NMa competition risks new payment system public transport

13 November 2006

Pauline Kuipers

The Netherlands Competition Authority (NMa) has issued an informal opinion that the OV-chip card system, a new payment system for public transport, poses a double risk to competition.

The NMa found that the absence of an independent appeals procedure for public transport companies was a risk, in the event that Trans Link Systems (TLS) were to deny access to the OV-chip card system. Following this observation, TLS has introduced an independent arbitration procedure, to deal with complaints from public transport companies which have not been given access. Another risk concerns the position of Netherlands Railways (NS) as majority shareholder of TLS. NS may possibly exert a significant influence on its competitors’ ability to enter the payment system, which is expected to become the standard payment system in public transport in The Netherlands.

TLS is responsible for developing the system and comprises a collaborative venture of five public transport companies: NS, Connexxion, GVB, RET and HTM. Also, TLS evaluates requests for access to the payment system. The OV-chip card system will be the new payment system for public transport. The Minister of Transport, Public Works and Water Management is intent on abolishing the present system of bus and tram cards (so-called ‘strippenkaarten’) and train tickets as of 1 January 2009 at the latest. The NMa has informed the Minister of Transport, Public Works and Water Management of its informal opinion in a letter.

NS owns 55% of TLS shares. As a result, the railway company may have a decisive influence on the Board of the TLS at general meetings of shareholders. In its informal opinion, the NMa refers to the special responsibility of NS to ensure that the Board of the TLS can independently decide on the interpretation of access conditions pertaining to the OV-chip card system. Access to the OV-chip card system will in practice become a condition for providing public transport services. Current suppliers and new entrants must therefore not be hindered or denied access to the system on improper grounds.

The NMa has drawn up its informal opinion at the request of TLS and NS. Both parties proved cooperative and transparent during the procedure. TLS and the public transport companies involved, are and will remain responsible for compliance with the Competition Act themselves.

Source: Press Release NMa, 28-07-2006 at www.nmanet.nl



Pauline Kuipers

Managing Partner

Call me on: +31 (0)70 353 8800