Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC derails cargo train cartel, imposes €49M in fines, (Jul 15, 2015)

By Greg Hammond, J.D.

Cargo train operators Express Interfracht and Schenker were fined over €49 million for allegedly fixing prices and allocating customers for Balkantrain and Soptrain “blocktrain” services in Europe for approximately eight years. Kühne + Nagel of Switzerland also took part in the cartel, according to the EC, but was not fined because it was given immunity under the EC’s 2006 Leniency Notice for revealing the existence of the cartel.

“Blocktrains” is a rail shipping system that transports cargo from one location to another without cars being split up or stored. This, according to the EC, saves money and time for consumers, particularly those with large volumes of cargo to transport.

The blocktrains at issue were “Balkantrain” and “Soptrain,” which are jointly operated by Express Interfracht, Kühne + Nagel, and Schenker. Balkantrain connects Western and Central Europe with Southeast Europe, and Soptrain connects Romania and Central Europe.

The EC claimed that the three companies agreed on multiple restrictive practices, including: agreements and allocation of existing and new customers, along with a customer allocation scheme involving a “notification system” for new customers; exchanging confidential information on specific customer requests; sharing transport volumes contracted by downstream customers; and coordinating prices directly by providing cover bids in respect of customers protected under their customer allocation scheme and coordinating sales prices offered to downstream customers. The alleged infringement lasted from July 2004 to June 2012.

“I find it very disappointing that a project to enhance transport efficiency and promote environmentally friendly cargo transport was derailed into a cartel,” stated Commissioner in charge of competition policy, Margrethe Vestager. “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.”

In calculating the fines, the EC considered the companies’ sales generated from cargo transport services concerning the jointly operated blocktrains Balkantrain and Soptrain, the serious nature of the alleged infringement, and the geographic scope and duration of the cartel. While Kühne + Nagel received full immunity, avoiding a fine of over €63 million, Express Interfracht received a reduction of 45 percent and Schenker received a reduction of 30 percent for their cooperation with the investigation. Express Interfracht was consequently fined €17.3 million and Schenker was fined nearly €31.8 million.

Companies: Express Interfracht; Kühne + Nagel; Schenker

News: Antitrust