ASSESSING THE LEVEL OF STATE AID TO THE RAILWAY SECTOR IN SELECTED EUROPEAN COUNTRIES: INSIGHTS FROM THE ITALIAN CASE

Ugo Arrigo, Giacomo Di Foggia

Abstract


This paper is aimed at analysing state aid to the railway sector in selected countries of the European Union. Although this is a preliminary exercise, literature lacks of specificity. From the analysis, a highly differentiated situation emerges: a group of countries with permanently lower subsidies (the Iberians, the Scandinavians and Austria); a group of countries with a medium level of subsidies (all of the major countries: Germany, France and the UK) and a group of countries with permanently high subsidies (Italy, Denmark, Belgium and the Netherlands). This paper demonstrates that railways have so far benefited from weakened forms state aid control. This can be motivated (i) by the need for modal rebalance recognised by national transport policies, (ii) by the natural monopolistic character of the network whose duplication is not economically feasible and (iii) by the non-competitive traditional structure, from a legal point of view, of even the transport service. This situation, however, is set to change drastically with the opening up of services to competition, which has already been done in the European Union for the freight sector and in some countries, although only on a voluntary basis, even for the passenger sector. By focusing on Italy, this study finds that the elevated state aid to the rail sector consequently results in both a major public finance problem and a potential factor of competition distortion.


Keywords


Railways, State aid, Public finance, Subsidies, Europe, Competition

Full Text:

PDF

References


Arrigo U, & Beccarello M. (2000). Il trasporto ferroviario La convergenza europea nel settore pubblico [Railway transport European convergence in the public sector] Franco Angeli, Milano

Arrigo, U, & Di Foggia, G. (2013a). Schemes and levels of state aid to rail industry in europe: evidences from a cross-country comparison European Journal of Business and Economics, 8(3). DOI: http://dx.doi.org/10.12955/ejbe.v8i3.410

Arrigo, U, & Di Foggia, G. (2013b). Gli aiuti di Stato al settore ferroviario nell’Unione Europea [State Aid to Railways in Europe] Working paper of Di SEA DE Retrieved January 1, 2014 from http://boa.unimib.it/bitstream/10281/49292/1/Arrigo-Di%20Foggia%20AIUTI%20DI%20STATO%20U.E.%20ALLE%20FERROVIE.pdf

Beria, P, Quinet, E, de Rus, G, & Schulz, C. (2012). A comparison of rail liberalisation levels across four European countries Research in Transportation Economics, 36(1). 110-120 DOI: http://dx.doi.org/10.1016/j.retrec.2012.03.014

Consolidated versions of Treaty on the Functioning of the European Union. (2008). Article 107 (ex Article 87 TEC). Official Journal of the European Union, C 115, 0001 – 0388

Crössmann, K, & Mause, K. (2014). Rail subsidisation in the European Union: An issue beyond left and right? Comparative European Politics, 1-22 DOI: http://dx.doi.org/10.1057/cep.2014.2

Dehornoy, J. (2011). The evolution of public funding to the rail sector in 5 European countries - a comparison In Fourth Annual Competition and Regulation in Network Industries (CRNI) conference

Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area 2011 OJ L 343/32

DG MOVE (2013). EU transport in figures, Statistical Pocketbook. Retrieved from http://ec europa eu/transport/facts-fundings/statistics/doc/2013/pocketbook2013 pdf

European Commission. (2012b). Communication from the Commission to the European parliament, the council, the European economic and social committee and the committee of the regions EU State Aid Modernisation (SAM) [2012]

European Commission. (2012a). State aid Scoreboard, Report on State aid granted by the EU Member States Brussels Retrieved October 10, 2013, from http://ec europa eu/competition/state_aid/studies_reports/studies_reports html

Eurostat. (2013). Railway transport Retrieved August, 3, 2013, from http://epp.eurostat.ec.europa.eu/portal/page/portal/transport/data/database

Eurostat. (2012). Energy, transport and environment indicators European Union, Luxembourg

Friederiszick, H W, Röller, L H, & Schulz, C C. (2003). Evaluation of the effectiveness of State aid as a policy instrument: The Railway Sector [Draft version] Retrieved September, 2, 2013, from idei.fr/doc/conf/rai/papers_2003/friederiszick.pdf

FS (2012). 2012 Financial Statements Retrieved from http://www.fsitaliane.it/fsi-en/Investor-Relations/Financial-Statements

Knieps, G. (2013). Competition and the railroads: A European perspective Journal of Competition Law and Economics, 9(1). 153-169 DOI: http://dx.doi.org/10.1093/joclec/nhs040

Nash, C, Nilsson, J E, & Link, H. (2013). Comparing three models for introduction of competition into railways Journal of Transport Economics and Policy (JTEP). 47(2). 191-206

NERA. (2004). Study of the financing of and public budget contributions to Railways, report to the European Commission – DG Tren, London, 136 p.

Nilsson, J. E, Pyddoke, R, Hulten, S, & Alexandersson, G. (2013). The Liberalisation of Railway Passenger Transport in Sweden Journal of Transport Economics and Policy (JTEP). 47(2). 307-312

Nilsson, J E. (2002). Restructuring Sweden’s Railways; The Unintentional Deregulation Swedish Economic Policy Review, 9(2)

Nitsche, R, Heidhues, P. (2006). Study on methods to analyse the impact of State aid on competition Economic papers no. 244, European Commission Brussels, Belgium

Pflieger, G. (2014). What “Regulatory State”? Explaining the Stability of Public Spending and Redistribution Functions after Regulatory Reforms of Electricity and Rail Services in the United Kingdom and Germany Law & Policy, 36(2). 195-221 DOI: http://dx doi org/10 1111/lapo 12018

Preston, J. (2009). Trends in European railways over the last two decades Built Environment, 35(1). 11-23 DOI: http://dx.doi.org/10.2148/benv.35.1.11

Szekely, B. (2009). Liberalisation of the railway industry in Europe: toward a sustainable system through process view International Journal of Sustainable Economy, 1(2). 167-185 DOI: http://dx.doi.org/10.1504/IJSE.2009.023046




DOI: http://dx.doi.org/10.12955/ejbe.v8i4.420

Refbacks



Print ISSN 1804-5839, Online ISSN 1804-9699

(c) 2016 Central Bohemia University