Germany’s Monopolies Commission (Monopolkommission) is warning that the planned special infrastructure fund to modernise the German rail network must not be allowed to become bogged down in old structures but must be used as a lever for a genuine new start and recommends the separation of DB InfraGO from the Deutsche Bahn.
Among three main recommendations of Monopolkommission, is the separation of the infrastructure management from Deutsche Bahn, which was the proposal of the federal government. In the long term, the recommendation remains to completely separate the ownership of the railway network and operations. Until then, the minimum requirement is that all responsibilities relating to the railway infrastructure are transferred to DB InfraGO AG. In addition, the contracts between DB AG and DB InfraGO AG, which regulate the transfer of profits and control, should be terminated.
According to the Monopolies Commission, there is a risk that public funds will not reach the rail network as intended but will indirectly benefit other areas of the DB Group through cross-subsidisation. The financial flows between DB AG and its subsidiary InfraGO AG are considered to lack transparency. DB Group’s dual role is problematic: on the one hand, it operates the rail network via DB InfraGO AG and, on the other, it uses the rail network for its own transport companies. This structure makes fair competitive conditions more difficult.
In addition to this structural disadvantage, there is another competitive disadvantage for other providers: the rapidly rising track access charges. Prior to the decision on the special infrastructure fund, the German government had channelled additional funds to DB InfraGO AG via an increase in equity in order to push ahead with the renovation of the rail network. The underlying issue was that the debt brake barred the financing of investments through construction subsidies. However, this step and the high interest rates on the equity capital have caused track access charges to skyrocket by up to around 30% in the last five years, depending on the segment. In addition, it is not yet clear how high the charges will be in 2026. This makes it even more difficult for rail competitors to survive in the market.
The Monopolies Commission therefore recommends a temporary reduction in the return on equity at DB InfraGO AG in order to slow down track access charges. In addition, the federal government should tighten incentives in order to achieve higher quality and punctuality through the railway infrastructure.
‘Only if the special fund and the reduction in track access charges are designed in a competition-oriented way for the railways will passengers and freight transport benefit from lower prices, more innovation and better quality,’ said Prof Tomaso Duso, Chairman of the Monopolies Commission.
The institution’s other recommendations are:
Earmarked funds for modernisation and digitalisation – The federal government should use the special fund for the railways exclusively for future-oriented measures. In addition to modernising the rail network, it should particularly promote the digitalisation of processes and infrastructure. This is because greater efficiency in processes will reduce track access charges for all railway companies and thus ticket prices for customers.
Transparency and expert control – A control and monitoring centre, with the participation of experts from the sector, should control the flow of funds. It will check whether the funds are being used cost-effectively and whether clearly defined federal objectives are being achieved. This ensures that the investments create the greatest possible benefit for the common good.
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