Regulatory and compliance

Approval and subsequent confirmation of the Royal Decree Law 23/2018: Is Spain's passenger rail sector finally opening up to competition?

Published on 30th Jan 2019

The fourth railway package has finally been transposed to Spanish law: passenger rail transport opens up to competition following the partial transposition of the European directive of 2016 that modified the RECAST directive aimed at the definitive liberalisation of passenger rail transport in the European Union, and therefore in Spain.

Finally, and as awaited, the Council of Ministers of the past 21th December, approved the Royal Decree-Law 23/2018 of 21 December ("RD-L 23/2018") was published, transposing, among others, Directive (EU) 2016/2370 of 14 December 2016 of the European Parliament and of the Council, which amended the previous European regulation on national passenger transport and railway infrastructure, containing and developing what is known as the "fourth railway package".

Likewise, the decision of 22 January 2019 of the Spanish Parliament, which ordered its publication in the Official Gazette the 29 January 2019.

The Spanish rail legislation is undergoing an important transposition that, as we will see below, leads to the completion of the provision of passenger transport services under monopoly by RENFE, which will now face competition from private companies on fair, non-discriminatory and transparent conditions.

Main news

Among the most outstanding developments we can highlight are the following:

  • A legal (or functional if there is vertical integration) separation is established between ADIF and RENFE, aimed at eliminating any conflict of interest that prevents any competitor of RENFE from guaranteeing access to essential infrastructure. ADIF, or whoever manages any railway infrastructure in Spain, must provide access to any operator under fair, non-discriminatory and transparent conditions.
  • Furthermore, and in relation to the above, cross-subsidies allowing companies managing railway infrastructure to finance a company providing transport services or vice versa are prohibited. The purpose of this prohibition is to allow new competitors to compete on equal terms with RENFE, which was until now the monopolist.
  • The quota system is eliminated, which implies that there will be no system of maximum quotas for licenses to provide rail passenger transport services. This means that there may be as many companies providing rail passenger transport services as is economically viable to be absorbed by the railway infrastructure. In this way, the Royal Decree-Law repeals Order FOM/1977/2015, of 29 September, on the tender procedure for the granting of the qualification for the carriage of passengers by rail provided for in the Agreement of the Council of Ministers, of 13 June 2014.
  • The Spanish Comisión Nacional de los Mercados y la Competencia (CNMC) has been given more weapons to regulate and ensure the competitive functioning of the rail passenger transport market, allowing a correct integration of new competitors in the market.
  • Operating licences granted to operators in other Member States of the European Union are recognised as fully valid in Spain. This is intended to avoid excessive bureaucratic burdens for new operators. Therefore, European operators will not have to register their licences in the Spanish Special Rail Registry.
  • Public services will compete with private services. In other words, both types of service will have the same right of access to the network and overlapping slots, the only requirement being that the economic viability of the public service (to be determined by the CNMC) will not be jeopardised.
  • New entrants are given the right to pick up and drop off passengers at any station, which will allow different types of multimodal services to be offered. In this case, it is important to have access to the time slots that ADIF gives to new entrants, so that the viability of a new service is not undermined. This aspect was already pronounced by the CNMC in July 2018 in its Report on the Draft Law to Modify Law 38/2015 of 29 September on the Railway Sector.

Task ahead

In spite of the new developments, and that, following the indications of the CNMC Report on the draft Law, the sixteenth Additional Provision of Law 38/2015 of 29 September on the Railway Sector on the rental and maintenance of railway equipment. This gives Renfe Alquiler de Material ferroviario, S.A. an obligation. The regulation of the conditions under which Renfe Alquiler de Material Ferroviario, S.A. and Renfe Fabricación y Mantenimiento, S.A. will provide their services to operators has been left for later regulation, which is key for new entrants to be able to compete successfully with the public operator.

We should remember the difficulty involved in the process of approval of rolling stock and traction for its use in the domestic market, whether new or second hand. This will make the content of the regulatory development of these conditions especially relevant, and the existence of effective competition in the market hinges on this matter, as has been demonstrated in the market for rail freight.

Schedule to be followed

RD-L 23/2018, opens competition from January 2019, however, according to its first transitory provision, Spanish consumers can only see RENFE compete with other companies from December 2020. This is provided that these potential competitors (such as the French SNCF or the German Deustche Banh) are able to obtain all the necessary technical information from ADIF to be able to order new trains and that these are manufactured on time according to this information.

These issues are not trivial, given that access to technical information and infrastructure are key to the success of a new competitor. Historically, this is where ex-monopoly companies present more advantages, competing fiercely with new entrants, which could hinder a rapid market penetration from them.


Liberalisation is generally positive and in this instance appears to have arrived in time via partial transposition of the political pillar of the fourth railway package. However, it remains to be seen whether in practice companies that want to compete with RENFE will be able to receive all technical information from ADIF in time to obtain the relevant permits from the government and receive new trains on time from manufacturers.

As with historic European liberalisation of the telecommunications and electricity sectors, it is difficult to exclude the possibility that new entrants may encounter problems when it comes to accessing the technical information on the network or the infrastructures themselves.

We hope that in this instance the infrastructure administration and the government will do everything necessary to ensure that new entrants do not find it difficult to compete effectively and on time in the Spanish market for passenger transport.

Otherwise, the only alternative they would have would be possible investigations by CNMC, which will have sufficient powers to ensure the liberalisation and free competition of the Spanish rail transport sector under the new applicable legislation.

These powers include a transparent methodology for estimating traffic. Railway companies would have updated and complete information on rail services offered in the market. In this way, the new competitive framework would not jeopardise the provision of services under public service obligations. These are common challenges of the liberalisation process as indicated by the CNMC itself.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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