(EU Commission’s antitrust decision in case No. AT.39767, ‘BEH Electricity’)
Alexander Galendinov[1]
On 10 December 2015 the European Commission adopted a decision that renders legally binding the commitments offered by Bulgarian Energy Holding (BEH) to end alleged competition restrictions on Bulgaria’s wholesale electricity market[2].
The European Commission opened proceedings against BEH on 3 December 2012 making it the first ever antitrust investigation conducted by the Commission against a Bulgarian undertaking[3].
The Commission raised concerns that BEH might be abusing its dominant position on the wholesale electricity market in Bulgaria. In particular, the Commission reached the preliminary conclusion that BEH and its subsidiaries -Kozloduy nuclear power plant, the National Electricity Company (NEK) as well as Maritsa East II thermal power plant, may be hindering competition on wholesale electricity markets in Bulgaria and neighbouring Member States through territorial restrictions which limit their partners’ freedom to deliver electricity supplied by BEH by prescribing where the electricity has to be delivered.
According to these clauses, electricity supplied by BEH may, for example, be resold only within Bulgaria with prohibition on export. According to the Commission, such territorial restrictions have the effect of partitioning electricity markets along national lines while hindering competition and undermine the integration of EU electricity markets.
To address the Commission’s concerns, BEH proposed commitments on the basis of Article 9 of Regulation 1/2003[4]. In particular, the Bulgarian undertaking committed to offer certain volumes of electricity on an independently-operated day-ahead market on a newly-created power exchange in Bulgaria which would ensure anonymous trading of electricity and thus preventing the seller from enforcing territorial restrictions on resale.
It is specified that BEH will set up a power exchange with the assistance of an independent third party with expertise in the area, and transfer control of the ownership of the new power exchange to the Bulgarian Ministry of Finance which aims to ensure the independence of the power exchange.
In addition to this and to ensure the liquidity of the exchange, BEH will offer minimum stipulated volumes of electricity on the Bulgarian power exchange,for a period of five years. After market testing the commitments initially offered by BEH, the Commission reached the conclusion that the offered commitments address its competition concerns thus allowing for the commitments to be made legally binding on BEH and its subsidiaries.
The outcome of the electricity antitrust investigation may have an impact on the ongoing antitrust investigation regarding the Bulgarian natural gas market[5]. In the latter case, the Commission investigates whether BEH together with its gas supply subsidiary Bulgargaz and gas infrastructure subsidiary Bulgartransgaz, might be hindering competitors from accessing key gas infrastructures in Bulgaria and thus leading to a market foreclosure which is to be considered as an abuse of a dominant position under Article 102 TFEU.
Considering that all previous gas foreclosure investigations were closed with commitment decisions, it will not be surprising if the gas investigation against BEH will also end up with a commitment decision. In light of the newly created power exchange, under Commission’s ‘BEH Electricity case’, one possible commitment might be that BEH and its gas subsidiaries might propose to offer minimum stipulated volumes of natural gason the Bulgarian power exchange for a certain period of time.Such a commitment, if offered and accepted, would ensure the liquidity of the exchange which, on its turn, would become a genuine power trading platform, where both natural gas and electricity are commercialised in a transparent and competitive-based manner.
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Link to the article in Bulgarian language: РЕШЕНИЕТО НА ЕВРОПЕЙСКАТА КОМИСИЯ В ПРОИЗВОДСТВОТО СРЕЩУ БЪЛГАРСКИЯ ЕНЕРГИЕН ХОЛДИНГ ЗА ЗЛОУПОТРЕБА С ГОСПОДСТВАЩО ПОЛОЖЕНИЕ ПРИ ТЪРГОВИЯ НА ЕДРО С ЕЛЕКТРИЧЕСКА ЕНЕРГИЯ
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[1] Master in European law, University Paris 1 Panthéon-Sorbonne. Master of Arts in EU Competition law, King’s College London The statements and opinions expressed in this article are those of the author and they not represent the official position or interest of any public or private entity.
[2]AntitrustdecisionoftheEuropeanCommissionincase AT.39767 ‘BEH Electricty’, available at the website of Directorate General for Competition: http://ec.europa.eu/competition/antitrust/cases/dec_docs/39767/39767_2018_3.pdf
[3] Commission press release, “Antitrust: Commission opens proceedings against Bulgarian Energy Holding”, (IP/12/1307), 3 December 2012
[4] Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty
[5] Commission press release, ‘Antitrust: Commission opens proceedings against Bulgarian Energy Holding and its subsidiaries Bulgargaz and Bulgartransgaz’, (IP/13/656), 5 July 2013