Office of Rail Regulation issues a statement of objections against English Welsh and Scottish Railway Limited

14 March 2006
ORR/05/06

The Office of Rail Regulation has today issued a supplementary notice that EWS has abused its dominant position and thereby infringed the prohibition contained in chapter II of the Competition Act 1998 and Article 82 of the EC treaty. The supplementary notice responds to representations made by English Welsh and Scottish Railway Limited (EWS) and others to ORR’s proposed decision issued on 6 May 2004

The supplementary notice says that EWS pursued an anti-competitive strategy through its agreement and maintenance of contracts with exclusionary effect and discriminatory and predatory pricing practices in the market for the supply of coal haulage by rail in Great Britain

EWS now has the opportunity to make written and oral representations. These will be considered before ORR makes its final decisions as to whether UK and/or EC competition law has been infringed and as to the appropriate amount of any penalties imposed on EWS.

Notes for editors

  1. ORR exercises 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:
    1. the chapter I prohibition 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
    2. the chapter II prohibition 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 positions.  EC Regulation 1/2003 (the Modernisation Regulation), which entered into force on 1 May 2004, requires the ORR, 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. A statement of objections gives notice of a proposed infringement decision under the Competition Act 1998 to the parties involved.  The parties then have the opportunity to make written and oral representations in response to the case set out by the ORR. Such representations will be considered by the ORR before any final decision is made.
  5. In calculating financial penalties the ORR takes into account a number of factors including seriousness of infringement, relevant turnover and any mitigating and/or aggravating factors. The final amount of a penalty calculated may not in any event exceed 10 per cent of the worldwide turnover of an undertaking in the preceeding 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).
  6. This statement of objections follows EWS’s response in November 2004 to ORR’s Rule 14 Notice (issued in May 2004).  ORR has carefully considered EWS’s written representations and in the Statement of Objections, ORR responds to the key arguments made by EWS.

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