EU Brings Antitrust Claims Against Utilities
Client Alert | 1 min read | 07.30.07
European Commission regulators have initiated legal proceedings against French energy companies Suez SA and Electricite de France, alleging that the utility companies conspired to fix prices in Belgian and French markets.
The Commission said on Thursday that it had launched an investigation of Electrabel, the Belgian arm of French company Suez, and EDF, France's government-sponsored energy company, for allegedly abusing dominant market position.
Regulators will look into contracts required by Electrabel and EDF that allegedly prevent industrial customers from switching energy providers. The Commission said that these contracts “significantly foreclose” the Belgian and French energy markets. In its investigation of the two companies, regulators said they would take into account conclusions reached in the investigation of Belgian gas provider Distrigas, another subsidiary of Suez SA that was involved a case that raised similar issues.
In April, Distrigas, Belgium’s main gas distributor, took steps to alleviate antitrust concerns over its long-term gas supply contracts. Under its commitments, Distrigas promised that 70% of the gas it supplied in Belgium would be contestable for competitors each year and that no individual contract would last over five years. Nonetheless, it will be allowed to tie under long-term gas supply contracts of up to 30% of its existing gas supply or up to 20% of the market. This will “protect Distrigas from having to re-open existing long-term gas supply agreements if the volume of gas it supplied decreased,” the Commission said.
Because Distrigas is a unit of Suez SA, the European Commission also addressed the possible Gaz de France/Suez merger. If the merger goes through and Distrigas is divested, then the commitments will apply to the sales in Belgium of Distrigas and its purchaser, the Commission said. If the merger does not go ahead, then the commitments will apply to Distrigas and the other members of the Suez group that are active on the Belgian gas market.
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