EU launches fare dumping probe against Czech state rail operator

By bne IntelliNews November 10, 2016

The European Commission announced on November 10 that it has launched a probe into longstanding claims that Czech state rail operator Ceske Drahy has used unfair pricing on major routes in a bid to shut out private competition.

The investigation will be welcomed by the two private companies seeking to compete with Ceske Drahy. Both Regiojet and Leo Express have long-running legal cases lodged claiming that the state incumbent has been dumping fares on the country's major route linking Prague with the industrial eastern city of Ostrava.

The commission said in a statement that it has concerns CD may have charged prices that are so low that it could not cover the costs of the service. That would be in violation of EU anti-trust rules.

"We need to take a close look at Ceske drahy's business practices to make sure they do not push out competitors to the detriment of passengers," said European Commissioner in charge of competition policy Margrethe Vestager in a statement.

Following a complaint, the commission carried out inspections at the premises of CD in April. The opening of proceedings "does not prejudge the outcome of the investigation", the statement reads, but does mean the commission will treat the case as a matter of priority.

Regiojet and Leo Express entered the market in 2011/12, after Brussels oversaw the liberalisation of EU railways. Ceske Drahy was previously the only operator in the Czech Republic. Leo Express founder Leos Novotny claimed to bne IntelliNews last year that his company has faced obstruction and threats from Ceske Drahy ever since its launch.

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