The railway line Medina Campo-Madrid, Spain

Spain faces EU Court of Justice for rail regulation violations

Railway line between Medina Campo and Madrid in Spain Adif

The European Commission has decided to refer Spain to the Court of Justice of the European Union for failing to correctly transpose and applying EU rules concerning rail, it announced on 18 October.

The management independence of the rail infrastructure manager Adif – in particular the determination of infrastructure charges which operators pay to run trains over tracks – is not in line with the rules, according to the European Commission (EC). While Spain modified its law regarding the determination of infrastructure charges in a direction that may potentially meet the requirements set under the Directive, it did not yet implement this change.

Unless action is taken swiftly, track access charges will be considered de facto as taxes, and there is a risk that the old system will continue to apply until 2024/2025, states the Commission. This would consequently lead to the fact that railway undertakings will be unable to challenge track access charges. Since they are included in a law, such charges “cannot be challenged before the Spanish Courts”, something the European Commission does not approve of.

The concerned EU rules are established in Directive 2012/34/EU, establishing the so-called Single European Railway Area (SERA). This aims at restructuring and harmonising the EU rail market, allowing the expansion of the rail sector based on competition, technical harmonisation and joint development of cross-border connections. The Directive for example dictates the independence of rail infrastructure managers in the capacity allocation to railway operators and in determination and collection of the charge.

Board independence “not ensured”

Also, the rail regulatory framework in Spain is in breach of the management of railway undertakings according to commercial principles, and the correct drafting of contractual agreements, in the eyes of the Commission.
More specifically, the independence of the boards of the infrastructure managers and the incumbent railway undertaking are “not clearly ensured”. “Considering the composition of the board, which is appointed by the Ministry of Transport, the Ministry’s right to terminate members’ mandates and the decision-making rules, it must be concluded that the State is in effect able to exercise decisive influence on management board decisions, including those on ticket prices”, according to the Commission.

In addition, the EC states that “key elements” are missing in the contractual agreement between the Spanish government and the infrastructure managers. It lacks, for example, key performance indicators related to efficiency and a decrease in access costs.

Warnings

Before the European Commission takes big steps such as referring a country to the Court, a number of smaller steps are taken. In May 2018, the Commission sent a letter of formal notice to the Spanish government, to which Spain replied in January 2019 informing the Commission that some of the objections raised had been solved through new legislation adopted, while others required further work. The European Court of Justice will now consider the case. It has not been announced when the matter will be handled by the Court or when a a ruling can be expected.

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Author: Esther Geerts

Former Editor RailTech.com

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