Wednesday, August 21, 2019

Rail Freight Group Points to Relaxed State View of Anticompetitive Behaviour

Sluggish Reaction of National Authorities Angers Association
Shipping News Feature
SLOVAKIA – EUROPEAN UNION – The European rail cargo sector has been involved in controversy for years, with accusations, including the exchange of funds between infrastructure interests and rolling stock management, coming from a variety of sources. States flaunt EU rules and objectors say this is both anticompetitive and harmful to consumer interests. Now a new row has erupted after the European Rail Freight Association (ERFA) levelled its sights at the Slovakian authorities. 

Earlier this year ERFA wrote to the European Commission objecting to revision of the Guidelines on State Aid for Rail Undertakings saying the whole system of support for individual rail companies was both outdated and anticompetitive. Now, it has made a specific attack on Slovak services regarding the refusal of the state owned railway group to act according to that own country’s laws.

In 2012, the Antimonopoly Office of Slovak Republic (AMO SR) had already taken a decision in a very interesting case related to the key condition to be able to offer rail freight services, the availability of railway rolling stock. Between 2005 and 2010, the state owned rail company Zelezničná spoločnosť Cargo Slovakia (ZSCS) refused to sell or lease surplus electric locomotives and it also refused to provide fuelling services to other operators.

The competition authority considered that this attitude of refusing to supply was an abuse of a dominant position within the meaning of article 102 of the Treaty on the Functioning of the European Union and must be sanctioned.

On 19 July 2019, AMO SR confirmed its position but imposed a sanction of nearly €3 million, instead of €10 million, after the original decision had been annulled by the Regional Court in Bratislava and the Supreme Court of the Slovak Republic. In the current decision the Office says it took into account the comments of the courts.

The decision has not come into force yet, meaning that it required 10 years for the Slovakian authorities to penalise, with a comparatively small sanction, the state rail freight monopoly for abuse of its dominant position. ERFA is writing to the Director General of the European Commission Competition Authority asking for a review of competition processes in Slovakia. ERFA says it is totally unacceptable for any new operator to have to wait ten years for the resolution of what the competition authority clearly believes is anti-competitive behaviour. Carole Coune, ERFA Acting Secretary General, added:

”The future of the climate also depends of the audacity of the judges. For the development of a healthy market in second hand rolling stock of all types, as there is for air and road vehicles, competition authorities and judges must play their role. Investigate and condemn severely the refusal to supply as abuse of dominant position in the meaning of article 102 of the Treaty.”