The Italian Veneto Rail Transport Case: The National Rail Incumbent Found Guilty of An Abusive Practice but only Penalized with a Symbolic Fine

Abstract

The Italian Competition Authority (ICA) has found the Italian incumbent railway undertaking (FS) to have abused its dominant position in connection to the procedure initiated by the Region of Veneto (RV) to award of a public contract for the provision of regional and local rail transport passenger services. FS breached competition by convincing the contracting authority to directly award the contract to its subsidiary train operator TI, instead of choosing the service provider through a competitive tender procedure as originally planned by RV. In that regard, FS linked the provision of the passenger rail services in the public contract, falling within the exclusive competence of TI, with the commitment to upgrade the rail network, which was the exclusive task of the rail network manager RFI, equally owned by FS. This was reflected by the fact that RFI and TI jointly negotiated with RV the terms and conditions of the public service contract together with the electrification works of the rail network. Interestingly, though the FS conduct was qualified as a serious competition restraint, lessening the competition for the market for regional passenger rail transport services for several years, the ICA imposed on the dominant firm a symbolic competition fine of € 1,000 in light of the upgrade of the rail network with the electrification works that RV would obtain.