Office of Rail Regulation makes finding of anti-competitive behaviour against English Welsh and Scottish Railway Limited

17 November 2006
ORR/33/06

We have today notified EWS of our decision that the company has infringed the prohibition contained in Chapter II of the Competition Act 1998 and Article 82 of the EC Treaty.

The decision is based on our findings that EWS concluded contracts whose terms had the effect of excluding competitors from the market for coal haulage by rail and that it had also pursued discriminatory and predatory pricing practices in the same market.

EWS has accepted our findings as set out in the infringement decision. Its decision to accept our findings has allowed us to resolve this case more quickly and effectively than would otherwise have been the case. We have therefore taken account of this co-operation in setting the penalty of £4.1 million, to be imposed on EWS.

We are also issuing certain directions to EWS and other parties to remove the contractual terms found to have an exclusionary effect. 

Notes to editors

  1. We exercise powers under the Competition Act 1998 (the Act) concurrently with the OFT in respect of agreements or conduct which relate to the supply of services relating to railways (see section 67(3) of the Railways Act).
  2. The Act contains two prohibitions:
    i.  Chapter I prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or any part of it) and which may affect trade within the UK (or any part of it);and
    ii.  Chapter II prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK ( or any part of it).
  3. The EC Treaty and the Act both prohibit companies from abusing their dominant position. EC Regulation 1/2003 (the Modernisation Regulation), which entered in to force on 1 May 2004, requires us, as a national competition authority of a Member State, to apply Article 82 as well as the Chapter II prohibition, where there is an actual or potential effect on trade between Member States.
  4. In calculating the financial penalty, ORR has had regard to the OFT’s Guidance as to the appropriate amount of penalty. The final amount of the penalty may not exceed 10 per cent of the worldwide turnover of an undertaking in the preceding business year (or 10 per cent of its UK-wide turnover in the financial year preceding the date when the infringement ended if prior to 1 May 2004). The penalty takes account of the requirement in the Guidance that a penalty must reflect the seriousness of the conduct involved and serve to deter future infringement of the Act. The Guidance also sets out a number of aggravating and mitigating factors which can merit an adjustment to the initial assessment of the appropriate penalty.  ORR has found no such factors over and above that of EWS’s co-operation in respect of which it allowed a 35% discount from the penalty.
  5. ORR undertook its investigation of EWS’s conduct following complaints from Enron Coal Services Limited in 2001 and Freightliner Heavy Haul in 2002. ORR issued a Rule 14 Notice to EWS that it was minded to make an infringement decision in May 2004. EWS made detailed representations to ORR in response to that notice in November 2004. ORR issued a further supplementary notice in March 2006 to which EWS submitted a response in June 2006.
  6. A non-confidential copy of this decision will be available on the ORR website in due course.

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