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Passenger Land Transport in Portugal: Improving Competition by Legislative

ReformJosé Luís Moreira de Silva

Ana Pereira de MirandaAna Sofia Firmino

9th International Conference on Competition and Ownership in Land Passenger Transport

7 September 2005

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1 : The European Model

2 : Challenges for a Portuguese Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

1 - The European Model

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i) Rules

ii) Public Service

iii) State Aids

iv) Public Procurement

European Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- Articles 16, 73, 86 and 87 of the EC Treaty

-Regulation (EEC) No. 1191/69,amended by Regulation (EEC) No. 1893/91

-Regulation (EEC) No. 1.107/70 (subsidiary)

-Regulation (EEC) No, 1.192/69

European Model

Rules

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- Altmark Decision from the ECJ, 24 July 2003

- Danske Decision from the CFI, 16 March 2004

European Model

Case Law

ECJ and CFI

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- MS shall terminate obligations inherent in the concept of public service (however such obligations may be maintained / imposed as mean of guaranteeing the supply of sufficient transport services, justified by public interest

- Applies to transport undertakings providing services in transport by rail, by road and by inland waterway (urban, sub-urban and regional services)

- In order to provide guaranty of provision of sufficient transport services, MS may enter into public service contracts with transport undertakings

European Model

Public Service

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- MS States may establish / maintain public service obligations to urban, sub-urban and regional passenger transport services and grant compensation to the respective operators

- “Public Service Obligations”: obligations assumed by transport undertakings, that, if considering its own commercial interests would not have assumed or would not have assumed in the same extent and conditions

- Public service obligations include the obligation to exploit, the obligation of transporting and the tariff related obligation

- Decisions relating to the maintenance of public service obligation (or a part thereof) or to extinguish such obligation after a certain period, must include the granting of a compensation to the financial burden resulting thereof

- The decision to terminate a public service obligation in transport services must be accompanied by the introduction of alternative services

European Model

Public Service

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- Compensations received by transport undertakings by their public service obligations are not considered as not compatible with the Common Market and must not be notified

- For a compensation not to be considered as a State Aid:

i)The recipient undertaking must actually have a public service obligation;

ii) The parameters on the basis of which the compensation was calculated must be established in advance in an objective and transparent manner;

iii) The compensation cannot exceed what is necessary to cover all or part of the costs incurred with the discharge of public service obligations; and

iv) When the undertaking was not chosen pursuant a public procurement procedure, the level of compensation needed must be determined taking into account an average undertaking (…)

European Model

State Aids

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Directive 93/38/EEC, of 14 June 1993 (transposed by DL n.º 223/2201, 9-8)

- Applicable to transport services

- Contracts to value over € 400.000

- Public tender

- Transposition with certain problems of compatibility, under appreciation by the ECJ

European Model

Public

Procurement Rules

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Directive 2004/17 (EC), 31 March 2004 (Special Sectors – Transports)

- Concerning transports the Directive shall apply to “activities relating to the provision or operation of networks providing a service to the public in the field of transport by railway, automated systems, tramway, trolley bus, bus or cable”

- The provision of bus transport service to the public shall not be considered an activity embraced by this Directive where other entities are free to provide those services

European Model

Public

Procurement Rules

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

2 – CHALLENGES FOR A PORTUGUESE MODEL

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- Overlapping of two frameworks with different strategies

- LBTT was not transposed into practice

- Main obstacles to changes: lack of definition of competencies within different levels of direct and indirect Administration, regulating entities and Municipalities

- RTA guidelines: compensation for the provision of transport services which are not viable

- LBTT guidelines: compensation for specific obligations relating to quality, quantity and price

Present Model

RTA/LBTT

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Metropolitan Areas

- AML/AMP

- Road Transport / Rail Transport / Subway / Elevators / Inland Waterways

- Public service

- Concession and Provision of services

- Municipalities / Municipal Undertakings/ Private Undertakings

Present Model

LBTT

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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i) Central Administration :

- MOPTC

- CSOPT

- DGTTF

ii) Indirect Administration:

- AMTs

- INTF/IPTM

- Public Undertakings

iii) Local Administration:

- Municipalities

- Metropolitan Areas

- Intermunicipal Communities

Present Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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Council of Ministers Resolution no.

150/2004 (DR 30-10-2004)

- Regulation of the LBTT

- Compliance with EC law

- AMTs regime

Future Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- Principle of competition

- Licences granted by public authorities

- Controlled competition with public service obligations

- Public service contracts (public tender)

- Imposition of public service obligations (payment of compensation)

Future Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- AMT

- Areas of AML and AMP

- Municipalities

- Road Transport in the respective territory

- Other entities

– Rest of the country

Future Model

Passenger Land Transport in Portugal: Improving Competition by Legislative Reform

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- Institutional Challenge

- AMTs in Lisbon and Oporto

- Legal Challenge

-The new public service obligations

- Contractual Challenges

-The new contracts of supply of transport services

- Financial Challenges

-The new models of financing of transport services

Passenger Land Transport in Portugal: Improving Competition by Legislative

Reform

Principal Challenges

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The European Model and Challenges for Portugal