Keywords
Summary

Keywords

1 Competition - Transport - Competition rules - Rail transport - Regulation No 1017/68 - Joint fixing of prices - Prohibition - Legal exception provided for in Article 3(1)(c) of Regulation No 1017/68 - Narrowly construed - Inclusive rates - Competitive rates - Meaning

(EC Treaty, Art. 85(1)(a); Council Regulation No 1017/68, Arts 2(a) and 3(1)(c); Council Decision 82/529, Art. 4; Council Recommendation 84/646, Art. 4)

2 Competition - Dominant position - Relevant market - Definition - Criteria - Rail services sub-market and rail transport market in general

(EC Treaty, Art. 86)

3 Competition - Dominant position - Relevant market - Geographical delimitation - Criteria

(EC Treaty, Art. 86)

4 Competition - Dominant position - Abuse - Discriminatory pricing

(EC Treaty, Art. 86)

5 Competition - Community rules - Concurrent application of Articles 85 and 86 of the Treaty - Whether permissible

(EC Treaty, Arts 85 and 86)

6 Competition - Administrative procedure - Access to the file - Request made after adoption of the Commission's final decision - Refusal - Effect on the legality of the decision - None

7 Acts of the institutions - Unalterable after adoption - Amendments subject to observance of the rules on competence and procedure

8 Competition - Transport - Competition rules - Rail transport - Fines - Amount - Determination - Criteria - Review by the Court

(Council Regulation No 1017/68, Arts 8, 22 and 24)

Summary

9 An agreement between the national rail undertakings of three Member States the purpose of which is to set up a common administration for the fixing of prices and tariffs for the carriage by rail of maritime containers to or from one of those States via the ports of those States, is incompatible with the common market.

An agreement establishing a common system for fixing prices falls within the scope of Article 85(1)(a) of the Treaty and of Article 2(a) of Regulation No 1017/68 applying rules of competition to transport by rail, road and inland waterway, irrespective of the extent to which the provisions of the agreement have in fact been observed. The reason for this is that the joint fixing of prices restricts competition, in particular by enabling every participant to predict with a reasonable degree of certainty what the pricing policy pursued by its competitors will be.

Such an agreement is not covered by the legal exception provided for in Article 3(1)(c) of Regulation No 1017/68 which authorizes `agreements, decisions or concerted practices the object and effect of which is to apply technical improvements or to achieve technical co-operation by means of ... the organization and execution of ... transport operations, and the fixing and application of inclusive rates and conditions for such operations, including special competitive rates'.

The introduction of a legal exception for agreements of a purely technical nature cannot amount to an authorization, on the part of the Community legislature, allowing agreements to be concluded whose purpose is the joint fixing of prices, if it is not to render nugatory Article 2(a) of Regulation No 1017/68.

Furthermore, since the independent determination by each economic operator of his commercial policy and in particular of his pricing policy corresponds to the concept inherent in the competition provisions of the Treaty, that exception and in particular the words `inclusive rates' and `competitive rates', must be construed with caution. The term `inclusive rate' must be understood to mean the `whole-journey' price, including the various national parts of a transnational journey, and the term `competitive rate' must be understood as allowing the various undertakings operating on a single transnational route to fix inclusive rates not only by adding together the tariffs for each of them, but also by incorporating common adjustments to ensure the competitiveness of the transport in question in relation to other modes of transport, without however altogether eliminating the independence of each undertaking with regard to the fixing of its own tariffs in accordance with its competitive interests.

That interpretation of Article 3(1)(c) of Regulation No 1017/68 does not, moreover, conflict with Article 4 of Council Decision 82/529 on the fixing of rates for the international carriage of goods by rail, or with Article 4 of Council Recommendation 84/646, addressed to the national rail undertakings of the Member States on strengthening their cooperation in international passenger and goods transport; on the contrary, it is in conformity with them.

10 In order to be considered, for the purposes of Article 86 of the Treaty, the subject of a sufficiently distinct market, it must be possible to distinguish the service or the good in question by virtue of particular characteristics that so differentiate it from other services or other goods that it is only to a small degree interchangeable with those alternatives and affected by competition from them. In that context, the degree of interchangeability between products must be assessed in terms of their objective characteristics, as well as the structure of supply and demand on the market, and competitive conditions.

In that regard, the rail services market constitutes a sub-market distinct from the rail transport market in general. It offers a specific range of services, in particular the provision of locomotives, traction and access to the railway infrastructure which, while provided according to the demands of the railway transport operators, is in no way interchangeable or in competition with their services. The distinct character of railway services also derives from the demand and supply factors that are specific to those services. It is not possible for transport operators to provide their services if they do not have railway services available to them.

Where, furthermore, the services covered by the sub-market are the subject of a statutory monopoly, placing those seeking the services in a position of economic dependence on the supplier, the existence of a dominant position on a distinct market cannot be denied, even if the services provided under a monopoly are linked to a product which is itself in competition with other products.

11 The definition of the geographical market for the purposes of applying Article 86 of the Treaty does not require the objective conditions of competition between traders to be perfectly homogeneous. It is sufficient if they are `similar' or `sufficiently homogeneous' and, accordingly, only areas in which the objective conditions of competition are `heterogenous' may not be considered to constitute a uniform market.

Moreover, a Member State may constitute, in itself, a substantial part of the common market on which an undertaking may hold a dominant position, in particular where it enjoys a statutory monopoly on that territory.

12 By prohibiting abuse of a dominant position, Article 86 of the Treaty seeks to prohibit a dominant undertaking from strengthening its position by using methods other than those which come within the scope of competition on the basis of quality. Thus, an undertaking may not apply artificial price differences such as to place its customers at a disadvantage and to distort competition.

13 The existence of an abuse of a dominant position cannot be ruled out by the fact that the undertaking which holds the dominant position has formally entered into an agreement the object of which is the joint fixing of tariffs and which thus falls within the scope of the prohibition of restrictive agreements. The existence of such an agreement does not preclude the possibility that one of the undertakings bound by the agreement might unilaterally impose discriminatory tariffs.

14 The legality of a decision taken by the Commission against an undertaking in a competition case cannot be affected by the Commission's refusal to grant further access to the file during the period prescribed for bringing an action, where the request to that effect was made after adoption and notification of the decision and thus constitutes an element which post-dates it.

15 The principle of legal certainty aims to ensure that situations and legal relationships governed by Community law remain foreseeable. To that end, it is essential that the Community institutions observe the principle that they may not alter measures which they have adopted and which affect the legal and factual situation of persons, so that they may amend those acts only in accordance with the rules on competence and procedure.

16 When applying the rules of competition to rail undertakings, the fact that the Commission finds that Article 86 of the Treaty has been infringed rather than Article 8 of Regulation No 1017/68 applying rules of competition to transport by rail, road and inland waterway does not prevent it from imposing a fine under Article 22 of that regulation, since the relevant provisions of Article 8, referred to above, have the same wording and the same scope as those of Article 86 of the Treaty.

So far as concerns the taking into account of an undertaking's turnover when setting the fine to be imposed upon it for infringement of the rules on competition, it is permissible, in the context of Article 22 of Regulation 1017/68, to have regard both to the total turnover of the undertaking and to the turnover accounted for by the services in respect of which the infringement was committed. As regards the setting of the amount of the fine within the quantitative limits provided for in that provision, since fines constitute an instrument of the Commission's competition policy, that institution must be allowed a margin of discretion when fixing their amount, in order that it may direct the conduct of undertakings towards compliance with the competition rules.

Nevertheless, it is for the Community judicature, in the exercise of its unlimited jurisdiction pursuant to Article 24 of Regulation No 1017/68, to verify whether the amount of the fine imposed is in proportion to the duration of the infringement and to the other factors capable of affecting the assessment of the gravity of the infringement, such as the influence which the undertaking was able to exert on the market, the profit which it was able to derive from those practices, the volume and the value of the services concerned and the threat that the infringement poses to the objectives of the Community.

In that regard, the unprecedented nature of a decision imposing a fine in the rail transport sector cannot be pleaded as a ground for a reduction of the fine, provided that the gravity of the infringement of the competition rules is undisputed.