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European Commission accepts E.ON commitments on German gas market

DATE: 24.06.2011

 

On 4 May 2010 the European Commission issued a Commitment Decision by which it accepted a series of commitments offered by E.ON in order to address a lack of transport capacity and open access to the German gas market. The commitments were offered as part of an investigation into a possible abuse of E.ON’s dominant position in that market. In Germany E.ON operates a number of local distribution networks and some networks with long distance lines. It is reported that E.ON was making long-term reservations of most of the "firm, freely allocable” entry capacities on these networks. These reservations, it was alleged, then prevented competitors from using the network for transport, which had the effect of limiting consumer choice.

To avoid being found by the Commission to have abused its dominant position, E.ON undertook to release 17.8 GWh/h firm, freely allocable entry capacity volumes to its gas network by October 2010, such reduction corresponding to about 15% of total pipeline capacity. E.ON further committed to, by October 2015, reduce its booking entry capacity in the H-gas network (owned by NetConnect Germany) grid to 50% and its pipeline capacity in E.ON’s own L-gas grid to 64%.  However the Decision allows E.ON to book, under a short term regime, any capacity not booked by competitors, thus ensuring that no liberated capacity will remain unused.

The Decision is based on Article 9 of Regulation 1/2003 on the implementation of the EU’s rules on competition and accordingly is legally binding on E.ON. A violation of the decision would render E.ON liable to a fine of 10% of E.ON’s total annual turnover for the preceding year.

The Commission noted that in response to consultations on E.ON’s proposed commitments, many third parties specified the difficulties they face due to lack of available entry capacity. The Commission considers that the Decision will have a major structural impact on the gas market in Germany, allowing companies other than E.ON to compete more effectively and ultimately benefitting industrial and domestic consumers of gas.

This decision is the ninth major competition decision adopted by the Commission following its enquiry into the energy sector (IP/07/26). The sector enquiry concluded that there were serious anti-competitive issues in the energy sector with consumers and businesses alike suffering from inefficient and expensive electricity and gas markets. Resulting from this enquiry the Commission has made the energy sector a priority for enforcement using all the competition powers available to it under the EU Treaties (Articles 101,102 and 106 of the Treaty on the Functioning of the European Union), and also by addressing market concentration through its merger control powers (Regulation 139/2004). Following the enquiry the Commission has taken firm steps to address these issues, either through adopting decisions, fining companies or accepting commitments. The other decisions adopted have addressed:

  • GDF Suez’s position on the French gas market (IP/09/1872);
  • RWE’s position on the German gas market (IP/09/410);
  • E.ON’s position on the German electricity market (IP/08/1774);
  • Svenska Kraftnät’s position on the Swedish electricity market (IP/10/425);
  • EDF’s position on the French electricity market (IP/10/290);
  • E.ON and GDF Suez market sharing in the French and German gas markets (IP/09/1099);
  • Distrigas’ position on the Belgian gas market (IP/07/1487); and
  • ENI’s position on the Italian gas market (MEMO/10/29).

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