On 28th May 2013, the Italian Competition Authority (“ICA”) published its decision to open an indepth investigation on Ferrovie dello Stato Italiane S.p.A. (“FS”), the Italian railway incumbent operator, for abuse of dominance.

After the privatization in 2000, FS has become the holding company of the FS Group, which fully controls Trenitalia S.p.A. (“Trenitalia”), the incumbent passenger services operator, and Rete Ferroviaria Italiana S.p.A. (“RFI”), which manages the Italian railway network (“Network”) and consequently the access to passenger stations and maintenance facilities.

In April 2012, the Italian company Nuovo Trasporto Viaggiatori S.p.A. (“NTV”) entered the market for high-speed passenger services, so that putting an end to Trenitalia monopoly on the passenger services market.

NTV filed a complaint with ICA against Trenitalia for anti-competitive practices.

After examining the complaint ICA decided to start proceedings alleging that FS had committed the following infringements of Article 102 TFEU:

  1. Charged high prices to allow NTV to access the Network and, at the same time, low-prices to consumers for high-speed passenger services
  2. Denied NTV access to the Network during peak hours, granting them to Trenitalia
  3. Denied NTV access to maintenance facilities and spaces for advertising and promoting commercial services in passenger stations
  4. Refused to grant NTV suitable ticket office locations

In particular, ICA found that the conduct referred at (a) above could constitute a margin squeeze. FS charged low-prices in the downstream market (high-speed services) combined with a high price policy in the upstream market (network access), so that to impede NTV from offering the same price in the downstream market because of the insufficient margins due to the costs suffered in the upstream market.

In relation to the conduct referred in letter (b), (c) and (d) above ICA alleged that their implementation was designed to impede NTV entering into the high-speed passenger services market. In addition to that, ICA found that a dominant undertaking, like FS, is under an obligation to deal with other competitors (NTV) in a non-discriminatory way in relation to the access to the infrastructure that it owns.

In our view, the ICA’s decision highlights two important issues for competition authorities: first, the growing scrutiny of the ICA on margin squeeze issues and secondly, the extent to which FS’s subsidiaries are commercially as well as legally independent of the holding company. This lack of commercial independence has led to FS being subject to investigation although it is an holding company, legally separated from Trenitalia and RFI, which have materially carried out the alleged anti-competitive conduct.