San Francisco Frontiers - German rail regulator backs Italian firm in competition spat

The rail network in Germany is in poor condition, with passengers frequently complaining of late trains, cancelled services and ageing infrastructure.

Its woes hit a nadir last week when a radio communications system malfunctioned, crippling nationwide for several hours and leaving thousands of passengers stranded in trains.

On Tuesday, the Federal Network Agency regulator sided with Italo in a case it brought against Deutsche Bahn for obstructing competition.

Italo wants to expand into Germany, where Deutsche Bahn accounts for more than 90 percent of long-distance rail transport.

In a draft decision, the agency said it wanted to ensure "a minimum level of access in long-distance transport for competitors" of Deutsche Bahn.

Until now, these operators "could not be sure of obtaining sufficient network usage rights", it added.

If the decision is formally adopted, DB InfraGO, the Deutsche Bahn subsidiary responsible for rail infrastructure, would no longer be allowed to allocate more than 60 to 75 percent of rail slots to the same company.

This would apply to heavily used lines -- not to regional or freight traffic -- and only if there is a dispute between operators.

As well as Italo, the decision would apply to other companies such as Munich-based company Flix, which is planning to expand its rail offering.

"For rail customers, competition means better quality and lower prices," Klaus Mueller, president of the German regulator, said in a statement.

But Deutsche Bahn criticised the decision, saying the move could "worsen the structural problems of rail junctions".

Italo's parent company is ready to invest 3.6 billion euros ($4.1 billion) to enter the German market starting in April 2028.

Deutsche Bahn has launched a modernisation drive, and is betting on a massive ramp-up in public spending on infrastructure to turn around its fortunes.

K.Gray--SFF