Commerce Commission warns Toll over competition issues

11.15am

Competition watchdog the Commerce Commission has warned rail company Toll NZ, formerly Tranz Rail, that it will face prosecution if it repeats alleged anti-competitive practices.

Toll took control of Tranz Rail last year after apparent transgressions of the Commerce Act occurred.

The commission said it had found evidence indicating Tranz Rail's conduct in certain New Zealand rail markets over a period from 1997 to 2002 risked contravening the Act.

The commission's investigation centred around allegations that Tranz Rail used its dominant market position in access to the rail network to reduce competition in the rail passenger excursion and charter market.

Tranz Rail denied it contravened the Act.

Tranz Rail had for years provided access to its rail network for heritage trains from the National Federation of Rail Societies (NFRS), now known as the Federation of Railway Organisations, but then in 1997 hiked its prices and limited access to the lines, the Commission said.

"In the commission's view, Tranz Rail's conduct risked hindering competition in a number of ways," commission chair Paula Rebstock said in a statement.

Tranz Rail replaced its cost-based access pricing system with one based on the fares set on its own Tranz Scenic scheduled services.

"Tranz Rail's access charge was, in the commission's view, set too high because of a failure to make allowance for the fact that the services offered by the heritage operators on certain routes, particularly the Tranz Alpine route, were quite different," Ms Rebstock said.

The commission said under a new regime, Tranz Rail started charging third parties the same rate, whether or not they supplied their own rolling stock, which most heritage operators did.

"The commission considers that heritage operators may have been deterred from using train carriages and locomotives supplied by other operators, as it would not have been economically viable."

As well, in 1997 Tranz Rail introduced additional restrictions on heritage operators using wooden-bodied carriages with open platforms on lines where there were opposing trains or level crossings over major roads.

"This could have had the effect of making the running of historic trains unviable because of route non-availability or overly long schedules," Ms Rebstock said.

She noted that a subsequent return to its original pricing and other requirements had overcome the issues raised by the commission's investigation.

However, she said that the commission had made it clear to Toll that any resumption of such behaviour would be likely to attract enforcement action.

- NZPA