Rail Ticketing Regulation

Executive summary

The proposal for a Rail Ticketing Regulation is the first serious attempt of EU policy to fix a market failure that competition authorities across Europe have documented for more than a decade and have been able to address only one case at a time: railway incumbents hamper consumer transparency and comparison through ticket intermediaries by withholding their content, restricting access through unviable commercial terms, and steering passengers to their own channels.

The Rail Ticketing Regulation addresses this problem by placing content-sharing and FRAND obligation on the railways that control the underlying product: rail tickets. The proposal therefore both correctly identifies the problem and employs the right tools to solve it.

Content-sharing is the Regulation’s core: The content-sharing obligation built on fair, reasonable and non-discriminatory (“FRAND”) terms is the heart of the Regulation and should be preserved and reinforced. FRAND provides a solid but flexible legal standard; it addresses the ticket distribution restrictions that matter most without imposing an overly rigid framework.

The sharing obligation must be extended beyond rail, notably to airlines: This is the single most important improvement the co-legislators can make. The practices the Regulation disciplines in rail are pursued in nearly identical fashion by large airlines. The Regulation leaves unaddressed the mode where transport operator restrictions directly harm consumers and limit modal shift. The remedy is to extend this Regulation’s own content-sharing and FRAND obligations across passenger transport modes, including air, coach and waterborne passenger transport, so that equivalent restrictions on independent distribution are subject to equivalent rules irrespective of mode. This is particularly important in air, where access to content is a significant barrier and essential to effective multimodal comparison and to the modal-shift objective.

Remove the resale obligation: One element of the proposal works against all the others. The resale obligation would compel incumbents to sell their competitors’ tickets through their own platforms. Far from opening the market, this entrenches the incumbent’s grip on distribution, turns the incumbent’s website into the gateway through which rail is bought, and strips independent platforms of the comparison advantage that is their reason to exist. The obligation should be removed; should the co-legislators retain it, it should be confined to the schedule-display duty alone, with no obligation on the incumbent to resell its rivals’ tickets. In either case, vertically integrated incumbent rail channels with significant market presence should be prohibited from preferring their own services.

eu travel tech key asks:

Preserve and strengthen the content-sharing obligation built on FRAND, including viable cost-based remuneration and look-to-book ratios adapted to multimodal search; keep the conditions imposed on platforms transparent, objective and non-discriminatory, so that they cannot be used to deny access by design.
Extend this Regulation’s content-sharing and FRAND obligations across passenger transport modes, including air, coach and waterborne passenger transport, so that equivalent restrictions on independent distribution are subject to equivalent rules irrespective of mode and consumers can effectively compare and combine transport services.
Remove the resale obligation, which would entrench incumbents’ control of distribution and foreclose the very independent platforms the rest of the Regulation seeks to empower; should it be retained, confine it to the schedule-display duty alone; and in either case prohibit self-preferencing by the ticketing services of rail operators with significant market presence.

Introduction

eu travel tech represents the travel technology sector, including online travel agencies (“OTAs”), metasearch engines, travel management companies (“TMCs”) and global distribution systems (“GDSs”). Its members operate the search, comparison and booking services through which European consumers and businesses find, compare and purchase travel across operators and modes. Their business model depends on a comprehensive, accurate and attractive presentation of all available options; they therefore have a direct interest in the free flow of transport content from operators to the channels that distribute it. Several of them are independent rail ticketing platforms, and the conduct the Rail Ticketing Regulation (“RTR”) addresses, the withholding of content and the imposition of unviable terms by incumbents, describes the daily commercial reality in which they operate.

eu travel tech welcomes the proposed Regulation’s approach to content sharing. The Commission has accurately identified a genuine and well-documented market failure in rail distribution and proposes to address it systematically rather than leaving it to repeated and slow case-by-case antitrust enforcement. The structure of the rail ticketing market makes the problem acute: incumbent railway undertakings act as gatekeepers; they operate the large majority of passenger rail services in their home markets, inherited from the era of state monopoly, and control the sale of the related tickets. That position gives them both the incentive and the ability to harm the independent comparison platforms that depend on their content, by sharing data and offers selectively, withholding the cheapest fares and imposing terms on which independent distribution is not viable. The result is reduced price transparency and a market in which travelers cannot easily and comprehensively compare and combine all offers. New and competing rail services are affected similarly, as they depend on independent channels to reach passengers. A restricted independent distribution sector thus weakens the business case for transport services that would otherwise drive affordability and modal shift. Travelers are therefore harmed both directly and indirectly by such restrictions imposed by incumbent operators. eu travel tech agrees with that analysis, which the Commission has set out at length and which a decade of competition enforcement supports.

This support is the more pointed because of the contrast with the companion Multimodal Booking Regulation (“MBR”). The two proposals share an Impact Assessment and a common subject, the distribution of transport tickets, but they point in opposite directions. The MBR projects a gatekeeper-style conduct regime onto independent intermediaries that hold no market power, granting new rights to the operators that do; eu travel tech considers that proposal, in its current form, should be rejected, and sets out its detailed position in a separate paper. The RTR does the reverse: it identifies the party that controls the product, the incumbent, and places obligations on that party for the benefit of the independent platforms and the competing operators that depend on access to its content. That is the correct allocation of rights and obligations, and it is the model the EU should follow across transport distribution.

This paper sets out eu travel tech’s detailed position. Four messages frame the article-by-article amendments in the Annex:

• The market failure is real and the sharing obligation is the right fix: The conduct the Regulation targets has been found, or is under investigation, by competition authorities across Europe; ex-post competition enforcement has proved too slow and too piecemeal to cure it; and FRAND is the appropriate systematic remedy (Section 2).
• FRAND must be reinforced so that it cannot be circumvented: The framework is sound but defeasible; remuneration must realistically cover the distribution service, look-to-book ratios must reflect how consumers actually search, and the conditions operators may impose must be held to the same FRAND discipline as the agreement itself (Section 3).
• Extend the Regulation across passenger transport modes: The same restrictions on independent distribution arise beyond rail, most visibly in air, and the EU’s modal-shift objective depends on consumers being able to compare and combine services across modes. The Regulation’s content-sharing and FRAND obligations should therefore apply to transport service providers across rail, air, coach and waterborne passenger transport on the same basis (Section 4).
• The hosting obligation should be removed. It would entrench the incumbents the rest of the Regulation disciplines, foreclose independent distribution, and contradict the proposal’s own objectives (Section 5).

See the full paper below and annex below.