Friday, January 9, 2015

Eastern European Freight Rail Operator Accused of Antitrust Activity

Tearing Up Rail Line Reduced Competition in EU Market says Commission
Shipping News Feature

LITHUANIA – LATVIA – The European Commission (EC) has informed the Lithuanian state-owned rail operator Lietuvos Gelezinkeliai (LG) that it suspects the company of reducing competition in the rail freight markets in Lithuania and Latvia by removing a railway track connecting the two countries. Such behaviour, if established, would breach EU antitrust rules that prohibit the abuse of dominant market positions. The EC suggests that the removal of this track may have prevented customers from using the services of other rail operators for the transport of cargo between the two countries.

In September 2008, LG suspended traffic on a railway track running between Lithuania and Latvia. One month later LG dismantled the track and it has since not been rebuilt.

The Commission says that it is concerned that these actions could produce limited competition on the rail markets in Lithuania and in Latvia, in particular by obstructing the plans of a major customer of LG from redirecting its railway freight to Latvia using the services of other rail operators. The Commission carried out inspections at the premises of LG in 2011, after having received a complaint allegedly from Polish refinery PKN Orlen. EC then formally opened antitrust proceedings against the railway in March 2013.

If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10% of a company's annual worldwide turnover.