Across a range of industries, the European Union has opened up previously monopolised markets, first with liberalising legislation, and then with antitrust enforcement.

As the EU’s competition authority, the European Commission has powers to challenge anti-competitive behaviour, and it has imposed fines amounting to hundreds of millions of euros on incumbent energy and telecoms companies for using their control of infrastructure to hamper rivals seeking a foothold in consumer markets.

Thus far, the railway sector has largely escaped intrusive investigations and eye-watering fines, but there are signs that both national and European regulators are prepared to take on the incumbent rail companies.

In 2013, the Commission launched an investigation into DB Energie, a subsidiary of Deutsche Bahn that was the only supplier of traction current for trains on Germany’s rail network. DB Energie was accused of offering the traction current on terms and conditions that allowed Deutsche Bahn’s own freight services to enjoy rebates and discounts for which rivals could not qualify.

Deutsche Bahn brought the investigation to a close by conceding remedies to the Commission, agreeing to revise its pricing structure and to open up the market for traction current to competition.

Enforcing the rules

Announcing the concessions, Joaquín Almunia, the European commissioner for competition, said that “in a sector where competition has been slow to develop following liberalisation, [this] decision illustrates how the enforcement of antitrust rules can help make rail markets function better in Europe”.

But the Commission’s scope to act is restricted by the limited liberalisation that has taken place in cross-border passenger rail services, says one competition lawyer. For the moment, competition authorities are likely to focus on the freight sector, where there has been more liberalisation.

National competition regulators have already started to take such action. France’s competition authority adopted an influential decision in December 2013, fining the rail company SNCF €60.9 million for abusing its dominant position over railway infrastructure. The regulator found that SNCF had used confidential information it obtained as the track operator to disadvantage rivals – in particular, Euro Cargo Rail, a subsidiary of Deutsche Bahn – and took different measures to restrict competitors’ access to essential infrastructure. This decision was said by a French official to serve as a “structural blueprint” for the sector.

In a similar vein, the United Kingdom’s Office of Rail Regulation opened an investigation into the freight sector in November 2013. A decision is not expected until next year. The Italian competition authority has a similar case ongoing.

Germany, by contrast, has not yet instigated any national antitrust investigations into the freight sector, to the disappointment of rivals that have gathered to form the campaigning association ‘mofair’ (mobil und fair) to denounce Deutsche Bahn.

The national competition authorities, like the Commission, do not have much scope to act, with only cross-border passenger services having seen any degree of liberalisation. Indeed, many incumbents still enjoy a monopoly over domestic passenger rail.

Although the national competition authorities have limited scope to act, they can pursue suspected abuses in ancillary sectors that are open to competition, such as the market for ticket sales in France. In the UK, the rail regulator examined the provider of information on rail times to ensure that its conduct was not preventing new products incorporating that information (such as mobile apps) from reaching the market.

On 30 January, the German competition authority opened an investigation into Deutsche Bahn, on suspicion that it may have abused its dominant position to disadvantage ticket sales for its rivals from its outlets in stations.

More cases are likely. “As any sector which has recently been liberalised – and is being liberalised – there is always a risk that incumbents could engage in illegal behaviour in order to prevent or delay entry,” said a spokesperson for the Commission. “The Commission will remain vigilant, as do national competition authorities.”

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