CZECH REPUBLIC: The European Commission has begun an investigation into whether national operator ČD has breached EU competition rules by charging fares below its costs with the aim of excluding competitors from the passenger market.
The Commission said ČD had ‘significantly decreased’ fares on the Praha – Ostrava route following the launch of competing services by RegioJet in 2011 and LEO Express in 2012. While the Commission ‘of course welcomes vigorous price competition to the benefit of passengers’, it has concerns that ČD may have charged prices which would not cover its costs.
ČD told Railway Gazette it had ‘never’ charged prices below costs to shut out competitors, and said a claim of predatory pricing made by LEO Express had been dismissed by a court in Praha in December 2015.
In response to a complaint, the Commission had carried out inspections at ČD premises in April. The start of proceedings now relieves the domestic competition authorities of their competence in the case, and there is no deadline to complete the investigation.
‘Competition drives prices down and service quality up’, said Commissioner for Competition Margrethe Vestager on November 10. ‘This is what we need in railway passenger transport, especially when we’re serious about cutting our carbon emissions. We need to take a close look at ČD’s business practices to make sure they do not push out competitors to the detriment of passengers.’
Independent operators’ association ERFA welcomed the investigation, saying it would ‘send a strong signal that anti-competitive behaviour cannot be accepted in the Single European Railway Area’. The rail sector ‘should urgently stop thinking as a monopoly service provider’, it said.
ERFA claimed incumbent passenger and freight operators ‘are doing their best’ to shut out competition rather than improving service quality and efficiency. ‘Price dumping’ which prevents competitors accessing the market was ‘to the detriment of passengers and customers.’
