Friday, January 15, 2016

Antitrust Fine for Rail Freight Operator Which Issued Illegal Cargo Contracts

Competition Authority Stamps Down on Illicit Practices
Shipping News Feature
POLAND – The Office of Competition and Consumer Protection (UOKiK) in Poland has found that the country’s largest rail freight operator, PKP Cargo, abused its dominant position which resulted in limited competition on the rail freight market. As a result, the antitrust authority fined the company zł14.2 million (€3.3 million), reduced partially because so much time had passed between the initiation of proceedings in 2006 and the conclusion of the case in 2015.

UOKiK established that in 2006 PKP Cargo introduced regulations allowing it to refuse to sign a special agreement with enterprises it saw as offering competition to its own logistics services. The contracts which were offered extended attractive discounts to companies that did not compete directly with PKP Cargo, thus preventing competitors from expanding their own activity and gaining new customers, thus offering no threat to the dominant company. These illegal practices went on until 2007.

This is the Office’s second decision arising from the 2006 proceedings, which were undertaken following a complaint from a PKP Cargo competitor, CTL Logistics, and this latest case may yet be subject to an appeal. In 2009 PKP Cargo was fined more than zł60 million (€13.8 million), which the court of second instance upheld. In October 2013, however, the Supreme Court overturned the judgment, mainly so UOKiK could extend the scope of its investigation, and remanded the case for reconsideration by the Court of Competition and Consumer Protection.

The original charge concerned special agreements, but after PKP Cargo changed its trade policy, the charges were widened to consider the company’s refusal to sign commercial contracts and provide discounts to non-competitors. In March 2014 the competition court overturned UOKiK’s 2009 decision, forcing the Authority to continue a case limited in scope in comparison with the original complaint.