The Law regarding the Liberalization of Railway Transportation in Turkey No. 6461, which came into force on 1 May 2013, and the relevant secondary legislation, paved the way for the liberalization of the railway transportation market with an aim to harmonise with the EU legislation. This article stipulates the framework of the mentioned legislation.
Practice area: Transport
Turkish railway market has been under the monopoly of Turkish State Railways, a state-owned institution. It is then decided to liberalize the railway sector with the aim of promoting a competitive market and harmonizing with the European Union legislation. Accordingly, Turkish railway sector and the relevant legislation have been undergoing a significant transition since 2003.
The Law regarding the Liberalization of Railway Transportation in Turkey No. 6461 (“Law No. 6461”), which came into force on 1 May 2013, paved the way for the liberalization of the railway transportation market, which is expected to be followed by important secondary legislation – one of them has just been recently enacted. Within this context, the Regulation on Access to Railway Infrastructure and Capacity Allocation (“Regulation”) was published on the Official Gazette numbered 29343 on 2 May 2015 and entered into force on the same day.
The Law No. 6461 enabled the public entities and private companies registered with the trade registry to run businesses as railway operator and to be granted with authority to build and access the railway infrastructure. However, the capacity allocation and pricing criteria has not been stipulated under the Law No. 6461 and it has been envisaged that the mentioned issues will be regulated with secondary legislation. Thus, the procedures and principles to be applied with respect to the determination of railway infrastructure access fees and railway infrastructure capacity allocation was provided with the published Regulation, which was prepared by the Ministry of Transport, Maritime Affairs and Communications (“Ministry”).
The inner city and suburban railway infrastructure which is not connected to the national railway infrastructure network and railway infrastructure used in cargo carriage only under the scope of business of the railway infrastructure without using the national railway infrastructure network are excluded from the scope of the Regulation.
- General conditions
Pursuant to the Regulation, prior to applying for infrastructure capacity allocation by railway operators which have obtained a valid transportation certificate, they are required to set up a safety management system defined under the relevant domestic legislation and 2 obtain a safety certificate from the Ministry. The Regulation also stipulates that pricing and plans relating to infrastructure capacity should provide equal and non-discriminatory access to all operators.
- Access agreement
According to the Regulation, infrastructure operators and railway operators may sign access agreement and the right to use the specific railway infrastructure capacity may be allocated to railway operators for a specific period, in consideration of a fee. It is also possible to enter into a framework agreement by the same parties in relation to infrastructure capacity to be provided for a period exceeding an order plan period1. The maximum duration of the relevant framework agreement is determined as five years.
- Network notification
The Regulation stipulates that infrastructure operators shall prepare and publish a “Network Notification” each year, on the internet, in the form provided by the Regulation. The notification shall be published at least four months prior to the deadline for infrastructure capacity allocation applications and shall be sent to the Ministry for approval at least 30 days prior to its date of publication. Railway operators shall make an application for the right to use the railway infrastructure to infrastructure operators pursuant to the terms stated under such Network Notification.
- Equivalent and non-discriminatory practice and some restrictions
Pursuant to the Regulation, infrastructure operators are under an obligation to implement a non-discriminatory and equivalent tariff to different railway operators.
The Regulation further grants the Ministry the authority to enforce a maximum and/or minimum pricing practice to apply for a certain period, in order to ensure the competitiveness of the market, whenever necessary. Railway operators may differentiate access fees by specifying them in the network notification by categorising infrastructure and trains, in which case the relevant fees shall be stated in the network notification.
The Regulation also stipulates that in the event that the railway operators obtain certain services concerning access to service facilities and provision of services mentioned under the annex of the Regulation (such as bunkering, cargo terminals, maintenance) from alternative service providers, the infrastructure operators will be entitled to reject providing the relevant services. Article 6 of the Law No. 4054 Regarding the Protection of Competition, which regulates abuse of dominant position, has been reserved in respect of this provision.
It is stated under the Regulation that an infrastructure capacity allocated for a certain railway operator cannot be offered to the use of another railway operator. Furthermore, railway operators are prohibited from transferring the infrastructure capacity allocated to them to third parties by selling, leasing or in any other way.
As understood from the provisions of the Regulation in general, railway infrastructure and railway operation services market will have a character of regulated market in terms of competition law, similar to energy, fuel oil and telecommunication markets. Accordingly, it may be considered that although the authority to set a minimum and/or maximum price especially does not fall in line with competition law legislation, the Turkish Competition Authority will not be able to take any administrative actions in this respect.
- Claim and objection procedure
Railway operators are granted the right to serve claims of discrimination or damage to the Ministry against the relevant railway infrastructure operator’s tariff, network notification, capacity allocation or similar decisions or regarding a related railway operator. Negotiations relating to disputes on infrastructure access fees between railway infrastructure operators and railway operators will be carried out under the supervision of the Ministry. The Ministry shall evaluate any such claim, request further information from the related parties in 30 days and initiate negotiations. The Ministry shall serve its decision to the parties in 6 weeks following the receipt of all the relevant information. The relevant decisions are binding for all parties.
- Entry into force
The Regulation has come into force on its date of publication, 2 May 2015. However, pursuant to Provisional Article 1 of the Regulation, the network notifications for 2015 and 2016 may be made by Turkish State Railways Directorate General without taking the time limits stated under the Regulation into consideration.
Although the enactment of the Regulation is an important improvement since it is the first one amongst the secondary legislation on the subject matter, in an effort to liberalize the relevant market, it is also expected that other secondary legislation concerning sufficiency of railway operator companies, insurance and registration be also completed.
“Order plan” is defined under the Regulation as “A plan containing actions of trains that are planned to be operated within a calendar year in a certain network or line, as well as the relevant itinerary, times of departure and arrival, train journey numbers and train lines”.
The information given in this note are aimed only at providing information, and does not serve as a legal opinion under any circumstances.