Brussels, 5 March 2008
Antitrust: Commission calls on Greece to grant fairer access to lignite so as to improve competition in the electricity sector
The European Commission has adopted a decision finding that Greece has infringed Article 86 of the EC Treaty in combination with Article 82 by maintaining rights giving the state-owned electricity incumbent Public Power Corporation (PPC) quasi-exclusive access to lignite. As a result, despite liberalisation of the electricity wholesale market which started in 2001, PPC continues to enjoy today a virtual monopoly over access to lignite and Greece has protected PPC's dominant position in the electricity market. With this Decision, the Commission calls on Greece to propose and adopt remedies to ensure sufficient access to lignite by competitors of PPC.
Competition Commissioner Neelie Kroes commented “Customers are denied the benefits of competition in the electricity sector when one operator controls virtually all access to Greek lignite reserves, which currently represent the cheapest source of power generation in Greece. Greece should act decisively to establish a level playing field by ensuring within the framework of its national lignite policy, that competitors have access to substantial volumes of lignite.”
The Court of Justice has previously ruled that when a state measure results in inequality of opportunity between economic operators in favour of a dominant public undertaking, this constitutes an infringement of Article 86(1) of the Treaty, in conjunction with Article 82. Article 86(1) of the EC Treaty requires Member States to ensure that public undertakings and undertakings to which Member States grant special or exclusive rights to comply with EC Treaty rules, including the competition rules. Article 82 of the EC Treaty prohibits abuse of a dominant market position. The Commission has concluded that the measures adopted by Greece have distorted competition in favour of state-owned PPC, the former monopoly for electricity production, transport and supply.
Virtually all lignite deposits in Greece are owned by the state, which grants exploration and exploitation rights to undertakings. PPC has obtained 91% (in terms of volume of deposits) of the current exploitation rights. PPC has also obtained exploration rights for two of the three deposits for which exploitation rights are still to be allocated. It is currently Greece's policy to continue to grant lignite exploitation rights for electricity generation and it has indicated its intention to grant new exploitation rights for the three remaining deposits in the near future.
In Greece, virtually all lignite is used as a fuel for electricity generation in power plants situated close to the mines. Lignite is abundant in Greece, and is the cheapest available fuel in Greece. Indeed, lignite-fired electricity generation currently represents more than 60% of total generation and lignite-fired plants are by far the most extensively used power plants in Greece.
Competitors of PPC in the electricity market cannot currently compete efficiently with PPC in the Greek market because they are denied access to sufficient quantities of lignite. The very limited additional generation capacity that competitors have built since the liberalisation of the market in 2001 is based on comparatively expensive energy sources. As a result, PPC continues to produce more than 85% of the electricity consumed in Greece. By maintaining quasi exclusive access to lignite in favour of PPC, Greece has allowed PPC to maintain its dominant position in the electricity wholesale market.
It is Greece's responsibility, in the framework of its national energy policy, to identify concrete measures to end the infringement. The Decision of the Commission indicates that competitors would probably need to have access to a minimum of 40% of exploitable lignite resources in order to create a level playing field in the electricity market. This conclusion is valid irrespective of whether or not Greece maintains its current national policy of allocating additional lignite reserves for exploitation, bearing in mind the obligation to respect environmental and public health objectives that must be met with regard to the exploitation of lignite. The evolution of national policy in this regard, on environmental, health or other grounds, is unaffected by today's decision.