Abstract
The liberalisation of gas and electricity markets had been achieved in almost all EU Member States by the end of the last century. It basically aimed at bringing competition into energy markets and benefiting from its favourable impacts. However, initial experiences showed that markets suffered from limited competition. The objective of this article is to give a brief assessment of the current market competition with special attention to two fundamental issues related to undistorted competition: unbundling of activities and developments in market concentration. The analysis shows that significant progress has been achieved in the unbundling of activities over the past few years. However, the market concentration in the retail segment in most Member States is still high (based on the HHI, C3, the number of undertakings with a market share over 5 percent, and the ARCI indicators).
Highlights
Gas and electricity markets have undergone significant changes over the last decades
This article aims at providing a brief assessment of the current competition with special attention to two fundamental issues related to undistorted competition: the unbundling of activities and the development of market concentration
Hirschman index (HHI) value in electricity and gas retail markets based on the data of 2012
Summary
Gas and electricity markets have undergone significant changes over the last decades. 2000s (earlier in some countries, later in others) energy markets in both sectors had been opened up to competition in almost all EU Member States. Liberalisation basically aimed at bringing competition into energy markets and thereby benefiting from its favourable impacts. The emergence of vertically integrated transnational market players encompassing cross-border or even cross-sectoral value chains of the whole sector led to significant impediments to the development of effective competition. Apart from high market concentrations, insufficient unbundling of network activities was another factor that restricted competition. Both implicit crossfinancing opportunities and the hidden barriers to network access hindered the evolution of undistorted competition and enhanced the possibility to generate extra profit for energy market players already dominant in energy markets (Kádárné Horváth 2012)
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