Railways – Structure, Regulation and Competition Policy

The 1997 examination of the railway sectors of OECD countries raised classic issues of regulation and competition, including definition of the market, scope of the natural monopoly, structural issues (vertical and horizontal separation), access pricing, non-commercial obligations, anti-competitive cross-subsidisation and effects of state ownership. The variety of different regulatory and institutional approaches to the rail industry can be explained, in large part as appropriate responses to differing underlying market conditions in each country. This study yields important lessons for reform of the rail sector and for reform of other network industries. Key results from the roundtable included the harmful effects of a long-term soft-budget constraint on productivity and factor prices, the importance of a careful analysis of inter-modal competition and, most importantly, the opportunities for fostering intra-modal competition through horizontal and vertical separation and track access regimes. The roundtable also discussed principles for setting access prices. This document comprises proceedings in the original languages of a Roundtable on the structure, regulation and competition policy in the Railways Sector which was held by the Working Party n°2 of the Committee on Competition Law and Policy in October 1997. This compilation which is one of several published in a series named “Competition Policy Roundtables”, is issued to bring information on this topic to the attention of a wider audience.