European and Swedish Antitrust News (November 9, 2020)

Photo: PatrikPaprika

The EU Commission has sent a Statement of Objections for alleged predatory pricing by České dráhy (ČD), the state-owned Czech rail incumbent, which appears to have set prices below costs to drive out two competitors on the Prague – Ostrava route. In other news, the Swedish Competition Authority has no objections to the Swedish Transport Administration’s plan to start doing some railroad maintenance in-house, but warns that the administration must consider what dynamic effects that will have on competition. The SCA has also published a study on competition in public procurement, and the EU Commission has accepted the improved commitments from Broadcom.

EU Commission sends Statement of Objections for predatory pricing. The Commission is concerned that České dráhy (ČD), the state-owned Czech rail incumbent, has been involved in predatory pricing during 2011-2019. Czechia opened up for competition, outside of public service contracts, on certain passenger routes, and two new competitors started operating on the Prague – Ostrava route where the number of passengers grew quickly. ČD reacted by starting to offer prices that did not cover costs to force the competitors out of business. The Commission therefore has the preliminary view that ČD engaged in predatory pricing.

SCA notes unclear consequences of in-house railroad maintenance. The Swedish Transport Administration has suggested that parts of the maintenance of railroads should be done in-house instead of through procurements. The Swedish Competition Authority states that it has no objections to the suggestion, but the SCA notes that the STA need to carefully consider how its in-house maintenance will affect the number of bidders on contracts it wishes to procure and what effect the changes will have on the numerous SMEs currently working as sub-contractors in the sector.

Swedish study of public procurement. The Swedish Competition Authority has published a report by Fredrik Andersson on competition in public procurement in Sweden. The report concludes that high transaction costs is a high barrier preventing SMEs from bidding and thereby limiting competition and that strong price competition restrict quality improvements. Increasingly common social, environmental and labour law conditions should be properly analyzed beforehand and the report notes that incomplete follow-up of set conditions is a competition problem, particularly when the conditions aren’t noticeable in the consumption and use of a good or service, as there’s a risk that companies simply don’t implement the specified conditions.

EU Commission accepts Broadcom’s improved commitments. Broadcom’s exclusivity provisions in contracts with major customers have excluded competitors from the markets for Systems-on-a-Chip (“SoCs”) for TV-boxes and modems. In April, Broadcom offered a commitment to not require any original equipment manufacturer (OEM) to obtain more than 50% of its SoCs from Broadcom, but after feedback Broadcom has now committed to not have any minimum percentage requirement in the EEA, and the Commission have accepted the commitment.

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