Antitrust: EDF commitments to open French electricity market to competition made legally binding
European Commission - IP/10/290 17/03/2010
Brussels, 17 March 2010
The European Commission has made legally binding commitments offered by the French electricity group EDF. These commitments were offered in response to the Commission's concerns that EDF's contracts with large electricity consumers may hinder the entry and expansion of EDF's competitors on the French market. Under the commitments, EDF will make sure that every year a significant number of customers are free to contract with other electricity suppliers. Resale restrictions will also be removed. The decision will increase competition in the French electricity wholesale market to the benefit of large customers and the economy as a whole.
Vice-President for Competition Almunia commented: "Today's decision marks an important step towards the effective liberalisation of the French electricity markets to the benefit of large customers and, by extension, the economy as a whole".
In December 2008, the Commission sent EDF a Statement of Objections (see MEMO/08/809), expressing the concern that the scope, duration, and exclusive nature of EDF's supply contracts may prevent other electricity suppliers from entering and expanding in the French electricity market. It also objected to restrictions on customers preventing them from reselling the electricity. The Commission took the view such behaviour was prima facie an abuse of a dominant position enjoyed by EDF on the French market in contravention of Article 102 of the EU Treaty. For competition to develop, EDF's competitors need to have access to customers which are currently tied to EDF through long-term contracts. Following the Commission's statement of objections, EDF undertook to ensure that an average of 65% of the electricity that it has contracted with large customers will return to the market every year, because the contract ends or because customers will be able to opt-out of their contract for free. EDF has some flexibility to meet this average over the lifetime of the commitments, but each year at least 60% of its total contracted electricity volumes must return to the market. In addition, future contracts between EDF and large customers will be for no longer than five years, unless the customer can opt-out from the contract for free at least every five years. Moreover, EDF will now always offer customers the possibility to conclude non-exclusive contracts, allowing customers to partly source their electricity needs from other suppliers. In this way, competitors can compete to supply a customer which also has a contract with EDF. This will facilitate the emergence of more effective competition in supplying large electricity consumers in France. This commitment will be binding on EDF for ten years unless EDF's market share drops below 40% for two consecutive years.
The Commission's Statement of Objections also expressed the concern that customers could not resell electricity they had contracted to purchase from EDF. EDF will now remove these restrictions and even facilitate resale if requested by a customer. This will support the development of the French electricity wholesale market and make it easier for customers to optimise their electricity supplies. This commitment will apply for ten years without the possibility of earlier termination.
In November 2009, the Commission published a summary of the commitments and invited market players to comment (see IP/09/1669). The market test confirmed that the commitments offered by EDF were suitable to remedy the competition concerns identified. As a result of the market test certain safeguards to prevent the commitments being circumvented were also included.
Electricité de Strasbourg, a company which is part of the EDF Group and which also supplies large electricity consumers in France is also bound by these commitments.
The EDF Group will submit yearly reports to the Commission and the French energy regulator, the "Commission de Régulation de l'Énergie" (CRE) on compliance with the commitments.
Today's decision is part of a number of measures, aimed at addressing competition problems in French electricity markets, that will structurally change French electricity markets in the longer run. (See MEMO/09/394).
The Commission's decision, based on Article 9 of Regulation 1/2003 on the implementation of the EU competition rules, takes into account the results of the market test launched on 4 November 2009 (see IP/09/1669). This decision makes the commitments offered by EDF legally binding on it until 1 January 2020, and ends the Commission's investigation. If EDF were to breach its commitments, the Commission could impose a fine of up to 10 percent of EDF's total turnover without having to prove a violation of EU competition rules.