#Antitrust: Lithuanian Railways fined €28M for dismantling 19km of railway track to block competition

Lithuania: The European Commission had fined Lithuania’s national railway company Lietuvos Geležinkeliai €27·9m for hindering competition in the rail freight market by dismantling a cross-border railway line connecting Lithuania and Latvia.

In 2008, Lithuanian Railways dismantled a 19-km long railway track connection between Lithuania and neighboring Latvia, thereby preventing the nearby oil company Orlen Lietuva, a subsidiary of Polish oil company PKN Orlen and a major customer of Lithuanian Railways, from using the services of other railway companies.

The removal of the track meant that Orlen would need to use a much longer route to reach Latvia (see below). Since then the dismantled track has not been rebuilt.

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Lithuanian Railways is the incumbent state-owned rail company in Lithuania. The company is “vertically integrated”, meaning that it is responsible for both railway infrastructure and rail transport.  The EU’s rail freight market was liberalized in 2007.

Competition Commissioner Margrethe Vestager said;

“Lithuanian Railways used its control over the national rail infrastructure to penalise competitors in the rail transport sector. The European Union needs a well-functioning rail freight market. It is unacceptable and unprecedented that a company dismantles a public rail infrastructure to protect itself from competition.”

Article 102 TFEU prohibits the abuse of dominant market position which may affect trade between EU Member States and prevent or restrict competition.  Lithuanian Railways failed to show any objective justification for the removal of the track,  which had hindered competition by preventing its customer from using the services of another operator.

The Commission said the fine (set on the basis of the Commission’s 2006 Guidelines on fines) took into account the value of sales relating to the infringement, the gravity of the infringement and its duration.

In addition, the Commission’s decision requires Lithuanian Railways to ‘bring the infringement to an end and refrain from any measure that has the same or an equivalent object or effect.’ and for a plan to be presented to the Commission within the next 3 months.

Reacting to the decision, Lithuanian Railways’ Managing Director, Mantas Bartuška, said it would closely study the Commission’s decision and decide how to proceed, pointing out that the line in question was not the only cross-border route, was in poor condition and that levels of usage were not sustainable..

Rokas Masiulis, Lithuania’s Minister of Transport and Communications, was quoted as saying by news website vz.lt “We will use all legal measures available to defend the interests of Lithuania. At the same time, we put all efforts to establish a constructive dialogue with the European Commission”. 

More information will be made available under the case number 39813 in the public case register on the Commission’s competition website once any confidentiality issues have been resolved.