European Commission fines rail operator cartel $53m

EU antitrust regulators said Kuehne + Nagel, Express Interfracht, and Schenker operated as a cartel, fixing prices on their joint “Balkantrain” and “Soptrain” services in Europe from July 2004 to June 2012.    The European Commission has fined German logistics provider Schenker, a Deutsche Bahn subsidiary, and Express Interfracht (EXIF), part of the Austrian railway company Österreichische Bundesbahnen, a combined 49.15 million euros (U.S. $53.23 million) for price fixing on their joint “Balkantrain” and “Soptrain” services in Europe.
   The Balkantrain service connects Western and Central Europe with Southeast Europe, while the Soptrain line provides a direct link between Central Europe and Romania.
   The EU antitrust regulators said Swiss third-party logistics provider Kuehne + Nagel International AG was also a member of the price fixing “cartel,” but K + N avoided a potential fine of 62 million euros “as it was granted immunity under the Commission’s 2006 Leniency Notice for revealing the existence of the cartel.”
   Schenker’s portion of the fined amounted to 31.8 million euros, while EXIF is responsible for the remaining 17.4 million euros. Both companies received a 10 percent reduction in fines for admitting culpability and assisting EU authorities with the investigation.
   The case covered behavior regarding joint blocktrain services, a rail shipping system by which cargo is transported from one hub to another without wagons being split up or stored along the way, operated by the cartel members from July 2004 to June 2012. In theory, blocktrains save time and money for customers, particularly those transporting high volumes, as they are more efficient economically than traditional rail transportation.
   Specifically, the European Commission found the companies engaged in the following practices in order to limit competition between them:

• They agreed and allocated existing and new customers as well as setting up a customer allocation scheme including a ‘notification system’ for new customers.
• They exchanged confidential information on specific customer requests.
• They shared transport volumes contracted by downstream customers.
• They coordinated prices directly by providing each other with cover bids in respect of customers protected under their customer allocation scheme and coordinated sales prices offered to downstream customers.

   The European Commission’s cartel ruling does not apply to the “intrinsic upstream coordination of the operators (joint purchasing of transport services, such as locomotion/traction, trailers and other equipment from national rail carriers),” however, “because such coordination to create a ‘blocktrain’ service is not anticompetitive” in and of itself. “The decision solely concerns the collusion between the operators of the blocktrains in the marketing of the service,” the antitrust commission said.
   “I find it very disappointing that a project to enhance transport efficiency and promote environmentally friendly cargo transport was derailed into a cartel,” Commissioner Margrethe Vestager, head of competition policy, said of the case. “The European Union needs rail cargo markets to function efficiently on the basis of effective competition and not to be hijacked by vested interests to the detriment of customers.”