Metro seeks to halt Transbank rate hike ahead of TDLC, warns of ‘imminent threat to users’

On Nov. 18, Metro SA Passenger Transport Company filed a preliminary ruling with the Tribunal de Defensa de la Libre Competencia (TDLC) to try to stop Transbank’s rate hike.

According to the slogan ThirdFour days later, the court decided not to proceed with the request, as the company has not presented sufficient elements to prove the damages, but it is expected to return to office with the appeal.

In this legal action, Metro requested that Transbank be ordered “not to terminate the contracts with Metro or to suspend services for non-payment of the tariff increase reported in its letter dated August 22, 2022, nor of its modification communicated by letter dated 2, 2022”.

According to the state company, “the measures requested are necessary to prevent possible negative effects on competition and to protect the common interest, since it is the only way to ensure that no effects or damages are generated”.

“The measures aim to temporarily protect my client’s rights against the imminent threat of negative effects that the implementation of the tariff increase, the transfer of these higher costs for users and/or the suspension of the services provided by Transbank to Metro, in accordance with the contracts in force between the two”, adds Metro in its letter.

Along the same lines, the transport company claims that the average amount charged to cards in the self-service machines of the automatic lines is about 4,000 dollars -for debit cards- and 6,500 dollars -for credit cards-.

This means that Transbank’s new tariffs, since they correspond to a fixed amount per transaction, expressed in UF+VAT, translate into a significant increase in tariffs compared to those previously applied.

According to estimates from the state-owned company, the fare increase averaged nearly double what Metro was billed before Aug. 22. However, while Transbank has seen a reduction in its fees this month, they represent a close to 86% increase on what Metro pays.

For their part, from Transbank they specified that “the sentence of the Supreme Court has determined precise criteria which the tariff system must comply with, consisting of three elements: acquisition margin, exchange rates and cost of the brand”.

“Of these three elements, Transbank only has the authority to set the acquisition margin, which must be equivalent to its economic costs (long-term average costs) that allow the company to finance itself. This is exactly what has been done with all of our affiliated businesses, including Metro, as soon as the ruling was published, otherwise it would have resulted in arbitrary and unlawful discrimination and blatantly contrary to the provisions of the Supreme Court,” they added.

According to Metro’s lawsuit, it would be difficult for the company to pass on this higher cost to transit users.

“Assuming these higher costs for Metro will have a significant impact on the income it receives from the contract with the MTT. Unfortunately, even migrating services to another supplier immediately is not feasible, because there are no alternative suppliers who can offer the service immediately, as well as operational reasons for the machines available to Metro”, reads the letter.

“It is highly probable that Metro, if the application of the tariff increase reported by Transbank is not suspended, will see the need to bear the cost increase with significant negative effects on its already impoverished financial situation, which will entail a slicing of the revenue it receives from the contract with the MTT, in an annual decrease which – according to preliminary estimates by the public company – would exceed 10% of the margin it obtains from said contract”, he concludes.

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