The European Commission decided, on Friday 30 October, to inform the state-owned Czech rail incumbent České dráhy (ČD ) of its preliminary view that it has breached EU antitrust rules by charging prices below costs.
Margrethe Vestager, Executive Vice-President in charge of competition policy, stressed that competition in the rail passenger transport sector can drive prices down and service quality up to the benefit of consumers. “In the present case, we have concerns that České dráhy was involved in predatory pricing which is against the EU competition rules”, the Commissioner said.
In November 2016, the Commission opened a formal antitrust investigation to assess the alleged predatory conduct of ČD relating to the provision of rail passenger services in the Czech Republic, in particular on the Prague-Ostrava route, the backbone of the Czech rail network (see EUROPE 11665/28).
In 2011 and 2012, two new railway undertakings, RegioJet and Leo Express, started operating commercial trains on the Prague-Ostrava route. As competition increased in the rail sector in this area, the number of passengers using this route by rail doubled in a few years.
The Commission’s investigation shows that ČD potentially felt that RegioJet and Leo Express were expanding too quickly. ČD reacted by starting to offer its services at prices that did not cover its costs, with the aim of hindering competition in the market. The Commission has therefore reached the preliminary view that between 2011 and 2019 ČD engaged in predatory pricing on the Prague-Ostrava route.
Predatory pricing constitutes a serious infringement of the EU antitrust rules. ČD’s conduct, if confirmed, would amount to an infringement of Article 102 of the Treaty on the Functioning of the European Union (TFEU) through predatory pricing. The sending of a Statement of Objections does not prejudge the outcome of the investigation.
If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company's annual worldwide turnover.
The Commission is not bound by any legal deadline to complete antitrust inquiries into anticompetitive conduct. The duration of this type of investigation depends on a number of factors, including the complexity of the case, the extent to which the undertaking concerned cooperates with the Commission and the exercise of the rights of defence. (Original version in French by Lionel Changeur)