Arriva was restricting competition on two local passenger bus routes in Warmińsko-Mazurskie voivodeship. By reducing prices below the level of costs borne, it has eliminated its competitor from the market. A financial penalty in the amount of over PLN 76 000 (ca. EUR 19 000) has been imposed upon the company

In free market economy, entrepreneurs enjoy the freedom of calculating prices for products or services they offer. In principle, state institutions are not allowed to interfere with the rates applied by undertakings. A situation in which an entity enjoying a dominant position applies a pricing policy that is aimed at eliminating its competitors from the market, for instance by reducing prices below the level of costs borne, is one of the exceptions. Such practices constitute a violation of the antimonopoly law. What is important, the price reduction is only seemingly favorable for consumers, as once the competitors have been eliminated, the dominant entity is free to reestablish excessive rates.

Such practices were used by Arriva (formerly operating under the business name Veolia Transport). The entrepreneur offers passenger transport services in many regions of Poland. UOKiK has questioned its activities on two local bus routes in the vicinity of the town of Kętrzyn (Kętrzyn-Srokowo-Kętrzyn and Kętrzyn-Barciany-Kętrzyn). The proceedings were initiated in November 2012, based on a complaint filed by the company’s competitor. It has been determined that the unlawful conduct resulted from the fact that similar transportation services had been commenced by another entrepreneur. Arriva was previously enjoying a nearly monopolistic position on those two local routes, as the range of services offered by other carriers was severely limited. The appearance of a competitor has resulted in the company considerably reducing the prices of tickets for those routes - from PLN 7.80 to PLN 2.70.

Analysis performed by UOKiK has indicated that the rates offered by the local dominant entity were below the costs borne thereby. The practice has resulted in the withdrawal from the market of the undertaking willing to compete with Arriva. Having regained its market position, the company increased the ticket prices. It was mainly the residents of local towns and villages along the route that suffered from the prohibited practice, as they were deprived of the ability to choose their preferred carrier, and were forced to buy tickets at prices determined by the dominant company, and not based on the competitive rivalry of undertakings.

For abusing its market position consisting in using predatory pricing and thus eliminating competition, Arriva has been fined with a financial penalty of PLN 76 061 (ca. EUR 19 015). The decision is not final and may be appealed against in court.

Additional information for the media:

Małgorzata Cieloch, Spokesperson for UOKiK
Department of International Relations and Communication
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel.: +48 22 827 28 92, 55 60 314
Fax: +48 22 826 11 86
E-mail: malgorzata.cieloch@uokik.gov.pl