Energy and Competition law - How antitrust commitments can be terminated early

A key aspect of the European Commission's decision-making process on Articles 101 and 102 of the Treaty on the Functioning of the European Union is that it can review commitments given by undertakings as part of the original infringement decision where circumstances have changed and then release companies from having such commitments where appropriate. The Commission can either review such commitments on its own initiative or where requested (e.g. by the companies which are subject to such commitments).

On 26 July 2016, the European Commission announced that it had released a German energy operator from commitments to reduce long-term bookings on the German gas grid. This release happened ahead of schedule due, in part, to the implementation of the commitments and also due to a change in market circumstances which resulted in increased competition on the market. The Commission released the operator from the commitments based on Article 9(2) of Regulation 1/2003 which allows for a re-opening of the original competition law investigation after a material change in the facts on which the original antitrust decision was based.

The Commission originally had concerns that long term bookings may have prevented other gas suppliers from accessing the German gas market and competing with the operator. Insufficient access can act to reduce the ability of suppliers to obtain customers (for example where long-term bookings involve a  significant majority of the available transport capacity at entry points into a gas transmission network). In 2010, the Commission accepted commitments to release large volumes of gas pipeline capacity and to further reduce its bookings of long term entry capacity in German grid. Following the Commission's decision, the operator booked less capacity than the threshold of total capacity set out in the commitments. Competitors were then able to enter the market and gain market shares. Transport capacity became available so that competitors had access to the capacity needed to operate on the market. Importantly, at the same time, the market developed in such a way that market participants generally preferred short-term bookings to respond to changing market demand and market shares.

The Commission re-assessed the market circumstances and, due to this material change in the structure of German gas market, the commitments were no longer necessary to ensure sufficient gas transport capacity for competitors. In making its decision, the Commission took into account an analysis of the German gas markets by the Commission, the German competition authority and the German energy regulator.

For further information please contact Alan McCarthy or your usual A&L Goodbody EU, Competition & Procurement contact.

Date published: 29 July 2016