The Autorité de la concurrence takes action to restore healthy competition and ensure that the rules be followed in the future
A fine and an injunction are imposed to the SNCF
Following the opening of ex officio proceedings in 2008 and a complaint filed by Euro Cargo Rail in 2009, the Autorité de la concurrence issues today a decision, by which it fines SNCF a total amount of €60.9 million for having implemented several practices that hindered or delayed the entrance of new operators in the railway freight sector.
These practices amount to an abuse of a dominant position and distorted competition in the specific context of the sector's effective opening to competition from 31 March 2006 onwards.
In essence, the penalised practices, on the SNCF's part, were as follow:
In addition to its freight business, the SNCF is a Delegated Infrastructure Manager (hereinafter DIM) for the Réseau Ferré de France (RFF – French Rail Network), which remunerates the former for such work. As such, when new rail companies request train paths allocations or to visit technical sites, the SNCF gathers sensitive and confidential information on the strategy and business behaviour of its rivals. Thus, it knows, for instance, of the customers canvassed, of the calls for tenders concerned, of the transport plans considered by its competitors (paths used, train length, transported tonnage, schedule, traffic origin and destination, etc.).
The dawn-raids carried out in the SNCF's premises established that the Freight branch of the SNCF had access to such confidential information and used it for its own commercial interest. In some cases, it aligned its market strategy with the traffics which were specifically targeted by its rivals (immediate customer contacting in order to define their needs or talk about prices and reasons why a customer wished to switch operators; thorough reviewing of its market strategy in certain geographical areas and for certain types of goods; a posteriori reconstruction of a rival's transport plan on the basis of the supplied information in order to “take advantage of it” and to design aggressive and targeted commercial offers).
This practice, which cannot be described as “competition on the merits”, artificially hampered the business of the SNCF's competitors and hindered the proper functioning of competition in the sector.
|A financial penalty of €60.9 million
For a company in a dominant position, which is the incumbent operator, to try and foreclose its competitors in the context of a market opening is a serious fact and it caused a certain harm to the economy. However, the Autorité noted that no document in the case could lead to thinking that the practices were part of a global strategy or a comprehensive plan drawn up by the SNCF.
An e-mail of 15 December 2006 from the former Sales Director of Fret SNCF, seized during the dawn-raids, illustrates this:
“Referring back to the matter of three-year contracts that would incur losses no matter what (confer our conversation yesterday) (...) In 3 cases, and for defensive reasons, we completed sales at market price regardless of profitability in order to prevent any hegemonic presence of our competitors (Basaltes in Voutre Neuillé, Ineos in Fos Italy, and Eurorail on Epinal Spain). (...) we kept improving our margins without being able to ensure that it was positive. This action was part of our desire to keep penetration by new entrants at A MINIMUM” (classification mark 38 749).
The SNCF, therefore, could maintain – at the expense of competitors at least as efficient as itself – the most important contracts in terms of turnover and the most strategic ones; market penetration by new entrants could only happen on the basis of smaller contracts, less conducive to their development.
|The injunction issued
It is in the market's interest that the SNCF, whose freight business contributes to many general interest tasks (land planning, environmental concerns...), should remain an essential and successful player in the market. This is the reason why the Autorité de la concurrence did not issue a financial penalty on this point, deeming preferable to issue an injunction against the SNCF. This injunction will lead the SNCF to change its economic model progressively, although within 3 years, as provided by the decision.
The Autorité enjoins the SNCF :
THE OBJECTIONS THAT WERE NOT RETAINED AGAINST THE SNCF
During the investigation, 13 objections were notified to the SNCF. The Autorité de la concurrence set 8 of them aside, deeming that the practices concerned were not established:
- Poaching of personnel trained for Véolia Cargo (please see pages 100 to 101 of the Decision/Objection 1);
- Deterrent pricing practice relating to the availability of freight yards (please see pages 99 to 100 of the Decision/Objection 5);
- Discriminatory pricing practices relating to access to SNCF's freight yards by VFLI (Objections 6 et 7), relating to the locomotive rental to Naviland Cargo (Objection 9) and to wagons hire by Ermewa Ferroviaire (Objection 13) ; (please see pages 103 to 106 of the Decision);
- Upholding of contracts binding the conventions for the use of freight yards to the railway services (see pages 101 to 102 of the Decision/Objection 12);
- Tied selling practices in full-train-load and wagon load services (see pages 102 to 103 of the Decision/ Objection 11);
> Press contact : André Piérard – Tel. : (+33) 1 55 04 02 28 / Contact by email
> See decision of the Paris Court of Appeal (6th November 2014)
> See decisin of the Court of cassation (Supreme Court of Appeal) - 22th November 2016
> See decision of the Paris Court of Appeal (20th December 2018)
> This last decision was submitted before the Cour de cassation (Supreme court of appeal)