Mobility: the Autorité publishes its opinion on the competitive functioning of the land passenger transport sector

Sustainable development is one of the objectives of the policy to open up land passenger transport to competition

While the European Green Deal presented in December 2019 calls for greenhouse gas emissions to be reduced by 55% by 2030 compared with 1990 levels, and for climate neutrality to be achieved by 2050, the transport sector needs to evolve to reduce its negative impact on the environment. At the national level, it is the largest contributing sector to greenhouse gas emissions (31% of greenhouse gas emissions in France in 2019). With the Green Deal mentioning an objective of a 90% reduction in greenhouse gas emissions from transport, transport policy must necessarily be seen through the prism of sustainable development.

Policies aimed at opening up public transport to competition were quick to incorporate the issues of sustainable development and the fight against climate change. As early as its 1996 White Paper on rail transport, the Commission established a clear link between sustainable mobility and the expected benefits of opening up to competition. Observing that “[t]he railways could do much to sustain mobility in the next century”, but that their market share was continuing to decline, the Commission recommended opening them up to competition in order to “revitalise” them.

All the Commission’s successive White Papers have included the issue of sustainable development in their definition of a transport policy open to competition, particularly in land passenger transport. Achieving the objectives of competition policy contributes to sustainable development when competition improves the transport offer for passengers and makes mobility, in its less polluting forms, more attractive for consumers, which is likely to encourage a modal shift.

As part of this opinion, the investigation carried out by the Autorité’s departments has shown that opening up to competition can accelerate the ecological transition of transport.

In the contracted urban transport markets, both the European Court of Justice and the European Commission recognise the contracting authority’s right to choose between the lowest and the most economically advantageous bid, and consider that environmental factors can be used to determine the latter. The introduction of environmental criteria in calls for tender issued by mobility authorities can encourage players to intensify their innovation. For example, in a call for tender, the Hauts-de-France region selected a carrier that proposed an ambitious ecological offer (80% of the fleet greened). From 23 August 2026, it will be mandatory to include at least one environmental criterion in the award criteria for public procurement contracts.

Given their importance, sustainable development objectives and the intermodality that contributes to them could be more clearly integrated into the mission of the sector-specific regulator, the ART, by introducing a more explicit legal basis. With this in mind, the Autorité recommends that the legislator amend the French Transport Code (Code des transports) to ensure that the ART’s missions are consistent with the overall objectives of France’s transport policy, which include environmental protection and regional development.

The competitive situation in the markets for freely organised services

The intercity coach market: the success of “Macron” coaches

In 2013, anticipating the development of the market, the Autorité launched inquiries at its own initiative to issue an opinion on the operation of the French regular interregional coach transport market. The Autorité proposed a series of measures to open up market access to competition. These proposals were taken up by the legislator and the government in the 2015 “Macron Law”.

Since then, companies have been free to provide regular intercity coach services. These services are freely marketed when all the stops served are more than 100 kilometres apart. Routes that are less than 100 kilometres may be prohibited by the organising authorities of rail transport services if they are deemed to pose a threat to the authorities’ economic equilibrium, under the supervision of the ART.

The Autorité now finds that, although dominated by a duopoly (FlixBus and Blablacar represented 66% and 33% of coach traffic per km in 2021, respectively), this sector is showing definite dynamism. Even if ridership remains geographically polarised (45% of passengers travelled from or to Paris), the opening of freely organised lines has helped develop transport in poorly served areas.

The Autorité’s investigation has also found that these coach services complement the transport offer and are more of an alternative to freely organised rail services than to the contracted rail transport organised by the regions.

The Autorité has made a series of new recommendations to improve the organisation of the sector and measure the competitive and environmental impact of the “Macron” coaches.

The freely organised rail transport market: new entrants face persistent barriers to entry

Since 2008, the Autorité has issued a number of decisions and opinions with recommendations to promote competition in this sector, which is gradually being opened up to competition. Since 12 December 2020, railway companies have had free access to the French rail network to develop passenger transport services (open-access market for freely organised services).

Since 18 December 2021, SNCF Voyageurs has been competing with Trenitalia on the Paris-Lyon route. Last July, Spanish operator Renfe entered the market, notably on the Lyon-Barcelona route. The Autorité also notes that several other players are planning to enter the French market: Midnight Trains, Le Train, Railcoop and Kevin Speed, among others.

The rail passenger transport market has therefore entered a new phase in its development. The arrival of competitors to SNCF Voyageurs reveals the practical conditions of competition. It demonstrates the many obstacles likely to hinder the development of free competition. The Autorité’s opinion therefore sets out, on the one hand, to take stock of its previous recommendations, and, on the other, to describe these new difficulties and put forward a range of suggestions for resolving them.

• SNCF Réseau’s organisation within the SNCF group

As infrastructure manager, SNCF Réseau is responsible for regulating and stimulating competition in rail transport markets. In addition to maintaining, regenerating and modernising the infrastructure, it has the crucial role of ensuring equal access to the network for all railway companies.

The Autorité had recommended the creation of an infrastructure manager independent of the SNCF group, but took note of the different choice made by the legislator. However, it is keen to point out the competitive limitations of the chosen solution and notes the persistent concern that this organisation is causing among new entrants.

In this respect, the Autorité’s investigation identified a number of competitive risks inherent in this integrated organisation. This situation is fraught with numerous risks in terms of conflicts of interest, impartiality, equal access to the network, cross-subsidies and fair competition conditions between railway companies. The proximity of the group’s various activities, the similarity of the visual identities and the single SNCF group brand create confusion between the activities of the infrastructure manager, which is deemed independent, and those of the railway company.

In addition, the Autorité notes that SNCF Réseau seems to be adapting slowly to the opening up to competition, and is struggling to make room for the diversity of new entrants’ business models.

The Autorité therefore reaffirms the need for vigilance regarding the practical consequences of SNCF Réseau’s vertical integration with the SNCF group’s railway and non-railway companies. It is making a series of recommendations to neutralise the competitive risks inherent in this organisation.

• Persistent barriers to entry

The Autorité highlights the persistent barriers to entry that hinder the development of competition: difficulties in accessing rolling stock and on-board signalling equipment, rolling stock qualification and compliance services and service facilities, as well as unsatisfactory quality of infrastructure and services provided by the infrastructure manager.

The poor quality of the infrastructure is criticised by all market players: the lack of visibility on the scheduling of works, the absence of exhaustive mapping of facilities and the heterogeneity of signalling systems generate risks and costs for the railway companies present on the network or wanting to use it. This poor performance, and the lack of investment by the French State, are set against the high level of tolls charged to railway companies.

Faced with strong demand for rail transport, which is being encouraged by the government as part of the climate transition, competition can promote the development of the offer and thus help finance the investment needed to restore the quality of rail infrastructure. The effect on the offer is confirmed by the example of Austria and Italy, which opened up their rail markets earlier than France. In Austria, for example, in the freely organised railway markets, the arrival of a new entrant on the Vienna-Salzburg route to compete with the incumbent operator ÖBB led to a 25% reduction in prices on this route and a 25% increase in passenger numbers. In Italy, the arrival of new entrant NTV in 2012 prompted incumbent operator Trenitalia to increase frequencies and improve the quality of service. In France, the ART has noted a 10% drop in ticket prices on the Paris-Lyon route since Trenitalia’s arrival.

Rail tolls, which are particularly high in France, could act as a deterrent to new entrants. An assessment of the impact that lower tolls would have on rail offers and, thereby, on infrastructure financing seems necessary.

The private public passenger transport market: taxis and PHVs

The Autorité is issuing an opinion on this sector for the eighth time since 2013. In line with its decision-making practice, the Autorité makes a distinction between two markets: the hail and rank market, i.e. transport without booking, in which taxis have a legal monopoly, and the pre-book market, in which taxis compete with PHVs.

The development of intermediation platforms and geolocation tools means there is little separation between these two markets in practice, but the maintenance of a legal monopoly on the hail and rank market remains an essential feature of the sector.

In its previous opinions, the Autorité made recommendations on the regulation of taxi fares, the specific obligations imposed on PHVs, the need to create a statistical tool and a market observatory, and the conditions for accessing the professions of taxi driver and PHV driver, in particular the organisation of examinations to obtain professional licences. It finds that the government has taken insufficient account of its recommendations.

In addition, the Autorité notes that the government’s knowledge of the market remains incomplete. The French Observatory of Private Public Passenger Transport (Observatoire national des transports publics particuliers de personnes) created by the 2016 “Grandguillaume Law” should help to change the situation, since the data collection system is now effective. The Autorité welcomes the creation of this observatory, but notes that the data published is still insufficient to assess the reality of competitive conditions.

Lastly, in line with the recommendation made in Opinion 14-A-17, the Autorité finds that the creation and procedures for the professional examination for PHV drivers have helped remove a barrier to entry and bring the conditions of access to the two professions closer together.

The competitive situation in contracted markets

European Union law allows the government to choose to subsidise the transport services it organises, by way of derogation from State aid rules, if they are services of general economic interest, subject to public service obligations (PSOs).

In France, the organisation of public transport is a shared responsibility between the French State, the regions and the inter-municipalities. These mobility organising authorities (autorités organisatrices de mobilité, AOMs) have a crucial role to play since, in the contracted transport sector, competition takes place through the calls for tender they issue.

Urban transport: in the face of low competitive intensity, AOMs must play their full role in stimulating competition

In cities, most public transport journeys are made within dense, often multimodal, transport networks organised at the conurbation level. In principle, the AOMs entrusted by the legislator with the organisation of urban transport services are the inter-municipalities.

In 2009, the Autorité called on local and regional public authorities to be vigilant in the face of the potential risk posed to urban transport markets by the combination of a high degree of operator concentration and the presence of the incumbent rail transport operator, via its subsidiary Keolis. Back in 2005, the French Court of Auditors (Cour des comptes) noted that in this sector, which is concentrated around a very small number of operators, effective competitive bidding for operating contracts was “problematic”, with opening up to other operators “virtually non-existent” in practice, and tenders usually covering the entire urban network concerned.

The situation has not changed significantly since then. The Autorité finds that recent calls for tender in several cities have seen only one candidate submit a bid. Furthermore, between 2005 and 2021, in 74% of the cases studied, the incumbent operator was renewed following a competitive bidding process. Given this situation, AOMs and the Autorité must remain vigilant.

In 2020, the Autorité called on every company with a legal monopoly “not to give an undue advantage to its subsidiary by leveraging assets or information in an exclusive situation made available to the bidding company under privileged conditions”.

In this opinion, the Autorité reiterates its call for vigilance to organising authorities, which are responsible for driving competition in urban transport markets, regarding the competitive risks that can arise when a bidder is backed by an incumbent operator that combines infrastructure management and service operation within a single group.

It recommends, where appropriate, that the operators concerned reinforce the separation measures between subsidiaries, and recommends that the State shareholder ensure separation between the subsidiaries of the companies it owns, in order to guarantee compliance with competition law.

In addition, in 2009, the Autorité invited organising authorities to consider allocating their calls for tender, while taking into account the interests of users, insofar as allocation is likely to increase competition and limit the dependence of AOMs on the few very large operators present in the market.

Finding that this recommendation has not been closely followed, the Autorité reiterates it and invites AOMs:

• not to rule out allocation as a matter of principle, and to systematically study its impact before taking decisions on the next expiry dates of their contracts with operators;
• to include a robust set of service quality and performance incentives and penalties in the contractual framework, in the interests of users, particularly when they decide to contract with a single operator.

Lastly, the Autorité invites AOMs to intensify their exchanges and feedback on the competitive organisation of urban transport, particularly within the associations of which they are members. This work could lead to the drafting of a best practice guide. The Autorité is prepared to contribute to this within the limits of its powers, and invites the ministries concerned and the ART to respond, where appropriate, to requests from AOMs on this subject, in accordance with the principle of the self-government of local and regional public authorities.

Regional rail transport: opening up to competition is an opportunity the regions must seize

Contracted rail transport was opened up to competition by the 2018 law for a new rail deal. In 2019, the Provence-Alpes-Côte d’Azur (PACA) region launched a competitive bidding process for the operation of two TER lots, one of which was won by SNCF Voyageurs and the other by Transdev. The Hauts-de-France region also put out a call for tender for the “Étoile d’Amiens” lot, which was ultimately won by SNCF Voyageurs.

Competitive bidding seems to be showing its first effects. In the PACA region, for example, SNCF Voyageurs has committed to a regularity target of 98.5% and a 9.5% increase in train kilometres.

The opening up of the sector to competition will become more widespread as, from 25 December 2023, any new contract for the operation of a contracted regional rail transport service (currently operated under the TER brand by SNCF Voyageurs) will have to be subject to competitive bidding.

The Autorité notes, however, that the opening up to competition could be delayed by the behaviour of the regions, which are sometimes reluctant to open up their rail transport to competition. For example, the Occitanie region chose to terminate its contract with SNCF Voyageurs and sign a new one before 24 December 2023 – contracts signed before this date can run for ten years and provide for a gradual opening up to competition, or even for opening up to competition only when they expire (i.e. December 2033). The Autorité notes that several other regions have postponed competitive bidding of SNCF Voyageurs until at least the end of the 2020s.

Over and above political choices and the resources available to the regions to initiate competitive bidding, the Autorité notes that the success of opening up the market also depends on several operators being able to submit solid bids in response to calls for tender and position themselves as credible competitors to SNCF Voyageurs.

At present, this does not seem to be the case, since only a minimum number of candidates are able to complete the competitive bidding process for each tender. For example, in 2019, for one of the two lots opened to competition by the PACA region, only SNCF Voyageurs was able to complete the call for tender process. In this respect, the Autorité recalls that the competitive bidding process launched by the French State in 2020 for the operation of the “Intercités” lines proved unsuccessful, as no bids other than that of SNCF Voyageurs were received.

This situation can be explained by a number of factors, including the cumbersome nature of the calls for tender concerned and the uncertainties of the competitive bidding schedules of certain regions, as well as the existence of a large number of barriers to entry, some of which are the same as for freely organised markets; they include difficulties in accessing service facilities, the question of transferring rolling stock and staff, problems in accessing spare parts or the data needed to prepare a bid, the intervention of SNCF Réseau in the examination of bids at the request of certain regions, and so on.

Faced with these risks and barriers to entry, it is essential that encouraging operators with the means to do so to submit bids is at the heart of the regions’ concerns, and a central aspect of their competitive bidding processes. The Autorité has identified a series of best practices that regions could implement to boost competition in the tenders they organise, in order to benefit from the virtuous effects of putting companies in competition with each other.

In addition to lowering service costs, opening up to competition gives regions greater freedom, particularly in the terms of the contract they sign with an operator. Regions can, for example, choose to promote intermodality and sustainability, or demand an increase in the offer. The Autorité considers that the investments made by the regions at the time of competitive bidding offer long-term benefits.

The Autorité is also making recommendations to the French State and SNCF Réseau to help neutralise certain identified competitive risks.

The role of stations in competition: the challenges of intermodality

In Opinion 09-A-55, the Autorité has already analysed the competitive issues specific to railway stations. In this opinion, the Autorité stressed that these infrastructures are not “mono-modal” and must meet intermodal needs. The multimodal nature of railway stations, which may initially have been limited to the presence of a car park or taxi rank, has been steadily growing ever since. In addition, the liberalisation of intercity coach transport has made it necessary to develop a second type of station, namely bus stations, which can also be multimodal, particularly when they are located in or close to a railway station.

The Autorité notes that, overall, its recommendations have been taken into account in regulations.

Railway stations

In France, SNCF Gares & Connexions is the sole manager of railway stations, which have long been qualified by case law as critical infrastructure. It has been the manager of all station facilities since 1 January 2020.

SNCF Gares & Connexions was created in response to a recommendation made by the Autorité to separate station management and operation from the incumbent transport operator. However, despite the transfer of SNCF Gares & Connexions to the infrastructure manager SNCF Réseau, the operational management of stations continues, in practice, to be largely carried out by the railway company SNCF Voyageurs. This company is the main, or even, exclusive user of stations and, as such, can achieve significant economies of scale in their operation. This is the “carrier-integrator” model [1].

Because SNCF Gares & Connexions has little control over this organisation, it poses a number of problems, as highlighted by the French Court of Auditors (Cour des comptes) and the ART.

The investigation carried out as part of this opinion has shown that there are three possible ways of managing railway stations: own station management by SNCF Gares & Connexions, the carrier-integrator model, or transferring station management to the organising authorities.

In the Autorité’s view, the carrier-integrator model poses a number of problems in the context of opening up rail transport to competition. In addition to the 46 stations managed by SNCF Gares & Connexions, as the market opens up to competition, railway companies will be required to operate in stations currently managed by SNCF Voyageurs.

In the Autorité’s opinion, competitive bidding for contracted transport services is incompatible with the carrier-integrator model, which is based exclusively on SNCF Voyageurs.

The Autorité also notes that it is in the interest of AOMs to be more involved in station management, insofar as they bear the costs of managing stations served only by contracted rail transport, and can have station management delegated to them [2].

For stations served by TERs, delegating their management to the organising authorities and including them in calls for tender for contracted transport would seem to be the best solution.

However, this model is not taking hold. Delegating station management to AOMs is an option, which they are not obliged to take up.

In addition, the crisis of the carrier-integrator model in the context of opening up to competition could also have an impact on the quality of service offered to station users:

• This difficulty is primarily due to the poor performance of SNCF Gares & Connexions. In its 2021 report on passenger rail stations, the French Court of Auditors (Cour des comptes) highlighted SNCF Gares & Connexions’ poor internal performance, which contributed to the fragility of its business model. In particular, it noted that SNCF Gares & Connexions did not take service quality sufficiently into account, and pointed to the lack of specifications to define the precise service quality expected and set the level of service corresponding to each category of station.
• Vigilance is also required regarding the effects of opening up to competition on station accessibility for people with reduced mobility (PRMs). The Autorité therefore invites the different stakeholders to take this issue into consideration upstream to guarantee station accessibility.

Bus stations

According to the typology established by the ART, 76 of the 327 facilities listed in the public register kept the ART are bus stations. The nature of the operators is very diverse: they can be local and regional public authorities (communes, regions), groups of local and regional public authorities or operators such as Keolis (which operates bus stations in Caen and Nîmes) and Transdev (which operates bus stations in Lens, Le Mans and La Réunion). SNCF Gares & Connexions operates around 50 bus stations linked to railway stations, forming multimodal hubs.

The Autorité finds that the situation of bus stations in France is unsatisfactory and constitutes an obstacle to the development of coach services. In practice, industry players paint a negative picture of existing bus stations. Some of the problems reported by players fall within the ART’s remit, in terms of fees for accessing bus stations, but it is mainly capacity, saturation and quality issues that are raised.

• As far as insufficient capacity is concerned, this is mainly due to material and technical constraints, as many bus stations are designed for regular contracted urban or intercity transport lines, which are very busy during rush hour, reducing the number of slots available for long-distance transport during these times. In addition, some bus stations are too small to offer slots to new operators, or new slots to existing operators. This situation must be set against the overall under-utilisation of the bus stations operated by SNCF Gares & Connexions, which raises questions about the relevance of their location on a case-by-case basis and the thought that went into their design, in terms of the links between modes of transport.

More generally, since some bus stations are under-utilised while others are saturated, it would seem that the current regional coverage is not optimal and that changes to the decision-making process for new bus stations or the development of existing ones are needed.

• In terms of quality of service, the contributions received point to insufficient interconnections with other modes of transport in a number of bus stations, deplorable levels of safety, hygiene and comfort (particularly in Paris Bercy bus station, but also in Bordeaux and Toulouse), and inadequate passenger information and facilities (waiting rooms, toilets, catering facilities, etc.). As a result, several operators complain about touchdown fees that they feel are too high in relation to the quality of service provided to their drivers and passengers.

It is unlikely that market dynamics will spontaneously lead to a significant improvement in the situation of bus stations. Consequently, in view of the shortcomings identified, the Autorité invites local and regional public authorities, as AOMs, to play a role in regulating competition in the sector, by taking a greater interest in the issue of bus stations.

Although many local and regional public authorities have a role to play, the regions, as leaders in intermodality, are particularly concerned and could usefully draw up quality standards, which could then be incorporated into public procurement contracts for bus stations or multimodal hubs.

Depending on the situation, improving the quality of service at existing bus stations may require better training for staff in welcoming users, assisting drivers and providing information on intermodality, services (required by local and regional public authorities in their contractual clauses or at the initiative of operators) to improve cleanliness, comfort and safety, both for passengers and for operators’ staff, etc. When the bus station is part of a multimodal hub, a very short transit time between modes of transport is particularly appreciated by passengers. The ART’s consultations with bus station operators could contribute to the development of these standards by listing best practices.

Intermodality: station layout and ticketing systems

The Autorité underlines the growing role of intermodality in the transport sector, which makes it essential to consider the link between intermodality and opening up to competition. So, while opening up to competition may, at first sight, complicate intermodality by fragmenting the transport offer, it is a source of innovation and efficiency gains that can promote the development of the offer.

The Autorité invites the role of stations to be considered through the prism of intermodality. Stations are hubs for exchanges between modes of land transport, both from a physical point of view, to ensure smooth passenger access to the different modes of transport, and from a commercial point of view.

• Development of station surroundings

The Autorité notes that intermodality concerns both the interior of stations and their surroundings. As part of its 2021-2026 performance contract with the French State, SNCF Gares & Connexions also has a role to play in promoting intermodality. In particular, the infrastructure manager is committed to developing bicycle parking, pump stations and repair workshops.

SNCF Gares & Connexions’ very important role in the sector, at the intersection of all modes of transport, and therefore ultimately in AOMs’ transport policies, can create a risk of a conflict of interest when AOMs launch calls for tender for which other SNCF group companies are candidates. The Autorité is proposing a number of best practices to AOMs to mitigate this risk.

• Passenger information and ticketing

Intermodality also involves ticketing and passenger information.

On the face of it, liberalisation seems to be fragmenting transport services, multiplying the number of different commercial conditions and offers, and increasing the complexity of ticket booking. This trend could become more pronounced in the future, in parallel with the opening up to competition, as a number of regions have informed the Investigation Services of their intention to launch regional multimodal ticketing services. These regional ticketing and passenger information services meet the need for the linking of transport services at the local level but could undermine the coherence of transport services at the national level, due to the lack of interoperability between the different systems. Such initiatives could, moreover, foreclose private operators wanting to enter the sector, whose services could better link the regional and national levels.

Here again, the Autorité is proposing best practices to AOMs to reduce the identified risks.

[1] The stations concerned are managed under a cooperation agreement between SNCF Voyageurs and SNCF Gares & Connexions, with SNCF Voyageurs re-invoicing management costs to SNCF Réseau without applying a margin.

[2] This option is available to organising authorities under Decree 2021-966 of 20 July 2021 (known as the “single-carrier” decree), and potentially concerns stations where at least 95% of traffic comes from contracted transport.