Ensuring competition on the rail market, more effective protection of passenger rights, precise determination of routes with subsidized services, strengthening of the market regulator position – these are the main recommendations from the latest report of the Office of Competition and Consumer Protection

UOKiK has been analysing the rail transport market for several years. Within six years, it conducted 66 proceedings concerning the conduct of PKP Group undertakings. What is more, the analyses resulted in 9 decisions regarding the infringement of consumer interests on the rail passenger market which challenged, inter alia, practices counteracing the development of competition on the market of cargo transport. Furthermore, the Office monitors the state aid granted to companies of PKP group. 

The result of the explanatory proceedings conducted by the Office since May 2010 concerning the rail transport, is the report Trends in development of competition and consumer protection on the markets for rail transport in Poland. It presents recommendations of the Office and covers the basic areas that require changes to improve the situation in this sector.

Ensuring competition – ownership changes

The structure of the rail transport is a top priority for the development of competition on the market. PKP Group includes both, the infrastructure manager – PKP PLK, and carriers – such as PKP Cargo and PKP Intercity which poses a risk of discriminating entities outside the group. Therefore, the changes suggested by the Office relate primarily to providing conditions for competition between all rail carriers.

This will be ensured mainly by the complete ownership separation of the infrastructure manager and carriers. The creation of an independent entity managing access to the track will eliminate the inequality within PKP Group.  For example, charges for access to rail infrastructure may contain hidden preferences for certain rail operators. It is necessary to introduce clear and transparent rules for setting these rates and to ensure full independence of rail carriers from the entity determining them.

A separated manager should take over all infrastructure elements which are managed at present by other companies of PKP Group and be maintained by the State. Authors of the report indicate that privatisation of such an entity is not recommended because of the strategic importance of rail infrastructure for the country’s security, as well as due to maintaining by the State full control of equal treatment of carriers. It is vital also because charges for access to railway lines in Poland are now among the highest in Europe. The role of the Railway Transport Office, as the market regulator, should be to fix the rates for access to infrastructure at levels that ensure the development of competition.

Market access barriers – obligation to have rolling stock

Additionally, UOKiK draws attention to the barriers to entering the rail transport market. Current regulations require from undertakings participating in tenders for provision of rail services to have rolling stock before the formal decision on granting the contract is made. Potential competitors for PKP Group may have problems mainly with high costs resulting form the necessity to purchase rolling stock and have it still before they are allowed to use the infrastructure.

According to the Office, it is worth considering to co-finance the rolling stock, e.g. under regional aid or using a solution applied in Great Britain where special companies are direct owners of rolling stock and undertakings participating in tenders for provision of public services are not required to have carriages and locomotives. It is worth noting that Kujawsko-Pomorskie Voivodeship has adopted this solution and a private entity,  Arriva RP, operates on the passenger transport market. The undertaking decided to render services precisely because the voivodeship self-government decided to lease 13 railbuses to the contract winner.

Organisation of passenger transport from public funds

At present, most passenger rail transport in Poland is performed as a public service, i.e. service which provision would not be profitable without a compensation. There is, however, no precise separation of the routes which must be co-financed from those which can be provided commercially.  For example, binding provisions imply that all intervoivodeship connections are subsidized, where no seats are booked and is no distinction between routes which require support and those which do not. The success of commercial transport of Interregio operated by Przewozy Regionalne, which runs on the same routes as subsidised trains of PKP Intercity under the TLK brand demonstrates that it is necessary to establish transparent rules for division of routes into commercial and implemented under public services. According to UOKiK, some connections may be profitable enough to be run in unimpeded competition where no public funds are involved. This means that the present organisation of rail transport from public funds may be ineffective.

For this reason UOKiK calls to firstly design socially desired routes and then identify from them those for which services cannot be implemented in a commercial way.  After that tenders for routes that require state aid should be announced.

Role of the market regulator

UOKiK points a weak position of the President of the Railway Transport Office as the sectoral regulator on the national market for rail transport. The narrow range of competence and subordination to the Minister of Infrastructure makes the Railway Transport Office implement the policy created by the latter, not an independent body setting and achieving own goals. According to UOKiK, the Railway Transport Office should play the main role in the organisation of rail transport – starting with the development of guidelines for preparing transport plans and finishing with their implementation. In relation to the infrastructure manager, the regulator should have measures of imposing equal treatment for all carriers.

More effective passenger protection

Proper organisation of the rail market, including the effective competition will improve significantly the situation of passengers. Poor quality of provided services is caused primarily by a bad condition of infrastructure. UOKiK postulates activities ensuring more effective exercising of passenger rights. Moreover, the Office supports actions aimed at solving the key problems - integration of fares and schedules of various carriers, as well as changes in provisions which will increase passenger rights if a train is delayed or cancelled. It is essential to apply provisions of the EU law with an emphasis on the rights of the disabled in rail transport.

Additional information for the media:
Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańcow Warszawy 1, 00-950 Warszawa
Tel.:(+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: [SCODE]bWFsZ29yemF0YS5jaWVsb2NoQHVva2lrLmdvdi5wbA==[ECODE]