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December 5th, 2009

ANTITRUST:E.U. COMMISSION ACCEPTS COMMITMENTS BY GDF SUEZ 5-12-2009

The European Commission has adopted a decision that renders legally binding commitments offered by the French energy company GDF Suez to boost competition on the French gas market.

The European Commission has adopted a decision that renders legally binding commitments offered by the French energy company GDF Suez to boost competition on the French gas market.

In particular, the commitments address Commission concerns that GDF Suez may have closed off competitors from access to gas import capacity into France in breach of EU rules on abuse of a dominant market position (Article 102 of the Treaty on the Functioning of the European Union (TFEU) ¹ - see MEMO/08/328 and IP/09/1097 ). In response to the Commission's concerns, GDF Suez offered a major structural reduction of its long-term reservations on French gas import infrastructure capacity. In the light of GDF Suez's commitments, the Commission has now closed its investigation.

Competition Commissioner Neelie Kroes said: “The remedies offered by GDF Suez provide a real opportunity for competitors to enter the French gas market and so offer energy consumers greater choice of gas supplier and more competitive prices. The remedies will improve structural access to French gas import infrastructure and contribute to an integrated and competitive single European energy market that can provide a secure supply of energy at affordable prices."

In July 2009, the Commission consulted interested parties on the commitments proposed by GDF Suez to address the Commission's competition concerns (see IP/09/1097 ). The respondents confirmed that the commitments were adequate and proportionate to remedy the concerns. In its final commitments proposal, GDF Suez has also taken due account of a number of relevant points resulting from the Commission's market test.

In the course of its investigation, the Commission came to the preliminary view that GDF Suez's long-term reservations for most of France's gas import capacity, as well as its behaviour relating to investment and capacity allocation at two liquefied natural gas import terminals in France, might have infringed EU rules on the abuse of a dominant market position (Article 102 of TFEU).The Commission was concerned that this conduct largely closed off access to the French gas market to other potential gas suppliers.

New entrants into gas markets require access to gas import infrastructure (such as pipelines and liquefied natural gas terminals). Insufficient access to infrastructure limits their ability to acquire customers, no matter how competitive their offers may be. Preventing new entrants from gaining access to infrastructure therefore, hinders the development of competition in energy markets.

Under the proposed commitments, GDF Suez will rapidly release a large share of its long-term reservations of gas import capacity into France, and will then continue to reduce its share to below 50% of these reservations. These commitments should have a major structural impact on the possibility for other companies to compete on the French market, to the benefit of domestic and industrial gas consumers.

The Commission reviewed the commitments in close cooperation with the French energy regulator.

The Commission had initiated its investigations into the French energy market in May 2006 (see MEMO/06/205 ), as a follow-up to the energy sector competition inquiry (see IP/07/26 and MEMO/07/15 ). Antitrust proceedings against GDF were formally opened in May 2008 (see MEMO/08/328 ).

Background

The Commission's decision is based on Article 9 of Regulation 1/2003 on the implementation of the EU Treaty's competition rules. It takes into account the results of the market test launched in July 2009 (see IP/09/1097 ). This decision, which does not conclude whether there is an infringement, legally binds GDF Suez to the commitments it has offered and ends the Commission's investigation. If GDF Suez were to break its commitments, the Commission could impose a fine of up to 10% of GDF Suez's total annual turnover without having to prove any violation of the EU Treaty's competition rules.

See also MEMO/09/536 .