AllRail warns Belgian government for sustaining SNCB monopoly
AllRail, the European interest group for independent passenger rail companies, is threatening to file a complaint against the Belgian government with the European Commission. It warns that the plans to give a direct award for the domestic rail operations to SNCB will violate EU laws, and that it would not hold up in court.
The Belgian government wants to award a 10-year public service contract to SNCB/NMBS without a call for tenders. Not a good plan, according to AllRail, because “this would leave the rail monopoly in the hands of SNCB until 2033 and hold back necessary innovations in the rail sector”. AllRail is therefore threatening to lodge a complaint with the European Commission. The organisation announced this in a letter sent to the members of the Parliamentary Commission for Mobility in Belgium last week, viewed by RailTech.
Last year, Belgium expressed its intention to award the Public Service Obligation (PSO) contract directly to SNCB when it published this in the European Official Journal. With it, the last contract with SNCB, which was directly awarded in 2008, will be renewed. Publication in the European Official Journal is a necessary part of the procedure to award the new public service contract which is due to commence in 2023.
‘Inconsistent with EU law’
AllRail sees three fundamental inconsistencies with EU law with this procedure, the first being that no market analysis has been carried out at all to see whether a public service contract for all train services is necessary and justified. Secondly, the scope of the public service contract is “neither properly defined nor mentioned at all in the publication in the Official Journal of the European Union”. “The publication in the Official Journal, which has already been done, is unusable as a basis for the award of a public service contract, as the publication lacks essential information such as the scope of the contract”, says AllRail. Lastly, a comprehensive public service contract for the whole of Belgium would not be in line with the principle of proportionality, the organisation claims.
AllRail already filed an official complaint of violation of EU law with the European Commission some time ago regarding the situation in the Netherlands, which also plans to give a direct award of the main rail network concession to state-owned operator NS. This summer, EU-Commissioner Vălean sent a letter to the Dutch government, threatening infringement proceedings and significant legal and financial consequences for the operator. If the public service contract is found to be unlawful, any benefit enjoyed, such as subsidies received, must be repaid as prohibited state aid, warns AllRail.
Belgium not open to rail liberalisation, but Brussels is
In Belgium, currently rail transport under a Public Service Obligation represents 100 percent of domestic passenger traffic and is not open to competition. However, the European Union, which ironically has its seat in Belgium’s capital Brussels, aims to liberalise rail transport, as opposed the the country itself. The EU Fourth Railway Package, which was adopted in 2016, stipulates that the award of rail transport must in future be made by public tender.
It established the right of every European railway operator to provide passenger services, at both international and domestic level in every EU Member State. This creates competition and companies are motivated to improve their products, the EU argues. This should increase the market share of rail compared to other transport modes. In other European countries, the process of opening up the rail market also for domestic lines is at a further stage, such as in Italy, Germany and Spain.
The member states were given some time to adapt to the change for domestic rail since 2016, namely until December 2023. The Netherlands and Belgium see the remaining time as an opportunity to give their national railway companies one more direct award, and safeguard the operating rights for the state-owned railway undertakings. In Belgium, the SNCB will be given targets to improve performance, says the government. Negotiations on the content of this contract are still ongoing. They must be completed by 23 December, when they must be submitted to the European Commission.
Belgian Minister of Mobility Georges Gilkinet says he has a well thought-out plan behind the award to SNCB. “For years railway policy was developed without a clear political vision”, Gilkinet stated when explaining his plans for the railways. “As Minister for Mobility, I want to provide an ambitious framework through a public service contract for SNCB and a performance contract for infrastructure manager Infrabel. Our aim is to attract more passengers to the railways and to transport more freight by rail. To this end, we must also give ourselves necessary resources, with a modern governance framework and strong priorities for the future of the railways.” One of the areas for which the government reserves funds, is for night trains to try and get more night train operations to go to and from Belgium. The investments in rail left railway manager Infrabel unimpressed, however.
Infringement procedure could follow
In response to AllRail’s letter to the Parliamentary Committee on Mobility, Minister Gilkinet says he is “attentive” to the arguments, but stresses that the government remains behind the direct award, reported de Standaard. So it is now up to AllRail to make good on its threat to make an official complaint to the European Commission, which could lead to an infringement proceeding before the European Court of Justice. AllRail recommends the Belgian government to proceed by starting a market analysis to examine whether certain train services can be operated in “open access” even without a public service contract, and only for those train services for which it is necessary, enter into proportionate public service obligations and contracts.
“The proposed public service contract for SNCB once again locks the Belgian rail network down for 10 years, frustrating the development of both the Belgian and European rail markets. That cannot, and should not be the intention. It is a bad shopping experience for consumers if there is only one provider – and this is no different on the railways”, says AllRail in the letter to the Belgium parliament.