The McNulty-Report and the Issue of Unbundling 06/02/12

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UIRR keenly follows the discussions in Brussels that relate to the issue of unbundling with relation to the presently ongoing second reading of the Recast of the First Railway Package and the drafting of the Fourth railway package.

A considerable debate emerged recently around some of the recommendations made within the UK Government-commissioned “McNulty Report1” which recommended that the great degree of mistrust between sector players in the UK (the IM and Railway Undertakings) is resolved through “closer industry-level cooperation”.

Proponents of the integrated model of rail2 argue that there is no conclusive evidence which would underpin the claims that structurally separated railways (where the ownership ties between infrastructure managers and railway service providers are severed) would perform better, more efficiently, than in those countries like the UK, where such separation was carried out (in 1994).

Besides the evidence listed in Lord McNulty’s Report (strong advances in railway quality, output and safety performance in the UK), the UK’s Rail Freight Group published a powerful paper3, which lists excessive examples why the UK model outperforms the German, where a large integrated holding company dominates the sector.
“Smaller, separate units are usually more efficient than huge and integrated (ones)” – proclaimed Sir Roy McNulty at an event on 1 February 2012 held in Brussels4. He added: “Competition was a key driver for innovation and efficiency at both UK passenger and freight operations.”

UIRR expressed its position on unbundling numerous times, most lately in a position paper on 3 March 20115 stating: “as a matter of principle UIRR holds that no railway undertaking should be permitted to have any privileged (ownership-type) relationship with an infrastructure manager”.

Major European rail-countries continuing to live under the ‘integrated holding model’ are: Austria, Belgium, Czech Republic and France (following the French model), Germany and Italy. Examples for the separated model include Bulgaria, Poland, Romania, Scandinavia, Spain, The Netherlands, The UK.

UIRR hereby expresses its strong hopes that the conflict of interest rules proposed by the European Commission in the recast of the First Railway Package are ultimately upheld by the European Legislator, and the issue of unbundling is ultimately (and permanently) settled in the Fourth Railway Package, thereby releasing the full innovative force of competition within the European railway sector.

Related documents
Press release EN
Position of RFG EN
The McNulty Report EN
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