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Deutsche Bahn Loses EU Court Bid to Quash Antitrust Raids

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Sept. 6 (Bloomberg) -- 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 decided today that 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 unfairly favoring the group’s rail-freight arm. During that first raid, the commission gathered evidence which led it to order a second and a third raid over the “strategic use” of infrastructure by the companies in the Deutsche Bahn group.

Today’s ruling confirms that “inspectors on the spot are entitled to conduct a thorough search for evidence on any document, irrespective of its content or title,” said Antoine Colombani, a spokesman for the EU regulator’s antitrust department.

Deutsche Bahn will study the ruling and decide about an appeal to the EU Court of Justice, the Berlin-based company said by e-mail.

‘Fishing Expedition’

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

According to today’s ruling, the commission was entitled to use information gleaned in the first raid to justify subsequent inspections on the company focussing on different issues.

“Otherwise, this would entice companies during a first inspection to put forward all documents that could prove another violation, to protect themselves against any further prosecution,” the court said.

The court also rejected Deutsche Bahn’s argument that the commission should only be allowed to carry out antitrust raids if it has judicial authorization.

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.

Electricity Prices

The company 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 commission “will pursue its investigation in the Deutsche Bahn cases as planned,” said Colombani. “Currently commitments submitted by Deutsche Bahn are being market tested.”

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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