Brussels, 29 September 2010
Antitrust / ENI case: Commission opens up access to Italy's natural gas market
The European Commission has opened up access to Italy's natural gas markets by making legally-binding the commitments offered by ENI SpA to settle antitrust proceedings. Today's decision will promote healthy competition and potentially lower prices in the supply of gas to companies and to households in Italy. Concretely, ENI will divest its shares in three international transport pipelines to Italy: the TAG, the TENP and the Transitgas pipeline. This will ensure that third-party requests to access the gas pipelines will be dealt with by an entity independent of ENI, the main supplier of gas in Italy. After the recent decisions involving E.ON and RWE in Germany and GDF Suez in France, this is now the ninth major decision since the 2007 energy sector inquiry that had shown consumers and businesses were losing out because of inefficient and expensive markets.
Competition Commissioner Almunia, Vice-President of the Commission, said: “Access to infrastructure is key for the integration of gas markets, price competition and overall security of supply in the European Union. The legally-binding commitments will ensure that capacity hoarding and degradation will no longer take place on the transport pipelines into Italy and that the proper investment incentives will prevail."
The Commission, today, has taken a decision that makes legally-binding the commitments entered into by ENI SpA to divest its shares in the companies that own, operate and manage the transport capacity on the international pipelines TAG, TENP and Transitgas to bring gas into northern Italy respectively from Russia (TAG) and the North of Europe (the system TENP/Transitgas).
ENI is the main gas company in Italy both in the transport of gas and its supply in the downstream market to companies and households.
The Commission notified ENI in a formal Statement of Objections (SO) of March 2009 (see Memo/09/120) of its preliminary view that it may be abusing its dominant position on the gas transport markets by refusing to grant competitors access to capacity available on the network; by granting access in an impractical manner and; by strategically limiting investment in ENI's international transmission pipeline system. Demand for both short- and long-term access to the pipelines was very significant. This, in the Commission's view, amounted to capacity hoarding as well as capacity degradation and strategic underinvestment.
Also according to the preliminary view stated in the SO, ENI may have had the incentive to engage in a strategy of foreclosing rivals to protect its margins in the downstream gas supply markets. The practices were potentially harmful for competitors, weakened competition on the downstream gas markets and ultimately harmful for gas customers in Italy.
The commitments offered by ENI and tested on the markets are expected to increase the opportunity for other companies to transport gas into Italy and to compete on the Italian market to the benefit of gas consumers.
They effectively address the Commission's competition concerns set out in the SO, namely the conflict of interest resulting from the vertical integration of ENI in both the transport and supply of gas.
The sale of the ENI shareholdings in the international transport pipelines will be carried out under the supervision of a trustee and the buyers will need to be approved by the Commission.
In the case of TAG, the agreement is that ENI will divest its shareholdings to a company controlled by the Italian State which is likely to be Cassa Depositi e Prestiti (CDP). Should no binding sale and purchase agreement be signed within the agreed divestiture period, ENI's shares in TAG will be sold by the divestiture trustee to any suitable public or private purchaser approved by the Commission.
This is already the ninth major antitrust decision adopted by the Commission in the wake of its energy sector inquiry (see on the sector inquiry IP/07/26; for other major energy antitrust decisions in see IP/07/1487, IP/08/1774, IP/09/410; IP/09/1099; IP 09/1872; IP/10/290; IP/10/425 and IP/10/494).
According to Article 9 of Regulation 1/2003 (the EU antitrust law), the Commission may decide in cases where it intends to conclude antitrust violations to make commitments legally binding on companies that offer them. These, so-called Article 9 settlement decisions allow the Commission to resolve competition concerns more rapidly. Because they represent a settlement, Article 9 decisions do not conclude on the existence of an infringement. But were a company to break legally binding commitments, the Commission could impose a fine of up to 10% of the total annual turnover without, in this case, having to prove the violation either.
The investigation was started at the Commission's own initiative in 2007 with inspections at the company's premises. Article 102 of the Treaty on the Functioning of the EU (formerly Article 82) bans abuses of dominant positions.