKB
demanded repayment of that sum for the period January
to March 1998 on the grounds that the train path
pricing system (TPS 94) in force at that time was
unlawful. The judges however, dismissed the claim as
unjustifi ed. The ruling is fi nal.
51

52
EU initiative for public transport reform
In 2005, the European Commission made another attempt to reform the legal framework for public
passenger transport services. After the previous proposals were rejected by the Council of Ministers in
2000 and again in 2002, the Commission’s latest attempt has been substantially pared down.
The aim of the draft amendment of EEC Regulation No.
1191/69 is to provide the orderers in the rail and road
passenger transport sector with a legal framework for
the compensation of public service obligations or the
granting of exclusive rights. The award mechanisms for
these service contracts play a central role. While the
draft proposes a universal obligation to put contracts
up for tender, it also permits a number of exceptions.
Compulsory tender procedures would not apply, for
example, to in-house contract award, low-volume contracts
or to regional and long-distance rail services. As
regards the permissible compensation payments for
public service obligations, the draft proposal aims to
implement the precedent established by the European
Contract award practice in regional and local public transport is
to be given a new EU-wide legal framework.
Court of Justice in its leading decision “Altmark Trans”.
The key require ment of a future EU legal framework
from Germany’s viewpoint is that any new European
model must not jeopardise the contract award practice
which is already established in this country and which
has already successfully initiated the transition to
competition on rail. In that light, the proposal contains
some highly promis ing features, but also poses various
risks.
Correction of the proposals needed
The proposal pays due attention to the special circumstances
of the investment-intensive rail passenger
transport market by providing an option for direct
contract award. It is thus in line with German policy.
However, the European defi nition of “regional transport”
has to be rectifi ed, as large sectors of the German
regional transport market would otherwise be
arbitrarily excluded from direct contract award. The
draft proposal also contains a number of transitional
provisions which, owing to their possible retroactive
force, are highly dubious in legal terms and would
prevent an orderly transition. As regards public road
transport, the draft appears problematic in that it
privileges in-house contract award, which harbours a
risk of asymmetrical market opening.
In the next step, the European Parliament and the
Council of Ministers will review the draft regulation
proposed by the European Commission. This will involve
examining the risks and inconsistencies resulting
from the proposal and taking any necessary corrective
action.

The depots handle primarily the maintenance of diesel locomotives, freight wagons and diesel multiple units.
Heavy and regional maintenance services are provided
by companies which do not belong to Deutsche Bahn at
around 140 diff erent locations in Germany. Most of
these depots are run by non-Federal railway undertakings,
rolling stock companies, small maintenance
depots and depots run by municipal transport operators.
They provide stationary and mobile services for
the railway undertakings which operate in Germany.
This was revealed by a recent study conducted by SCI
Verkehr, confi rming the fi ndings of a study conducted
in October 2003.
72 of these depot locations are run by non-federal
railway undertakings, which thus make up the largest
group of non-DB depot operators in Germany. This is
because the railway companies wish to exert their own
infl uence on the maintenance of their rolling stock.
Moreover, those railway undertakings which perform
their own maintenance have the best opportunities to
monitor compliance with their duty to ensure the safety
of their fl eet.
Locations aff ected by market circumstances
In terms of the regional distribution of the 140 depot
locations, the highest density is in North Rhine-Westphalia,
Baden-Württemberg, Lower Saxony and Saxony-
Anhalt. Only comparatively few companies run depots
in Bavaria alongside those of Deutsche Bahn.
Special Areas of Discussion
Germany-wide maintenance depot network
The railway undertakings operating in Germany have access to a functioning market for the maintenance of
rolling stock. This was confi rmed by a recent study conducted by the market research company SCI Verkehr,
which specialises in the rail sector.
In terms of the vehicle types involved, locations which
provide maintenance services for diesel locomotives
(approx. 90) are dominant, followed by depots for
freight wagon maintenance (almost 70) and diesel
multiple units (more than 60).This refl ects the present
competition situation, i.e. that competitors of Deutsche
Bahn are particularly active in the freight and
regional rail markets, where they are continuously
expanding their market shares. Diesel locomotives (rail
freight transport) and diesel multiple units (regional
transport) are predominantly used in these market
segments. The almost 70 locations for freight wagon
maintenance, on the other hand, can be attributed to
the high share of private ownership in the total freight
wagon fi gures. The survey conducted by SCI Verkehr
among the service providers revealed that the range of
services off ered by many of the depots can be adapted
to meet changing customer requirements. Changes in
the rail transport market will thus also aff ect the depot
locations and the range of products and services they
off er.
The study by SCI Verkehr proves that the railway
undertakings which operate in Germany have access
to a Germany-wide network of maintenance depots.
There are no apparent market access barriers, especially
as Deutsche Bahn, too, runs some 100 depots where
it also performs maintenance for other railway undertakings,
rolling stock owners and the rail industry.
53

54
Company L R F M Shareholder
Companies with foreign shareholders
AAE-Holding AG
Bentheimer Verkehrsmittel
Deutschland AG
Ahaus-Alstätter
Eisenbahn GmbH
AAE-Holding AG
x 100% Bentheimer
Verkehrsmittel AG
Abellio GmbH 75.1% Star Capital
Partners Ltd.
(investment fund)
24.9% indirectly
Essener VVG mbH
Abellio Rail NRW x 100% Abellio GmbH
ARCELOR S.A.
EKO Stahl GmbH ARCELOR S.A.
EKO Transport gesellschaft
mbH
(EKO TRANS)
Stahlwerk Thüringen
GmbH
Arriva plc.
x 100% EKO Stahl GmbH
x ARCELOR S.A.
Regentalbahn AG 100% Arriva plc.
Regental
Bahnbetriebs GmbH
x x 100% Regentalbahn AG
Vogtlandbahn GmbH x x 100% Regentalbahn AG
PE Arriva AG 100% Arriva plc.
PE Cargo GmbH x 100% PE Arriva AG
Prignitzer Eisenbahn
GmbH
Ostdeutsche
Eisenbahn GmbH
Once again over 300
companies on the network
The customers of DB Netz also include museum
railways, charter and construction companies. The rail
environment is still characterised by diverse corporate
structures, but the fi nancial pressure in the transport
and logistics market has made its mark. Two more
investment funds have now joined the rail market: WL
Ross & Co. LLC took over VTG AG, and Star Capital
x 100% PE Arriva AG
x 50% Prignitzer
Eisenbahn GmbH
50% Hamburger
Hochbahn AG
Partners Ltd. is the new majority shareholder of
Abellio GmbH. The proportion of railway undertakings
under full or partial foreign ownership has thus risen
once again. This overview of companies shows the
major competitors of DB transport undertakings in
Germany.
Company L R F M Shareholder
Bertschi AG
Rail4chem
Eisenbahnverkehrsgesellschaft
mbH
x 25% Bertschi AG
25% VTG AG
25% Hoyer GmbH
25% BASF AG
CTL Logistics x Chem Trans Logistik
Holding Polska S.A.
CTL Rail GmbH x 100% CTL Logistics
Connex
Verkehr GmbH
Connex Cargo
Logistics GmbH
Bayerische
CargoBahn GmbH
indirectly 100% Veolia
Environment
x 100% Connex Verkehr
GmbH
x 100% Connex Cargo
Logistics GmbH
Hörseltalbahn GmbH x 100% Connex Cargo
Logistics GmbH
DE Transport GmbH x 65% Connex Cargo
Logistics GmbH
35% Dortmunder Hafen AG
Industriebahn-
Gesellschaft
Berlin mbH
Niederbarnimer
Eisenbahn AG
NEB Betriebsgesellschaft
mbH
50.2% Connex Cargo
Logistics GmbH
49.8% Berliner Hafenund
Lagerhausbetriebe
66.92% Industriebahn-
Gesellschaft Berlin mbH
26% four rural districts
6.16% Provinzialverband
Mark Brandenburg,
ten local authorities
x Niederbarnimer
Eisenbahn AG
NordWestCargo GmbH x 51% Connex Cargo
Logistics GmbH
49% Stadtwerke
Osnabrück
Regiobahn Bitterfeld
Berlin GmbH
x 100% Connex Cargo
Logistics GmbH

Company L R F M Shareholder
Teutoburger-Wald-
Eisenbahn-AG
TWE Bahnbetriebs
GmbH
80.14% Connex Cargo
Logistics GmbH
19.86% diversifi ed shareholdings
x 100% Teutoburger-
Wald-Eisenbahn-AG
Connex RegioBahn GmbH 100% Connex
Verkehr GmbH
Bayerische Oberlandbahn
GmbH
x 100% Connex
RegioBahn GmbH
Connex Sachsen GmbH x 100% Connex
RegioBahn GmbH
Nord-Ostsee-Bahn
GmbH
x 100% Connex
RegioBahn GmbH
neg Niebüll mbH x x Nord-Ostsee-Bahn GmbH
99.8% NEG Norddeutsche
Eisenbahn GmbH,
Schmidt Reisen GmbH
NordWestBahn GmbH x 64% Connex
Regiobahn GmbH
26% Stadtwerke
Osna brück AG
10% Verkehr und Was ser
GmbH Oldenburg
Ostseeland Verkehr
GmbH
Rheinisch-Bergische
Eisenbahn GmbH
Württembergische
Eisenbahn-GmbH
Connex Sachsen-Anhalt
GmbH
Dillen en Le
Jeune Cargo
Dillen en Le Jeune
Cargo NV
x x x 70% Connex
Verkehr GmbH
30% Nahverkehrsgesellschaft
Schwerin
x 100% Connex
RegioBahn GmbH
x x 96.95% Connex
RegioBahn GmbH
x 100% Connex
Verkehr GmbH
x 60% Dillen en
Le Jeune Cargo
40% Hupac AG
EuRailCo GmbH 50% Transdev
50% RATP Développement
trans regio Deutsche
Regionalbahn GmbH
x 75.1% EuRailCo
24.9% Rheinische
Bahngesellschaft AG
EuroLuxCargo S.A. 100% Société Nationale
des Chemins de fer
Luxembourgeois
NEG Norddeutsche Eisenbahngesellschaft
mbH
x 100% EuroLuxCargo S.A.
neg Niebüll mbH x x 99.8% NEG Norddeutsche
Eisenbahngesellschaft mbH,
Nord-Ostsee-Bahn GmbH,
Schmidt Reisen GmbH
Overview of Companies
Company L R F M Shareholder
European
Rail Shuttle B.V.
50% Maersk-Sealand
50% P&O Nedlloyd
boxXpress.de GmbH x 47% European Rail Shuttle
Holding B.V.
38% Eurogate
Intermodal GmbH
15% TX Logistik AG
Heavy Haul Power
International GmbH
x Richard Martin Painter,
Martina Thiele,
Charles Temple Reed
Hupac AG 72% carrier companies
23.8% Schweizerische
Bundesbahnen AG
4.2% other railways
Dillen en Le Jeune
Cargo NV
x 40% Hupac AG
60% Dillen en Le Jeune
Cargo
Hupac GmbH x 100% Hupac AG
Keolis S.A. 52.3% 3i (investment fund)
44.5% affi liated company
of the French state railway
SNCF Participations
3% Keolis Management
Rhenus Keolis GmbH &
Co. KG (Eurobahn)
Freiberger Eisenbahngesellschaft
mbH
Niederrheinische
Verkehrsbetriebe AG
Schweizerische
Bundesbahnen AG (SBB)
x 49% Keolis S.A.
51% Rhenus AG & Co. KG
x 85% Rhenus Keolis
GmbH & Co. KG
10% Verkehrsbetriebe
Kreis Freiberg
5% diversifi ed shareholdings
x 51% Rhenus Keolis
GmbH & Co. KG
Wesel and Kleve district
authorities, Cities of
Duisburg and Moers
SBB Cargo AG 100% SBB AG
SBB Cargo
Deutschland GmbH
x 100% SBB Cargo AG
SBB GmbH x 100% SBB AG
EuroTHURBO GmbH x 100% SBB GmbH
Trenitalia SpA
TX Logistik AG x 51% Trenitalia SpA
49% supervisory board
and board of directors
boxXpress.de GmbH x 15% TX Logistik AG
47% European
Rail Shuttle Holding B.V.
38% Eurogate
Intermodal GmbH
55

56
Company L R F M Shareholder
VTG AG WL Ross & Co. LLC
(investment company)
Rail4chem
Eisenbahnverkehrsgesellschaft
mbH
Wincanton
Trans European
Management GmbH
UNISPED Spedition
und Transport gesellschaft
mbH
Wincanton
Trans European
(Deutschland) GmbH
BGE Eisenbahn und
Güterverkehr GmbH
SME Private Railways
AHG Handel & Logis tik
GmbH & Co. KG
Anhaltische Bahn
Gesellschaft mbH
AStrans
Spedition GmbH
Bahnbetriebsgesellschaft
Stauden mbH
BayernBahn Betriebsgesellschaft
mbH
Borkumer
Kleinbahn und Dampfschiff
fahrt GmbH
Brohltal Schmalspureisenbahn
Betriebs-GmbH
Deutsche Regionaleisenbahn
GmbH
Bayerische
Regionaleisenbahn
x 25% VTG AG
25% Hoyer GmbH
25% Bertschi AG
25% BASF AG
x Wincanton Trans European
Management GmbH
Wincanton Trans European
Management GmbH
x 32% Wincanton Trans
European GmbH
18% HGK AG,
M-real Zanders GmbH,
City of Bergisch Gladbach
x Lutz Stache,
AHG Handel & Logistik
Verwaltungs GmbH
x x Dessau-Wör litzer
Eisenbahn e.V.,
Verein Bergbau- und
Erlebnisbahn e.V.
x 100% Anton Schmirler
x x Staudenbahnfreunde e.V.
x x Bayerisches Eisenbahnmuseum
Nördlingen
x 100% Aktiengesellschaft
EMS
x x Brohltal
local authority
x x 100% Deutscher
Bahn kunden-Verband e.V.
x x 100% Deutsche Regionaleisenbahn
GmbH
Döllnitzbahn GmbH x x x 74.9% Oschatz
rural district and local
authorities along the line,
Deutscher Bahn kunden-
Verband e.V.
D&D Eisenbahn GmbH x Christian Dehns.
Dörte Dehns
Eifelbahn Verkehrsgesellschaft
mbH
x Jörg Seyff ert
Company L R F M Shareholder
Ei.L.T. GmbH x Philip Schemutat,
Hanno Mühlefeldt
Eisenbahn-Bau-
und Betriebsgesellschaft
Preßnitztalbahn mbH
Eisenbahn Betriebsgesellschaft
mbH
Klützer-Ostsee-
Eisenbahn GmbH
Eisenbahnbetriebe
Mittlerer Neckar GmbH
Euregio Verkehrsschienennetz
GmbH
GET Georgsmarien hütte
Eisenbahn und
Transport GmbH
GVG Georg Verkehrsorganisation
GmbH
Wiebe Holding
GmbH & Co. KG
BLP Wiebe
Logistik GmbH
H.F. Wiebe
GmbH & Co. KG
Hoyer GmbH
Rail4chem
Eisenbahnverkehrsgesellschaft
mbH
IGE Eisenbahnverkehr
GmbH & Co. KG
Industrietransportgesellschaft
mbH
Brandenburg
ITL Eisenbahnge sellschaft
mbH Dresden
Kreisbahn Mans felder
Land GmbH
Laeger&Wöstenhöfer
GmbH & Co. KG
x x IG Preßnitztalbahn e.V.
x 100% Ludger Guttwein
x 100% Eisenbahn
Be triebsgesellschaft mbH
x 100% Gesellschaft zur
Erhaltung von Schienenfahrzeugen
Stuttgart e.V.
x Ewald Schmitz,
Helmut Conrads,
Henning Ernden
x Jürgen Großmann
x Susanne Georg,
Rolly Fly SA Holding
The Wiebe family
x Wiebe Holding GmbH &
Co. KG,
Thorsten Bode,
Werner Zitz
x Wiebe Holding GmbH &
Co. KG
x 25% Hoyer GmbH
25% Bertschi AG
25% VTG AG
25% BASF AG
x Armin Götz,
IGE board of directors
x Villmann Group
x x 100% Karin and
Uwe Wegat
x x x Helga Teutsch,
Gerhard Kellner
x x Laeger&Wöstenhöfer
Beteiligungs-GmbH,
Beate Wöstenhöfer,
Joachim H. Laeger
Lappwaldbahn GmbH x Hans-Dieter Lewandowski
LOCON Logistik und
Consulting GmbH
x Freiherr von Ascheraden
H.E. Kraff t,
Rita Dahme,
Carsten Meger,
Gunther Schulz

Company L R F M Shareholder
Mittelweserbahn GmbH x x Markus Fuhrmann,
Hans-Peter Kempf,
Jens Koppmann,
Christian Speer
Verkehrsbetriebe
Grafschaft Hoya GmbH
Neukölln-Mitten walder
Eisenbahngesellschaft
AG
Nordbayerische Eisenbahngesellschaft
mbH
x x Mittelweserbahn GmbH,
WeserBahn GmbH,
two rural districts,
three cities,
two local authorities
x x The Britze family,
diversifi ed shareholdings
x Torsten Sewerin,
Jan Ristau
PBSV-Verkehrs-GmbH x x AVJ Management
und Beteiligungs-GmbH,
B. Buchholz Wackerhagen
Pfalzbahn Eisenbahnbetriebs-GmbH
RCN rail center
Nürnberg
GmbH & Co. KG
RSE Rhein-Sieg-
Eisenbahn GmbH
Rügensche Kleinbahn
GmbH & Co. KG
Sächsisch-Böhmische
Eisenbahngesellschaft
mbH
SLG Spitzke
Logistik GmbH
x VCD e.V.,
8 private individuals
x Stahlberg Roensch
GmbH & Co. KG,
RCN RailCenter Nürn berg
VerwaltungsGmbH
x x VCD e.V.,
Eisenbahnclub Rhein-Sieg,
32 private individuals
x x Herrmann Schöntag
x x HWB Hochwaldbahn
Servicegesellschaft mbH
x Spitzke AG
Stock-Transporte x Detlef Michael Stock
TIM Rail Eisenbahngesellschaft
mbH
TLG Transport &
Logistik GmbH
x RP Eisenbahn GmbH,
TIM Transport
Intermodal GmbH
x Frey Group
TX Logistik AG x 51% Trenitalia SpA
49% supervisory board
and board of directors
boxXpress.de GmbH x 15% TX Logistik AG
47% European Rail Shuttle
Holding B.V.
38% Eurogate
Intermodal GmbH
Uwe Adam
Eisenbahnverkehrsunternehmen
GmbH
Vulkan-Eifel-Bahn
Be triebs-GmbH
x x The Adam company
x x 100% Jörg Petry
Overview of Companies
Company L R F M Shareholder
Industrial Railways
Augsburger
Localbahn GmbH
BASF AG
BASF AG. Service Center
Railway
BASF
Schwarzheide GmbH
Rail4chem
Eisenbahnverkehrsgesellschaft
mbH
Chemion
Logistik GmbH
x Adolf Präg
Verwal tungs GmbH,
City of Augsburg and
Stadtwerke Augsburg,
Augsburger
Verkehrsverband GmbH,
Bus verkehr Schwaben
Be tei ligungs GmbH,
Knape Gleis sanierung
GmbH,
UPM-Kymmene
x BASF AG
x BASF AG
x 25% BASF AG
25% Hoyer GmbH
25% Bertschi AG
25% VTG AG
x indirectly 100% Bayer AG
Cargo Rail GmbH x Dillinger Hüttenwerke AG
InfraLeuna Infrastruktur
und Service GmbH
x several Leuna-based
companies
Rhenus AG & Co. KG 90% Rethmann AG &
Co. KG
Rhenus Keolis GmbH &
Co. KG (Eurobahn)
Freiberger Eisenbahn -
gesellschaft mbH
Rhenus Rail
Logistics GmbH
Thyssen
Krupp Stahl AG
Eisenbahn und
Häfen GmbH
x 51% Rhenus AG & Co. KG
49% Keolis S.A.
x 85% Rhenus Keolis GmbH
& Co. KG
10% Verkehrs betriebe
Kreis Freiberg
5% diversifi ed shareholdings
x Rhenus AG & Co. KG.
Spedition Trade Trans
100% Thyssen
Krupp Stahl AG
EH Güter verkehr GmbH x 100% Eisenbahn und
Häfen GmbH
Verkehrsbetriebe
Peine-Salzgitter GmbH
x 100% Salzgitter AG
57

58
Company L R F M Shareholder
Municipal and Land-Owned Railways
AKN Eisenbahn AG x x x Free and Hanseatic City of
Hamburg,
Land of Schleswig Holstein,
diversifi ed shareholdings
NBE nordbahn Eisenbahngesellschaft
mbH
Schleswig-Holstein-Bahn
GmbH
Albtal-Verkehrs-
Gesellschaft mbH
UEF Eisenbahnverkehrsgesellschaft
mbH
Ankum
Bersenbrücker
Eisenbahn GmbH
Augsburger
Localbahn GmbH
Bahnen der Stadt
Monheim GmbH
Bentheimer
Eisenbahn AG
Bodensee-
Oberschwaben-Bahn
GmbH & Co. KG
Bremer
Straßenbahn AG
metronom Eisenbahngesellschaft
mbH
x 50% AKN Eisenbahn AG
50% Hamburger
Hochbahn AG
x 100% AKN
Eisenbahn AG
x x 100% City of Karlsruhe
x 14% Albtal-Verkehrsgesellschaft
mbH
14% Leonhard Weiss
GmbH & Co. KG
72% Ulmer Eisenbahnfreunde
e.V.
x 30% Ankum local authority,
25% Verkehrsgesellschaft
Landkreis Osnabrück
GmbH, four cities
x City of Augsburg and
Stadtwerke Augsburg,
Adolf Präg Verwal tungs
GmbH,
Augsburger Verkehrsverband
GmbH,
Busverkehr Schwaben
Beteiligungs GmbH,
Knape Gleis sanierung
GmbH,
UPM-Kymmene
x 100% Monheimer
Ver sorgungs- und
Ver kehrsgesellschaft mbH
x 93.99% Grafschaft
Bentheim rural district
6.01% Cities of Nordhorn
and Neuenhaus
x 27.5% Technische Werke
Friedrichshafen GmbH
25% City of Ravensburg
37.5% Bodensee and
Ravensburg rural districts
10% Meckenbeuren local
authority
Bremer Versorgungs- und
Verkehrs gesellschaft mbH
x 5% Bremer
Straßen bahn AG,
69.9% Nie der sachsen
Bahn GmbH,
25.1% Hamburger
Hochbahn AG
Company L R F M Shareholder
WeserBahn GmbH x 100% Bremer
Straßenbahn AG
Bremen-Thedinghauser
Eisenbahn GmbH
Verkehrsbetriebe
Grafschaft Hoya GmbH
x 10% WeserBahn GmbH
three loc. author. 30 % each
x x WeserBahn GmbH,
Mittel weserbahn GmbH,
two rural districts,
three cities,
two local authorities
BVO Bahn GmbH x x x 100% Verkehrsbetriebe
Erzgebirge GmbH
City-Bahn
Chemnitz GmbH
Delmenhorst-
Harpstedter
Eisenbahn GmbH
x Chemnitzer Verkehrs AG,
Autobus GmbH Sachsen
x x City of Delmenhorst,
Oldenburg rural district
Harpstedt local authority
Döllnitzbahn GmbH x x x 74.9% Oschatz rural district
and local authorities
along the line,
25.1% Deutscher
Bahn kunden-Verband
duisport rail GmbH x 100% Duisburger Hafen AG
Eisenbahnen und
Verkehrsbetriebe
Elbe-Weser GmbH
Niedersachsen Bahn
GmbH
metronom
Eisen bahn gesellschaft
mbH
Elektrische Bahnen der
Stadt Bonn und des
Rhein-Sieg-Kreises (SBB)
Emsländische
Eisenbahn GmbH
Erfurter Industrie-
Bahn GmbH
Süd-Thüringen-
Bahn GmbH
Freiberger Eisenbahngesellschaft
mbH
x x x 58% Land of Lower Saxony
14% Rotenburg (Wümme)
rural district,
10% Stade rural district,
further rural districts
and diversifi ed shareholdings
40% Eisenbahnen
und Verkehrsbetriebe
Elbe-Weser GmbH
60% Osthanno versche
Eisenbahnen AG
x 69.9% Niedersachsen
Bahn GmbH
25.1% Hamburger
Hochbahn AG
5% Bremer Straßenbahn AG
x Rhein-Sieg district authority,
Stadtwerke Bonn
Verkehrs-GmbH
x x Emsland rural district
x x x City of Erfurt
x 50% Erfurter
Industriebahn GmbH
50% Hessische
Landesbahn GmbH
x 10% Verkehrsbetriebe
Kreis Freiberg,
85% Rhenus Keolis GmbH
& Co. KG,
5% diversif. share holdings

Company L R F M Shareholder
Häfen und Güter verkehr
Köln AG (HGK AG)
BGE Eisenbahn und
Güterverkehr GmbH
Hamburger
Hochbahn AG
metronom Eisenbahngesellschaft
mbH
NBE nordbahn Eisenbahngesellschaft
mbH
Ostdeutsche Eisenbahn
GmbH
Harzer
Schmalspurbahnen
GmbH
Havelländische
Eisenbahn AG
Hessische
Landesbahn GmbH
x 54.5% Stadtwerke
Köln GmbH,
City of Cologne,
Erft district authority
x 18% HGK AG
32% Wincanton Trans
European GmbH,
M-real Zanders GmbH,
City of Bergisch Gladbach
100% Hamburger Gesellschaft
für Ver mögens-
und Beteiligungsverwaltung
mbH (wholly-owned
subsid. City of Hamburg)
x 25.1% Hamburger
Hochbahn AG
69.9% Niedersachsen
Bahn GmbH
5% Bremer
Straßenbahn AG
x 50% Hamburger
Hochbahn AG
50% AKN Eisenbahn AG
x 50% Hamburger
Hoch bahn AG
50% Prignitzer
Eisenbahn GmbH
x x x three rural districts,
City of Quedlinburg,
Kurbetriebs gesellschaft
Braunlage,
local authorities,
Tanne local authority
x Havelland rural district,
Oberhavel-Holding
Besitz- und Verwaltungsgesellschaft
mbH,
Deutsche Ausgleichsbank
Land of Hesse
Hessenbahn GmbH x x Hessische
Landesbahn GmbH
Hellertalbahn GmbH x 33.3% Hessische
Lan desbahn GmbH
33.3% Westerwaldbahn
GmbH
33.3 % Siegener
Kreisbahn GmbH
Süd-Thüringen-
Bahn GmbH
vectus Verkehrsgesellschaft
mbH
x 50% Hessische
Landesbahn GmbH
50% Erfurter
Industriebahn GmbH
x 74.9% Hessische
Landesbahn GmbH
25.1% Westerwaldbahn
GmbH
Overview of Companies
Company L R F M Shareholder
Hohenzollerische
Landesbahn AG
x x x 72% Land of
Baden-Württemberg,
28% two rural districts
Ilmebahn GmbH x Northeim rural district,
City of Einbeck
Kasseler Verkehrs-
Gesellschaft AG
Regionalbahn Kassel
GmbH
Kölner Verkehrsbetriebe
AG
Märkische Verkehrsgesellschaft
mbH
Märkische Eisenbahngesellschaft
mbH
Mecklenburgische
Bäderbahn Molli
GmbH & Co. KG
Mindener Kreis bahnen
GmbH (MKB)
Neuss-Düsseldorfer
Häfen GmbH & Co. KG
Niederrheinische
Verkehrsbetriebe AG
Osthannoversche
Eisenbahnen AG
NiedersachsenBahn
GmbH
metronom
Eisenbahngesellschaft
mbH
indirectly 100%
City of Kassel
x 50% indirectly
City of Kassel
50% indirectly
Land of Hesse
x indirectly 90% City of
Cologne
Märkische Kommunale
Wirtschafts-GmbH,
19 local authorities
x Märkische Verkehrsgesellschaft
mbH,
Märkische Kommunale
Wirtschafts-GmbH,
City of Plettenberg
x x Bad Doberan rural district,
City of Bad Doberan,
City of Ostseebad
Kühlungsborn,
four private individuals
x 100% Minden Lübbecke
district authority
x Neuss-Düsseldorfer
Häfen Verwaltungs GmbH.
Stadtwerke Düsseldorf AG
x x Wesel and Kleve district
authorities,
Cities of Duisburg
and Moers,
51% Rhenus Keolis
GmbH & Co. KG
x 40.2% Land of
Lower Saxony,
33.8% Federal Republic
of Germany,
17.1% rural districts,
cities, local authorities,
8.9% DB AG
60% Osthannoversche
Eisenbahnen AG
40% Eisenbahnen und
Verkehrsbetriebe
Elbe-Weser GmbH
x 69.9% NiedersachsenBahn
GmbH
25.1% Hamburger
Hochbahn AG
5% Bremer
Straßenbahn AG
59

60
Company L R F M Shareholder
Rinteln-Stadthagener
Verkehrs GmbH
Ostseeland
Verkehr GmbH
Rhein-Neckar-Verkehr
GmbH
x 74% Osthannoversche
Eisenbahnen AG
26% cities and rural
districts
x 30% Nahverkehr
Schwerin GmbH
70% Connex
Verkehr GmbH
x 35.13% MVV Verkehr AG
16.26% MVV OEG AG
27.83% Heidelberger
Straßenbahn AG
18.36% Verkehrsbetriebe
Ludwigshafen
2.42% Rhein-Haardtbahn
GmbH
Rurtalbahn GmbH x x x Dürener Kreisbahn GmbH,
R.A.T.H. GmbH
VIAS GmbH x 50% Verkehrsgesellschaft
Frankfurt am Main (VGF)
50% Rurtalbahn
GmbH (RTB)
Saarbahn GmbH x Stadtbahn Saar GmbH,
two local authorities
Sächsisch-Ober lausitzer
Eisenbahngesellschaft
mbH (SOEG)
Seehafen Kiel
GmbH & Co.KG
Siegener Kreisbahn
GmbH
x x x Löbau-Zittau rural district,
City of Zittau,
local authorities
x 100% City of Kiel
x 100% Betriebs- und Beteiligungsgesellschaft
Kreis
Siegen-Wittgenstein mbH
Hellertalbahn GmbH x 33.3% Siegener
Kreisbahn GmbH
33.3% Hessische
Landesbahn GmbH
33.3% Westerwaldbahn
GmbH
Südwestdeutsche
Verkehrs-AG
x x x Land of
Baden-Württemberg
Breisgau-S-Bahn GmbH x 50% Südwestdeutsche
Verkehrs-AG
50% Freiburger
Verkehrs AG
Ortenau-S-Bahn GmbH x 100% Südwestdeutsche
Verkehrs AG
Verden-Walsroder
Eisenbahn GmbH
Verkehrsbetriebe
Extertal-
Extertalbahn GmbH
x x 68.66% Verden rural
district
15.69% City of Verden
15.65% rural districts and
local authorities
x x Lippe district authority,
E-Werk Wesertal GmbH.
Westfälisch-Lippische Vermögens
verwal tungs-GmbH,
City of Rinteln,
Schaumburg rural district
Company L R F M Shareholder
Verkehrsbetriebe
Grafschaft
Hoya GmbH
Verkehrsgesellschaft
Landkreis Osnabrück
GmbH
Vorwohle-
Emmerthaler Verkehrsbetriebe
GmbH
Wanne-Herner
Eisenbahn und
Hafen GmbH
x x two rural districts,
three cities,
two local authorities,
Mittelweserbahn GmbH,
WeserBahn GmbH
x x Osnabrück rural district,
neighbouring district
authority, local authorities
x 54% Cities of Bodenwerder
and Eschershausen
46% local authorities and
private shareholders
x 100% City of Herne
Westerwaldbahn GmbH x x 100% Altenkirchen district
authority
Hellertalbahn GmbH x 33.3% Westerwaldbahn
GmbH
33.3% Hessische
Landesbahn GmbH
33.3% Siegener
Kreisbahn GmbH
vectus Verkehrsgesellschaft
mbH
Westfälische
Verkehrsgesellschaft
mbH
Regionalverkehr
Münsterland GmbH
Regionalverkehr
Ruhr-Lippe GmbH
Westfälische Landeseisenbahn
GmbH
x 25.1% Westerwaldbahn
GmbH
74.9% Hessische
Landesbahn GmbH
Westfälisch-Lippische
Vermögens verwaltungs
GmbH,
four district authorities
x Westfälische
Verkehrsgesellschaft mbH,
Coesfeld district authority
x Westfälische Verkehrsgesellschaft
mbH,
district authorities,
cities, local authorities
x x Westfälische Verkehrsgesellschaft
mbH, district
authorities, cities, local
authorities
L = Long-distance transport
R = Regional transport
F = Freight transport
M = Museum, tourist and charter transport,
works train services
This list of companies has been compiled on the basis
of generally available sources. It does not claim to be
complete. Please do not hesitate to inform us of any
inaccuracies or updated information.