OREANDA-NEWS. July 16, 2015. The European Commission has imposed fines of € 49 154 000 on Express Interfracht, part of the Austrian railway incumbent ?sterreichische Bundesbahnen ("?BB"), and Schenker, part of the German railway incumbent Deutsche Bahn ("DB"), for operating a cartel in breach of EU antitrust rules in the market for so-called cargo 'blocktrain' services. The three companies fixed prices and allocated customers for their "Balkantrain" and "Soptrain" services in Europe for nearly eight years.

K?hne+Nagel of Switzerland, which is one of the largest transport and logistics companies in Europe, also took part in the cartel but was not fined as it was granted immunity under the Commission's 2006 Leniency Notice for revealing the existence of the cartel. Express Interfracht and Schenker received reductions of their fines under the Leniency Notice for cooperating with the investigation. Since all three companies agreed to settle the case with the Commission, the fines imposed were further reduced by 10%.

Commissioner Margrethe Vestager who is in charge of competition policy said: "I find it very disappointing that a project to enhance transport efficiency and promote environmentally friendly cargo transport was derailed into a cartel. The European Union needs rail cargo markets to function efficiently on the basis of effective competition and not to be hijacked by vested interests to the detriment of customers."

'Blocktrains' refers to a rail shipping system to transport cargo from one hub to another without wagons being split up or stored on the way. This saves time and money for customers from a wide range of industries, in particular those with large volumes to transport. In principle, blocktrains are economically more efficient than traditional rail cargo transport, notably for single commodity shipping.

The 'blocktrains' covered by the cartel, named "Balkantrain" and "Soptrain", were jointly operated by K?hne+Nagel, Express Interfracht and Schenker. "Balkantrain" ensures the connection between Western and Central Europe with Southeast Europe. "Soptrain" connects Central Europe with Romania.

In order to limit competition between them, the companies agreed on several restrictive practices:

  • they agreed and allocated existing and new customers as well as setting up a customer allocation scheme including a 'notification system' for new customers;
  • they exchanged confidential information on specific customer requests;
  • they shared transport volumes contracted by downstream customers;
  • they coordinated prices directly by providing each other with cover bids in respect of customers protected under their customer allocation scheme and coordinated sales prices offered to downstream customers.

The infringement lasted from July 2004 to June 2012 for all companies.

The intrinsic upstream coordination of the operators (joint purchasing of transport services, such as locomotion/traction, trailers and other equipment from national rail carriers) is not covered by today's decision because such coordination to create a 'blocktrain' service is not anticompetitive. The decision solely concerns the collusion between the operators of the blocktrains in the marketing of the service.

Fines

The fines were set on the basis of the Commission's 2006 Guidelines on fines (see press release and MEMO).

In setting the level of fines, the Commission took into particular account the companies' sales generated from rail cargo transport services related to the jointly operated blocktrains "Balkantrain" and "Soptrain", including ancillary transport services, the serious nature of the infringement, its geographic scope and its duration. The fines ensure an appropriate level of deterrence while remaining proportionate to the infringement.

Under the Commission's 2006 Leniency Notice, K?hne+Nagel received full immunity for revealing the existence of the cartel, thereby avoiding a fine of more than € 62 million. Express Interfracht received a reduction of 45% and Schenker a reduction of 30% for cooperating with the investigation.

Under the Commission's2008 Settlement Notice, the Commission applied a reduction of 10% to the fines imposed in view if the parties' acknowledgment of their participation in the cartel and of their liability in this respect.

The total fines imposed are as follows:

Reduction under the Leniency Notice

Reduction under the Settlement Notice

Fine (€)

K+N

100%

(10%)

0

EXIF

45%

10%

17 356 000

Schenker

30%

10%

31 798 000

Total

49 154 000

Background

The Commission's investigation started with unannounced inspections in June 2013.

More information on this case will be available under the case number 40098 in the public case register on the Commission's competition website, once confidentiality issues have been dealt with. For more information on the Commission’s action against cartels, see its cartels website.

The settlement procedure

Today's decision is the 19th settlement since the introduction of the settlement procedure for cartels in June 2008 (see press release and MEMO). In a settlement, companies acknowledge their participation in a cartel and their liability for it. Settlements are based on the Antitrust Regulation 1/2003 and allow the Commission to apply a simplified and shortened procedure. This benefits consumers and taxpayers as it reduces costs; benefits antitrust enforcement as it frees up resources to tackle other suspected cartels; and benefits the parties themselves in terms of quicker decisions and a 10% reduction in fines.

The Commission previously reached settlements with cartels participants in the following cases: DRAMs, animal feed phosphates, washing powder, glass for cathode ray tubes, compressors for fridges, water management products, wire harnesses, Euro and Yen interest rate derivatives, polyurethane foam, power exchanges, bearings, steel abrasives, mushrooms, Swiss Franc interest rate derivatives and bid-ask spreads, envelopes and parking heaters.

Action for damages

Any person or firm affected by anti-competitive behaviour as described in this case may bring the matter before the courts of the Member States and seek damages. The case law of the Court and Council Regulation 1/2003 both confirm that in cases before national courts, a Commission decision is binding proof that the behaviour took place and was illegal. Even though the Commission has fined the companies concerned, damages may be awarded without being reduced on account of the Commission fine.

The Antitrust Damages Directive, which the Member States have to implement in their legal systems by 27 December 2016, makes it easier for victims of anti-competitive practices to obtain damages.