Summaries of judgments: Lietuvos geležinkeliai AB v. Commission

Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)
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Judgment from General Court (First Chamber Extended Composition) of 18 November 2020, T-814/17, Lietuvos geležinkeliai AB v. Commission

Competition – Abuse of a dominant position – Rail freight market – Decision finding an infringement of Article 102 TFEU – Access by third-party undertakings to infrastructure managed by Lithuania’s national railway company – Removal of a section of railway track – Concept of “abuse” – Actual or likely exclusion of a competitor – Calculation of the amount of the fine – 2006 Guidelines on the method for setting fines – Remedies – Proportionality – Unlimited jurisdiction

Facts

Lietuvos geležinkeliai AB (LG) is a Lithuanian national railway company responsible for the management of the Lithuanian railway and provides rail transport services for freight and passengers. The Lithuanian undertaking Orlen Lietuva AB (Orlen) is specialized in refining crude oil and distributing refine oil products. Both had since 1999 an agreement according to which LG provided to the last undertaking transport services on the Lithuanian rail network, more precisely on the shorter route to Latvia. However, in 2008, following a commercial dispute between both undertakings regarding the rates paid by Orlen to LG for its transport services, Orlen explored the possibility of contracting the undertaking LDZ for rail transport services of its freight to Latvia.

In September 2008, LG suspended the traffic on a 19km long section of the shorter route to Latvia after identifying a defect in the rail track and later, in October 2008, LG proceeded with the complete removal of the entire track.

On July 2010, the undertaking Orlen lodged a complaint with the Commission alleging the violation of competition law rules by LG. Following this complaint, the Commission adopted, in October 2017, the decision according to which it considered that the undertaking LG, as manager of the railway infrastructure, committed an abuse of its dominant position preventing LDZ from entering the Lithuanian market.

Subsequently, LG brought an action seeking the annulment of this decision or, as an alternative, the reduction of the fine. The undertaking alleged manifest errors of assessment of facts and of law in the application of Article 102 TFEU as regards the abusive nature of the conduct and the assessment of the practice in question. Additionally, it claimed the infringement of Article 296 TFEU and Article 2 of Regulation No 1/2003 on the grounds of insufficient motivation, errors in establishing the amount of the fine and errors relating to the imposition of a remedy.

Decision

The General Court (GC) dismissed LG’s action almost in its entirety but decided to reduce the amount of the fine imposed on LG.

First, the GC rejected the plea related to the existence of manifest errors of assessment of facts and of law in the application of Article 102 TFEU as regards the abusive nature of the conduct alleged by LG. The GC considered that, contrary to was alleged by LG, the Commission was not obliged to assess the practice in the light of the existing case law concerning the refusal to provide access to essential facilities. In fact, the GC considered that the removal of the track should be analysed as an act capable of hindering the market entry by making access to the market more difficult and leading to an anticompetitive foreclosure effect.

In relation to the alleged error of assessment of facts and of law in the application of Article 102 TFEU as regards the practice in question, the GC also rejected this plea. The GC considered that the applicant did not submit any evidence capable of raising a doubt on the reasoning followed by the Commission, which considered the justifications presented by the applicant in order to justify the removal of the track as inconsistent, contradictory and unconvincing. The undertaking LG was not able to demonstrate the necessity of the immediate and complete removal of the track. In this sense, the GC also considered that Commission did not make any error of assessment by considering the decision to remove the track as highly unusual.

Moreover, the GC rejected the plea of alleged violation of Article 296 TFEU and Article 2 of Regulation No 1/2003 on the grounds of insufficient evidence and failure to state reasons. The GC underlined that the Commission did not determined the existence of abuse by the undertaking LG based on the assumption that the facts established could not been explained otherwise than by an anticompetitive behaviour. On the contrary, the GC considered that Commission’s decision was based on sufficiently strong evidence, which demonstrated the existence of the contested infringement.

As regards the existence of errors relating to the imposition of a remedy by the Commission, the GC considered that the Commission respected the principle of proportionality and did not infringe Article 7 of Regulation No 1/2003. Indeed, the Commission was not obliged to require the undertaking LG to bring the infringement to an end, either by restoring the competitive situation which existed before the track was removal by reconstructing it or by eliminating the disadvantages facing competitors on the alternative routes.

However, concerning the plea alleging errors in establishing the amount of the fine, the GC, under its unlimited jurisdiction and according to a well-established case-law, reduced the amount of the fine previously imposed by the Commission. More precisely, considering the nature of the infringement, the position of LG in the relevant markets, the geographical extent and the duration of the infringement, the GC considered that the amount of EUR 20 068 650 represented a fair assessment of the gravity and duration of the infringement.

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