Lithuanian Rail Cuts Off Key Track to Keep Customer, EU Says

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By Eleanor Tyler

A Lithuanian rail company illegally destroyed track in an effort to ensure that a key customer didn’t jump to a competing Latvian railway, according to a Oct. 2 decision from the European Commission.

The commission fined Lithuania almost 28 million euros ($32.87 million) for anticompetitive conduct. Competition Commissioner Margrethe Vestager called the removal of the track by Lithuania’s state-owned railroad “unacceptable and unprecedented.”

The commission said the rail sabotage thwarts a larger European push to unite and modernize freight traffic between member states. The EU first began liberalizing its rail freight market in 2007, meaning all freight can operate on all rails in member states. But anticompetitive conduct by dominant rail companies could ultimately “prevent the EU from achieving its ultimate goals for rail transport,” the commission said.

“Lithuanian Railways failed to show any objective justification for the removal of the track,” the commission said. The track has never been rebuilt.

Blunt Moves

Polish oil company AB Orlen Lietuva, a big freight customer of Lithuanian Railways, considered switching rail traffic from its Lithuanian refinery to a Latvian rival railway in 2008. To prevent losing Orlen’s business, Lithuania pulled up a 19-kilometer section of rail track that efficiently connected Orlen’s refinery to Latvian ports through the competing Latvian railroads.

The EU said Lithuania used its power over the public rail infrastructure to cut off Orlen’s main tie to the Latvian border. It also disabled the rail line for all users. The only remaining route to Latvia for Orlen, without that track segment, was a circuitous route mostly on Lithuanian lines.

Orlen complained to the EU. The EU started investigating in 2011 and opened formal antitrust proceedings against Lithuania’s railway in March 2013.

In addition to the fine, Lithuania’s railway has to rebuild the track and refrain from similar anticompetitive moves in the future.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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