Czech Railways fined CZK 270 million for abuse of dominant position on the market for rail freight transport

The Office for the Protection of Competition has imposed a fine of CZK 270 million on the company České dráhy, a.s. (the Czech Railways Company) for abuse of dominant position on the market for rail freight transport of large volume substrates. By its behaviour, the company violated the Czech and the EC competition law. The decision has not entered into force yet and the Czech Railways can file an appeal against it.

In particular, the Czech Railways Company, without objectively justifiable reasons, charged its customers dissimilar prices for provision of comparable services of rail freight transport of large volume substrates. At the same time, the Czech Railways company applied significantly different levels of margins. The infringement lasted from 1 January 2003 to 30 November 2007. This behaviour harmed those customers, who got worse business conditions, and indirectly also consumers. The discriminatory price policy of the Czech Railways company also affected assertion of other rail transport providers on the market.

From 1 January 2005 to 30 November 2007 the Czech Railways Company also applied without objectively justifiable reasons different conditions for so-called level prices for rail freight services (different volumes of transported cargo necessary for reaching the quantity rebates and different range of rebates  when reaching the given volume of transported cargo). Again, some of the customers of the Czech Railways Company services were put at a disadvantage when they got less favourable conditions for reaching level prices. The true objective of unfair application of conditions for level prices was securing the loyalty of selected customers.

Finally, the Czech Railways discriminated companies SPEDIT-TRANS, a.s. and ŠPED-TRANS Levice, a.s., customers of rail freight transport, who were as from 1January 2006 excluded from setting of negotiated prices for the transport with the Czech Railways, i.e. the Czech Railway Company refused to provide them with the reduction of TCC (tariff of carriage consignment) price. At the same time the Czech Railways took measures obliging the two companies to deposit 100 % of the price for the rail freight transport services in advance. On 5 January 2006 the Czech Railways company terminated the so-called central clearing contracts with both companies. (The invoicing for rail freight transport services is based on central clearing contracts.) These steps were taken in response to competitive behaviour of the companies towards the Czech Railways. Eventually, both companies were forced to leave the market or considerably restricted in their business.

Department of External Relations of the Office