On July 31, 2019, the ICA issued a decision stating that Ferrovie dello Stato Italiane S.p.A. (“FS”), Rete Ferroviaria Italiana S.p.A. (“RFI”) and Trenitalia S.p.A. (“Trenitalia”) had abused their dominant position in the markets for rail infrastructure management and regional rail passenger transportation services in Veneto (the “Decision”).[1] However, the ICA imposed on the firms concerned a symbolic fine of only €1,000, taking into account the fact that the contested practices would ultimately lead to improvements and innovation in the railway infrastructure.

Factual background

FS, a company fully owned by the Italian Ministry of Economics and Finance, is the holding company of the FS Group and controls both RFI, which operates the Italian rail network in a monopoly regime, and Trenitalia, which is the main service provider for public rail transport in Italy.

On February 26, 2014, the Veneto Region launched an invitation to tender for the provision of regional railway services. On December 30, 2016, the Veneto Region withdrew the invitation to tender and instead issued a notice stating that Trenitalia would be entrusted with the provision of regional railway services. On January 11, 2018, the Veneto Region directly entrusted Trenitalia with the provision of regional rail services from 2018 to 2032.

Following the direct award, on March 14, 2018, Arriva Italia Rail S.r.l. (“Arriva”) complained to the ICA that the Veneto Region had entrusted Trenitalia with the provision of railway services only because, in exchange, RFI had promised to invest in infrastructure modernization in Veneto. According to Arriva, this violated European and national laws that impose structural separation between the owner of the rail network and the railway service provider.

On May 3, 2018, the ICA started the proceedings to investigate the contested conduct, alleging that the decision of the Veneto Region to entrust Trenitalia with the provision of regional rail services was not an independent choice, but the result of anticompetitive conduct implemented by the FS Group.

The relevant markets and the parties’ dominant position

The ICA found that the anticompetitive conduct concerned two relevant product markets: (i) the upstream market for the management, maintenance and development of the rail network, which is national in scope; and (ii) the downstream market for the provision of public regional rail passenger transport services, which is regional in scope.

According to the ICA, RFI holds a dominant position in the first market, as it is the sole operator of the national rail network. Trenitalia is dominant in the second market, as it is the main service provider for public rail transport in Veneto.

The ICA’s assessment

In the ICA’s view, the parties implemented a single and complex anticompetitive strategy, aimed at leveraging RFI’s legal monopoly power in the upstream market in order to induce the Veneto Region to grant Trenitalia exclusive rights for the provision of regional rail services in Veneto until 2032. According to the ICA, the anticompetitive strategy relied on RFI’s allegedly wide discretionary powers in planning railway infrastructure interventions and allocating economic resources for their implementation.

In particular, according to the ICA, on March 9, 2016, the holding company FS held a preliminary joint meeting, in which RFI and Trenitalia’s representatives jointly discussed with the Veneto Region matters falling respectively within the competence of the network operator (the modernization of a portion of the railway infrastructure in Veneto) and the rail transport service provider (the provision of regional rail services). In this context, RFI and Trenitalia allegedly carried out a joint analysis to decide whether to invest in the electrification of a portion of the railway network in Veneto, by examining the costs and benefits for both companies.

According to the ICA, RFI did not consider the electrification investment to be economically viable on a standalone basis. Nonetheless, it subsequently decided to proceed with the infrastructure intervention because it would have significant benefits for the FS Group as a whole. Moreover, Trenitalia unlawfully participated in the decision-making process concerning the modernization of the railway infrastructure in Veneto and, accordingly, gained a competitive advantage compared to other railway service providers by exploiting confidential information when negotiating its commercial offer with the Veneto Region.

In the ICA’s view, the contested conduct led the Veneto Region to set aside the competitive tender procedure and to directly entrust Trenitalia with the provision of regional rail services.

The ICA concluded that FS, RFI and Trenitalia’s conduct constituted an abuse of dominant position, in violation of Article 102 TFEU. However, it considered that the conduct would, “in any case, lead to an improvement in the network in terms of technological innovation” and, therefore, only imposed on the parties a symbolic fine of €1,000.

[1]              ICA Decision of July 31, 2019, No. 27878, Case A519, Affidamento del servizio di trasporto pubblico ferroviario nel Veneto.