Governance of Competition in the Swiss and European Railway Sector
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Governance of competition in the Swiss and European railway sector Final research report to the SBB lab, University of St.Gallen May 2012 “Rail companies’ fiercest competition comes from other transport modes. Efficient competition between modes of transport depends on achieving appropriate pricing and investment policies.” (Nash and Matthews, 2009) Authors Prof Matthias Finger, Ecole Polytechnique Fédérale de Lausanne and European University Institute Dr Andrea Rosa, European University Institute With the collaboration of Dr Marc Laperrouza, Ecole Polytechnique Fédérale de Lausanne Dr Martin Holterman, European University Institute Ian Brand-Weiner, European University Institute Nadia Bert, European University Institute 1 Robert Schuman Centre for Advanced Studies Within the European University Institute (EUI), the Robert Schuman Centre for Advanced Studies (RSCAS), created in 1992 and directed by Stefano Bartolini since September 2006, aims to develop inter-disciplinary and comparative research and to promote work on the major issues facing the process of integration and European society. The Centre is home to a large post-doctoral programme and hosts major research programmes and projects, and a range of working groups and ad hoc initiatives. The research agenda is organised around a set of core themes and is continuously evolving, reflecting the changing agenda of European integration and the expanding membership of the European Union. Details of the research of the Centre can be found on: http://www.eui.eu/RSCAS/Research/ Research publications take the form of Working Papers, Policy Papers, Distinguished Lectures and books. Most of these are also available on the RSCAS website: http://www.eui.eu/RSCAS/Publications/ The EUI and the RSCAS are not responsible for the opinion expressed by the author(s). Florence School of Regulation The Florence School of Regulation (FSR) is a partnership between the Robert Schuman Centre for Advanced Studies (RSCAS) at the European University Institute (EUI), the Council of the European Energy Regulators (CEER) and the Independent Regulators Group (IRG). Moreover, as part of the EUI, the FSR works closely with the European Commission. The objectives of the FSR are to promote informed discussions on key policy issues, through workshops and seminars, to provide state-of-the-art training for practitioners (from European Commission, National Regulators and private companies), to produce analytical and empirical researches about regulated sectors, to network, and to exchange documents and ideas. At present, its scope is focused on the regulation of Energy (electricity and gas markets), of Communications & Media, and of Transport. This research project has been carried out within the scope of the research activities of FSR - Transport Area. For further information Florence School of Regulation – Transport Area Robert Schuman Centre for Advanced Studies European University Institute Via Boccaccio, 151 I-50133 Firenze Tel.: +39 055 4685 751 Fax: +39 055 4685 755 Transport Area E-mail: [email protected] http://fsr.eui.eu 2 Summary This report looks at the railway systems in selected European countries (France, Germany, Great Britain, the Netherlands, Sweden, and Switzerland) with a focus on passenger services with the aim to understand whether the institutional approaches to governing those systems may be typified and whether the approaches or the types may be related to some measure of systemic performance. Overall, this research aims at drawing lessons of general use from the situations examined. This research is based on three sets of information. First, an in-depth account of the current state of railway systems in the countries examined is provided. This has been carried out with a particular focus on regulatory arrangements, Public Service Obligations (PSOs) and overall evolution of railway-related institutions over the years since 1988. The main purpose of such a portrait is to observe and characterise the types of institutional arrangements. Then publicly available performance indicators (PIs) have been collected and contrasted with the institutional evolutions, seeking a causal link. Finally, a set of interviews with stakeholders has been carried out in all countries except Switzerland to investigate the existence of a systemic approach, as well as the stakeholders’ understanding of performance. The analysis leads us to conclude that each country is a type: there is a variety of institutional approaches and, in terms of institutional arrangements, convergence among countries cannot be detected. While the policies and different Directives of the European Commission certainly do play a role, the institutional path of each country is essential in respectively defining the institutional approaches. Moreover, no country seems to be entirely settled into a lasting system, even when developments have been introduced in stages. The need for further evolution seems particularly important when it comes to interfaces among actors. We have observed, however, a certain movement towards regionalisation, which may be taken as an emerging trend with so far satisfactory results. We have also observed the importance of PSO services for new entrants and the link of such services to the regionalisation trend. Open access is of minor relevance in all the States surveyed. The establishment of a relationship between the evolution of the institutional arrangements and of the publicly available systemic indicators has been unattainable. At times, improvements in performance that coincide with institutional reforms were perceived. However, such instances are much less common than they would have to be in order to count as clear evidence of the effect of the reforms in question. This can mean that either performance evolves irrespective of the institutional arrangements or the institutional arrangements produce effects only with a time lag beyond the scope of this research. Other possible explanations are that the PIs commonly used do not significantly respond to the change in institutional arrangements, given that the institutional arrangements are aimed at producing systemic effects whereas most of the measured PIs respond to firm behaviour. The interviews led us to conclude that no one speaks for the railway system of a country. A system view is lacking while there is a demand for a body with a systemic function. Depending on the system, such a body may be the incumbent integrated operator, the Infrastructure Manager (IM) at arm’s length of the Ministry, or the Regulator. The interviews looked also at system PIs, and disagreement as to what good system-wide indicators are emerged. The difficulty in relating systemic indicators to the system’s evolution may be due to the lack of system’s PIs. Also, some indicators mentioned have less to do with the output of the railway system, but rather with the outcomes of a given policy or with input variables. 3 Our interviews also show that each actor defines its own PIs, which are most likely the ones that suit the actor better than the system. These stakeholder PIs are also not harmonized, nor integrated nor consolidated, thus leading to a multiplication of measurements and ultimately to the impossibility of defining performance in a coherent manner. 4 Table of contents Summary .................................................................................................................................... 3 Table of contents ........................................................................................................................ 5 List of figures ............................................................................................................................. 9 List of tables ............................................................................................................................. 13 List of attached spreadsheets ................................................................................................... 16 List of acronyms ...................................................................................................................... 17 Introduction .............................................................................................................................. 21 1.1 The context and subject matter.................................................................................. 21 1.2 The research questions .............................................................................................. 22 1.3 The underlying theoretical framework and argumentation ....................................... 23 1.4 The underlying methodology .................................................................................... 25 1.5 Outline of the report’s structure ................................................................................ 25 2 Competition in railways: a literature review .................................................................... 27 2.1 Introduction ............................................................................................................... 27 2.2 State of the literature on competition in railways ..................................................... 27 State of competition in European railways ....................................................................... 29 2.3 Conclusion: selection of countries ............................................................................ 31 3 Institutional arrangements in five selected countries, plus