ALLRAIL welcomes EU Commission announcement
in new case of alleged predatory pricing
against rail newcomers
BRUSSELS, 30th October 2020: Executive Vice-President of the EU Commission Mrs.
Margrethe Vestager announced today that she is sending out a Statement of
Objections against the Czech state-owned rail incumbent Czech Railways (České
Dráhy) for alleged predatory pricing.
The decision directly affects two ALLRAIL members – the privately owned Czech
newcomers RegioJet and Leo Express. After they entered the market on the Prague -
Ostrava route (RegioJet in 2011 and Leo Express the following year), state-owned rail
incumbent České dráhy ('ČD') - the dominant operator on the Czech rail market -
unreasonably dropped its prices for its services on this same route by almost 80%. This
is particularly staggering considering that, according to ČD, even the original higher
prices before 2011 had not covered its costs and the operations were loss-making.
The EU Commission has reached the preliminary view that between 2011 and 2019, ČD
was engaged in predatory pricing on thar route. It must also be noted that this pricing
policy by ČD is still ongoing.
This activity of selective below-cost pricing is the so called "predatory pricing" – which
leads to the distortion of competition on the relevant market and might lead to
eliminating newcomers from the market. Such an activity by a state-owned company
undermines the functioning of the Single European Rail Area. Enforcing competition
rules is an essential preliminary condition in order to achieve modal shift to rail and the
goals of the EU Green Deal.
(Continued overpage)
Executive Vice-President of the EU Commission Margrethe Vestager, who is in charge
of competition policy, said in a press release today1
that "competition in the rail
passenger transport sector can drive prices down and service quality up to the benefit
of consumers. It benefits the environment too as travelers shift to rail in line with the
Green Deal objectives. In the present case, we have concerns that České dráhy was
involved in predatory pricing which is against EU competition rules."
After decades of decline in the late 20th Century, it was the begin of competition on the
tracks - leading to a more passenger-centric approach and competitive pricing - that
caused rail passenger numbers to start growing again.
Unfortunately, in 2020, competition in the passenger rail sector is still rare and very
vulnerable. In theory the EU rail market is open - but in reality it is still very closed.
Newcomers effectively do not have equal access to the market, in terms of fair access
to market dominant sales channels, 2nd hand rolling stock and more.
For example: in March 2020 yet another antitrust case involving ČD as well as Austrian
state incumbent ÖBB (the so called "Twins" case) became known: both Incumbents
agreed to ÖBB not selling 2nd hand couchette rolling stock to the Czech-based
newcomer RegioJet - despite it offering a higher price than a non-Czech operator.2
ALLRAIL President Dr. Erich Forster says: "ALLRAIL welcomes this new announcement. It is
a vital sign for the market that the situation is being monitored and that rules will be
enforced. It is also an important signal to other EU Member States: They must not
tolerate such behaviour in their countries or even finance it. Ruthless behaviour - like
ČD's since 2011 - must be closely reviewed and prevented from happening again."
Sending a Statement of Objections is not a final decision and the process will continue;
however, it is already a strong and important signal for the European passenger rail
market. Considering that the severe drop in demand due to the COVID-19 pandemic
threatens the very survival of passenger rail newcomers, announcements like this one
today are highly necessary and very welcome.
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