Privates favoured

Bulgaria’s rail market to be opened up? The Bulgarian competition commission CPC has declared the country’s railfreight market to be distorted. The state-owned quasi-monopoly is thus being shaken.

Photo: Frank Stier

A decision arrived at by the Bulgarian Commission on the Protection of Competition (CPC) in mid-January 2023 could bring about fairer conditions in the Bulgarian market for railfreight transport in future – if it really has consequences. The CPC found that NKZhI, Bulgaria’s state-owned national company for railway infrastructure, has abused its monopoly position and distorted competition in the railfreight market since 2010 by favouring BDŽ Tovarni Prevosi (BDŽ TP), the freight subsidiary of the Bulgarian State Railways BDŽ, over licensed private railway enterprises.

Long preparation, but clear words in the end

It took the CPC almost two years to reach its decision. In February 2021 the Bulgarian Railway Company (BŽK), a private enterprise, notified the CPC of the discrimination private companies face at the hands of the state infrastructure company.

According to the CPC, NKZhI has “pursued a comprehensive and complex strategy to privilege BDŽ TP,” putting its competitors in the freight market “at an unfair competitive disadvantage.” It is alleged to have “granted access to and use of railway infrastructure and services at different terms,” amongst other things.

This saved state-owned BDŽ TP fees that its private competitors had to pay when doing business. NKZhI also charged differently for the allocation of electricity through its distribution networks.

However, according to the CPC, “the functioning of a competitive railfreight market for consumers and businesses in Europe is a key to building a green and sustainable economy for the future.”

Its strong market position therefore obliges NKZhI to “guarantee non-discriminatory access to all hauliers that dependent economically on its infrastructure.” The CPC gave the state infrastructure company 60 days to respond.

According to the Bulgarian business magazine Kapital, the infrastructure company NKZhI was the largest company in Bulgaria’s transport sector in 2021, with a turnover of just over BGN 531 million (approximately CHF 265 million).

National and international potential

The state-owned railfreight operator BDŽ TP, with a turnover of approximately BGN 132 million (approximately CHF 66 million), maintained its strong position, with a clear lead over Bulmarket Rail Cargo (BRC), based in Ruse on the Danube, with just under BGN 55 million (approximately CHF 27 million).

However, BDŽ TP has been suffering from structural problems for a long time already, and made a loss of BGN 7 million (CHF 3.5 million) in 2021. It is steadily losing market share to the dozen or so of its private competitors. Some of these are expanding into neighbouring countries too.

Last year, for example, BRC acquired the Romanian railway company Vest Trans Rail (VTR) for EUR 17 million. The CPC complainant BŽK, which in 2004 became the first private railway company to be licensed in Bulgaria, is one of a group of smaller market players in Bulgaria in terms of turnover. It is part of Romania’s Grampet Group, the most active railway enterprise operating in southeastern Europe.Frank Stier