Updated: Sept. 25, 2012 (Initial publication: May 21, 2010)
Sectorial Analysis
II.5-2: In a May 4, 2010 decision, the European Commission accepts the commitments offered by German energy corporation E.ON to improve competitors’ access to its natural gas transportation network
http://www.thejournalofregulation.com/spip.php?article260
The European Commission conducted a competition inquiry on the competitiveness of European energy markets, because it believed that these markets functioned poorly, especially because they are insufficiently open to competition and their prices are too high. Proceedings were begun in December 2009 against E.ON, and were closed by this corporation’s May 4, 2010 legally-binding commitments to the European Commission to improve its competitors’ access to its natural gas transportation network. Access to transportation networks, which are essential facilities, is the heart of any regulatory system, and if access was not organized beforehand (ex ante), it can be arranged afterwards (ex post), as is the case in this affair, via an alliance between Competition Law and Contract Law, wherein the commitments take on the form of a sort of co-regulation (cf. infra brief summary)
FRENCH
Par une décision du 4 mai 2010, la Commission Européenne a accepté le les engagements proposés par la société énergétique allemande E.ON d’ouvrir davantage à ses concurrents l’accès à son réseau de transport de gaz.
La commission européenne a mené en 2007 une enquête sectorielle sur le fonctionnement concurrentiel des marchés énergétiques européens en estimant que ceux-ci fonctionnent mal, notamment puisqu’ils sont peu ouverts et leurs prix trop élevés. Une procédure ouverte en décembre 2009 contre E.ON est ici close par l’engagement de celle-ci envers la commission européenne d’ouvrir à ses concurrents son réseau de transport de gaz. L’accès au réseau de transport, facilité essentielle, est le cœur du système de régulation et s’il ne se fait pas {ex ante} il peut se faire alors {ex post}, comme on le voit dans cette affaire, par une alliance entre le droit de la concurrence et le droit du contrat, l’engagement devenant une sorte de corégulation (voir infra dans le bref commentaire).
GERMAN
Die Europäische Kommission hat am 4. Mai 2010 ein Beschluss veröffentlicht, in dem sie die Zusage des deutschen Energiekonzerns E.ON, der Konkurrenz effektiven Zugang zu seinen Gasleitungen zu öffnen, für verbindlich erklärt.
Die Europäische Kommission hat eine kartellrechtliche Untersuchung im Energiesektor durchgeführt, da sie die europäischen Energiemärkte für ineffizient hielt, vor allem aufgrund mangelnden Wettbewerbs und zu hohen Preisen. Mit dem Beschluss vom 4. Mai 2010 werden die von E.ON angebotenen Verpflichtungen, den Zugang zu den Gasnetzwerken für potentielle Konkurrenten zu öffnen, für rechtlich bindend erklärt. Zugang zu Transportnetzen, die als wesentliche Einrichtungen ({Essential Facilities}) zählen, ist zentral für jedes Regulatierungssystem. Wenn dieser Zugang nicht im Voraus ({ex ante}) organisiert ist, kann er trotzdem im Nachhinein ({ex post}) etabliert werden, wie es hier den Fall ist, durch ein Bündnis zwischen Wettbewerbsrecht und Vertragsrecht, indem das Unternehmen durch seine Verpflichtungen quasi mitregulierend wirkt (siehe unten {Brief Summary})
SPANISH
Attached documents
Context and Summary
Brief commentary
This decision is instructive for a number of reasons.
First of all, we observe once again that “competition inquiries”—which are undertaken unilaterally, without any procedural guarantees, and without taking into account due process of law—are simply the first step in prosecuting anticompetitive practices. This is the case in the energy sector: we observe the same mechanism in the pharmaceutical sector (cf. Regulatory Law Review, 2010, III-2.1), which raises important questions as to at what point must companies’ right to due process be respected.
More importantly, this is a perfect example of the harmonious articulation between competition law and regulatory law. Indeed, when a sector is governed by the economically natural monopoly of a transport network (in this case, natural gas networks), competition can be introduced through ex ante regulation. But, if sector-specific regulation is not dynamic enough to introduce competition, competition law’s ex post mechanism of the abuse of dominant position can also be used for this purpose. The opposite path was chosen by the United States through the Supreme Court’s doctrine of ‘Essential Facilities’, created in 1911 as a part of antitrust law, at a time when regulators possessing ex ante powers had not yet been created. The finesse of the E.ON decision at hand lies in the insertion of the legally-binding commitment into competition law. Legally binding commitments were only created by the recent European Regulation of 2003 on the modernization of competition law.
Yet, by nature, a commitment—simply an offer made by a company to an authority, who accepts it—is a contract, or an ex ante tool. Legislation has carefully provided for numerous sanctions in case the commitments are not upheld in the future. Therefore, it is quite logical that the commitments should be examined both by the competition authority and the regulator for the energy sector, because these commitments are structuring the market for the future, in an ex ante perspective, since the contract is certainly an expression of competition law’s growing adoption of a regulatory law perspective.
This sort of regulation through commitments is performed by the duo formed by the competition authority and the company making the commitments, which means that it is a sort of co-regulation. It is therefore remarkable that the European Competition Commissioner, Joachim Almunia, explicitly stated that such commitments were an overall solution.
The commitment, because it shares with the contract the possibility for the parties to draw up their respective obligations, is an adequate form of ex ante regulation. Here, we can clearly see this fact. Truly, competition law is obliged by nature to use its strength in a very radical manner, especially by declaring practices and clauses illegal and void ab initio; whereas in a commitment, this strength can be used with great finesse, by defining, for example, the exact dates for the gradual opening of the network—which belongs to an owner who is also a producer and a user—to competitors. Thereby, the substantial capacity of E.ON’s gas network’s entry points organize the future competition on this market: the commitments detail a timeframe and plans for E.ON to abandon 15% of the bookings that it made on its own network, in order to space out the reduction in its bookings over a period stretching from October 2010 to October 2015. The commitments also define the type of natural gas network concerned by these commitments. This is why, after October 2015, E.ON will be able to keep 64% of its bookings for low-caloric-value gas on its gas network.
Thanks to the ex ante nature of this contract, and its flexibility and casuistic nature; the contract in the form of a commitment can be an adequate regulatory instrument.
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