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EU Regulation and Competition Law in the Transport Sector, 2nd Edition edited by Ortiz Blanco, Luis; Van Houtte, Ben (23rd February 2017)

Part I Introduction, 1 EU Transport and EU Transport Policy

Vicenç Pedret Cuscó

From: EU Regulation and Competition Law in the Transport Sector (2nd Edition)

Edited By: Luis Ortiz Blanco, Ben Van Houtte

Institutional structure of Community — Market definition — Market power — European Union — Transport

(p. 3) EU Transport and EU Transport Policy

(I)  Introduction

1.01  This chapter will present a panorama of EU transport policy, taking stock of its main achievements and shortcomings since its creation in 1958, with the entry into force of the Treaty of Rome. Its guiding line will be the horizon of the Internal Market completion, with its three strands of service liberalization, network integration and, linked to both of them, the harmonization of nationally differentiated regulatory frameworks.

1.02  Environmental protection, at the beginning absent from the Treaty, with the 1986 Single Act became ‘integrated’ in transport policy, and with the 1997 Amsterdam Treaty, sustainable development was made an objective of its own. Climate change added a new dimension to transport sustainability: owing to its almost total dependency on oil, the transport sector is one of the main sources of greenhouse gases. Developing a low-carbon transport system is now a central objective of the European Transport Policy. Once the Internal Market is achieved, it may become, by its relevancy and difficulty, the main objective left.

1.03  Next to climate change, other new challenges have moved to the central stage such as globalization, the information technologies (IT) revolution, and ageing. Then there are the transport activity permanent goals: safety, speed, reliability, capacity, affordability, security, and respect for the environment and for passenger rights, as well as good working conditions. Will the Union transport system be able to live up to these challenges? The European Union has been preparing to address them for years.

1.04  The approach taken will start by giving an overall view of sector activity, followed by a general description of the EU transport policy and the way in which the White Papers have developed it. Afterwards this chapter will examine in closer detail the modal policies grouped around two subjects: the development of the Internal Market and the integration of the networks due to hold it together. A review of horizontal issues will complete the panorama, closed by some final reflections.

(II)  Transport Activity

1.05  In transport, several modes compete and cooperate to provide a door-to-door service: road, rail, inland navigation, maritime transport, and air transport. There is also cycling, so important in urban transport, and walking … where mobility started. Road transport is the largest (p. 4) intra-EU mode if freight transport by truck and passenger transport by car are taken together. The other giant is maritime transport, where the main activity is freight transport. Within passenger transport, air transport activity has grown more than any other mode, having already overcome railway transport during the 1990s; the freight activity of air transport is small, measured by volume, but not so much if measured in value. Inland navigation is relatively important in the Rhine riparian countries and to a lesser extent, in the Danube ones.

1.06  Transport is both a consequence and a causal factor of economic growth: it has a ‘derived demand’ as it has to accommodate gross domestic product (GDP) growth but it is also a growth engine, especially given the European Union’s role as a logistics global power. The effects in both directions between transport and GDP are very visible whenever there is an EU enlargement.

1.07  For many years, the growth in the demand for transport was proportionate or even larger than GDP increases. From a sustainability point of view, it was considered necessary to break the link between GDP growth and transport growth. Now it has happened, even if policy has not had much to do with it: at 1.6 per cent, the average annual economic growth in the EU-28 from 1995 to 2013 was larger than the growth in goods transport services, which was 1.1 per cent, and in passenger services, which remained at 1.0 per cent.1

1.08  The behaviour of freight-transport activity has been strongly influenced by the effect of the recession. In more general terms, the ‘decoupling’ of freight activity from GDP seems related to the business cycle. In the case of passenger transport, the decoupling seems to be of a more structural character, possibly linked to the fact that the daily mobility needs of people tend to decelerate once a certain standard of living is reached.

1.09  Another sustainability goal is to shift mobility towards the modes of transport that are less congested and less damaging for the environment. As shown below, for freight transport between 1995 and 2013, the ‘greener’ modes as a whole (rail, maritime, inland waterways, and pipelines) have lost ground. For passenger transport for the same period, the ‘green modes’ (railways, metro, tram, and bus) have resisted well in front of the private car but have lost ground (-1 per cent) if air transport is put on the other ‘not so green’ plate of the balance.

1.10  Freight transport activity in the EU-28 countries increased between 1995 and 2013 by 22 per cent. This relatively slow growth reflects the consequences of the crisis, as the traffic increase for the shorter period between 1995 and 2006 had already been higher at 35 per cent.

1.11  In both cases the leading mode is road freight transport, which activity has grown by 33 per cent more in 20132 than it was in 1995. As a result the modal share of road freight has gone up from 45 per cent in 1993 to 49 per cent in 2013. In the same period, 1995–2013, rail transport of goods has grown by nearly 5 per cent in absolute terms, and its share of the total freight activity has fallen from about 14 per cent to some 12 per cent. Meanwhile, inland waterway transport managed to grow by 25 per cent, thus keeping its relative modal weight at over 4 per cent, as in 1995. Transport by sea has grown by 17 per cent, a bit less than the average of freight transport, and, thus, its part in the modal split has fallen from near 33 per cent to just over 31 per cent.

(p. 5) 1.12  With regard to passenger transport, activity grew by over 20 per cent between 1995 and 2013, chiefly due to the use of private car growth of almost 19 per cent and determining by its sheer modal split weight of 72 per cent, the growth rate of total passenger activity. However, this weight has been slightly eroded since 1995, falling from 73 per cent to 72 per cent. This percentage point has indirectly gone to air transport, which, at 67 per cent between 1995 and 2013, is the passenger mode that has grown the most. Accordingly, its modal share has gone from 6.5 per cent in the mid-1990s to 9 per cent in 2013. Rail passenger transport grew by 21 per cent between 1995 and 2013, which has allowed this mode practically to keep in 2013 the same modal share of 6.5 per cent it had in 1995. Tram and metro transport increased their activity by 33 per cent, which has led this mode to increase its modal share slightly from 1.3 per cent to 1.5 per cent. On the other hand, bus and coach transport activity has only increased by 5 per cent in 18 years, which has caused a decrease in their modal share from over 9 per cent to 8 per cent.

1.13  The private car is the largest actor of road transport, and of intra-EU transport as a whole.3 In 2013, in the European Union, there were around 248 million private cars, with 43 million in the 13 countries that have joined since 2004. The motorization in the latter group of countries doubled from 200 cars per 1000 inhabitants in 1996 to 408 in 2013, while the motorization in the other Member States grew by just 17 per cent during those 16 years, bringing the total for the EU-28 to 491 cars per 1000 inhabitants.

(III)  The Policy

(A)  Transport and the Treaty

1.14  The fundamental objectives of the European Transport Policy stem from the Treaty itself. Among those, some can be almost directly attributed to transport policy such as those found in Article 3(3) Treaty on the Functioning of the European Union (TFEU):

The Union shall establish an internal market. It shall work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment. It shall promote scientific and technologic advance.

1.15  Moreover, the Common Transport Policy has specific objectives laid down by the Treaty of Rome in what has now become Articles 90 to 100 TFEU. Article 91 states that the Union should define the rules applicable to international transport between Member States, the rules applicable to transport services by non-resident carriers within a Member State, measures on transport safety, and any other appropriate provision. These rules refer to rail, road, and inland waterway transport, while maritime and air transport was, and still is, excluded from the Common Transport Policy Title unless the Council decides otherwise; they are subject, nonetheless, to the general rules of the Treaty as made clear by the European Court’s ‘French Seaman’ judgment of 1974.4

1.16  One of the periods in which transport policy experienced quicker and more decisive development was between 1985 and 1993, after 25 years making room for a Common (p. 6) Transport Policy amid national policies and laying the foundations of EU transport legislation.5

1.17  What triggered the much greater activity during the late-1980s was a 1985 ruling of the European Court of Justice, following a European Parliament claim before the Court about the failure to act of the Council in relation to the development of the transport policy6 as foreseen in the Treaty of Rome.

1.18  Since then, the scope of the European Transport Policy has been considerably widened by the 1992 Maastricht Treaty, which introduced the ‘network’ concept in its Trans-European Network Title and a competence on safety in its Common Transport Policy chapter.

1.19  Although the Treaty distinguishes between the initial Common Transport Policy (CTP) and the Trans-European Network (TEN) policy, in this chapter, they will be considered together under the name of European Transport Policy (ETP). The ETP is just one of the many policies—national, regional, local, or even international—that have an influence on the transport system. Some Member States move ahead on their own with market opening, investment, and pricing for infrastructure use, creating demonstration effects and peer pressure. Sometimes they do so as a response to a situation in the market, which is another, decisive, shaping force of the transport system.

1.20  International law is particularly important in the two modes that deal the most with international transport, which are maritime and air transport. For these modes, there is a body of legislation rooted in a historic tradition different for each mode but generally more liberal for sea transport.

1.21  Transport policy is a competence shared with Member States. In the areas of shared competence, such as the ETP, and according to the subsidiarity principle, the Union cannot take action unless this would be more effective than action taken at national, regional, or local level; the action undertaken should be limited to what is necessary to achieve the objectives set out in the Lisbon Treaty, in line with the proportionality principle.

1.22  During this half century, the scope of the ETP has grown from the original six Member States to now twenty-eight, which share the same ‘acquis communautaire’. The different enlargement waves have shown how the new Member States strived to adopt EU rules; particularly impressive was the effort that was made after the big 2004 Eastern enlargement. Moreover, since 1994, the CTP ‘acquis’ is shared and applied by the three countries, which, with the European Union, form the European Economic Area.7

1.23  The enforcement of EU law is the primary responsibility of Member States, which is often a weak point of the system, particularly when the rules are complex and there are too many (p. 7) actors to control, as in road freight transport. Whenever the Commission finds that Member States are not up to the task, it starts, as guardian of the Treaties, an infringement procedure, which ultimately can result in an action before the Court of Justice, where sanctions can ensue.

(B)  Transport and competition policy

1.24  Market opening and network integration, both duly regulated, allow and foster the efficient functioning of competition. But the latter cannot be taken for granted. Once competition is introduced, firms can grow to acquire dominant positions in their markets, which enables them to set prices, influence capacity, or limit choice. They can get together to agree on restrictions of competition or reach dominant positions through mergers. Public firms may abuse their status. Finally, firms can receive help from the State. All these situations distort the correct functioning of the market and can raise de facto barriers to intra-EU trade.

1.25  When the European Economic Community (EEC) was set up, these dangers were all too evident. The Treaty of Rome anticipated this risk and provided for remedies. The corresponding Articles have not changed since 1957, and they oblige the Commission to police the Internal Market by dismantling or controlling: restrictive agreements (currently Art 101 TFEU), abuses of a dominant position (Art 102 TFEU), and State aid (Art 107 TFEU). Public enterprises are also subject to these competition rules, insofar as the latter do not obstruct them from achieving their particular tasks (Art 106 TFEU). In some cases, though, the market shows failures and shortcomings that need to be corrected, and thus exemptions are applied concerning services of social economic interest (Art 106(2) TFEU), social and regional development aid, or projects of European interest (Art 107 TFEU) such as those on infrastructure or research.

1.26  Transport services have monopolistic or oligopolistic tendencies derived from the economies of scale they experience and from the fact that the underlying transport infrastructure is mostly a natural monopoly. Where these ‘network’ characteristics are stronger, such as in railways or air transport, they have in the past, justified keeping national markets closed and supplied by a single operator, only subject to competition from other modes.

1.27  As national transport markets have opened up and been sewn together in a much larger European market, EU competition rules have fully applied, and all of the exemptions mentioned have become relevant. Thus, transport firms have often required the attention of the Commission as central competition authority responsible for aid to regional airports and airlines in difficulty, special tax treatment for shipping, subsidies for railways or commercial transport infrastructure, and, as in all sectors presumptions of abuses of dominant positions and restrictive practices, have had to be either cleared, forbidden, remedied, or sanctioned.

1.28  The outcome in one sense or another is always a matter of degree that has to be assessed on a case-by-case basis. This is done according to detailed economic and legal analysis and is based on the precedent of similar cases and Court of Justice rulings after appeals from the concerned firms.

1.29  As market opening moves forwards and the ‘acquis’ and the analysis improve, transport specific antitrust block exemptions and, to a lesser extent, State Aid block exemptions are being replaced by the general competition rules and the exemptions that apply to the rest of the economy.

(p. 8) 1.30  On antitrust legislation, few exemptions are left (notably maritime consortia). Transport is by and large subject now to the same general rules that apply to other sectors (Regulation 1/2003).8

1.31  As to State aid, although general rules apply, specific sectoral rules are left, even if there is a trend towards the expansion of the former to new areas—such as the envisaged inclusion of ports and airports in the General Exemption Block Regulation9—to the detriment of sectoral rules.

1.32  The reasons for a special treatment of transport are shrinking and the subsequent special treatment as well. But as transport falls into the general regime, more individual cases could fit uneasily into the new rules and would have to be cleared on a case-by-case basis by the Commission.

1.33  With the very large EU market thus policed by the Commission, firms can grow and profit from scale economies without suffocating new entrants.

(C)  The Commission’s transport policy as developed in the Transport White Papers

1.34  The Transport White Papers are documents where the Commission explains and justifies its transport policy and gives the reasons for a series of legislative or other measures that it will propose in the context of its approach to the transport policy through its right of initiative.

1.35  There have been three White Papers on transport, in 1992, 2001, and 2011. They have a most relevant forerunner in the 1985 White Paper on ‘Completing the internal market’,10 which proposed transport market opening measures. Most of them were swiftly introduced, such as the phasing-out of quotas for international road transport, the freedom to provide international and cabotage services for inland waterway transport, the freedom to provide sea transport services, or a greater freedom for air transport services between Member States. Thirty years later, the only objective practically not yet fulfilled is the freedom to provide services for the transport of passengers by road. It is also to be noted the absence of railway transport from the list. Nevertheless, the same White Paper made clear that the CTP is made up of other measures that do not concern directly the Internal Market, such as ‘State aid policy, improvement of railway financing, harmonization in the road sector, infrastructure planning and investment’.

1.36  The first Transport White Paper was that of 1992.11 It introduced the concept of sustainable mobility as an objective and put emphasis on harmonization, to complement the 1985 White Paper agenda, in particular developing the argument for a framework that enables charging for the use of infrastructure,12 as well as the harmonization of technical, social, environmental and safety requirements. This White Paper insisted on complementarity between modes.

(p. 9) 1.37  In 2001, the second White Paper13 changed the emphasis and put forward a policy to promote modal balance, in order to fight growing congestion and keep transport sustainable without restricting mobility. This policy should be focussed on the user with its rights … and obligations (user charges). The 2001 White Paper programme gave rise to an outburst in activity, second only to that of the 1992 project.14 In a few years regime-shaping legislation was adopted, for example, on rail freight market opening, the Single European Sky, the safety agencies European Aviation Safety Agency (EASA), European Maritime Safety Agency (EMSA), and European Railway Agency (ERA), Galileo or air security.

1.38  One target this White Paper set was that of freezing the EU-15 modal breakdown known at the time (1998) until 2010. The idea was to start a stronger policy concerning modal shift by 2010. Another target was to reduce road fatal accidents by 50 per cent by 2010. The modal breakdown objective was in a way attained for passenger transport but failed concerning freight traffic.15 The road safety target was practically reached.

1.39  The 2011 White Paper16 set more ambitious long-term sustainability objectives that, as anticipated by its 2001 predecessor, included modal split quantitative goals. This White Paper reflected the European Union’s willingness to fight climate change as the European Union committed to attain the overall objective of reducing greenhouse gas (GHG) emissions by 80 per cent by 2050. To make this possible, GHG emissions of transport should be reduced by 60 per cent by 2050. This is a tall order, taking into account that at the same time, transport activity is expected to grow by more than 50 per cent.

1.40  The roadmap includes two different periods. A modal shift towards the more environment-friendly modes was planned in the run-up to 2030, together with more energy-efficient cars and behavioural change. The goals aimed at include ‘halving the use of conventionally fuelled cars in urban transport by 2030’ and that ‘thirty per cent of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030’. From 2030 on the main instrument would be technological development, notably by fostering electro-mobility.

1.41  Together with this sustainability-aimed approach, there is also the more traditional aim of establishing a ‘Single European Transport Area’, reflecting the emphasis on market consolidation following the 2004 and 2007 enlargements. It was thought that pursuing this second objective would help to attain the sustainability goal without having to restrict mobility.

(p. 10) 1.42  The programme of the 2011 White Paper includes forty actions, to be developed during the current decade, that are organized in four groups: Internal Market, innovation, infrastructure, and international.

1.43  Under the Internal Market perspective, the objective is the elimination of all residual barriers between modes and national systems. This objective requires a higher degree of convergence and enforcement of rules, standards, and rights, to ensure a level playing field for competition.

  • •  In particular by achieving a Single European Railway Area, establishing a truly Internal Market for rail freight services and opening the market for passenger rail services, including competitive tendering of public service contracts. This goal will also require strengthening the independence of infrastructure managers. The European Union Agency for Railways will provide safety certificates, thus suppressing a technical non-tariff access barrier.

  • •  Another objective is to pursue the gradual elimination of remaining restrictions on cabotage in road transport while strengthening law enforcement.

  • •  Efforts to complete the reform of air traffic management (‘European Single Sky’) will be enhanced, notably by deploying the technological component ‘SESAR’ (Single European Sky ATM Research, ATM being air traffic management). Airport capacity problems will be addressed, in particular by proposing a new regulation on slots.

  • •  The European seaports policy will be reviewed in order to give a wider autonomy to port authorities, increasing the transparency of the financial relations between the public authorities and the ports.

  • •  A ‘Blue Belt’ will be created for short sea shipping, consisting of the reduction of the administrative burden and the simplification of customs procedures, the heaviest any mode of transport has to suffer for intra-EU trips.

1.44  Under the innovation angle, the idea is to bring together different aspects such as funding, regulation, technical standards, and infrastructure in order to achieve the ETP goal of a safe, low-carbon, and digital transport sector. With these objectives in mind, EU research will address the full cycle of research, innovation (e.g. prototypes), and market deployment in an integrated way.

1.45  The infrastructure perspective aims at putting the TEN-T network at the service of the Internal Market and territorial cohesion. It will concentrate on a core network, mostly developed through a corridor approach, with a view to developing an intelligent infrastructure. The latter will be increasingly self-financed, with the internal and external costs of transport reflected in its price in an undistorted way, having greater recourse to the ‘user pays’ and ‘polluter pays’ principles.

1.46  Finally, the international dimension aims at opening up third-country markets in transport services, with the objective of promoting European transport solutions and standards worldwide.

(D)  The sustainability agenda

1.47  The fight against climate change becomes a central objective of the ETP as reflected in the 2011 White Paper, and for good reasons. Transport is an energy-intensive activity, as becomes apparent every time oil prices jump. This energy comes almost entirely from fossil (p. 11) fuels; oil accounting for 96 per cent of the energy consumed in transport.17 Its combustion produces gases that are toxic for people and nature, as well as CO2, which contributes to global warming. Transport is the second source of GHG emissions with 24.4 per cent of total within the European Union (19.8 per cent excluding international aviation and maritime bunkers), behind the energy industries. Road transport is the largest emitter with almost 73 per cent of the transport sector’s GHG emissions (including international aviation and maritime bunkers).18

1.48  Energy costs and linked emissions are a concern that will be tackled through greater energy efficiency and a reduction of the near absolute oil dependency, in particular through electro-mobility. There are a small but increasing number of electric vehicles on the roads,19 but nowadays, electric transport is still mostly based on trains, metro, and tramways. Whatever the case, electric vehicles are as green as the electricity they use, which in some countries comes largely from coal.

1.49  The transition towards a low-carbon transport system requires coordinated action at the four levels of infrastructure, equipment, vehicles, and behaviour. The European Union approved in 2014 a ‘Clean power for transport’ Directive20 of alternative fuels for all modes, but targeted at the road and shipping modes. The Directive develops a strategy for alternative fuels, and in particular for their infrastructure, and launches a liquefied natural gas action plan for shipping.

1.50  Concerning vehicles, there is also legislation to limit the conventional and greenhouse pollution from cars and the conventional pollution of trucks. This legislation is initiated and monitored by the European Commissioner responsible for enterprise policy. New cars are tested for their emissions to make sure that they do not exceed levels deemed acceptable at present.

1.51  Europe produces just 11.4 per cent of global CO2 emissions,21 enough to lead but not to achieve global results. Therefore, the European Union should provide attractive solutions establishing a convincing balance between sustainability and competitiveness. The latter will be strongly influenced by the problem of ‘carbon leakage’ by which firms delocalize to less strict countries. This is above all a concern for the EU-based modes with extra-EU activities, in particular maritime and air transport, which are vulnerable to out-flagging for environmental, social, and fiscal reasons.

1.52  If the world does not manage to mitigate climate change, transport will have to adapt to it, above all by being ready to face extreme weather events. In any case, many of the measures employed in Europe also bring benefits concerning energy security as they reduce dependency on oil, which is largely imported (87.4 per cent).22

(p. 12) (IV)  The Market: Liberalization and Rule Harmonization in the Different Modes

(A)  Road

1.53  The services of the private car are in principle not provided on a commercial basis, leaving aside taxis and sharing economy’s concerns like UBER, as this mobility service is produced by the end user. In relation to private cars, the European Union deals mainly with road safety (see Section V(D)), where competence is shared with Member States. Moreover, as just seen, the European Union promotes improved and alternative energy technologies for mobility.

1.54  Road transport provides great flexibility to the transport system, as it is the only mode able to carry out door-to-door services. The road-freight sector is one where small firms or even one-person companies predominate, often as subcontractors to a few very large logistic firms.

1.55  Road transport is also the transport mode that is most labour intensive and where most employment is concentrated. As a consequence, to make full and regulated market opening socially acceptable, the harmonization of working conditions and the enforcement of rules matters even more than in other modes.

1.56  In the early years of the EEC, State intervention in international transport was comprehensive, as all the elements that allow market transactions were controlled by governments: access to the market (licences), prices (tariffs), quantities (quotas), and quality of the transport service. Cabotage was altogether forbidden. Incipient EU law included a cornerstone regulation (Regulation 11 of 1960),23 applying to inland transport in its entirety: it prohibited discrimination in tariffs and conditions of transport on the basis of the country of origin. However, Member States could still use direct subsidies that were thought to be more susceptible to direct control by the Commission.

1.57  The quota system for transport between Member States remained in force until 1988 and for traffic in transit to non-Member States until 1 January 1993. In their place, a system of Community licences granted on the basis of qualitative criteria was set up. The number of international transport licences increased each year until the complete opening of the market in 1998. This first measure provided also that cabotage linked to international transport could be undertaken for a ‘transitory’ period. The problem was that it was left for Member States to define what that period should be like, which led to a variety of treatments for cabotage.

1.58  Concerns with cabotage increased as a result of the enlargement, which was correctly expected to have an impact on competition and social conditions, since drivers from the new Member States were employed under much lower wages and social security charges. To clarify the situation, the ‘transitory period’ was redefined in more precise terms in 2009, which coincided with the year in which specific restrictions to cabotage for the Member States that joined in 2004 were lifted.24

(p. 13) 1.59  After those changes cabotage transport cannot be considered as fully open yet. Only three cabotage services are allowed for a given vehicle in the course of an international trip—and only in connection with an international trip25—within a limit of 7 days, with either 3 days in the country of unloading or just 1 per country in the transit Member States in the 3 days following the entry in any of those countries. However, enforcement of this rule is very difficult because of the atomization of the market … and to its own complexity.

1.60  The impact of cabotage is sizeable in a few countries (6.1 per cent and 5.2 per cent for France and Germany respectively), even though the EU average, which combines Member States providing and receiving cabotage operations, is low at only 3 per cent. As expected, growth in cabotage performed by enlargement Member States’ operators has been important,26 in part, because ‘cabotage’ makes real sense to reduce empty returns, and in part, because the new entrants export international transport services and ‘cabotage’ is included.

1.61  There is the accusation of ‘social dumping’, which in some cases could be true, given enforcement difficulties, but in other cases, just reflects the play of the Internal Market, with countries specializing where they have competitive advantages. Moreover, many transport firms from the West of the European Union have used their right of establishment to set up subsidiaries in the Central and Eastern Member States, even in some cases through illegal mailbox companies.

1.62  In its programme for 2016, the Commission promises to give a further push to market opening, taking into account the need to make progress simultaneously on the enforcement of the existing social legislation:

‘We will work to remove legal and technical access barriers to the road transport market and to strengthen the enforcement of applicable social legislation’.27

1.63  As to passenger transport, only the non-regular services were liberalized in 1996. Local road passenger transport carried out under a public service contract is regulated by Regulation 1370/07 (see Section VI).

1.64  Inter-urban passenger transport by coach has recently experienced two important developments: in 2013, Germany opened its market for distances over 50 km, and in 2015, France opened the market for distances over 100 km. With these moves, both Member States joined the UK and Sweden, which had already opened their coach markets over 30 and 20 years ago, respectively, thus expanding the training turf for multimodal passenger mobility firms of all countries.

1.65  Member States had their own national regulations for freight and passenger road transport. Harmonization replaced most of those rules with EU legislation, notably in the following domains: access to carrier’s profession and to the profession of road driver; technical issues such as brakes, suspension, weights and dimensions of international vehicles; technical control of vehicles; road safety rules on safety belts, speed limiters for trucks, and transport of (p. 14) hazardous goods; environmental protection with exhaust emission standards; social matters such as the age and qualifications of drivers of industrial vehicles and periods of driving and rest; and finally concerning charges for the cost of using the infrastructure. Enforcement has been upheld through roadside and site inspections and above all with the on-board (now digital) ‘tachograph’, which keeps track of driving, engine speed, and rest periods.

1.66  Road haulage is the mode of transport where the barriers to entry are lower as it requires limited investment to start a business, provided the person has a driving licence and obtains an operator licence. This keeps competition vigorous and firm turnover strong as well. The European Union set a higher barrier by fixing the conditions of access to the profession concerning the professional competence and financial standing of the candidate road haulier, as well as his/her good repute.

1.67  As part of the road package approved in 2009, a register of individuals in the profession was set up in order to facilitate their control. Road transport registers allow the linkage of the domestic authorities in charge of monitoring and policing practices. This tool favours those who abide by the rules. Rule enforcement and market opening are linked.

(B)  Railways

1.68  Passenger transport by rail has always had, and retains, an important role for commuter transport, subject to public service obligations. For over a century, it was also the only means available for inland long-distance passenger transport. Its function as a means of interurban transport was undermined by private car competition for the shorter distances and by the plane for the longer ones. This led, following the Japanese ‘Shinkansen’ example of the sixties, to the development of the high-speed train (HST), much faster than the private car and with shorter combined times from one city centre to another than the plane. But the train renaissance based on the high-speed train was at the beginning technology led, with little impact on market organization.

1.69  So far the liberalization of domestic passenger railways at the EU level has not gone much beyond the starting point and has remained stuck at about the place it was in 1991 when Directive 91/440 concerning the development of Community railways was approved.28 This groundbreaking Directive prescribed the separation of accounts for infrastructure and for operation, required independence from public administrations in the management of railway enterprises, and only provided free access to rail networks to international groupings of incumbent railway enterprises (passengers and freight) and combined transport firms (freight).

1.70  On the freight market, railway transport, like inland waterways, has specialized in low-value heavy-weight products, in particular coal29 and building materials, where transport speed is much less important than the low cost per tonne transported.

1.71  International rail freight takes place largely in the centre of Europe,30 with an important axis going from the Netherlands (Rotterdam in particular) towards Germany, Austria, (p. 15) Switzerland, and Northern Italy. A smaller East-West axis, which used to be defined by the connection between Germany and France, is now being extended to Poland.

1.72  The liberalization of rail freight appeared as difficult as that of passenger rail, but the ‘First Railway Package’ managed to unlock it in 2001 after difficult negotiations. Thus, the freight market was to be opened up within the TEN-T rail freight network from 2003 and for the whole network from 2008. The same package laid down rules for the granting of railways licences and established principles for infrastructure charges, allocation of slots, and safety certification.

1.73  The market for rail freight services was finally opened 1 year before in 2007, by the ‘Second Railway Package’ of 2004, which also set up the European Union Agency for Railways (ERA). Also in 2007, a ‘Third Railway Package’ decided that the opening of the market for international railway passenger services would take place in 2010, allowing some conditional degree of ‘cabotage’31 linked to international services.

1.74  Rail freight market opening is most advanced in Romania, Sweden, the UK, Bulgaria, and the Netherlands (in this order). Market opening in rail passenger transport, on national grounds, is advanced in the UK, Poland, Estonia, and Sweden. The situation in Germany in 2013 reflects the EU average, with 32.6 per cent for freight and 11.5 per cent for passengers.32 Although between 1995 and 2011, rail passenger travel has grown the most in the liberalized markets in the UK (+70 per cent) and Sweden (+42 per cent), these countries are followed by France (+37 per cent) and Belgium (+26 per cent), which retained their monopolies. For freight the largest growth rates were indeed for countries at or over the average market opening: The Netherlands (+76 per cent), Denmark (+71 per cent), and the UK (+66 per cent).33

1.75  But apart from the ‘cabotage’ possibility linked to international services, passenger domestic services have not been open to competition so far. The discussion on a ‘Fourth Railway Package’34 launched by the Commission in 2013 is now35 being concluded by the EU institutions. It proposes two different modalities of market opening: competition ‘in the market’ for long-distance commercial services and public procurement competition ‘for the market’ for regional public services. First indications are that direct award of contracts will still be possible under certain conditions.36

(p. 16) 1.76  The fourth package is due to reinforce the vertical separation (‘unbundling’) requirements, strengthening the independence of infrastructure managers that give access to the infrastructure. The directives say that, to avoid discrimination, essential functions such as path allocation and track access charging must be performed by entities independent from railway operators. Moreover, the infrastructure manager should have incentives to reduce infrastructure costs. Finally, its independence will have to be ensured at the very least by ‘Chinese walls’ within the holding of the former incumbent. This will make the role of the national regulator to ensure fairness even more decisive.

1.77  In the way to the fourth package, the Commission kept on proposing incremental moves towards regulated market opening. This was the case of the 2012 ‘recast’ Directive (2012/34/EU)37 that merged three of the directives of the ‘first package’ of 2001 and, apart from clarifying and consolidating legislation, lowered some entry barriers. Thus, the ‘recast’ Directive improved the independence, competence, and means of national regulators requiring them to cooperate with regulators in other Member States. It also facilitated access to rail-related services and intermodal nodes such as stations, marshalling yards, and refuelling points and clarified provisions on infrastructure charging and financing, for instance requesting infrastructure managers to publish an infrastructure development strategy. In this way, it tackled two of the key issues related to the unbundling debate: reducing barriers to entry for new operators, especially in nodes, and maintaining the investment incentives of infrastructure managers.

1.78  The fourth package will increase the powers of the ERA in respect of interoperability and safety issues. Under the texts agreed in June 2015 by the Council, ERA would become a ‘one-stop shop’ for all applications for safety certification for railway undertakings and the authorization of locomotives and rolling stock for cross-border services. For services within one Member State, operators and manufacturers would be able to choose between the ERA or the national safety authorities.

1.79  In railway transport, as in the other modes, passenger—and freight—transport vehicles often share the same infrastructure competing for slots and for priority in case of incidents. In railways, usually the much slower freight transport is side tracked. This reduces rail freight ability to face the competition from trucks and barges. As an answer to this concern, an action was implemented from 2010 to protect rail freight through ‘rail freight corridors’, where they are given at least equal opportunities, if not priority, in relation to passenger trains.38

(C)  Inland waterway transport

1.80  Inland waterway transport (IWT) is a minor mode for the European Union as a whole as it only represents 4.5 per cent of the freight modal split or 6.7 per cent of the modal split for inland transport (both in 2014). However, it is very important for the Netherlands, where it represents 46.6 per cent of freight inland transport, and for Belgium and Germany where the corresponding figure stands at 16.0 per cent and 9.9 per cent respectively. Moving from the Rhine to the Danube, the other Member States that rely strongly on (p. 17) IWT are Romania, where its modal split part reaches 29 per cent, and Bulgaria, where it attains 26.9 per cent.39 Rotterdam and Antwerp ports also rely strongly on IWT for their hinterland accessibility.

1.81  The Mannheim Convention of 1868 established the total freedom of navigation on the Rhine for all the members to the convention, which were the riparian States. The Central Commissions for Navigation of the Rhine and the International Commission for the Protection of the Danube River, dating back to 1994,40 have legislative powers. The two commissions were a forerunner of EU policy but at the same time restricted EU action. Liberalization for all EU waterways was introduced in 1991, fixing the conditions for the access of non-resident carriers to international intra-EU transport and resolving the issue of cabotage. This system entered into force in January 1993 with certain exceptions in place until 1995.

1.82  Together with road transport, IWT is the other mode where small- and medium-sized enterprises, predominate owing to the lower barriers to entry. A peculiarity is, however, that 80 per cent are owner-operators who live in their vessels. As with road transport, there is also a weak capitalization of individual operators and a tendency to overcapacity, which was addressed in 1989 by a scrapping ‘old for new’ process coordinated at a Community level. A reserve fund was brought back to life in 2014, which obliges operators to pay a lump sum when a new vessel is brought to the market. Legislation has also been adopted by the European Union, unifying a variety of technical standards for IWT vessels.

1.83  The European Union promotes IWT through the programme NAIADES, providing support notably in the field of logistics, training, and environment. Linked to it, a River Information Service has been set up, acting as a traffic management system and allowing for real-time exchanges of information between shore and barge.

(D)  Air transport

1.84  Air transport is the mode with the highest recorded growth in transport activity and the highest foreseen growth as well with 50 per cent more flights expected in 2035 than in 2012.41 It is, therefore, the sector bringing the most intense growth dynamism to the rest of the economy.

1.85  Air transport relations between Member States were organized through a dense and complex web of bilateral agreements. However, economic and societal integration was ahead of political reality. Flight structures were also getting more complicated with hub and spoke systems replacing point-to-point journeys by multistage ones.

1.86  Following a timid liberalization of regional air services in the early 1980s, three ‘packages’ of regulations were adopted, which aimed to gradually achieve the freedom to provide air transport services within the Community. The 1987 ‘first package’ concerned fares, capacity supplied by national airlines,42 and access to markets by more than one airline per Member State, as well as the way in which competition rules were to be applied following the 1986 (p. 18) Nouvelles Frontières judgment.43 The 1990 ‘second package’ brought a further liberalization of fares, expanded market access, and granted new block exemptions from competition rules in respect of certain agreements and concerted practices by airlines. The ‘third package’ adopted in 1992 concerned the granting of operating licences by Member States to Community air carriers, the establishment of fares, and the access for Community air carriers to intra-Community air routes, allowing ‘cabotage’ from 1997.

1.87  Those packages were supplemented by two regulations in 1989 and 1993, dealing with computer reservation systems and airport slot allocation. Taken together they practically brought to completion the opening of the air market. A few restrictions left were removed in 2008.

1.88  The regulated market opening of air transport has allowed air carriers to set their own prices, which has given them the possibility to manage their load factors and make the best use of their transport capacity. ‘Yield management’ introduced by low-cost companies has been adopted by the competing transport modes. Competition under subsidized prices is allowed in the case of linking the Member States’ islands regions.

1.89  The policy role of the Court of Justice to push forwards the CTP was exemplified once again with yet another major decision, the 2002 ‘Open Skies’ judgment. The ruling made clear that bilateral international agreements including national ownership clauses were contrary to EU rules on the right of establishment because they discriminated against carriers from other Member States established in the Member State that had concluded the agreement.44 This judgment led to the conclusion of Community agreements with third countries.

1.90  Air transport is still the only mode where the Union has had to define the nationality of the firms:45 in order to show that a carrier is controlled by a Member State, 51 per cent of the company shares must be in the hands of EU shareholders. These ownership rules limit the size companies can attain through mergers and acquisitions. As an alternative, airlines establish alliances, which, by putting two networks together, create important benefits such as new destinations, easier connections, and common frequent flyer schemes.

1.91  After the open skies ruling, the Commission obtained mandates to negotiate EU open skies agreements. Moreover, cooperation procedures were established46 to ensure that national bilateral agreements were compatible with EU law and that the EU-exclusive competences on various aspects47 were respected. A major success was the agreement concluded with the United States in 2007, which entitled airlines in the Union to operate flights to the United (p. 19) States from any European airport. They are able to operate without restrictions on the number of flights, aircraft, or routes, and to set prices in line with the market.

1.92  Once the Internal Market is achieved, and while network integration progresses, the main air transport issue is the insertion in the global market through comprehensive air transport agreements such as those existing for the United States, Canada, Western Balkans, and Morocco. Ownership requirements of 51 per cent in EU hands can be relaxed in the context of these agreements in case of reciprocity. Working conditions in the partner’s air transport sector will also be checked to ensure that competition does not erode the European Union’s own labour conditions.

1.93  The EASA was set up in 2002 in order to oversee aircraft certification. Member States had started by pushing to its limits intergovernmental cooperation with the airworthiness certificates of Concorde and Airbus only to realize that technical agreement and proper enforcement were better guaranteed within the EU system as EU law. There are safety agencies for other modes but EASA is the one with most competences, issuing ‘single type certificates’ for new aircraft and preparing safety rules for their operation. It is also able to adopt soft law by itself.

(E)  Airports

1.94  Airports are typically a local natural monopoly, a condition they can lose if they become saturated and there is land available for another airport. Among airports there is a strong competition to attract traffic. There is also some degree of intra-airport competition, as within an airport different firms are allowed to offer airport services, thus ground-handling services have been opened to regulated competition.

1.95  The right to fly needs to be complemented by the right to land, having non-discriminatory access to airports and to time slots. Slots, however, are allocated through administrative procedures taking into account ‘grandfather rights’ which favour the old incumbent flag carriers. There is also a danger of discrimination concerning airport charges, which are determined administratively on the basis of the costs incurred by the airport but not as a tool to allocate the best slots. Slot allocation will become more of a pressing issue as demand will exceed capacity for hours in many airports.48

(F)  Maritime transport

1.96  Ships carry 75 per cent of all trade between the European Union and the rest of the world if measured in tonnes and 51 per cent if measured in value. This difference is due in part to air transport, which carries 23 per cent in value but only 0.8 per cent in weight. Intra-EU shipping accounts for 31 per cent of the transport activity when measured in tonnes km.49

1.97  Until 1977, the Community institutions did not adopt a single formal act in the maritime transport sector. As in other modes, one of the first things to do was to decide how to organize the relations of Member States with third countries and with international organizations.

1.98  The first important advances took place in 1986 when a legislative package established the freedom to provide services between Member States and third countries. It did so by (p. 20) abolishing restrictions such as cargo sharing, by laying down the procedures for applying the Treaty’s rules on competition, and by taking measures such as the use of correcting duties against unfair pricing practices. In 1992, the Council adopted a regulation phasing in as from 1993 the liberalization of ‘cabotage’ for Community ship-owners operating vessels registered in the Member States. The process was completed in 1999.

1.99  Since liberalization was achieved, EU maritime policy has been largely concerned with safety. Rules have become tighter in response to successive shipwrecks, some of them such as the Erika or the Prestige of catastrophic consequences for the coastal environment. The former led to the creation of the EMSA in 200250 to provide technical assistance to the Commission on safety, security, and pollution issues. Those accidents also gave rise to EU legislation requiring an accelerated phasing in of double-hull tankers, the imposition of sanctions on polluters, a tightening of the rules on the certification societies that assess the seaworthiness of ships and a better monitoring, through EMSA’s SafeSeaNet, of ships carrying hazardous goods. In June 1995, the Ports State Control Directive51 had given Member States the mandate to inspect foreign ships calling at their ports, giving them the possibility to detain vessels in port in case deficiencies in relation to international safety standards are observed.

1.100  Attention has also been paid to short sea shipping (SSS) as a sustainable alternative to road transport in intra-EU transport. The TEN-T programme on Motorways of the Sea has provided grants for related port infrastructure and the Marco Polo programme subsidies for the operation of SSS services. The current emphasis is on the reduction of customs and port formalities through the ‘Blue Belt’ programme as intra-EU ships were treated as if leaving the European Union.

1.101  One of the objectives of the ETP is to reduce the environmental impact of maritime transport. For that purpose the European Union works with the International Maritime Organisation (IMO). For once this international organization went further than what the Union could have done by declaring in 2008 the Baltic and North Sea area a SECA52 zone, where emissions of SO2 from ships should be highly restricted. The Commission intends to collaborate in the required adaptation by promoting the deployment of alternative fuels such as liquefied natural gas, the standardization of refuelling equipment, and making available support from the Connecting Europe Facility (CEF) and the European Strategic Investment Fund.

(G)  Maritime ports

1.102  Ports are a decisive intermodal node for European competitiveness as they are by far the main freight gateway to the world. As with airports and other types of intermodal nodes, there is interport competition and intraport competition. Competition often takes place through a hierarchical network structure where there are large hub ports able to service large containerships and to tranship the load into feeder ships that take the load to smaller (p. 21) spoke ports. This cargo handling work is done at terminals mostly belonging to global operators.

1.103  Interport competition is intense with a giant port like Rotterdam more than twice the size of the second port (which is Antwerp) in tonnes loaded/unloaded, and more than three times the size of the third port (which is Hamburg). The three of them belong to the Northern range of ports, which is the preferred entry to Europe not only for ships coming from America, but less obviously also for ships coming from Asia through the Suez Canal. This creates an imbalance in favour of the Northern range ports, not only because of their proximity to the industrial core of Europe, but also due to a greater efficiency in providing port services and hinterland transport which compensates for the higher cost of transport to them from Suez (3 extra days).

1.104  An obstacle to fair interport competition comes from hidden or open financial support from Member States. The Commission has put forwards a proposal53 that is still being discussed to ensure financial transparency of ports in order to guarantee a level playing field in port competition. This proposal also contains measures to open to tendering some transport services such as pilotage, towage, and mooring, which concern intraport competition.

1.105  In intraport competition generally a number of service providers compete to provide the service, but this is not always the case, given the diversity of EU port sizes and of systems in which they are organized. The Commission put forward proposals to introduce market opening legislation for the provision of port services and in particular, for cargo handling and passenger service which are excluded from the current proposal. This legislation was rejected by the European Parliament in 2003 and again in 2005, mostly on safety and social conditions grounds, as for instance, concerning the possible self-handling by extra-EU workers contracted directly by shipping companies at much worse working conditions.

1.106  There is no EU secondary legislation regulating market access to port services although the TFEU as interpreted by the Court of Justice applies, and legal action may be taken whenever a firm finds its rights infringed. In a recent ruling, the Court found the Spanish port legislation on cargo handling to be contrary to the right of establishment and, although it confirmed that handling services can be considered as being of general interest, it found the Spanish arrangements disproportionate to the aims sought concerning the service and the protection of labour.54

(V)  Network Integration

(A)  Trans-European Transport Networks

1.107  Markets are supported by physical networks over which freight and passengers are transported. The EU Internal Market needs physical interconnections as well; they are provided by the Trans-European Transport Networks (TEN-T), whose need took time to be recognized.

(p. 22) 1.108  In the early 1980s, the same Parliament that brought the Council to the Court used its budgetary powers to set up a credit line with a very small budget for transport infrastructure: it was a foot in the door to develop a transport infrastructure policy. A rudimentary form of coordination predated both, through the setting up of an infrastructure committee. At first this policy was based on overcoming specific geographic obstacles, but during the 1980s a debate in which the ‘European Round Table of Industrialists’ intervened introduced the concept of networks. The first infrastructure Guideline was that for the HST network, which was only ‘welcomed’ by the Council in 1990 because there was no legal basis for a more formal backing until the 1992 Treaty of Maastricht. The latter had a Title on the TENs of energy, telecommunications, and transport.

1.109  For many years there has been a tension between some Member States wishing to include as many projects as possible in the TENs and the Commission, which has been trying to establish priorities in their coordinated development and financing. This has given rise to different generations of lists of priority projects, involving often those that were far from being mature, which led to a poor credibility of the Guidelines as a reference for industrial investments. Projects like Lyon-Torino or Brenner (both ongoing, although the latter is more advanced and some stages have already been completed), have been on the to-do list since 1994.

1.110  The latest edition of the ‘TEN-T Guidelines’55 has evolved from a list of priority projects over a large and dense network to the identification of a ‘core’ network, with demanding infrastructure standards, which should be imperatively completed by 2030, and of an underlying ‘comprehensive’ network that should be ready by 2050. The core network will be based on nine multimodal integrated corridors linking the different parts of Europe. It will connect ninety-four main European ports with rail and road links and provide access to thirty-eight major airports. The comprehensive network provides widespread accessibility to the core network. The Guidelines were always adopted through decisions addressed only to Member States, but in 2013, they took for the first time the legal form of a Regulation of general application in order to extend their binding character not only to Member States but also to the private sector as manager of infrastructures requested to comply with specific quality standards. High-level coordinators support the implementation of the core corridors according to a work plan by bringing together action from all parties, in particular from Member States.

(B)  Rail traffic management

1.111  Given the high degree of integration between vehicles and infrastructure and the variety of national rules, technical interoperability is crucial to allow for international transport by rail. Differences in command and control, signalling, gauge, and electric systems (diesel units apart) preclude trains from crossing borders. Interoperability is organized through general directives and implemented through technical specifications for interoperability (TSI) drafted, at present, by the European Union Agency for Railways (ERA) under a mandate by the Commission. There are TSIs for HST and for conventional railways. The high-speed lines and trains were the first to have an interoperability Directive, as early as 1996, while conventional railways had to wait until 2001.

(p. 23) 1.112  Although EU legislation on interoperability is now complete, progress towards it is slowed down by problems in the enforcement of those rules and by the large amount of national rules that are not always publicly known.

1.113  Rail transport is increasingly guided electronically, which adds to the complexity of ensuring interoperability. In the early 1990s, the European Union started research on a ‘European Rail Traffic Management System’ (ERTMS), which after a period of pilot projects, has reached, from 2010, its deployment stage over the network, where it is expected to replace existing national systems. For the moment only 5,000 km of trackside have been deployed, and 4,000 locomotives have been equipped.56

1.114  ERTMS is made up of the radio system GSM-R for voice and data information exchange between track and train and of the European Train Control System (ETCS) duplicated, by which an on-board computer receives information about authorized speed and distance to other trains. In this way the system safely allows an increase to the number of trains in the network, as well as their speed.

1.115  The process of change is slowed down by the protection of still operational national systems, combined with the complex and expensive migration of the network plus that of on-board equipment. One solution is the coexistence of two or more systems for a period or equipping locomotives with multiple national systems.

1.116  The ERTMS authority is the ERA committed to clarify, stabilize, and update technical specifications. But some national authorities try to fill the gaps with their own innovations, creating problems of interoperability for operators and equipment suppliers.

1.117  Given all these difficulties, it is no surprise that the introduction of the system takes time, particularly in the central countries (e.g. Germany and France), which are crucial to ensure its success. As a result the ERTMS is now growing from the periphery to the centre.57 This dynamic implies that the benefits of network effects at EU level will not be reaped until the final stage.

(C)  Air traffic management

1.118  ATM is another natural monopoly and as such, it involves the risk that a national ATM service discriminates in favour of national companies.

1.119  Air transport has its own virtual infrastructure made up of the sky routes fixed by ATM systems. These systems were overseen only by national authorities from the different Member States, coordinated within Europe by Eurocontrol, an intergovernmental entity. Within Europe traffic control is carried out from sixty air traffic centres, and as a result, the European sky is fragmented, and aircraft fly over 40 kilometres more than needed by following routes that in many cases reflect national boundaries. Thus they spend more time, use more kerosene, and produce more CO2 emissions than under a Single European Sky.

1.120  The success of the air transport liberalization, with the increase in traffic it allowed, rendered the traditional system of ATM based on national borders inadequate, even more so because (p. 24) the technologies and techniques used were obsolete. Thus pressure from the air transport industry led to a completely new competence on ATM being given to the Union by the Council and the European Parliament.

1.121  The initial step took place through the first Single European Sky (SES) package58 in 2004, which launched the SES concept and made some progress towards this goal with the harmonization of national regulations and the organization of air navigation services, as well as by improving the design of air routes and the interoperability of equipment.

1.122  The most controversial change, however, came in 2008, with the second SES package,59 which envisaged nine functional airspace blocks instead of the twenty-seven existing national ones. Going beyond national boundaries, even if at first only for cooperation purposes, was a real revolution in the ETP for any modal network. The second package set up also a system of performance indicators to judge the performance of the ‘infrastructure’ manager in attaining quantitative targets concerning safety, cost efficiency, capacity, and environmental impact. Moreover, it created a network manager to oversee the functioning of the whole SES and a performance review body—both functions being entrusted to Eurocontrol from 2010. It included an extension of the EASA competences to include the SES, notably in safety concerns.

1.123  The SESII package was later added to with a SESII + package60 that is still being discussed by the EU institutions and which was due to make rules more performance-based, increase the independence of national supervisory authorities, and make tendering mandatory for some support activities, like weather forecasts.

1.124  The success of the SES relies strongly on its technical pillar called SESAR, which concentrates and coordinates research efforts. It is a public-private partnership (PPP) ‘joint undertaking’ set up in 200761 and due to last until 2024, which is being funded by the CEF with some 2.5 billion euros for the period 2014–2020 and by the research programme Horizon 2020 with 585 million euros.62 SESAR will require the installation of automated communication, information, and decision-making systems, both on aircraft and on the ground. As with ERTMS, the deployment of SESAR has to be made in a coordinated and synchronized way throughout the network.

(p. 25) (D)  Intelligent road transport systems and road safety

1.125  With about 250 million passenger cars and 36 million freight vehicles, the difficulties of traffic management in the road sector are evident. Still, the nature of the problem is the same as in other modes, first of all to avoid that two vehicles crash into one another by trying to be at the same place at exactly the same time. Unfortunately, this happens too often in road transport, and as a result, nearly 26,000 people (25,938 in 2013) die each year in fatal road accidents, which is in order of magnitude beyond fatalities in other transport modes (ninety-seven passengers killed in railway accidents in 2013, zero lives lost in air transport that year).

1.126  The European Union has as its current objective, the reduction of road fatalities by half by 2020 in comparison to 2010. The previous objective of the same 50 per cent reduction by 2010 was almost achieved. There is EU legislation concerning the driving licence, technical characteristics of vehicles (safety belts and roadworthiness testing), and infrastructure (safety of road tunnels). The most recent measures concern the exchange of information for cross-border enforcement of rules on offending foreign drivers and the deployment of embarked eCall systems, which can ask for help automatically in case of accident.

1.127  Apart from signalling and the modest but essential traffic lights, road drivers have had little ‘intelligence’ assistance so far on how to navigate roads and streets. Then came the GPS. This U.S.-based system will soon be complemented, or replaced in case of need, by the European system Galileo, which will enhance the precision and coverage of the resulting system of satellite global positioning. The system, financed by the European Union, which agreed on this project in 2001, should have thirty satellites of which twelve are already in orbit and six are being launched during 2016. It will greatly benefit the safety, efficiency, and integration of the different transport modes and networks, starting by road, where it is most visible for the public, but also air and waterborne transport. Initial services will be available by end 2016 and full services by 2020.

1.128  On Intelligent Transport Systems (ITS) for road transport, the Union has approved a Directive63 to channel the various activities taking place at all levels in order to develop vehicles, fleets, and intelligent infrastructures able to talk to each other. The European Union is making every effort to ensure that ITS become interoperable by adopting technical specifications. The ITS will be able for a start to provide traffic data, travel information, e-call emergency services, and truck-parking information and reservation.

(E)  Intermodality

1.129  Interconnection refers to transitions of transport segments, often within the same mode (e.g. changing aircraft at a hub airport); where the transition concerns different modes of transport the possibility to interconnect seamlessly is called intermodality. The term applies to freight, in particular, where containers are used, but a swift interconnection is also an objective for passenger transport.

1.130  By making transhipment easier, intermodality allows shippers and passengers to choose the best combination of modes of transport. The setting up of efficient combinations of modes (p. 26) or the use of a single mode, if more efficient, was labelled64 as ‘co-modality’ and defended by the Commission from 2006 as a more flexible alternative to modal shift.

1.131  The Commission has been promoting intermodality at first during the 1990s through a programme that funded combined railroad transport services,65 and since the 2001 White Paper through the Marco Polo programmes,66 which, among other actions, provided a limited amount of subsidies to working capital to start up operations involving green modes of transport. Their objective was to take traffic off the roads to reduce congestion and the environmental impact of transport. In 2013 the European Court of Auditors issued a report67 stating that the programmes did not reach their objectives, in terms of shifting freight off the roads, were not able to show their achievements in terms of environmental improvements, and had little additionality as compared with what the private sector would have carried out unassisted. The Commission has corrected some of the shortcomings and brought the actions into the TEN-T, concentrating on infrastructure rather than operation costs. The case illustrates the informational difficulties of fine-tuning subsidies to projects.

1.132  The ETP also seeks to facilitate the flow of information that accompanies the movement of goods by promoting paperless cargo supply chains with the adoption of standard electronic formats (e-freight and e-maritime). It can also support the provision of intermodal nodes.

(F)  Financing the TEN-T

1.133  For many years the only European instrument to finance transport or other infrastructure was the European Investment Bank through its loans at best market conditions for projects that made economic sense. Grants had to wait first for the European Regional Development Fund (ERDF) set up in 1975, and then the transport infrastructure budget line. The adoption of the TEN-T Guidelines was accompanied by the transformation of the latter in a larger TEN-T budget line intended to support Member States and private investment with relatively small sums of money for feasibility studies, interest subsidies, and guarantees, as well as by other means. In reality the main form of support became straight grants as the interest subsidies proved difficult to manage while guarantees could not be implemented without setting high reserve funds.

(p. 27) 1.134  A CEF has been created68 for the period 2014–2020, which includes funding for transport amounting to €26.25 billion, of which practically €15 billion are available to all Member States and €11 billion must be allocated exclusively to projects in Cohesion Fund eligible Member States. Of the former, €2 billion have been allocated to the European Fund for Strategic Investments, which has a wider scope of action than the TEN-T does and is meant to support profitable private investments and PPPs.

1.135  The support granted by the CEF to large priority projects can reach high co-financing rates of up to 40 per cent (e.g. rail cross-border projects) or even more in the case of the rail management system ERTMS or of some SESAR projects (50 per cent). The management of these funds is centralized in the Innovation and Networks Executive Agency (INEA).69 The CEF has no particular amounts allocated to Member States. Instead, it is based on calls for proposals launched by INEA where projects from different Member States compete. Project promoters thus have an incentive to present good projects, adapted to the selection criteria, and be respectful of all related EU laws (environmental, competition, social, and budgetary stability).

1.136  Cohesion policy likewise gave rise to specific financial support for transport that had been also a beneficiary of the structural funds assistance through the regional and social funding instruments ERDF and European Social Fund (ESF).70 One policy measure that favoured transport in particular was the creation of the Cohesion Fund (1993) whose remit was to provide grants to transport and environmental infrastructure in the four countries where GDP did not reach 90 per cent of the EU average of the then 12 Member States. At the beginning, the Cohesion Fund countries were Spain, Ireland, Greece, and Portugal. Now all the countries of the enlargements to the East are included and the first two are no longer eligible. The Cohesion Fund is able to finance very large projects with only a small contribution from the Member States concerned and may have led in some cases to relative overinvestment in transport, if compared with other development needs.

1.137  For most countries, one of the main problems linked with the development of the TEN-T is finding the financial means needed. One possibility is to make wider use of PPPs where the private partner brings funds, management capacity, and technical expertise in exchange for a risk-subject remuneration. These risks are allocated to the party better able to manage them. At the beginning, PPP schemes were used in some cases to circumvent the then nascent EU public deficit rules, but slowly Eurostat tightened its criteria so that at present only true PPPs are financed. Generally, only the most profitable modes of transport infrastructures such as toll motorways, ports, and airports could be financed through PPPs which transfer the risk of demand to the private partner. PPPs based on the transfer of availability risks are more widely used.

(G)  Pricing for infrastructure use, cost recovery, and external costs

1.138  Fair and efficient pricing is the great-unfulfilled ambition of the European Commission under the ETP throughout the years. Market opening will not yield the benefits expected (p. 28) if the pricing system for the use of the infrastructure is distorted. The Commission has discussed this theoretical principle by means of a Green Paper and a White Paper in the 90s and a Communication in 2008.71

1.139  Charging can also bring funds to the financing of infrastructure. The use and construction of infrastructure does not come for free; at the end somebody pays—typically the user or the taxpayer. In the case of external costs, it is the citizen who bears the consequences of air pollution and suffers accidents. But the Treaty (Art 191) clearly establishes the principle that ‘the polluter should pay’. The Commission has tried many times to introduce pricing for infrastructure use and has only managed to approve a voluntary regime for interurban road freight transport and a compulsory regime for railway transport.

1.140  The current situation for pricing in road transport is that of a patchwork, as it is often said, with several different national systems and a handful of urban ones. For heavy freight vehicles, only four Member States do not apply either distance-based tolls or time-based vignettes; nine apply time-based vignettes; tolls with physical barriers are applied in seven Member States, while electronic network wide tolls are levied on eight Member States.72 The last group did not exist before 2004, when Austria introduced the first such system, and then came Germany and other mostly Central European countries. Different factors are at work for widening the area where distance-based user charges are applied: tolling devices – on board and roadside – are becoming more precise and cheaper; neighbour countries learn from each other; and road maintenance costs soar.

1.141  With the ‘Eurovignette’ Directive, the Union determines the maximum toll that the Member States can be allowed to charge, in order to avoid confiscatory charges or national discrimination. The Directive has evolved from the initial time-based methods with a sticker for a period towards promoting distance-based user charges. In all cases the maximum possible amount corresponds to the recovery of the construction costs to which in 2011 have been added73 as an option, the external costs of conventional air pollution (not CO2) and noise. There is also a bigger possibility of differentiation during congested periods. The coverage from the Directive has doubled in length as it now covers all the motorways where tolls are applied, even those not included in the TEN-T.74

1.142  As regards the private car, under national rules it is subject to distance-based tolls in eight countries and to time-based vignettes in seven.75 The Commission holds the view, as stated in the 2011 White Paper, that marginal cost pricing—in principle for maintenance, congestion, (p. 29) air pollution, and noise—should be applied in the long-term to all vehicles,76 including the passenger car, which up to now has remained practically outside the scope of the EU charging policy. The exception is the vexed harmonization of electronic paying devices through the European Electronic Tolling System.

1.143  Once again charging appears in the Commission programme for 2016:

We will be promoting the use of non-discriminatory road charging schemes based on the polluter-pays and user-pays principles and efforts to create a single European transport area, allowing a more efficient use of the existing road infrastructure and a more flexible use of fleet capacity.77

1.144  In the meanwhile, cars will continue to be subject to EU legislation on minimum fuel excise taxes—which are quite high in Europe78—and minimum car circulation taxes.

1.145  Concerning rail transport, trains are requested to pay for the operation costs they incur. Moreover—but only on a voluntary basis—Member States can apply scarcity charges during congestion periods and use mark-ups to recover infrastructure costs. Railways can also apply charges for external costs but only if competing modes do the same.

1.146  The pricing system for airports is subject to very broad EU Guidelines allowing airports to apply airport charges related to the cost of the infrastructure or the service provided. Charges can be modulated to reflect environmental costs, to help manage excess of demand, and to recover (or pre-finance) infrastructure costs. Although congestion mark-ups can be added to the charges, they are not linked to slot allocation. Supply and demand only decide slot prices in the secondary trading grey79 market. In any case the charging schemes should be transparent, objective, and based on clear criteria. The Commission, as competition authority, keeps an eye on possible abuses of a dominant position when setting airport charges.

1.147  There is an intended proposal for seaports to lay down some very general principles concerning the transparency of public funding of ports. In regard to inland waterways, the applicable international agreements stand in the way of any kind of charging on the Rhine, even for the internalization of externals costs.

1.148  As to air transport, it internalizes CO2 emission costs by means of the emissions trading system (ETS). This system is being applied to different sectors of industry and indirectly, through the electricity they consume, to trains, metros, and tramways. In the ETS, emissions are allowed up to an overall amount that is reduced from year to year, the market setting the price for the quantity allowed. After an attempt to apply this system not only for flights within the European Union but also to international flights starting or departing from EU airports, the European Union established a transitory regime 2013–2016 where the ETS system would only apply to flights within the European Union while the situation is discussed within ICAO.

(p. 30) (VI)  Urban Transport

1.149  Given the weight of urban areas where 70 per cent of the EU population lives, urban mobility is closely linked to the objective of achieving a competitive and resource-efficient European transport system. Furthermore, many of the negative effects of transport such as congestion and pollution occur mainly in urban areas. The city is the place where the dependence on the conventional private car is more intensely felt but also where more alternatives to its use exist, including public transport, electric vehicles, cycling, walking, and the shared use of vehicles. A successful ETP, therefore, cannot ignore the urban dimension.

1.150  However, urban transport is an area where the principle of subsidiarity narrowly restricts the EU competences. ETP action is mostly limited to identifying and promoting best practices arising from the cities themselves, notably by means of the research programme CIVITAS, which has financed pioneering smart and clean mobility projects. It also makes sure that the technical solutions chosen are interoperable and can be used by vehicles and travellers from other cities.

1.151  Cities are also the place where most long-distance trips start and end. Rail and coach stations, ports, airports, and other intermodal nodes located within cities, or close to them, fall fully within the TEN-T policy remit that is concerned with nodal accessibility.

1.152  The 2011 White Paper proposals on urban transport included the acceleration of the take up of sustainable urban mobility plans and enterprise mobility plans as well as the improvement of the availability of data and statistics for policy making in the field of urban transport.

1.153  Pursuant to Regulation 1370/2007, on public passenger transport services,80 the Union created a framework for the non-discriminatory and transparent award of public transport contracts for a limited period. It also laid down the conditions under which public services should be open to competition or can be provided in-house, generally by public enterprises, and it provided safeguards to avoid advantages derived from monopolistic situations in local markets when competing in open markets elsewhere.81

1.154  Passengers are in many occasions protected by ‘public service obligations’ which were given more prominence by a binding Protocol in the Treaty of Lisbon.82 It is up to Member States to decide which kind of services deserve to be considered of general economic interest giving rise to public service obligations and attracting subsidies. However, these subsidies should be limited to the real cost of the obligation as established by the Court of Justice’s Altmark judgment in 2003.83 Market opening is compatible with public service obligations, in particular through competitive tendering of public contracts or competition ‘for the market’, as opposed to normal competition ‘in the market’.

(p. 31) (VII)  Research and Innovation

1.155  Most of the intelligent transport systems (ITS) mentioned earlier (ERTMS, SESAR, Galileo, CIVITAS, and eCall) have been or are financed largely by the European Union through its research programmes. The European Union organises its research policy for the period 2014–2020 mainly through the funding programme ‘Horizon 2020’, which is endowed with 70 billion euro, a 50 per cent rise compared with the previous period 2007–2013. Its priority concerning ‘Societal challenges’ includes an item for ‘Smart, green and integrated transport’, with an allocation of 6.3 billion euro intended mostly for ‘Mobility for Growth’ and for ‘Green Vehicles’.

1.156  As it has been shown in Section III(C), the European Union has extremely ambitious objectives for the future of the transport system, notably concerning safety and the need to reduce CO2 emissions by 60 per cent by 2050. Moving away from oil is an objective that implies a full overhaul of the transport system’s capital stock. New technologies will have a decisive role to fulfil this goal, which also involves other objectives of research such as logistics, intelligent transport, or urban transport. These technologies have yet to be developed to the required levels of efficiency, safety, and affordability, but they are an essential part of the Commission’s roadmap to 2050.

1.157  Even if the European equipment firms are worldwide leaders, the research involved is expensive and its rewards far from guaranteed for the firms daring to undertake it. If we consider both the sectors of transport equipment and transport services, it turns out that transport is the sector of the EU economy that invests the most in research and technological development (RTD) and the European Union is the world zone that invests the most in transport.84 This is mainly due to the equipment sector—the transport service sector tending to buy the innovation built in vehicles and equipment. Most of this research is private, aimed at improving car performance, while the second mode with the highest research is aviation for which research comes from corporations as well.

1.158  Therefore, to reach the challenging aims sought, cooperation between private firms and the public sector is required. Since its creation with the Single Act, the EU research policy has co-financed research projects with the private sector through the Framework Programmes (FP), but the kind of cooperation now needed requires a concentration of vast resources and a strong commitment of the industry to a long-term research agenda. Consequently, the European Union encouraged industries to set up cooperative ‘European Technology Platforms’ with the objective to define a shared Strategic Research Agenda.

1.159  The Single Act also created a tool to implement these shared agendas with public support, the EU joint undertaking,85 as a structure for the execution of research and technical development programmes with other public bodies or as a PPP. This instrument was used for the (p. 32) first time with the Galileo project when it was launched as a priority TEN-T project and applied again for the conception and deployment of SESAR. Later on, the joint undertaking has been used for three projects aimed more at upstream research: the railways-innovation platform ‘Shift2rail’, ‘Clean Sky’ on the environmental performance of aviation, and ‘Fuel Cell and Hydrogen’, which supports these two alternative energy technologies. The last two projects belong to the five top priorities, from all sectors, of the EU ‘Joint Technology Initiatives’ within the current EU seventh FP.

(VIII)  The Social Dimension of Transport

1.160  About ten and a half million people work in the transport and related services sector. They make up for 5 per cent of the total EU workforce. The number of people working in commercial transport services proper goes beyond the six million, of whom three million work in road freight transport.

1.161  Transport workers are expected to work long hours, on weekends, by night, whatever the weather, and often far from their homes. Job conditions in transport used to attract a wage premium, but this seems no longer to be the case. A low job attractiveness combined with the ageing of EU transport workers and technological change could cause skill shortages.86 More immediately, there is competition from Member States and third countries with lower wages and less strict tax and social security regimes, two issues which the Union has no competence to harmonize.

1.162  Fair working conditions are a fundamental right upheld in the European Charter of Fundamental Rights, but they are also behind the quality of the transport service and the capacity of the sector to retain personnel and attract new candidates.

1.163  EU policy and legislation has catered for these problems. First pieces of legislation on working conditions were adopted in the 1960s as harmonization measures: they concerned driving and rest hours of mobile road workers. The horizontal working time Directive,87 which covers at present some transport workers, was approved under the Single Act.

1.164  Nowadays under a Treaty social policy legal base (Title X), there is specific transport working time legislation for mobile workers in civil aviation, for workers involved in cross-border rail traffic, seafarers, and most mobile workers in road transport. There is also EU legislation on health and on training, certification, and rules on access to the profession for all modes, with the exception of seaports. Part of this legislation was developed through formal Social Dialogue channels, pursuant to Article 155 TFEU, according to which agreements reached by social partners can be proposed by the Commission to the Council to be made mandatory.

1.165  Moreover, workers are protected by horizontal EU labour legislation as in the case of the Directive on Posting of workers88 or the Regulations on social security coordination,89 all of (p. 33) them very important for internationally mobile workers. Workers can rely also on EU rules covering information to workers in particular, in case of transfers of undertakings and collective redundancies.

1.166  Competition within and between modes and technological change compounded by periods of faltering growth have led to the restructuring of firms and whole sectors, generating difficult job transitions, despite EU and national labour law and employment ‘flexicurity’90 safeguards. Indeed, the first effect of productivity increases is that of displacing jobs, only afterwards lower transport costs attract demand and generate jobs. This is what happened in air and road transport.

1.167  As a consequence, before market opening or network integration take place, there is a strong social resistance in the sector concerned because workers fear job losses and a deterioration of working conditions. Acknowledging this, the 2011 White Paper stressed that ‘market opening needs to go hand in hand with quality jobs and working conditions’, and the Commission checks systematically the social impact of its market and network proposals. Once markets are opened, law enforcement of social and other rules becomes the main issue in order to prevent unfair competition.

(IX)  Protecting the User

1.168  The 2001 White Paper was published on 11 September 2001 (the day of the 9/11 attacks). Transport means and users were taken again as targets in Madrid (2004) and London (2005) and very recently in Brussels (2016). Consequently, the protection of transport users and workers became a central subject in the 2006 review91 of the 2001 White Paper.

1.169  At present, there are EU security rules for air and maritime transport concerning the quality of national control systems while the Commission conducts inspections to enforce them. However, legislation for land transport is only national, although there is some degree of cooperation at EU level to identify best practices.

1.170  Passengers are also protected against possible abuses by transport companies as regards the content and respect of transport contracts, for instance in relation to delays, cancellations or—in air transport—overbooking. EU legislation exists for all of the interurban modes of commercial transport, protecting in particular passengers with reduced mobility. It includes rules concerning information, assistance, reimbursement, and rerouting.

(X)  The International Dimension

1.171  Before the Treaty of Rome, international transport was already organized in the framework of the international institutions set up around the United Nations Organization, UN. At the (p. 34) time it consisted mainly of intergovernmental cooperation, difficult to agree upon and even harder to enforce. But, for better or for worse, the system worked. Nowadays the transposition of these international rules into EU legislation allows them to be implemented by the European Union, even if not ratified by other countries, and to be enforced quite homogeneously throughout the Union.

1.172  For years the main legislation by which the European transport modes have had to abide have been the rules of UN related international organizations, namely IMO for maritime transport, ICAO for air transport, UNECE for road transport, or the International Labour Organization (ILO) which covers labour relations for all modes. Other organizations such as Convention concerning International Carriage by Rail (COTIF) for rail transport or the Rhine Commission for IWT are historic European entities that do not belong to the UN family.

1.173  Most international organizations do not consider the European Union as a full right member, mostly because Member States prefer to act independently in the international context, contrary to what happens in international trade where negotiations are led by the European Union. In ICAO the European Union has observer status, while in IMO it is only the Commission that has such status. The only organization where the European Union is a full member is COTIF, which deals with international carriage by rail.

1.174  The European Union seeks to widen the scope and acceptance of its own standards such as those developed under SESAR or ERTMS. The application outside the Union of its rules and standards is particularly important to ensure a smooth accessibility to and from the neighbouring countries. It is no surprise then if the European Union tries to establish infrastructure connections and regulatory agreements with them. Neighbourhood relations take mainly the form of regional cooperation with the Western Balkans (with which there is a Transport Community Treaty in preparation), with the Eastern partnership (where there is collaboration concerning IWT), and with the Euromed area (where the extension of the TEN-T has the Motorways of the Sea as its main vector).

1.175  The European Union being a trading power, it has every interest in maintaining good transport relations with its trading partners. For many years, the United States was both the main customer and the main supplier of the European Union. Nowadays it is no longer the main supplier (which is now China) but it is still the main customer and the key strategic partner. The Union has had comprehensive air transport agreements with the US since 2007 and with Canada since 2009.

(XI)  Some Final Reflections on the Dynamics of Market Opening and Network Integration

1.176  As shown by this panorama of the EU transport policy, the attainment of a sustainable Single European Area seems within reach. The two main sectors for which market opening has not taken place yet, in terms of EU legislation, are rail domestic passenger transport and passenger transport by coach. Regarding freight transport there is the case of seaports and that of road freight cabotage where rights are restricted. When considering network integration, resistance can be found in air and rail transport. In the first case, difficulties arise around the concept of the ‘Functional Air Blocks’ encompassing areas from different Member States, (p. 35) and in the second case around the issues of unbundling in railways and of the penetration of ERTMS.

1.177  Beyond these two issues, there are the thorny issues of optimizing the charges and taxes for infrastructure use and external costs and of linking both of them to the financing of a clean, safe, and efficient TEN-T infrastructure, starting with the maintenance of the existing one.

1.178  What could happen next? Why change something that works?

1.179  In favour of the status quo, there is the social resistance from the groups who, mostly legitimately, benefit from it. There is also the weight of long life-cycle technologies. More uncertain is the question of whether a restrictive regulatory framework can cope with market growth: in the 1980s, air- and road-transport quotas could not. Finally, it matters a lot whether the current system is fiscally sustainable, particularly if demand shrinks: painful railways restructuring has not always been linked to market opening. Similarly, the maintenance and renewal of infrastructure cannot be postponed indefinitely.

1.180  Change could be favoured by improving technical interoperability, creating a resilient ‘flexicurity’ system with enhanced working conditions, and requesting transparency of the financial relations between Member States and transport firms. Once change starts to take place, the role of independent national regulators is essential.

1.181  The perception that market opening and network integration have in some cases stalled is compatible with the feeling that market opening and network integration at EU level will go ahead no matter how slowly. This could be creating a climate in which closed markets are perceived as potentially contestable and lead national authorities and market players to try to position themselves for a future of open competition.

1.182  Some EU multinationals such as DHL, Maersk, MSC, and Lufthansa, are global leaders. They and many others contribute to integrate the EU market and networks by being present across the European Union. But there is also a group of giant inland transport conglomerates that are public enterprises at home but operate as private companies when they invest abroad. This group includes DB-Schenker-Arriva, SNCF-Geodis-Keolis, Ferrovie dello Stato-Netinera, NS-Abellio, and Transdev.

1.183  Arriva, Keolis, Netinera, Transdev, and Abellio are the groups’ passenger franchise specialists. Together with private firms such as the UK’s First Group or National Express, they jump borders from one road or rail tendering to another. They also make some forays into long-distance transport competing ‘in the market’.

1.184  Thus, Member States where the market is open such as the UK, Sweden, or increasingly Germany, act as a training ground for operators from other Member States. Some of them possibly try to prepare for the day when there will be a European market. A truly EU-Twenty-Eight Single European Transport Area is really in the making. And it will be sustainable, providing attractive and ‘green’ transport solutions to the rest of the world.(p. 36)


1  All figures in this section are drawn from ‘EU transport in figures’, Statistical pocketbook 2015. EC-DG MOVE.

2  Growth would have appeared much bigger—46 per cent—if measured in 2006, before the start of the crisis.

3  In 2013 4,672 billion passenger km were recorded for passenger cars against 1,719 billion tonnes km for road freight or 582 billion passenger km for (intra-EU) air transport.

4  Judgment in Commission v France, C-167/73, EU:C:1974:35.

5  Groundbreaking regulations were adopted prohibiting discrimination on national grounds and banning support tariffs (1960), establishing a Community quota for international intra-EU road transport and harmonizing conditions of employment of lorry drivers (1968) and normalizing railway accounts concerning subsidies and extra costs for social obligations (1969).

6  Judgment in Parliament v Council, C-13/83, EU:C:1985:220: ‘The Court … Declares that in breach of the Treaty the Council has failed to ensure freedom to provide services in the sphere of international transport and to lay down the conditions under which non-resident carriers may operate transport services in a Member State.’

7  These countries are Norway, Liechtenstein, and Iceland, which are members of EFTA. Switzerland, also a member of EFTA, did not wish to be covered by the EEA agreement; instead, it operates under a complex set of bilateral agreements with the European Union.

8  Council Reg. (EC) No. 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Arts 81 and 82 of the Treaty, OJ [2003] L 1/1.

9  Council Reg. (EU) No. 733/2013 of 22 July 2013 amending Reg. (EC) No. 994/98 on the application of Arts 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid, OJ [2013] L 204/11.

10  ‘Completing the Internal market’, COM (85)310 final.

11  ‘The future development of the common transport policy. A global approach to the construction of a Community framework for sustainable mobility’, COM (92)494 final (White Paper 1992).

12  ‘On the harmonisation side, the main emphasis will be on the development of a Community framework for the charging of infrastructure and other costs to users. Such a framework is the essential foundation for the realization of sustainable mobility for the Community as a whole’ (White Paper 1992, para. 345).

13  ‘European transport policy for 2010: time to decide’, COM (2001)370.

14  An account of this defining period by three of their protagonists can be found in ‘Petites affiches’ No. 22 of 30.1.2003, with an interview by the then Commission vice-president, L. de Palacio, who was responsible for transport and energy, and two articles on the European Transport Policy and on its air transport policy by DG TREN, Director-General F. Lamoureux, and Air Transport Director M. Ayral, respectively. The three of them passed away not much later, still in their prime.

15  The results between 1995 and 2013 shown in Section II are not too different from those for 1998–2010. The deployment of the more powerful measures in respect of modal shift such as road pricing, TEN-T construction, and rail market opening was obviously too slow.

16  ‘White Paper on Transport. Roadmap to a Single European Transport Area—Towards a competitive and resource efficient transport system’, COM (2011)144 final.

17  Commission Staff Working Document accompanying the 2011 White Paper, SEC (2011)391.

18  All figures correspond to 2013. ‘Evaluating 15 years of transport and environmental policy integration’, EEA Report No. 7/2015.

19  Electric vehicles only amount to 0.07 per cent of the passenger car fleet and 0.3 per cent of new registrations. EEA Report No. 7/2015.

20  Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure, OJ [2014] L 307/1.

21  ‘Trends in global CO2 emissions’ 2014 Report. PBL-JRC.

22  See 2013 EU energy dependence on crude oil and petroleum products. ‘Energy, transport and environment indicators’, Eurostat 2015.

23  Reg. No. 11 concerning the abolition of discrimination in transport rates and conditions, in implementation of Art. 79(3) of the Treaty establishing the European Economic Community, OJ [1960] P 52/1121.

24  Through Reg. (EC) No. 1072/2009 restrictions to cabotage for the 2004 enlargement countries were lifted in 2009 and for those of the 2007 enlargement (Bulgaria and Romania) in 2012.

25  Freestanding cabotage that is allowed in maritime and air transport is not allowed in road transport.

26  According to Eurostat: ‘As for tonne-kilometres, Polish and Dutch hauliers made the largest contribution to cabotage in 2014. While there has been a modest increase in the total for the Netherlands since 2010 (+15 per cent), Poland in contrast has seen its total nearly double (+73 per cent). Other Member States to see large rises between 2010 and 2014 are Romania and the Czech Republic which reached the fifth and sixth ranks respectively’ (after Spain, Luxemburg, and Germany). Eurostat Statistics Explained December 2015.

27  COM (2015)610 final, p. 7.

28  Council Directive 91/440/EEC of 29 July 1991 on the development of the Community’s railways OJ [1991] L 237/25.

29  The rail transport of coal in Poland is more important than the rail freight market of twenty Member States. ‘Rail Monitoring report 2014’, COM (2014)353 final.

30  ‘For the EU-28 as a whole, the share of international (rail freight) transport could be estimated at around 39 per cent in 2014, remaining stable over recent years. Countries registering the highest share of international transport are located in key corridors within the European market. The Netherlands and Luxembourg, also strategically situated in the heart of the European market, registered shares of 88 per cent and 82 per cent in 2014, respectively. The key import port of Rotterdam (…) strongly influence these figures.’ Eurostat Statistics Explained December 2015.

31  In case it does not damage the financial equilibrium of existing services under public service obligations, PSOs.

32  This market-opening indicator is based on the market share of all but the principal freight—or passenger—railway undertaking.

33  ‘Fourth report on monitoring development of the rail market’, COM (2014)353 final.

34  The fourth package comprises the six following proposals, the first three for the ‘market pillar’ and the other three for the ‘technical pillar’: the ‘PSO Reg.’, COM (2013)28, the ‘Governance directive’ COM (2013)29 and the normalization of accounts Reg. COM (2013)26, plus a Reg. on the European Union Agency for Railways, ERA, COM (2013)27, a Directive on interoperability COM (2013)30, and a Directive on railway safety COM (2013)31.

35  Summer 2016.

36  On 19 April 2016, the European Parliament and the Council of ministers reached an agreement on the fourth package: for commercial services new entrants will be able to operate as of 2020, public service contracts should be awarded through competitive tender from 2023, although direct award will be allowed if performance targets (e.g. punctuality and quality) are set and met. EC Press release IP/16/1382.

37  Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area OJ [2012] L 343/32.

38  Reg. (EU) No. 913/2010 of the European Parliament and of the Council of 22 September 2010 concerning a European rail network for competitive freight OJ [2010] L 276/22.

39  Statistics explained. Freight transport statistics – modal split. Eurostat. Data for April 2016.

40  Before World War II, the European Commission of the Danube, dating back to the 1856 Treaty of Paris, was responsible for the administration of the Danube River.

41  ‘An aviation strategy for Europe’, COM (2015)598 final.

42  It went from a 50/50 split of bilateral traffic per national side to allow 60/40.

43  Judgment in Nouvelles Frontières (Ministère public v Asjes), Joined cases 209 to 213/84, EU:C:1986:188.

44  Judgment in Commission v United Kingdom, C-466/98, EU:C:2002:624. The Court found that, according to the clause on the ownership and control of airlines, the United States was, in principle, under an obligation to grant the rights provided for in the agreements to carriers controlled by the Member State with which it had concluded the agreement and was entitled to refuse those rights to carriers controlled by other Member States which were established in that Member State. That was held as a case of discrimination by excluding air carriers of other Member States from the benefit of national treatment in the host Member State, which is forbidden by the Union rules on the right of establishment. Accordingly, the clause on the ownership and control of airlines incorporated in the bilateral agreements concluded between the United States and the UK, Denmark, Sweden, Finland, Belgium, Luxembourg, Austria, and Germany was found contrary to the rules on the right of establishment.

45  ‘La Communauté européenne et le transport aérien’. Michel Ayral. Petites affiches. 20.1.2003.

46  Reg. (EC) No. 847/2004 of the European Parliament and of the Council of 29 April 2004 on the negotiation and implementation of air service agreements between Member States and third countries OJ [2004] L 157/7.

47  Namely, slots, intra-Community fares and Computerised Reservation Systems.

48  In 2035, more than 20 EU airports will be operating at or near full capacity for 6 or more hours a day.

49  Figures for 2013. «EU transport in figures» 2015. EC-DG MOVE.

50  Reg. (EC) No. 1406/2002 of the European Parliament and of the Council of 27 June 2002 establishing a European Maritime Safety Agency OJ [2002] L 208/1.

51  Council Directive 95/21/EC of 19 June 1995 concerning the enforcement, in respect of shipping using Community ports and sailing in the waters under the jurisdiction of the Member States, of international standards for ship safety, pollution prevention, and shipboard living and working conditions (port State control) OJ [1995] L 157/1, replaced by Directive 2009/16/EC of the European Parliament and of the Council of 23 April 2009 on port State control OJ [2009] L 131/57 (recast).

52  SECA stands for Sulphur emission control area.

53  ‘Proposal for a Regulation establishing a framework on market access to port services and financial transparency of ports’, COM (2013)296.

54  Judgment in Commission v Spain, C-576/13, EU:C:2014:2430.

55  Reg. (EU) No. 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No. 661/2010/EU OJ [2013] L 348/1.

56  ERTMS Newsletter Signal, June 2015. Interview to ERTMS coordinator, Mr Karel Vinck.

57  Spain, Italy, and Belgium for passengers; Austria, the Netherlands, and Hungary in the case of freight, for which the deployment of the system is less advanced.

58  Reg. (EC) No. 549/2004 of the European Parliament and of the Council of 10 March 2004, laying down the framework for the creation of the Single European Sky OJ [2004] L 96/1, Reg. (EC) No. 550/2004 of the European Parliament and of the Council of 10 March 2004 on the provision of air navigation services in the Single European Sky OJ [2004] L 96/10, Reg. (EC) No. 551/2004 of the European Parliament and of the Council of 10 March 2004 on the organization and use of the airspace in the Single European Sky OJ [2004] L 96/20 and Reg. (EC) No. 552/2004 of the European Parliament and of the Council of 10 March 2004 on the interoperability of the European Air Traffic Management network OJ [2004] L 96/26.

59  Reg. (EC) No. 1070/2009 of the European Parliament and of the Council of 21 October 2009 amending Regs (EC) No. 549/2004, (EC) No. 550/2004, (EC) No. 551/2004, and (EC) No. 552/2004, in order to improve the performance and sustainability of the European aviation system OJ [2009] L 300/34.

60  COM (2013)409 amending Reg. (EC) No. 216/2008 in the field of aerodromes, air traffic management, and air navigation services, and COM (2013)410 Reg. on the implementation of the Single European Sky (recast).

61  Council Reg. (EC) No. 219/2007 of 27 February 2007 on the establishment of a Joint Undertaking to develop the new generation European air-traffic management system (SESAR) OJ [2007] L 64/1.

62  Report on the implementation of the Single European Sky during the 2012–2014 period, COM (2015)663 final.

63  Directive 2010/40/EU of the European Parliament and of the Council of 7 July 2010 on the framework for the deployment of Intelligent Transport Systems in the field of road transport and for interfaces with other modes of transport OJ [2010] L 207/1.

64  Midterm review of the 2001 White Paper, COM (2006)314 final.

65  Council Directive 92/106/EEC of 7 December 1992 on the establishment of common rules for certain types of combined transport of goods between Member States (OJ [1992] L 368/38) sought to promote combined road and rail freight transport services through liberalization of road cabotage linked to combined transport, the elimination of authorization procedures for combined transport operations, and financial support through incentives for certain combined transport operations.

66  Reg. (EC) No. 1382/2003 of the European Parliament and of the Council of 22 July 2003 on the granting of Community financial assistance to improve the environmental performance of the freight-transport system OJ [2003] L 196/1(Marco Polo I), Reg. (EC) No. 1692/2006 of the European Parliament and of the Council of 24 October 2006, establishing the second Marco Polo programme for the granting of Community financial assistance to improve the environmental performance of the freight-transport system (Marco Polo II) and repealing Reg. (EC) No. 1382/2003 OJ [2006] L 328/1 and Reg. (EC) No. 923/2009 of the European Parliament and of the Council of 16 September 2009 amending Reg. (EC) No. 1692/2006 establishing the second ‘Marco Polo’ programme for the granting of Community financial assistance to improve the environmental performance of the freight-transport system (Marco Polo II) OJ [2009] L 266/1.

67  Special report SR 03/2013: ‘Have the Marco Polo programmes been effective in shifting traffic off the road?’

68  Reg. (EU) No. 1316/2013 of the European Parliament and of the Council of 11 December 2013 establishing the Connecting Europe Facility, amending Reg. (EU) No. 913/2010 and repealing Regs (EC) No. 680/2007 and (EC) No. 67/2010 OJ [2013] L 348/129.

69  Created in 2014 from the pre-existing TEN-T Executive Agency (2006).

70  The European Social Fund was set up under the Treaty of Rome, and is being used in the transport sector mostly for training purposes.

71  Green Paper ‘Towards fair and efficient pricing in transport’, COM (95)691; White Paper ‘Fair payment for infrastructure use’, COM (1998)466 and ‘Strategy for the internalisation of external costs’, COM (2008)435.

72  ‘State of the Union road transport market’, COM (2014)222. In April 2016 Belgium shifted to distance based network charging.

73  Directive 2011/76/EU of the European Parliament and of the Council of 27 September 2011 amending Directive 1999/62/EC on the charging of heavy goods vehicles for the use of certain infrastructures OJ [2011] L 269/1.

74  All of Europe’s 30,000 km of tolled motorways are covered by the new Directive, instead of only 15,000 km of TEN-T motorways under the previous regime. EC MEMO/11/378 of 7 June 2011.

75  On some motorways. Report in accordance with Art. 11(4) of Directive 1999/62/EC. SWD (2013)269.

76  White Paper 2011 para. 62.

77  COM (2015)610 final, page 7.

78  The minimum levels of energy taxation would correspond to a carbon price of €124.5 and €157 per tonne of CO2 for diesel and gasoline, respectively (SWD [2013]269). The corresponding ETS (Emission Trading System) price is below € 10 per tonne.

79  Its formalization will come with the adoption of the Commission proposal for a revised Slot Reg. COM (2011)0827 final.

80  Reg. (EC) No. 1370/2007 of the European Parliament and of the Council of 23 October 2007 on public passenger transport services by rail and by road and repealing Council Regs (EEC) Nos 1191/69 and 1107/70 OJ [2007] L 315/1.

81  ‘In addition, a competent authority providing its own transport services or an internal operator should be prohibited from taking part in competitive tendering procedures outside the territory of that authority’. Recital 18.

82  Protocol 26 of the Lisbon Treaty on services of general economic interest underlines: ‘the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest as closely as possible to the needs of users’.

83  Judgment in Altmark Trans and Regierungspräsidium Magdeburg, C-280/00, EU:C:2003:415.

84  ‘A detailed analysis of 172 EU-based companies active in transport research found a total corporate investment in transport R&D of more than € 39 billion in 2008, making it the largest industrial R&D investor in the EU. This result is confirmed by a more coarse estimation following the ICB classification scheme, according to which the EU transport industry invested € 40.8 billion in R&D in 2008 … EU-based transport companies hold a large share in global transport-related R&D investment, followed by companies with headquarters in Japan and the USA.’ Wiesenthal, T. et al. 2011. Mapping innovation in the European transport sector. European Commission. Joint Research Centre: Institute for Prospective Technological Studies.

85  Art. 187 TFEU.

86  For an analysis, see Christidis, P. et al. 2014. ‘Future employment in transport: analysis of labour supply and demand’, JRC.

87  Council Directive 93/104/EC of 23 November 1993 concerning certain aspects of the organization of working time OJ [1993] L 307/18, codified in Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organization of working time OJ [2003] L 299/9.

88  Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services OJ [1997] L 18/1.

89  Reg. (EC) No. 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems OJ [2004] L 166/1 and Reg. (EC) No. 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Reg. (EC) No. 883/2004 on the coordination of social security systems OJ [2009] L 284/1.

90  ‘Flexicurity’ is a horizontal EU labour policy objective aimed at replacing job security by employment security. It has four components: flexible and reliable contractual arrangements, comprehensive life-long learning, active labour-market policies, and modern social security systems.

91  The role of the State in protecting the citizen was a leitmotiv of Commissioner J. Barrot, then in charge of transport. In 2014, Mr Barrot would pass away in a Paris metro station.