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ACM suggests additional measures for level playing field in regional railway tender processes

16-05-2019

The Netherlands Authority for Consumers and Markets (ACM) has identified what risks exist for disrupting the level playing field in regional railway tender processes. ACM did so at the request of the State Secretary of Infrastructure and Water Management (IenW).

Henk Don, Member of the Board of ACM, explains: ‘Our study shows that the current control measures are largely sufficient in order to counter the risks. With regard to several points, we see opportunities to tighten the measures or to complement them.’

For this study, ACM assessed ten risks that had been flagged by the market. Out of those ten, ACM identified three risks with the ability to have a relatively large effect on the level playing field in regional tender processes. Even though the necessary control measures to counter these risks are already in place, ACM does see opportunities to tighten these existing control measures, and to implement several additional control measures.

These three risks are loss-making bids, relevant data not being available to all market participants, and limited availability of rolling stock to new entrants.

Request of the Ministry of Infrastructure and Water Management

The State Secretary of Infrastructure and Water Management had asked ACM to look at ‘all facets that are important for a level playing field in regional tender processes, like passenger revenues or benefits, yielded from operating the main railway network and rolling stock, that have ripple effects for the region.’ A specific request was to look at the risks that have occurred in the context of a level playing field, and those that can occur but that have not or not yet occurred. ACM was also asked to indicate to what extent the control measures that have already been implemented, like ex-ante regulation of services and facilities, sufficiently counter the risks.

Risks

ACM sees a risk if not all providers have equal access to relevant data (data of passengers and otherwise). That data is required, for example, for calculating the capacity that is needed for transporting passengers, and for revenue projections. According to ACM, it is important that, in regional tender processes, the data of the ‘OV-chipkaart’ (the national contactless smart card for public transport in the Netherlands) is available to all providers. To that end, more detailed regulations can be drawn up within the existing legal framework.

ACM also sees risks of loss-making bids by providers that have a dominant position and that also have an incentive to exclude a competitor from a tender process. Currently, ACM is only able to take action after the fact, under the Dutch Competition Act, for example, by imposing a fine if a loss-making bid has been made. In addition, ACM proposes a number of additional control measures to reduce the risks of loss-making bids further. For example, the Dutch State, as the sole shareholder of Dutch Railways NS, could, for all bids in regional tender processes, assess whether NS’s expected return is sufficiently high. Currently, the Dutch State only makes such assessments in the case of investments of over 100 million euros.

See also

16-5-2019 Update of 2013 Quick Scan on Passenger Rail Transport (in Dutch)

16-5-2019 Letter of ACM about Update of 2013 Quick Scan on Passenger Rail Transport (in Dutch)