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MEMO/07/313
Brussels, 26 July 2007
Antitrust: Commission initiates formal
proceedings against Electrabel and EDF for suspected foreclosure of the Belgian
and French electricity markets
The European Commission has decided to open two
formal anti-trust proceedings, one against Electrabel, which is the incumbent
electricity company in Belgium and part of the French SUEZ group, and one
against EDF, the incumbent electricity supplier in France, for possible breaches
of the EC Treaty's rules on abuse of a dominant market position
(Article 82). The Commission believes that Electrabel and EDF may have
introduced long term exclusive purchase obligations in their supply contracts
with industrial consumers that make it difficult for new entrant electricity
suppliers to acquire these consumers as clients in Belgium and France. As a
result, the development of a more competitive electricity market in these Member
States might be delayed. Such a delay in introducing competition on the market
could lead to higher prices and lower quality of service for all electricity
consumers in these countries, both companies and private
individuals.
This initiation of proceedings does not imply that the Commission has
conclusive proof of an infringement. It only signifies that the Commission will
conduct an in-depth investigation of the case as a matter of priority.
There is no strict deadline to complete inquiries into anticompetitive
conduct. Their duration depends on a number of factors, including the complexity
of each case, the extent to which the undertakings concerned co-operate with the
Commission and the exercise of the rights of defence.
What is the decision of the Commission to initiate proceedings
about?
The proceedings against Electrabel and EDF are not part of the energy
sector competition inquiry, on which the final report was presented on
10th January 2007 (see IP/07/26
and MEMO/07/15).
The energy sector inquiry has allowed the Commission to gain an in-depth
understanding on the functioning, and in some respects mal-functioning, of the
energy sector, which is of key importance for the overall competitiveness of the
European economy. The knowledge acquired during the sector inquiry has allowed
the Commission to draw conclusions as regards where Commission investigations
based on competition law could be appropriate and effective.
One of the
conclusions of the sector inquiry is that a number of electricity markets are
difficult to penetrate by new suppliers because many consumers buy on a long
term, exclusive basis from the incumbent operator (see in particular see pages
287-298, of the "Report on the Energy Sector Inquiry" available under:
http://ec.europa.eu/comm/competition/sectors/energy/inquiry/full_report_part3.pdf).
The alleged infringements that will now be investigated in depth concern the
contracts concluded by Electrabel and EDF with industrial customers in their
respective home markets, Belgium and France. It is suspected that these
contracts prevent customer switching, thereby significantly foreclosing the
markets concerned, in particular when considering their exclusive nature,
duration and the share of the market that is tied by these agreements. These
practices may constitute infringements of the EC Treaty's rules on abuse of a
dominant market position (Article 82).
The removal of the barriers to competition is expected to make it easier for
suppliers to enter and expand in the Belgian and French electricity markets,
thereby bringing more competition to markets that currently are still highly
concentrated. The investigation will concentrate on the markets for large
industrial electricity consumers.
The cases will take account of the reasoning developed in a competition case
concerning Distrigaz and the gas markets in Belgium (see MEMO/06/197).
The Commission hopes to bring this case to an end in the near future.
What is the legal base for the decision?
The legal base of this procedural step is Article 11(6) of Council Regulation
No 1/2003 and article 2(1) of Commission Regulation No 773/2004.
Article 11(6) of Regulation No 1/2003 provides that the initiation of
proceedings relieves the competition authorities of the Member States of their
authority to apply Articles 81 and 82 of the Treaty. Moreover, Article 16(1) of
the same Regulation provides that national courts must avoid giving decisions
which would conflict with a decision contemplated by the Commission in
proceedings that it has initiated.
Article 2 of Regulation No 773/2004 provides that the Commission can initiate
proceedings with a view to adopting at a later stage a decision on substance
according to Articles 7-10 of Regulation No 1/2003 at any point in time, but at
the latest when issuing a statement of objections or a preliminary assessment
notice in a settlement procedure. In the cases at stake, the Commission has
chosen to open proceedings before such further steps.
The Commission may make public the initiation of proceedings in any
appropriate way. Before doing so, it informed the parties concerned. The
competition authorities of the Member States concerned have also been
informed.
The company's rights of defence will be fully respected.
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