EUROPEAN COMMISSION DG Competition CASE AT.39813 Baltic rail (Only the English text is authentic) ANTITRUST PROCEDURE Council Regulation (EC) 1/2003 Article 7 Regulation (EC) 1/2003 Date: 02/10/2017 This text is made available for information purposes only. A summary of this decision is published in all EU languages in the Official Journal of the European Union. Parts of this text have been edited to ensure that confidential information is not disclosed. Those parts are replaced by a non-confidential summary in square brackets or are shown as […]. EN EN EUROPEAN COMMISSION Brussels, 2.10.2017 C(2017) 6544 final COMMISSION DECISION of 2.10.2017 relating to proceedings under Article 102 of the Treaty on the Functioning of the European Union AT.39813 - Baltic Rail (Only the English text is authentic) EN EN TABLE OF CONTENTS 1. Introduction .................................................................................................................. 8 2. Parties to the proceedings ............................................................................................. 8 2.1. The addressee of the decision ...................................................................................... 8 2.2. The complainant ........................................................................................................... 8 3. Procedure ...................................................................................................................... 9 4. Description of LG's practices which are the subject of this decision ......................... 10 4.1. OL railway freight business ....................................................................................... 10 4.2. The commercial dispute between OL and LG ........................................................... 12 4.3. OL sought to switch to LDZ and the Latvian seaports .............................................. 13 4.4. The condition of the Track prior to 2 September 2008 .............................................. 15 4.5. September 2008: events leading to the removal of the Track .................................... 16 4.5.1. The detection of the Deformation .............................................................................. 16 4.5.2. The reports of 5 September 2008 ............................................................................... 17 4.5.3. The letters from the director of LG's local branch of 4 and 5 September 2008 ......... 19 4.5.4. The Extraordinary Inspection Report of 12 September 2008 .................................... 20 4.5.5. The decision to remove the Track .............................................................................. 24 4.6. Involvement of the Lithuanian State Railways Inspectorate ...................................... 25 4.7. Information given to OL on LG's actions .................................................................. 26 4.8. The new transport agreement between LG and OL ................................................... 27 4.9. Funding the reconstruction of the Track .................................................................... 27 4.9.1. The initial request for funding.................................................................................... 27 4.9.2. The Feasibility Study ................................................................................................. 28 4.9.3. State funds .................................................................................................................. 30 4.9.4. OL's funding offer ...................................................................................................... 30 4.9.5. The self-financing option ........................................................................................... 31 4.9.6. Union Funds ............................................................................................................... 32 4.9.7. Removal from the priority list for Union funding ...................................................... 33 4.10. Arbitration between LG and OL ................................................................................ 33 4.11. Evidence regarding LG's concerns with respect to the Track .................................... 35 4.11.1. Seized document LK7 ................................................................................................ 35 4.11.2. Seized document VJ16 ............................................................................................... 36 4.11.3. Seized documents VJ9 ............................................................................................... 37 4.11.4. Seized documents VJ20 ............................................................................................. 38 4.11.5. Seized document ES9/VJ6 ......................................................................................... 38 EN 3 EN 4.11.6. Seized document LK13 .............................................................................................. 39 4.11.7. Annex 33 of the Complaint ........................................................................................ 40 4.12. LDZ's entry into the Lithuanian Market..................................................................... 40 5. Regulatory framework ............................................................................................... 41 5.1. Union legislation ........................................................................................................ 41 5.1.1. Licensing and safety certificates ................................................................................ 42 5.1.2. Directive 91/440/EEC ................................................................................................ 42 5.1.3. Directive 2001/14/EC ................................................................................................. 43 5.1.4. The recast Directive 2012/34/EU .............................................................................. 44 5.2. Lithuanian legislation ................................................................................................. 44 5.2.1. Ownership of infrastructure ....................................................................................... 44 5.2.2. Funding ...................................................................................................................... 46 5.2.3. Access to the infrastructure ........................................................................................ 47 5.2.4. Charges ....................................................................................................................... 50 5.2.5. Infringement procedures against Lithuania ................................................................ 52 6. Dominant position by an undertaking ........................................................................ 52 6.1. Undertaking ................................................................................................................ 52 6.2. The relevant product market ...................................................................................... 52 6.2.1. Principles .................................................................................................................... 52 6.2.2. Management of railway infrastructure ....................................................................... 53 6.2.3. Provision of rail transport services for oil products ................................................... 53 6.3. The relevant geographic market ................................................................................. 55 6.3.1. Principles .................................................................................................................... 55 6.3.2. Management of railway infrastructure ....................................................................... 56 6.3.3. Provision of rail transport services for oil products ................................................... 56 6.4. LG's dominant position on the relevant market ......................................................... 56 6.4.1. Principles .................................................................................................................... 56 6.4.2. Management of railway infrastructure ....................................................................... 57 6.4.3. Provision of rail transport services for oil products ................................................... 57 6.5. Dominance in a substantial part of the internal market .............................................. 58 7. The abuse ................................................................................................................... 58 7.1. Principles .................................................................................................................... 58 7.2. Application to this Decision ....................................................................................... 60 7.3. The removal of the Track ........................................................................................... 60 7.3.1. As regards the actual occurrence of the Deformation ................................................ 60 EN 4 EN 7.3.2. Recourse to methods different from those which condition normal competition ...... 61 7.3.2.1. LG was aware of OL plans to switch to the Latvian seaports using LDZ services ... 61 7.3.2.2. The removal of the Track by LG was done in great haste without securing the necessary funds and without taking any of