Commission publishes rail cargo settlement decision and increases DB Cargo fine by 50% for repeated cartel activity

Introduction
Background
50% increase of fine for repeated cartel activity
Comment

Introduction

On 1 October 2021, the European Commission published in the Official Journal(1) the 28-page public version of the settlement decision on the rail cargo cartel between three railroad undertakings: Deutsche Bahn, Société Nationale des Chemins de fer belges and whistleblower, Österreichische Bundesbahnen.

Background

On 20 April 2021, the European Commission fined railway companies Österreichische Bundesbahnen (ÖBB), Deutsche Bahn (DB) and Société Nationale des Chemins de fer belges/Nationale Maatschappij der Belgische Spoorwegen (SNCB) a total of €48.6 million for breaching EU antitrust rules.(2) While whistleblower ÖBB avoided a potential €37 million penalty under the leniency programme, DB and SNCB benefitted from a reduction of their fines for their cooperation during the investigation. In addition, the Commission applied a reduction of 10% on the fines imposed under the settlement notice in view of the acknowledgment of their participation in the cartel and of their liability in this respect.

Based on the Commission's investigation, the anticompetitive conduct lasted from 8 December 2008 to 30 April 2014, with SNCB participating only since 15 November 2011.

The three rail companies participated in a customer allocation cartel, which concerned cross-border rail cargo transport services on so-called block trains on key rail corridors in Europe. Block trains are cargo trains shipping cargo from one site, such as a production site, to another site, such as a warehouse, which are not split up or stopped on the way. Under the freight sharing model, which is a common model in international railway law, railway companies performing cross-border rail services typically provide customers with one overall price for the service required under a single multilateral contract.

The investigation revealed that the three railway companies coordinated by exchanging collusive information on customer requests for competitive offers and provided each other with higher quotes to protect their respective business. The companies thus participated in a customer allocation scheme in violation of the EU competition rules.

50% increase of fine for repeated cartel activity

DB Cargo's fine was increased by 50% for repeated cartel activity, because Deutsche Bahn AG, the parent company of the DB group, was an addressee of the Commission's freight forwarding cartel decision from March 2012.(3) DB Cargo even continued the alleged infringement in the rail cargo cartel (2008 to 2014) for more than two years after having received the freight forwarding decision in 2012. In addition, a deterrence multiplier of 1.1 was applied to DB due to its large worldwide turnover of €44 billion in 2019.

Comment

This decision makes it clear once again, that repeat offenders are fined more heavily. Under the 2006 guidelines for setting fines, companies that reoffend can face a 100% increase in their fine for having committed past infringements.

In setting the fine, the Commission may take into account circumstances that result in an increase or decrease in the basic amount of the fine. The basic amount of the fine may be increased where the Commission finds that there are aggravating circumstances, such as:

• a company continues or repeats the same or a similar infringement after the Commission or a national competition authority has made a finding that the company infringed competition law. In such case the basic amount will be increased by up to 100% for each such infringement established;
• refusal to cooperate with, or obstruction of, the Commission in carrying out its investigations; and
• role of leader in, or instigator of, the infringement; the Commission will also pay particular attention to any steps taken to coerce other undertakings to participate in the infringement and any retaliatory measures taken against other undertakings with a view to enforcing the practices constituting the infringement.

For further information on this topic please contact Sebastian Jungermann at Arnecke Sibeth Dabelstein by telephone (+49 69 979885 465) or email ([email protected]). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.

Endnotes

(1) Further information is available here.

(2) Further information is available here.

(3) Further information is available here.