From Energy Sector Inquiry to Recent Antitrust Decisions in European Energy Markets: Competition Law as a Means to Implement Sector Regulation

Abstract

This paper presents the conceptual path followed by European Union, European Commission and European Competition Network, after the Energy Sector Inquiry (2007) towards the realisation of the objective of an Energy Internal Market, fully functional and open to competition. Firstly, we examine the findings of Sector Inquiry and then we describe how the Third Energy Package - that followed - tried to address the issues highlighted by the Inquiry and how Third Energy Package introduces a promising but complex system, in order to develop sector rules. Following the above, we proceed to a brief but close examination of 10 recent -during or after Inquiry and the proceedings towards Third Energy Package - European antitrust decisions, which focused on several issues demonstrated by the Inquiry, such as: long-term energy supply contracts, market manipulation, vertical foreclosure, market partitioning, refusals to supply, discrimination between different categories of customers, strategic underinvestment, capacity hoarding and margin squeeze. All these cases except E.ON/GDF- were resolved under the commitments procedure of - Art. 9 of EU Regulation 1/2003 and the commitments mainly involved far-reaching structural remedies, such as ownership unbundling. Furthermore, we also investigate some recent mergers cases and some initiatives from selected European NRAs, in order to show the consistent character of competition policy in European Energy Markets.Following this analysis, we then proceed to Trinko case, in order to focus on two crucial and relevant to our analysis issues: essential facilities doctrine and the relation between sector regulation and competition law. After showing how Trinko case addressed these issues, we return to European Law and we examine the relevant point of view of European Competition Authorities. One major conclusion is that in EU, Commission applies competition law, in order to address issues fitting to sector regulation in a possibly stricter way than sector regulation does - for example Third Energy Package offers many alternatives to full ownership unbundling, while Commission's decisions actually present it as a single option; thus Commission tries to implement a sector specific policy by competition law means and methodology and especially by commitments procedure - a procedure that allows Commission to avoid ECJ investigation. We seek the reasons that lead to this approach and we highlight the weak points of it. Finally, we conclude that this approach may eventually lead to a dualistic system - possibly dangerous and inefficient as well - of addressing energy market's issues; a dualistic system that will fully reveal its possibly negative consequences after the Third Energy Package comes into force.