The French Competition Authority conditionally cleared a concentration in the transport sector leading to conglomerate anticompetitive effects by acce
The French Competition Authority (ADC) conditionally cleared the transaction by which the French incumbent train operator SNCF, through its subsidiary SNCF-P, and the Caisse de Dépôt et Placements du Québec (CDPQ) would jointly acquire the control on the bus operator Keolis and Effiae, a transport consultancy).
The concentration was originally notified to the European Commission. Believing that the concentration would only have effects on French national markets, the ADC filed a request for a referral of the case pursuant to Article 9 (2) (a) of EC Regulation 139/2004. The Commission found that the notified concentration affected a number of markets for passenger transport services and for auxiliary services having only a French dimension. The Commission considered that the ADC had already reached a considerable knowledge of the affected markets through the enquiry into the competition issues regarding intermodal passenger transport. Therefore, it decided to refer the concentration to the ADC.
In brief, the ADC found that the notified concentration would give rise to anticompetitive conglomerate effects in a number of markets for passenger transport services. The parties offered a set of behavioural remedies which met the competition issues raised by the ADC, which cleared the concentration.
First, through the concentration the parties might leverage their market power from the market for bus transport services into the market for quality control services. In its consultancy capacity Effia supplied quality control services to many bus operators competing with Keolis. The ADC feared that post-merger Effia would to have to incentive to pass on to Keolis sensitive information regarding the competitors’ operations. Keolis, in turn, might make use of these data for bidding for public transport service contracts tendered out by public authorities, thereby driving competitors off the market.
In order to avoid the risk of foreclosure, the parties committed to refrain from bidding for contracts for quality control services tendered by Keolis’ competitors. In case of contract already concluded, Effia would communicate its links with Keolis to the contracting authorities. These could have the power to terminate the contract with Effia.
A risk of conglomerate anticompetitive effects was identified by the ADC with regard to the markets for bus transport services, in the shape of impeding access to Keolis’ competitors to rail stations. Rail station are exclusively managed by a SNCF subsidiary, Gares et Connexion, by a reason of a concession. Rail stations had the nature of essential facilities. For bus operators access to rail station was indispensable to provide customers services in connection with trains operated by SNCF. What the ADC feared was that SNCF had then the ability and disincentive to discriminate against Keolis’ competitors as to granting access to stations to install ticket offices and information points. Such discrimination would lead to foreclosing competitors.
In that respect, the parties offered the remedies to grant Keolis’ competitors access to rail station on the basis of non discriminatory and transparent conditions. The parties also obliged to clearly set out fees for access.
The ADC was also of the view that SNCF and Keolis would leverage their market power into the market for intercity bus services by not giving to Keolis’ competitors data regarding SNCF train operations. For Keolis’ competitors the availability of data forecasted schedule, schedule change was crucial in providing a better services to customers and drafting bids in competition for the award of public transport services contracts. Alike, for Keolis’ competitors it was also important to sign with SNCF guaranteed connection agreements, through which regulate exchange information and terms for connection. In other words, these data were as sort of essential facilities, though the ADC did not refer to them in such a way
These issues were resolved with the partied committing to give on transparent and non discriminatory conditions the above data to bus operators and respond in a transparent and non discriminatory manner to any bus operators interested in concluding a guaranteed connection agreement.
All the above remedied were offered for a period of up to five years.
Interestingly, in order to address conglomerate anticompetitive effects the ADC accepted a set of behavioural remedies. This possibility is expressly contemplated in the recent Merger Guidelines, according to which the ADC can impose such remedies when is necessary to ensure the merging parties’ competitors access to input indispensable for them to carry out their economic activities. In this case the inputs were found in intangible assets, guaranteed connection agreements and data on SNCF train operations, as well as in tangible assets, access to rail stations.
The concentration was originally notified to the European Commission. Believing that the concentration would only have effects on French national markets, the ADC filed a request for a referral of the case pursuant to Article 9 (2) (a) of EC Regulation 139/2004. The Commission found that the notified concentration affected a number of markets for passenger transport services and for auxiliary services having only a French dimension. The Commission considered that the ADC had already reached a considerable knowledge of the affected markets through the enquiry into the competition issues regarding intermodal passenger transport. Therefore, it decided to refer the concentration to the ADC.
In brief, the ADC found that the notified concentration would give rise to anticompetitive conglomerate effects in a number of markets for passenger transport services. The parties offered a set of behavioural remedies which met the competition issues raised by the ADC, which cleared the concentration.
First, through the concentration the parties might leverage their market power from the market for bus transport services into the market for quality control services. In its consultancy capacity Effia supplied quality control services to many bus operators competing with Keolis. The ADC feared that post-merger Effia would to have to incentive to pass on to Keolis sensitive information regarding the competitors’ operations. Keolis, in turn, might make use of these data for bidding for public transport service contracts tendered out by public authorities, thereby driving competitors off the market.
In order to avoid the risk of foreclosure, the parties committed to refrain from bidding for contracts for quality control services tendered by Keolis’ competitors. In case of contract already concluded, Effia would communicate its links with Keolis to the contracting authorities. These could have the power to terminate the contract with Effia.
A risk of conglomerate anticompetitive effects was identified by the ADC with regard to the markets for bus transport services, in the shape of impeding access to Keolis’ competitors to rail stations. Rail station are exclusively managed by a SNCF subsidiary, Gares et Connexion, by a reason of a concession. Rail stations had the nature of essential facilities. For bus operators access to rail station was indispensable to provide customers services in connection with trains operated by SNCF. What the ADC feared was that SNCF had then the ability and disincentive to discriminate against Keolis’ competitors as to granting access to stations to install ticket offices and information points. Such discrimination would lead to foreclosing competitors.
In that respect, the parties offered the remedies to grant Keolis’ competitors access to rail station on the basis of non discriminatory and transparent conditions. The parties also obliged to clearly set out fees for access.
The ADC was also of the view that SNCF and Keolis would leverage their market power into the market for intercity bus services by not giving to Keolis’ competitors data regarding SNCF train operations. For Keolis’ competitors the availability of data forecasted schedule, schedule change was crucial in providing a better services to customers and drafting bids in competition for the award of public transport services contracts. Alike, for Keolis’ competitors it was also important to sign with SNCF guaranteed connection agreements, through which regulate exchange information and terms for connection. In other words, these data were as sort of essential facilities, though the ADC did not refer to them in such a way
These issues were resolved with the partied committing to give on transparent and non discriminatory conditions the above data to bus operators and respond in a transparent and non discriminatory manner to any bus operators interested in concluding a guaranteed connection agreement.
All the above remedied were offered for a period of up to five years.
Interestingly, in order to address conglomerate anticompetitive effects the ADC accepted a set of behavioural remedies. This possibility is expressly contemplated in the recent Merger Guidelines, according to which the ADC can impose such remedies when is necessary to ensure the merging parties’ competitors access to input indispensable for them to carry out their economic activities. In this case the inputs were found in intangible assets, guaranteed connection agreements and data on SNCF train operations, as well as in tangible assets, access to rail stations.
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