[co-author: Nicola Conway]
On the 18 December 2015, the UK Office of Rail and Road (“ORR”) formally accepted commitments from one of the UK’s leading providers of Deep Sea Container (“DSC”) rail transport services, which reportedly “fully address its competition concerns”.
The ORR, the UK’s independent regulator and monitor of railways and highways, received complaints of allegedly anti-competitive behaviour and an abuse of dominance on 17 June 2014 in relation to DCS’s arrangements with customers for the supply of its transport services. The ORR launched an investigation in November 2013, and concluded that certain agreements between the provider and its customers had the potential to “restrict competition by foreclosing access to customers for actual or potential rail freight operating company competitors.” One of the ORR’s main concerns was that many contracts were exclusionary in nature; requiring customers to contract solely (or largely) with the one supplier for long periods of time or on a rolling basis.
However, on 12 November 2015, before a decision was reached as to whether or not there had been breaches of Chapters I and II of the Competition Act 1998 or Articles 101 and 102 of the Treaty on the functioning of the European Union, the service provider offered various commitments which addressed the ORR’s concerns.
Among other obligations, the service provider has bound itself to:
1. refrain from entering into service provision contracts with customers which exceed five years or which require customers to purchase exclusively or largely from the one provider;
2. remove clauses in existing contracts which provide for automatic contract rollover;
3. provide all customers entering into contracts for periods of three years or more with a unilateral and unconditional right to reduce their commitments by 10% on the third anniversary of the contract and a further 10% on the fourth; and
4. deliver annual compliance statements to the ORR.
In their formal acceptance of the commitments on 18 December 2015, the ORR believes that the commitments will prevent the DSC arrangements with its customers from foreclosing competitors out of the market.
The commitments will remain in force until 31 March 2019, during which time the ORR has made its own assurance to continue to monitor the sector closely.
