European Law Monitor

Make your voice heard!

new f2Antitrust: Commission market tests commitments proposed by Deutsche Bahn concerning pricing system for traction current in Germany

The European Commission is inviting comments from interested parties on commitments offered by the German railway incumbent Deutsche Bahn (DB) regarding its pricing system for traction current in Germany. Traction current is electricity used to power locomotives.

DB Energie, the DB subsidiary providing traction current to railway companies, is the only traction current supplier in Germany. The Commission has concerns that DB Energie's pricing system, and in particular discounts that only railway companies of the DB Group can achieve fully, may have hampered the development of competition on the markets for rail freight and long-distance passenger transport, in breach of European Union antitrust rules.

To dispel these concerns, DB has offered to introduce a new pricing system for traction current that would apply uniformly to all railway companies and should enable other electricity providers to directly supply traction current to railway companies. If the market test confirms that the proposed commitments remedy the competition concerns, the Commission may make them legally binding on DB.

DB offered the following commitments to address the Commission's concerns:

  1.     DB Energie will introduce a new pricing system for traction current with separate prices for electricity and for access to the traction current grid. The grid access fee is subject to approval by the German regulator (Bundesnetzagentur).
  2.     DB Energie will apply a single price for electricity without volume or duration-based discounts.
  3.     DB Energie will pay non-DB railway companies a one-time retroactive refund of 4% of their latest annual traction current invoice.
  4.     DB will provide the Commission with the necessary data to assess if the price levels charged by DB under the new pricing system would lead to a margin squeeze.

The commitments would apply as from 2014 for five years.

Interested parties can submit comments within one month of the date of publication.

Background on the investigation

In June 2013, the Commission informed DB of its preliminary assessment that DB may have abused its dominant position on the market for the provision of traction current in Germany, in violation of Article 102 of the Treaty on the Functioning of the European Union (TFEU). The practice concerned relates to the pricing of traction current that may have created a margin squeeze on the long distance passenger rail transport and rail freight markets in Germany. A margin squeeze occurs when the prices charged by a dominant company on an upstream market (here the provision of traction current) do not allow competitors on the downstream market (here the provision of rail transport services) to trade profitably on a lasting basis.

Traction current is the 16.7 Hertz electricity used to power rail locomotives in Germany and is an indispensable input for railway companies. DB Energie currently is the only supplier of traction current in Germany, thereby holding a dominant position on this market.

DB Energie currently markets traction current through an "all-inclusive" offer where railway companies pay a price covering both the consumption of traction current and the use of the traction current network managed by DB Energie. Following a judgement of the German Bundesgerichtshof which ruled that the traction current network falls under the regulation of the Bundesnetzagentur, DB Energie will change its pricing system for traction current and charge separately the grid access fee – regulated by law - and the price for electricity. This should allow other electricity providers to also supply traction current to railway companies in competition with DB Energie.

Procedural Background

Article 102 TFEU prohibits the abuse of a dominant market position in the internal market, in so far as it affects trade between Member States.

If, in light of the results of the market test, the commitments proposed by DB provide a satisfactory solution to the Commission's competition concerns, the Commission may adopt a decision to make them legally binding on DB under Article 9 of the European Union's antitrust Regulation 1/2003. Such an Article 9 decision does not conclude that there is an infringement of European Union antitrust rules, but legally binds DB to respect the commitments offered. If a company breaks its commitments, the Commission can impose a fine of up to 10% of the company's annual worldwide turnover without having to find an infringement of European Union Antitrust rules.

The Commission initiated formal antitrust proceedings in June 2012 (see IP/12/597) after having conducted unannounced inspections at the premises of the DB Group (see MEMO/11/208).

More information is available on the Commission's competition website, in the public case register under case number 39678.