GERMANY: On June 26 the national competition authority ruled that state-owned operator Deutsche Bahn must alter its commercial practices to comply with competition laws. The Bundeskartellamt had found that DB had been abusing its domination of the travel market in relation to mobility platforms. DB has one month to appeal against the ruling.
Areas of concern highlighted by the authority included data sharing, advertising bans, ‘vertical price specifications’, bans on discounts and the withholding of commission payments to third-party sales platforms.
The authority noted that DB was ‘not only a dominant rail operator, but it is also a strong mobility platform itself with its online portal bahn.de and its app DB Navigator’. It asserted that ‘DB denies mobility platforms continuous and non-discriminatory real-time access to all the traffic data controlled by DB, which are essential for organising and booking journeys including different means of transport’. For ‘significantly smaller and lesser known railway companies in Germany’, mobility platforms were ‘an important channel to increase the reach and win customers for their transport services’.
Sharing up-to-date information
The Bundeskartellamt found that the data in question included information on train delays and cancellations, cancelled or additional stops, the reasons for delays or cancellations, additional or replacement services and up-to-date information on platform alterations and other changes during periods of disruption.
Bundeskartellamt President Andreas Mundt said that ‘the services of third-party mobility platforms making integrated route planning possible for passengers are not conceivable without including DB’s offers and traffic data. DB is therefore subject to abuse control under competition law and has to fulfil special obligations towards rival platforms.’
Mundt also affirmed that ‘without effective enforcement under competition law, the business models of mobility platforms cannot function in competition with DB’.
Under the European Union’s rail passenger rights regulation that came into force on June 7, DB is required ‘to share forecast data for the purpose of informing passengers’. However, the Bundeskartellamt considers that the regulation is ineffective in preventing the violation of competition law as it ‘does not cover all the necessary real-time data, nor does it regulate important commercial and technical aspects of implementing data access’.
Settlement could not be reached
In announcing the authority’s ruling, Mundt said that ‘following lengthy negotiations, a settlement agreement could not be reached, mainly due to individual commercial requirements. Consequently, to prevent possible practices of DB favouring its own offers or providing less favourable conditions regarding access to forecast data, an official decision ordering DB to cease in such practices is needed.’
Mundt also highlighted the need for DB to change a number of contractual clauses ‘which may restrict competition at the expense of rival mobility platforms. We want to prevent DB from expanding its dominance in passenger rail transport also to future mobility markets and from holding back innovative mobility service providers in favour of its own business interests.’
Measures imposed on DB include:
- allowing mobility platforms to use DB-specific terms for online and app-store advertising without contractual restrictions imposed by DB;
- permitting DB’s online partners to use their own discount campaigns, bonus points or cashback programmes when selling DB tickets, ending unequal treatment between third-party mobility platforms and DB itself; individual targeted discount campaigns which impose additional risks on DB with regard to managing passenger loadings are excluded;
- requiring DB to compensate mobility service providers based on minimum competition-law standards for carrying out booking and payment processes on behalf of DB when selling rail tickets.
Supplementary requirements, over and above those set out in the new EU passenger rights regulations regarding the provision of real-time data, will be specified; further, access to data by third-party rail operators will be required and must be non-discriminatory and comparable to DB’s own access.
Ruling goes too far, believes DB
DB responded immediately, saying it would appeal against the ruling, which interfered in its entrepreneurial freedom. It said that it failed to comprehend the decision, which had ‘far-reaching economic consequences for DB’. Noting that the ruling related to complaints from international online sales platforms, DB had ‘made it clear at an early stage that it would share its real-time data with its sales partners as part of a Europe-wide package to improve passenger rights from June 7’.
DB said that the decision by the Bundeskartellamt went ‘way beyond the original requirements. It obliges DB to remunerate online platforms for selling DB tickets, even if their services offer no added value for DB’. Noting that ‘the online platforms are often backed by well-funded major US banks, global asset management companies and funds’, DB pointed out that the ruling also obliges it ‘to release its trademarked terms and sales channel designations such as “DB Navigator” and “bahn.de” for the search engine marketing of the online platforms’.
DB affirmed that the burdens imposed by the required changes to its sales model were ‘not offset by any corresponding savings or extra income’. Its bahn.de portal and DB Navigator app were ‘powerful and successful sales platforms’, and DB wanted to invest in them further. However, the ‘additional financial burdens imposed on DB would in the worst case lead to higher ticket prices and less investment’.
Replicated across Europe
Responding to the ruling on June 29, the AllRail association of new entrants to the passenger market called for the European Commission to ‘act now to ensure this decision and behaviour change become standard practice across all EU markets’. The Bundeskartellamt’s ruling should ‘be immediately applied to all rail operators across Europe who use monopolistic behaviour’, the association said.
AllRail Secretary General Nick Brooks said that ‘the implications of today’s ruling are huge. Anti-competitive behaviour is not allowed, and Europe must act on this momentum to distribute the power away from dominant rail incumbents, like DB, in order to ensure it is shared by smaller existing companies and future start-ups who want a fair chance when entering the market.’
