THE REGULATIONS OF THE MINISTRY OF TRANSPORT AND COMMUNICATIONS BECAME AN OBSTACLE TO OPENING UP THE RAILWAY TRANSPORT MARKET

The Competition Council has found that the rules adopted by the Minister of Transport and Communications in 2020, which give freight carriers access to congested railway lines, favour LTG Cargo, a company operating on the market, and discriminate against other companies providing the same services.

The investigation was initiated in November 2021 based on suspicion that certain provisions of the rules regarding the allocation of capacity in the overloaded part of the public railway infrastructure might contradict the Law on Competition. These rules apply in cases where multiple companies wish to transport freight by rail, and there is a shortage of available infrastructure capacity in a specific section.

In accordance with these rules, a company wishing to transport freight in the overloaded section of the railway must submit documents in advance and justify that it has sufficient rolling stock, qualified personnel, and cargo for the requested infrastructure.

According to the assessment of the Competition Council, such provisions in the rules privilege the existing market player, LTG Cargo engaged in railway freight transportation, as it can justify without incurring additional expenses that it is adequately prepared to use the requested railway infrastructure capacity. Meanwhile, a carrier wishing to enter the market must submit contracts for the carriage of freight, acquire rolling stock and the necessary staff, and bear the financial risks involved, without even knowing whether it will have access to the entire requested railway section and, thus, without any guarantee that it will be able to carry out the activity at all.

Different competitive conditions can emerge in the market due to yet another established rule – allocating capacity in the overloaded section of the railway to the company willing to pay a higher price for the minimum access package.  According to this rule, the fee is calculated not only on the route where freight carriers compete but also on other routes. Therefore, an existing company is able to book more routes for transporting goods and will consistently pay a higher fee than a newcomer trying to enter the market.

The monitoring conducted by the European Commission also confirms that it is particularly challenging for new players to enter the Lithuanian market, where, in practice, the only carrier is LTG Cargo. The EU railway freight transport sector was opened to competition in 2007, and by 2016, new operators were operating in all EU countries, except Greece, Ireland, Lithuania, and Luxembourg, competing with companies firmly established in national markets.

Having assessed all the circumstances, the Competition Council concluded that the provisions of the rules approved by the Minister of Transport and Communications created obstacles for new carriers to enter the railway freight transport market, as an existing company was privileged.

This investigation, initiated based on the complaint of the company Gargždų geležinkelis, confirmed that potential new entrants to the market may face discrimination even when identical requirements are imposed on them as on an existing market player, who can fulfil them much more easily.

The Ministry of Transport and Communications is obliged to amend the provisions of the rules within three months so that they do not conflict with the requirements of the Law on Competition and to pay a fine of EUR 40 530.

The Competition Council terminated the procedure regarding other regulatory provisions related to the training of employees, as the Ministry of Transport and Communications had already changed the requirements previously imposed on carriers during the investigation.

The decision may be appealed to the Vilnius Regional Administrative Court within one month from the date of its delivery or publication on the Competition Council's website.