Ruling in a case concerning a joint enterprise, the Court of First Instance has for the first time applied the Council Directive on the development of the Community's railways. It considers that the Commission's assessment of the definition of the relevant market and of the effects of the agreements in issue allegedly restricting competition was wrong in a number of respects and has annulled the Commission's decision on the ground of inadequate reasoning.
The applicant company, acting on behalf of the railway undertakings British Rail (BR), Deutsche Bundesbahn (DB), Nederlandse Spoorwegen (NS) and Société Nationale des Chemins de Fer Français (SNCF), had lodged a request for the agreements entered into between those companies for passenger rail services through the Channel Tunnel to be exempted from the application of the rules on competition.
The first agreement notified to the Commission concerned the formation of ENS by those four railway undertakings - BR, SNCF, DB and NS - to provide and operate overnight passenger rail services between the United Kingdom and the Continent through the Channel Tunnel. The other agreements notified were operating agreements between ENS and the railway undertakings, under which the latter agreed to provide ENS with certain services, including traction over their networks, in particular locomotives, train crews and paths.
In order to operate the night passenger services, the railway undertakings concerned acquired, through ENS, specialised rolling stock suitable for running on their different rail systems and through the Channel Tunnel, financed by long-term leasing arrangements initially for a period of 20 years. The total cost of that stock was £ 136.7 million, increased to £ 158 million in January 1996.
In its decision, the Commission exempted those agreements from the application of the rules on competition for the period from 29 January 1993 to 31 December 2002. That exemption was, however, made subject to the condition that the railway undertakings concerned must supply to any ?international grouping’ of railway undertakings or any ?transport operator’ wishing to operate night passenger trains through the Channel Tunnel the same necessary rail services as they had agreed to supply to ENS. Those services were to be provided on the same technical and financial terms as to ENS.
The applicants sought to have that decision annulled, challenging the Commission's analysis, the condition imposed and the inadequate duration of the exemption granted.
The Court noted that it was not disputed that the relevant geographical market for the services in question should be confined to the four routes (destinations on the Continent) actually to be served by ENS. The question therefore arose whether the Commission had correctly evaluated ENS's market shares in arriving at the conclusion that the agreements would have an appreciable effect on trade between Member States. It pointed out that the contested decision made no reference to the market shares of ENS or of any other competing operators. Moreover, in the absence of any detailed analysis of the economic and legal context surrounding the relevant markets as set out in the parties' notification, the mere fact that ENS's estimated market shares were practically on the critical threshold of 5% could not justify automatic application of the prohibition of agreements between undertakings laid down in the Treaty. The Court could therefore conclude that the contested decision did not contain a sufficient statement of reasons to enable it to rule on the shares held by ENS on the various relevant markets or, thus, on whether the ENS agreements had an appreciable effect on trade between Member States.
The Court went on to consider whether ENS provided its international passenger services as an ?international grouping’ in accordance with the provisions of Directive 91/440 or rather, as the Commission contended, as a ?transport operator’ and thus subject to the rules on competition in the Treaty. It considered that the Commission had interpreted the term ?international grouping’ restrictively and had transposed the concept of ?transport operator’ from the market for combined transport of goods to the market for passenger services, whereas it has no place in the actual functioning of that market.
With regard to the conditions imposed on the exemption, the Court, referring to the case-law concerning the prohibition of abuse of a dominant position, held that an undertaking may not be regarded as possessing infrastructure, products or services which are ?necessary’ or ?essential’ for entry to the relevant market unless such infrastructure, products or services are not interchangeable and unless, by reason of their special characteristics - in particular the prohibitive cost of and/or time reasonably required for reproducing them - there are no viable alternatives available to potential competitors of the joint venture, which are thereby excluded from the market.
Finally, the Court accepted the applicants' arguments to the effect that the duration of the exemption was inadequate. It found that the contested decision did not contain any detailed assessment of the length of time required to achieve a return on the investments in question under conditions of legal certainty and was thus vitiated by insufficient reasoning on that point also.
N.B.: An appeal, on questions of law only, may be brought before the Court of Justice against this judgment of the Court of First Instance within two months from the date on which it is notified.
|
Unofficial document for media use which does not bind the Court of First Instance. Available in: French, English and German. For the full text of the judgment, consult our Internet page www.curia.eu.int. at around 3 pm today. For further information, contact Tom Kennedy phone: (352) 4303 3355 fax: (352) 4303 2731 |