EU/Competition: Transport and Shipping

Newsletter 11/2020

The Norwegian Competition Authority (NCA) closed 15.10.20 an investigation against Circle K Norge AS and YX Norge AS. The two companies have agreed by way of commitments to end their practice of publishing recommended list prices for retail fuel on their websites. The NCA launched an investigation against Circle K and YX in the Autumn of 2019 due to concerns that Circle K and YX cooperated on setting retail fuel prices. In particular, the NCA was concerned that the publishing of recommended list prices facilitated parallel national lifts on pump prices. The NCA found that such behavior could be in breach of the prohibition against anticompetitive agreements and concerted practices in Section 10 of the Competition Act. Circle K and YX do not share the Competition Authority’s competition concerns, but have nevertheless committed to refrain from publishing recommended list prices for retail fuel on their websites. Both Circle K and YX chose to end this practice before the commitments were made binding by the adoption of the Authority’s decision on 15.10.20.

Following a complaint, the Commission carried out inspections at the premises of the state-owned Czech rail incumbent České dráhy (ČD) in April 2016. In November 2016, the Commission opened a formal antitrust investigation to assess the alleged predatory conduct of ČD relating to the provision of rail passenger transport services in Czechia, and in particular on the Prague – Ostrava route, the backbone of the Czech rail network. On certain routes in Czechia, rail undertakings compete on a commercial basis, outside of public service contracts. In 2011 and 2012, two new rail undertakings, RegioJet and Leo Express, started operating commercial trains on the Prague-Ostrava route. As competition increased in the rail sector in this area, the number of passengers using this route by rail doubled in a few years. The Commission investigation allegedly shows ČD potentially felt that RegioJet and Leo Express expanded too quickly on the Prague – Ostrava route and beyond. According to the Commission, ČD reacted by starting to offer its services at prices that did not cover its costs, with the aim of hindering competition in the market. By issuing a Statement of Objections 30.10.20 (SO) the Commission therefore has reached the preliminary view that between 2011 and 2019 ČD engaged in predatory pricing on the Prague – Ostrava route. If the preliminary view of the SO is confirmed, ČD’s conduct would amount to an abuse of a dominant position through predatory pricing, being an infringement of Article 102 TFEU.

31.10.20 was the EU deadline to transpose the technical pillar of the Fourth Railway Package, thereby granting the European Union Agency for Railways (ERA) powers needed to become Europe’s single certification body for rail vehicles and railway traffic operators. The Fourth Railway Package is a set of legislative texts designed to complete the single market for rail services (Single European Railway Area). It puts an end to diverging technical, operational and legal requirements at national level that hamper the efficiency of international rail operations. The 2016 package consists of two pillars: (i) The so-called market pillar aims at increasing competition, thereby improving cost-effectiveness and quality of rail services. (ii) The new harmonised procedures involving ERA stem from the technical pillar of the Package, which aims at reducing costs and administrative burden for railway undertakings. The 4^th Railway package has yet to be incorporated into the EEA Agreement. The Norwegian Parliament (Storting) is in this relation contemplating – for the first time since 1945 – to as the Norwegian Supreme Court for an opinion on constitutionality pursuant to Section 83 of the Constitution, specifically whether the transfer of powers to the ERA can be decided upon by the Parliament by simple majority as a case of minor importance (“lite inngripende”).

Since May 2012, the Commission has implemented a major reform of EEA State aid rules: the State Aid Modernisation package. The Commission published 30.10.20 a Commission Staff Working Document summarising the results of an evaluation of the State aid rules. The exercise covered the following rules: (i) General Block Exemption Regulation (GBER), (ii) De minimis Regulation, (iii) Guidelines on regional State aid, (iv) Framework for State aid for research and development and innovation (RDI), (v) Communication on important projects of common European interest (IPCEI), (vi) Guidelines on State aid to promote risk finance investments, (vii) Guidelines on State aid to airports and airlines, (viii) Guidelines on State aid for environmental protection and energy and (IX) Guidelines on State aid for rescuing and restructuring. In addition, it also covered the Railways Guidelines from 2008 and the Short term export credit Communication from 2012. Those rules were not revised as part of the State Aid Modernisation, but an evaluation was relevant in the light of developments in EEA law and the Commission’s case practice. The “fitness check” concludes that, overall, the State aid rules under scrutiny are broadly fit for purpose. However, the individual rules need revisions, including clarifications, further streamlining and simplification, as well as adjustments to reflect recent legislative developments, current priorities, changes in markets and technology developments. By way of example, in line with the outcome of the evaluation, the Commission will propose to clarify and simplify the practical application of certain provisions, such as how to calculate in a simplified manner indirect eligible costs for research & Development projects. As regards IPCEIs, in view of the special role that SMEs play in the economy, and considering that State aid to SMEs is less likely to distort competition and affect trade between EEA countries, it may be appropriate to facilitate SMEs’ participation in IPCEIs, both directly and indirectly. The “fitness check” also revealed that compatibility rules on regional aid worked fairly well, but needed streamlining and clarification of some concepts. The “fitness check” shows that the environmental and energy rules have so far facilitated a more effective and less distortive deployment of state resources to improve environmental protection and achieve the objectives of the Energy Union. However, they need to be further adjusted in light of new technologies and novel support types, as well as recent environmental and energy legislation. The rules also need to be aligned to future challenges. In particular and according to the Commission, state aid should contribute even further to the European Green Deal, as well as to the EU’s Digital and Industrial Strategies. In particular, the revision of the energy and environmental rules will have to facilitate appropriate measures further promoting a modern decarbonised and circular economy, while ensuring limited distortions of competition and adequate safeguards to the integrity of the single market. The Commission plans to anticipate the review of the relevant State aid guidelines to the end of 2021. These include the Regional aid Guidelines, IPCEI Communication, RDI Framework, Risk Finance Guidelines, Environmental and Energy Guidelines and relevant provisions of GBER. The other rules that were part of the “fitness check” will be revised in the medium term. Public consultations on these rules are taking place between the second half of 2020 and the beginning of 2021. Visit DG COMP’s web page on the fitness check here.