Deutsche Bahn Loses EU Court Bid to Quash Antitrust-Raid Orders

Deutsche Bahn AG, Germany’s state-owned railway, lost its bid to overturn separate European Union decisions ordering antitrust raids at the company’s offices.

The EU General Court in Luxembourg said today regulators didn’t break EU rules with a series of inspections that Deutsche Bahn said started out as a “fishing expedition” seeking evidence of competition-law violations.

The European Commission, the EU’s antitrust watchdog, in 2011 raided Deutsche Bahn’s offices to check allegations that DB Energie was favoring the group’s rail-freight arm over others. During that first raid, the commission gathered evidence which led it to order a second and a third raid into possible competition issues by the “strategic use” of infrastructure by the companies in the Deutsche Bahn group, according to a court filing.

The Brussels-based EU regulator opened a formal probe into Deutsche Bahn’s DB Energie unit last year to check whether it offers discounts that may inflate prices for Deutsche Bahn rivals, putting them possibly at a “competitive disadvantage.” Traction current is electricity used to power locomotives.

In the court appeals, which were all filed in 2011, Deutsche Bahn called the commission’s first raid in March that year a “fishing expedition” because it was “disproportionately wide and non-specific” and violated the company’s defense rights.

The company also challenged the unlawfulness of the commission’s raids that resulted from the first inspections and the material the regulator had gathered there.

Deutsche Bahn last month offered remedies in a bid to settle the EU investigation. The proposals include a new pricing system for traction current “with separate supply prices for electricity and separate grid-access fees,” the EU said Aug. 15.

The remedies would also include a “one-time retroactive refund” of 4 percent for railway companies that don’t belong to the DB Group of their traction-current invoice for the year preceding the new pricing system. The proposals will be made legally binding and last for five years, if the commission accepts them.

The Berlin-based company said it was unable to immediately comment on today’s ruling.

The cases are: T-289/11, T-290/11, T-521/11, Deutsche Bahn and others v. Commission.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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