The fine of 20 million zloty for unjustified discrimination among contractors was imposed by the President of the Office of Competition and Consumer Protection on a company belonging to the capital group of Polskie Koleje Państwowe (Polish State Railways, PKP). The antimonopoly proceeding was initiated at the request of Sped-Pro. It confirmed some of the charges against PKP Cargo by the enterprise operating in shipping industry

In accordance with the antimonopoly Act, activities of a dominating entity are subject to restrictions. An unlawful practice is, for instance, discrimination - based on subjective criteria - among contractors by a market dominant entity. Such practice was charged to a company belonging to the capital group of Polskie Koleje Państwowe by Sped-Pro, an enterprise operating in the shipping industry. The irregularities were also confirmed by the antimonopoly proceedings started by the Office in June 2003.

During the investigation it was found out that PKP Cargo offered different prices for the same service - transportation of goods on a specific distance. However, the price level did not depend on objective economically based criteria that should be uniform for all the contractors. For instance, PKP Cargo offered a 3.5 percent rebate to Sped-Pro, while other enterprises - despite similar sales and  volumes of carried goods - obtained rebates up to 18 percent. In the opinion of the antimonopoly authority, the described practice shows that the company belonging to the group of Polskie Koleje Państwowe abused its market position. Even the factors taken into consideration by PKP Cargo, when determining the volume of rebates, were largely subjective (e.g. “susceptibility of the client to road transportation”) and the final rebates are settled during negotiations. In a result, clients of PKP Cargo bought transportation services of similar value, though received different rebates, not reflecting the outlays incurred by the carrier.

Similar charges are related to time schedules of planned transportation that clients have to submit to PKP Cargo. As UOKiK found out, also here there were major differences in the terms offered by the carrier. Some clients are subject to high contractual penalties for non-utilisation of transportation services declared in their annual time schedule, while there is no rebate reduction in case of other clients. UOKiK does not question the right to impose contractual penalties for non-performance under contracts. The illegal practice is to discriminate in this respect among contractors by the market dominating entity.

During the investigation, the Office questioned the reservation made by PKP Cargo in contracts that it would not provide services to selected buyers and to selected destinations. In the opinion of UOKiK, such practice is a specifically harmful manifestation of practices directed against development of competitive railway carriers.

In view of the above, the President of the Office ordered PKP Cargo to discontinue the above practices and imposed a fine of 20 million zloty. It is to have a preventive and repressive character - practices used by PKP are among the major infringements upon the competition law. It was also important that it was a second decision within the last few months confirming the abuse of the dominant position by PKP Cargo. In June 2004, the President of UOKiK imposed a fine of 40 million zloty for forcing its contractors to accept onerous contractual terms and for creating barriers to the establishment and development of competition.

The decision may be appealed to the Court of Competition and Consumer Protection.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
International Relations and Communication Department
Office of Competition and Consumer Protection
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Ph.: (+48 22) 827 28 92, 55 60 106, 55 60 314
E-mail: [SCODE]ZWFuZGVyc0B1b2tpay5nb3YucGw=[ECODE]