Latvijas dzelzcels (LDz) subsidiary SIA LDz Cargo has been abusing its dominant position on the railway freight market, as reported by Competition Council (KP).
Looking at LDz Cargo’s operations and their compliance with the Competition Law, KP found there were four freight carriers active on Latvia’s railway freight market. However, LDz Cargo has been abusing its dominant position on the market and since 2007 has been using different ways to make operations of other freight carriers more difficult in Latvia.
LDz representative Ella Petermane reports that KP has fined the company EUR 5.7 million.
KP also concluded that the company had unjustifiably set a fee for idleness of privately owned wagons on public railroads.
KP commenced its case on operations of SIA LDz Cargo and LDz in Latvia on December 28, 2018 after a request received from AS Baltic Express on November 7, 2017.
LDz stresses that the company does not agree with KP accusations and considers them unjustified. LDz plans to submit a request to the Administrative Regional Court to appeal KP’s decision.
Transport Minister Talis Linkaits says LDz will need to do a lot of work to become a client-oriented and transparent company, considering the EUR 5.7 million fined by Competition Council for abuse of dominant market position.
The minister’s advisor Ilze Salna explained that by issuing no-confidence to members of LDz board in May 2019, Linkaits’ complaints, among other things, were related to possible distortion of competition, which had put the company and Latvia’s state at risk with serious consequences back then.
At the time the minister was unhappy with LDz management’s “neglectful attitude towards KP’s evaluation”, and KP’s decision showed there were serious justifications for concerns about competition distortion, said Salna.
The advisor noted the current board of the company is focused on a new strategy, business and action plan to secure better transparency for LDz operations and fair competition.
At the same time, Salna notes that LDz needs to assess the consequences KP’s decision has caused for its business operations, the actions of the company’s officials in violation competition rules, as well as options for enforcing losses from those responsible should KP’s penalty come to force.
LDz Cargo turnover in 2019 was EUR 253.074 million, down by 8.1% YoY. The company’s profits increased by 42.3%, to EUR 2.785 million. Data for 2020 has yet to be published. (BNN/Business World Magazine)