OREANDA-NEWS. June 26, 2013. No.2 Working Party on competition and regulation of OECD Competition Committee had several meetings including the Round Table on “Innovations in the Railway Industry”.

Discussion covered the issues of structural reforms and the latest changes in the industry. Attendees included several regulators actively conducting reforms, the heads of competition authorities and representatives of academia. Participants paid attention to the subjects of prospective development of competition on the railway transport and continuing structural reforms.

The trend of reforms in the EU is further vertical separation, development of competition and actions aimed at harmonizing rules (currently over 13000 different rules are applied that should be decreased to reduce administrative barriers).

In 1998 Sweden made a decision on vertical separation and development of competition in freight and passenger transportation. For both sectors competition “on the market” was applied with state-by-stage reduction of the share of the former monopolist. In commuter transportation competition “for the market” is the basic. Reduction of state subsidies is one of the main selection criteria. Competition comes amid not only by increased passenger and freight flows but also by increased investments in the private sector.

Romania enforced the Directive on reforming the railway transport market due to recourse to the Court of the European Commission. Currently 24 operators compete on the market, the monopolist share is decreasing. To guarantee access to infrastructure and increase independence of the regulator, Romania’ competition authority was also assigned the tariff regulation functions. The Netherlands and Australia have similar successful experiences of combining the functions of tariff regulation and antimonopoly control.

Russia, as other countries, presented information about the course of the reforms and the current state of the market of passenger and freight railway transportation. Commenting certain aspects of the market situation, Deputy Head of the Federal Antimonopoly Service (FAS Russia) Anatoly Golomolzin said: “In the field of freight railway transportation developed competition is present in the services of freight car operators.“Russian Railways” OJSC remains the only freight carrier and the owner of the infrastructure in general use. Due to deregulation of competition in the field of the services of freight car operators, in the past ten years over 300,000 new cars have been built and investments reached around 600-700 billion Rubles (14-15 billion euro)”.

Anatoly Golomolzin also pointed out that separating the locomotive element in the tariff and clarifying the content of certain provisions of the Rules for providing infrastructure services would facilitate development of competition in freight transportation. After 2015 competition between carriers of Belarus, Kazakhstan and Russia within the Common Economic Space will be developing on the basis of non-discriminatory access to the national railway infrastructure. Creating commercial infrastructure will be important for developing competition in freight railway transportation.

Participants also discussed the issues of high-speed railway communication. The US plan to invest 40 billion dollars so 80% of the population will have access to such railways in the areas with high population density, including Florida and California. In addition to the existing projects on international communication, the UK is studying the projects of high-speed communication between London and other parts of the country. Italy is one of a few examples with competition “on the market” is present in the sector of high-speed transportation. A new private market player - Italio entered this sector in April 2012 under the guarantees of non-discriminatory access to the infrastructure. In the next few years Italo plans to considerably expand the sphere of its activities.

WP2 also specially discussed the issues of granting subsidies for infrastructure development. The position of the European Commission is that infrastructure subsidies do not restrict competition. At the same time, the WP2 discussed that subsidies in the infrastructure must be proportional and optimal. More subsidies are required if the transportation density is low and for creating new modern infrastructure facilities; fewer subsidies are needed in the infrastructure with high transportation density and in existing facilities.