FS subsidiary Italian Rail Network (RFI) has also been fined by Agcom for delaying by 18 months Arenaways' application for paths without intermediate stops following a decision the Office for the Regulation of Railway Services (URSF), which was established to manage the relationship between the infrastructure manager and train operators.
These are undoubtedly important rulings and represent a milestone in the liberalisation of Italy's railways, but questions remain over whether they will make life any easier for open access operators in the future.
Italy took the bold step a few years ago to open up the rail network to open-access passenger train operators well ahead of a European Union requirement to allow it. However, the government failed to back it up with adequate safeguards to allow private operators to flourish. Indeed, private operators find it very difficult to deal with incumbent FS which is the parent company of both the infrastructure manager, RFI, and national train operator, Trenitalia.
Successive Italian governments have paid lip service to railway liberalisation for many years, but the process of offering regional concessions was subject to endless delays between 2003 and 2007 before finally being cancelled in 2009. Italy's current prime minister Mr Mario Monti, also favours liberalisation and has changed the legislation regarding regional train concessions so that direct assignment of concessions will no longer be possible and tenders must be invited.
Up to now, most regional trains are operated under a service contract between the operator and each of Italy's 20 regions, while a few inter-regional trains are still based on national contracts. Regional services are heavily subsidised because train fares, which are government controlled, are among the lowest in western Europe. In addition, much of the rolling stock is very old. The size of the regions is also probably too small to make them commercially attractive to large operators, but conversely too large to attract small operators which might be interested in operating individual routes.
The result is that Trenitalia is the sole operator in every region either alone or in association with other train operators such as TreNord in Lombardy. However, some regional contracts are due to expire soon, for example in Emilia Romagna and Friuli Venezia Giulia, so it is hoped that the new legislation will encourage others to bid.
While NTV, the world's first private open-access high-speed operator, has now taken to the tracks despite several clashes with RFI over access to the network, an attempt by Arenaways, a small private operator, to introduce a conventional passenger service between Milan and Turin ended in failure. NTV obviously had the political and financial resources to win through, whereas Arenaways did not. Nevertheless, Arenaways appealed to Italian regulators.
Agcom ruled on July 25 that FS, through RFI and Trenitalia, had engaged in a complex and unified strategy to disrupt and prevent the entry of Arenaways into the Italian passenger rail market. Despite the seriousness of FS' conduct, but after taking into account the newness of the regulatory framework within which FS had operated, Agcom decided to impose a fine of €300,000 on FS.
The abuse was committed between 2009 and 2010, at a time when legislation aimed at meeting the needs of passenger rail liberalisation had yet to be introduced and the need to maintain economic equilibrium under service contracts for the provision of subsidised services applied.
According to Agcom, Arenaways was prevented from operating a commercial service on the Turin – Milan route by FS through a series of acts by its subsidiaries. In particular, RFI adopted delaying tactics with Arenaways' request for paths. Paths requested by Arenaways for the first time in April 2008 were only obtained in November 2010. For this offense, Agcom imposed a fine of €100,000 on RFI.
But even then URSF prevented Arenaways from making intermediate stops, because it believed it would compromise the economic balance of Trenitalia's service contract. URSF now says Trenitalia provided it with an incorrect representation of the facts to influence its decision in Trenitalia's favour, organising information in such a way as to alter the analysis of impaired financial equilibrium, thereby leading to URSF's decision to a refuse Arenaways' application to make intermediate stops between Milan and Turin.
Agcom says that Trenitalia expanded and altered the timings of its services so that they overlapped those proposed by Arenaways. For this offense, Agcom has imposed a fine of €200,000 on Trenitalia.
FS responded to Agcom's ruling on August 9. Regarding the action taken by Agcom for the abuse of dominance by Trenitalia and RFI against Arenaways, FS says the two companies have taken note of Agcom's decision. However, FS points out that it is required by law to maintain economic equilibrium under the service contract. FS, Trenitalia and RFI confirmed, at the same time, the full accuracy of their work and reserve the right to appeal.
Examining the dispute between RFI, Trenitalia and Arenaways, it appears that RFI has not allocated paths equitably, while URSF is not still not strong enough to oppose the will of FS. The government will need to reinforce the role of the regulator if a level playing field is to be achieved.