Updated: Sept. 10, 2012 (Initial publication: June 8, 2012)

Sectorial Analysis

The European Commission informed on May 31, 2012 that France has two months to adopt a gas prices regulation for non-residential customers compatible with European competition Law.



Context and Summary

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The question of final consumer’s energy pricing continues to have a media exposure in regulation news. These can be measured the dialectic between the regulation and the policy, because the Governments intend to protect the population and small businesses, and the law, which is blinder (some would say impartial).

We can also see the dialectic between regulation and competition, because competition always refers to the sufficient adjustment between supply and demand, regulation is partly linked to the competition when it intended to build competition.

However, in this case, the European Commission, even though it refers to the internal energy market and not to the blind automatic competition principles, intends to the principle adequacy of such an adjustment, because the resulting prices are favourable to the arrival of new entrants.

Conversely, the Commission says that the Code of energy, fixing rates for "non-residential" consumers, that is to say professionals, without reduce the time period of such fixation of prices, nor size a maximum size of consumers’ recipients of these rates. Therefore, the device is not unlawful in it because we are not here in a pure logic of competition law, which is disproportionate for the European Commission as compared to the goal of general economic interest, otherwise in itself legitimate The Commission therefore gives two months to the France to change its regulations. Otherwise, it warns, it could take action against the Member State before the Court of justice of the European Union.

We can measure that here the political aspect, this time above the strategic perspective. After having waited six years, the Commission makes "wide-eyed, and gives to France a short period of time, evokes an action. We will see if the Government of the Member State will be impressed. The fact what the Council of State has already condemned political choices yet very popular in pricing gas ("rate freeze") is certainly incentive to take into consideration the law.


Brief commentary

Since 2006, the European Commission considers that the French Law of the Code of Energy fixed pricing of natural gas for non-residential consumers, that is to say for professionals, is out of line with the European Union law, even the one which governs the Internal Energy Market. Indeed, according to the Commission, the first mode of organisation must be the free market-based price and not the tariff. However, after having exchanged words with the French Government for six years, the Commission continues to support that legislation which is not temporary and which is not proportionate to the size of the consumer, is contrary to European law. Therefore, it gave injunction to France to adopt regulations in accordance with these limits in order to save the economic interest task but not more of that. The France has two months to ensure its compliance.

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