European Commission accepts Deutsche Bahn's commitments and ends margin squeeze investigation

European Commission accepts Deutsche Bahn's commitments and ends margin squeeze investigation

Cristina Caffarra, Valter Sorana
European competition

On December 18, 2013, the European Commission closed its investigation of Deutsche Bahn Energie's (DBE) pricing of traction current (the 16.7 MHz electricity used to power trains and delivered on a specialized railway electricity network). DBE, a subsidiary of Deutsche Bahn (DB) and Germany's only supplier of traction energy, operated a regime of volume and duration rebate that were said to favour DB's railway operating subsidiaries. On 6th June 2013 the Commission issued a Preliminary Assessment claiming that DB had engaged in a margin squeeze against railway operating companies competing with DB's subsidiaries DB Schenker (operating in the freight rail transport market) and DB Fernverkehr (operating in the long-distance passenger rail transport market). The Commission claimed that, considering the period 2003-2011 as a whole, DB Schenker and DB Fernverkehr would have had negative profits if they had been charged the same average traction current prices as their competitors and thus DB's prices failed the "as efficient competitor" test for margin squeeze. DBE - which denies the allegation of anticompetitive behaviour - proposed a new pricing system without volume or duration rebates for any railway operator starting from 2014. Further, it offered a one-off retroactive refund of four percent for 2013. The Commission's Article 9 decision accepted these commitments and ended the investigation without a finding of infringement.

A CRA team led by Cristina Caffarra and including Valter Sorana and Michael Karlinski advised DBE in these proceedings and submitted a report to the Commission arguing for the use of the "as efficient competitor" test and that such test did not provide evidence of anticompetitive behaviour on DB's part.