competition rules in inland transport Doc.dr.sc. Iva Savić

Competition in a single transport market Transport costs > product and service prices Operators > competition > lower prices for final users MS – national carriers vs Comission – liberalization Reg 141/62 – suspending competition rules in transport sector Council: with the development of common policy in inland transport sector, application of competition rules follows Commission is vigilant to any signs of price fixing, market sharing or other kinds of anticompetitive behaviour which would impede effective competition and harm EU consumers' welfare

EU competition rules TFEU, art. 101-109 - applies to all economic sectors, incl.transport art. 101 TFEU (prev. Art. 81) > agreements between transport undertakings: between various branches or dif.undertakings in the same branch restricting competition? > prima facie prohibited > automaticaly void art. 81 (3) exemptions… art. 102 (prev. 82) – abuse of dominant position > common market – affecting trade

regulations Regulation 1017/68 – applying competition rules to inland transport (shipping and air transport excluded) taking special characteristics into account Exemptions: small and med size undertakings technical cooperation agreements agreements for imporvement of transport services … Replaced by Regulation 169/2009 - contains list of agreements, decisions *Only Article 13(3) Reg 1017/68 continues to apply under specified conditions

exemptions Reg 169/2009 sets list of decisions, agreements and concerted practices to which prohibition does not apply: the object and effect of which is to apply technical improvements or to achieve technical cooperation by means of… where their purpose is a) the constitution and operation of groupings of road or inland waterway transport undertakings with a view to carrying on transport activities; (b) the joint financing or acquisition of transport equipment or supplies, where these operations are directly related to the provision of transport services and are necessary for the joint operations of the aforesaid groupings (under specif. Conditions)

procedure Regulation 1/2003 implementation of the rules on competition laid down in Art. 81 and 82 for all transport activities sets out the general antitrust procedural framework a very limited number of sector-specific regulations in the transport sector

Merger control ensuring effective competition in transport markets Commission examines concentrations in passenger and cargo transport activities rail sector - result of liberalisation of passenger rail transport (2011) > increasing number of EU companies set up trans-national joint ventures in order to penetrate non-domestic markets Relevant market – defining the market

Article 101 (TFEU) procedures - antitrust Cases to investigate anti-competitive agreements (e.g. cartels) a) a complaint (e.g. from a competitor); b) the initiative of the competition authority (national authority or European Commission); c) an application under a leniency programme (where a participant in a cartel may avoid a fine or have it reduced if it provides information on the cartel) INVESTIGATION: a) European Commission - wide-ranging powerss, includingthe right to request information from companies and to enter companies’ premises, seize their records and interrogate their representatives it sets out a statement of objections (SO) which it sends to the companies in question > Companies under investigation may access the Commission’s file and respond to the SO OR Commission decides to adopt a commitment decision where no fines are imposed. APPEAL - to the General Court

Article 102 (TFEU) procedures - abuse of dominance INVESTIGATION: national competition authority or the Commission > on its own initiative or following a complaint The key first step : assess whether the firm involved is ‘dominant’. This involves defining its market both in terms of the product(s) it supplies and the geographic area in which they are sold. As a general rule, if the market share is under 40 %, it is unlikely to be dominant. Other factors are also taken into account finding out whether this dominant position is being abused due to practices such as predatory pricing (prices that undercut competitors), etc. same investigation powers as for Article 101 procedures. European competition network – information exchange

State aid

EU state aid rules number of state aid notifications is constant, with phases of increasing (economic crisis) art. 107 TFEU (ex 87) basic prohibition: „…any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market” Par 2. – unconditional exclusions Par. 3 – conditional exclusions specific sectoral rules on state aid granted to the transport sector Art. 93 TFEU (ex 73) - Treaty applies to transport with some additional exceptions („Aids shall be compatible with the Treaties if they meet the needs of coordination of transport or if they represent reimbursement for the discharge of certain obligations inherent in the concept of a public service.”) Sectoral regulations

art. 108 (ex 88) enforcement: - Commission monitors state aid Investigative powers exclusive competence to authorize aid Regulation (EU) 2015/1589 - detailed rules for the application of Article 108 TFEU (replacing Reg 659/1999) And more specific rules on procedure… art. 109 (ex 89) – special treatment (Council!)

inland transport legislative program in Directive 65/721 concept of „public service”: Regulation 1191/69 procedures for permissible aids: Regulation 1107/70 REGULATION (EC) No 1370/2007 on public passenger transport services by rail and by road (repealing Council Regulations Nos 1191/69 and 1107/70) + guidelines (!)

Public services Services that public authorities identify as being particularly important to citizens, but would not be supplied without public intervention Altmark judgement, 2003 Compensation for PS? Not a state aid if 4 cumulative conditions are met guide on the application (2013)