Direct award to NS against European Commission’s wishes could prove costly, Dutch ministry admits
If the Netherlands goes through with awarding NS the main railway net concession without a tender process and the European court were to rule this illegitimate, the Dutch government could face a fine of at least 3.8 million euros, and without a maximum, according to Dutch State Secretary Vivianne Heijnen.
Dutch State Secretary of Infrastructure Vivianne Heijnen said this in a letter to the Dutch Parliament, Dutch sister publication SpoorPro reported. She wrote this after questions about the possible legal, social, and financial consequences in case the European Commission turns out to be right. She also sent a letter directed at the Commission in Brussels, in response to a formal notice from their side earlier in July warning the Netherlands that it is starting an infringement procedure regarding their concession plans. From December 2023, it will no longer be possible to directly award a railway concession to an operator, as new European rules go into effect.
The current contract with NS, the Dutch state-owned railway company, ends by the end of 2024. However, the current government – though new elections will be held on November 22 – as well as a majority of the Parliament, is in favour of directly awarding the next concession to NS again for the period 1 January 2025 until the end of 2033. This means that the government has to prematurely award it to NS before the end of this year, even though the concession period would only start in 2025. A dubious legal situation, which the Commission said is “without objective justification”.
Other operators not amused
In the Netherlands, other operators are only allowed to compete in regional rail transport. Railway operators Arriva and Keolis for example run trains in the North and East of the Netherlands, respectively. These concessions are done via a tender process, but this is not the case for the main railway network. Arriva since 2021 also runs a few nightly trains on the main railway net in open-access, but this can only be done outside of the concession scope and the NS timetable, leaving limited options.
These other operators would like the chance to compete in a tender for (parts of) the main railway network. They are joined together in the Federation of Transport Companies (FMN) – which includes the likes of Arriva, Transdev, and Keolis. In the case, the judge ruled that the award process could continue, and in a second ruling, the court felt it had no jurisdiction to rule on the State’s private award of the main rail network concession to NS. “it is striking that the District Court, like three previous judges, does find that the European rules are unclear and yet fails to seek clarity from the European Court on the interpretation of those rules”, FMN said at the time.
The European Commission is since considering to step to the Court of Justice of the European Union. If this goes through, and after proceedings the direct award would be deemed against the rules, it could have major consequences for the Netherlands, and NS.
250.000 fine per day
“If the EU Court finds that there has been an infringement of EU law, and the Member State does not comply with this ruling, the EC can initiate a second procedure requesting the EU Court to impose a penalty payment and/or a fine on the Member State”, Dutch State Secretary Heijnen said in her letter. “The amount of fines/penalties imposed by the EU Court depends on the severity and duration of the infringement. A penalty is a minimum of 4,170 and a maximum of 250,200 euros per day. A fine is a minimum of 3,892,000 euros per violation, with no maximum”.
The European Court would decide the height of a fine and not the European Commission. If the proposed award of the main railway net concession cannot go ahead in its current form and has to be modified, it may mean that more space has to be given to carriers offering open-access services, says Heijnen. “However, the steering possibilities that are possible within the draft main railway net concession when it comes to, for example, quality, reliability and affordability are lacking for the carrier(s) offering its services in open access.”
A forced choice of public procurement will lead to “uncertainty on the Dutch railways for passengers and taxpayers”, according to the State Secretary. While the matter is complicated and finds itself in a new legal terrain with new rules coming into force, the Dutch state secretary views the outcome of the dispute with the EC “with confidence”.