E.ON's commitments open up German gas market to competitors
The European Commission has adopted a decision that renders legally binding commitments offered by E.ON to effectively open up access to the German gas market thereby addressing concerns that it may have unfairly shut out competitors in a possible abuse of its dominant market position.
After the recent decisions involving RWE in Germany and GDF Suez in France, this is now the ninth major decision since the 2007 energy sector competition inquiry that had shown consumers and businesses were losing out because of inefficient and expensive markets.
EU Competition Commissioner Almunia, Vice-President of the Commission, said: “The notorious lack of transport capacity is currently one of the major obstacles to gas competition in Germany. With today's commitments we have achieved a far-reaching solution which will give competitors access to the transport capacities they need to enter the market."
Following a Commission antitrust investigation, E.ON undertook to release large capacity volumes at the entry points to its gas networks by October 2010. The capacities released at different entry points by October correspond to around 15% of the pipeline capacity and will be published on the website of E.ON Gastransport GmbH in the course of next week. From October 2015, E.ON will further reduce its bookings of entry capacity in the NetConnect Germany grid to 50% and in E.ON's grid for low-calorific gas to 64% of the pipeline capacity.
The commitments are expected to have a major structural impact on the possibility for other companies to compete on the German market, to the benefit of domestic and industrial gas consumers. The Commission reviewed the commitments in close cooperation with the German energy regulator (Bundesnetzagentur) and the German competition authority (Bundeskartellamt). It also consulted interested parties, which responded positively to the draft settlement decision.
Access to gas pipelines is vital for new market entrants. Insufficient access limits the ability to acquire customers, no matter how competitive the offer might be. The Commission's investigation showed that E.ON had booked on a long-term basis the largest part of the available transport capacity at the entry points into its gas transmission networks. These bookings may have prevented other gas suppliers from accessing the German gas market, depriving them of the opportunity to compete with E.ON. The Commission therefore came to the preliminary view that the long-term reservations might have infringed EU rules on the abuse of a dominant market position (Article 102 of the Treaty on the Functioning of the EU – TFEU, formerly Article 82 of the EC Treaty).
Background
The Commission's decision is based on Article 9 of Regulation 1/2003 on the implementation of the EU Treaty's competition rules. It takes into account the results of the market test launched in January 2010. This decision, which does not conclude whether there is an infringement, legally binds E.ON to the commitments it has offered and ends the Commission's investigation. If E.ON were to break its commitments, the Commission could impose a fine of up to 10% of E.ON's total annual turnover without having to prove any violation of the TFEU's competition rules.
Commission's commitment decision opens German gas pipelines to competitors - Briefing