European Commission Acts on Wholesale Electricity Markets and Adopts Financial Sanctions against 3 European Power Exchanges in 2 Antitrust Cases
The European Commission made public yesterday its antitrust decision in two cases involving European power exchanges. The first decision is adopted against two of the major spot power exchanges in Europe: Nord Pool Spot (Norway) and EPEX Spot (EPEX, France). The two exchanges have been fined € 5 979 000 in total (€ 2 328 000 for Nord Pool Spot, € 3 651 000 for EPEX) for having agreed not to compete with one another for their spot electricity trading services in the European Economic Area (EEA) in the period 2011-2012 in the relation to the establishment of a joint IT system platform for cross border trading. The second decision concerns the Romaninan Power Exchange OPCOM which has been fine € 1 million for abusing its dominant position in the Romaninan market by putting extra-barriers for foreign traders for entering the market.Settlement in the Nord Pool Spot and EPEX Spot case: the unlucky counter-parts of the integration of the Internal Energy Market
The Commission and the EFTA Surveillance Authority (ESA) conducted joint investigations in the aftermaths of the announcement of the joint venture between the exchanges with the intention of establishing a joint IT system platform in September 2011, in particular for cross-border trading. Interestingly enough, this joint initiative was taken in the perspective of the completion of the Internal Energy Market (IEM) (the deadline being set to 2014). The IEM initiative, promoted by the European Commission, aims to integrate national energy markets at European level. The two authorities performed a series of investigation in situ in several European countries in February 2012 (see previous post). The two power exchanges mentioned at that time that "The Joint Venture will reinforce the ongoing European integration projects. It is expected to accelerate and simplify the creation of a single price calculation in the European day-ahead markets. [...] Nord Pool Spot and EPEX Sport will continue as separate power exchanges, i.e. keep their rulebooks and be in charge of their respective customers." (see press release by EPEX Spot, 28.09.2011).
After the opening of an official antitrust procedure, the Commission came to the conclusion that the elements of collusion between the two companies breached EU/EEA antitrust law, namely article 101 TFEU and article 53 EEA Agreement. A core issue identified by the Commission was the fact that, when investigating the possibility for a joint IT system, the two power exchanges also agreed not to compete with one another and to allocate the European territories where they had activities between them. "These agreements [based on exchanges during physical meetings, telephone calls, viedo conferences and e-mails] extended well beyond the legitimate purpose of the cooperation related to creating the Internal Energy Market", states the Commission. The Commission's investigation concluded that the infringement had a least last seven months in the period 2011-2012, until the EU/EEA authorities conducted their in situ inspections.
Since the two companies accepted the Commission's decision agreeing to settle the case, they have been given a 10% reduction on the fine. The legal basis for the calculation of the fine is Commission Guidelines on fines method from 2006 (link).
Simultaneous decision against the Romanina Power Exchange OPCOM
It should be noted that the European Commission released another antitrust decision on the same day against the Romaninan Power Exchange OPCOM, and its mother company Transelectrica, for abusing its dominant position in the Romaninan market for facilitating electricity spot trading (see coverage in a previous post). OPCOM is the operator of the only power exchange in Romania, which gives it de facto a dominant position. The Commission concluded that their behaviour discriminated against EU electricity traders by requiring all operators to have a Romanian VAT registration. Traders with a VAT registration in another Member State could not participate to the market for wholesale electricity trading until they obtain their Romanian VAT registration. This requirement entailed additional costs for foreign traders, which constituted a barrier to the entry onto the Romanian power exchange market. The Commission imposed OPCOM a fined of approx. € 1 million.
Towards more competition on wholesale electricity markets
Joaquin Almunia, Vice-President of the European Commission, made the following statement following the release of the decisions:
"These two decisions are significant, because power exchanges are central to the efficient functioning of electricity markets, in the best interest of consumers.
Indeed power exchanges provide key price information and price signals in wholesale electricity markets.
[...] preserving healthy competition between power exchanges and between traders contributes to ensuring that electricity markets operate as efficiently as they should. Ultimately, this prevents consumers from paying unjustified and unnecessary extra costs. This matters at a time when most European citizens are concerned by their rising electricity bills.
Towards more competition on wholesale electricity markets
Joaquin Almunia, Vice-President of the European Commission, made the following statement following the release of the decisions:
"These two decisions are significant, because power exchanges are central to the efficient functioning of electricity markets, in the best interest of consumers.
Indeed power exchanges provide key price information and price signals in wholesale electricity markets.
[...] preserving healthy competition between power exchanges and between traders contributes to ensuring that electricity markets operate as efficiently as they should. Ultimately, this prevents consumers from paying unjustified and unnecessary extra costs. This matters at a time when most European citizens are concerned by their rising electricity bills.
These two decisions are also a good illustration of how EU competition policy helps to build and sustain the Single Market." (Statement/14/48)
References:
Comments