"Chinese walls" to help EU passenger train services - EU rail boss

BRUSSELS Wed Jan 30, 2013 12:10pm EST

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BRUSSELS (Reuters) - Europe's transport chief proposed on Wednesday opening up the region's railway network to more competition, with plans that would dilute the power of dominant players like Germany's Deutsche Bahn and France's SNCF.

The European Union's rail freight services have been fully open to competition since 2007 as part of moves to a single market. But national domestic passenger markets remain largely closed.

To remedy that, the Commission proposes separating those who manage the tracks from those who run the trains.

Previously the Commision had floated the idea of strict separation of ownership by 2019, when domestic EU passenger markets should be fully liberalized.

But following lobbying from Paris and Berlin, EU Transport Commissioner Siim Kallas said companies could retain ownership in a holding structure, provided "Chinese walls" were erected to ensure legal, financial and operational separation.

"It's a holding structure we are talking about. We don't ask anybody to sell anything," Kallas told a news briefing.

Even so, the proposal was radical, he said.

"If member states consider that the holding company in neighboring countries has an unfair advantage, they can restrict or even refuse access for these companies to the market," he said.

SNCF declined to comment on the proposal.

But a Deutsche Bahn source, speaking on condition of anonymity, said the proposal was "not acceptable, because the planned remedies actually lead to a separation".

A spokesman for the German transport ministry said there was no need for stricter separation.

"We think the German model, with an integrated company, is a good one, a successful one. These structures in Germany do not only allow competition, they support it," said the spokesman.

Kallas said reform was vital if Europe wanted to avoid its trains just becoming "a luxury toy for a few rich countries".

He cited figures from 2009 when railway subsidies in Europe totaled 46 billion euros ($62 billion), which he said was "unaffordable".

"We want to create a single, EU railway area, interoperable and functioning. I don't see how this interoperability will be achieved if we continue like today," he said.

($1=0.7420 euros)

(Reporting by Teddy Nykiel and Barbara Lewis in Brussels, Ilona Wissenbach in Stuttgart, Gernot Heller in Berlin, Dominique Vidalon in Paris; Editing by Mike Nesbit)

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