Commissioner in charge of competition policy, Margrethe Vestager, said: "Territorial restrictions that divide energy markets along national lines prevent us from achieving a true European Energy Union. Today's decision will end these restrictions in Bulgaria and make the Bulgarian wholesale electricity market more open and transparent."
The Commission’s competition concerns
BEH is the State-owned Bulgarian energy incumbent. The Commission had concerns that BEH may have abused its dominant position on the market for the wholesale supply of electricity at freely negotiated prices (therefore non-regulated prices), in breach of EU antitrust rules (Article 102 of the Treaty on the Functioning of the European Union - TFEU). In particular, the Commission investigated clauses in electricity supply contracts concluded between BEH's production subsidiaries and third parties, such as traders, that impose restrictions on where these third parties could resell the electricity bought from BEH.
To address the Commission's concerns, BEH has committed to offer certain volumes of electricity on an independently-operated day-ahead market on a newly-created power exchange in Bulgaria. Power exchanges ensure anonymous trading of electricity (i.e. the seller cannot trace the electricity it sells). This prevents the seller from enforcing territorial restrictions on resale.
More specifically, BEH will set up a power exchange with the assistance of an independent third party with expertise in the area, and transfer control of the ownership of the new power exchange to the Bulgarian Ministry of Finance. These measures will ensure the independence of the power exchange.
In addition to this and to ensure the liquidity of the exchange, BEH will offer minimum stipulated volumes of electricity on the Bulgarian power exchange,for a period of five years. These volumes will be put for sale in the day-ahead market, with a maximum price based on the marginal costs of BEH's production subsidiaries. The volumes offered will vary on an hour-by-hour basis, in line with the pattern of consumption of electricity in Bulgaria.
After market testing the commitments initially offered by BEH, the Commission is satisfied that these commitments will address its competition concerns. They will make it easier to trade electricity, improve price transparency on the market and promote the integration of the Bulgarian wholesale electricity market with neighbouring countries' markets.
The Commission has therefore made the commitments legally binding on BEH and its subsidiaries.
The Commission opened formal proceedings to investigate whether BEH may be abusing its dominant market position in the wholesale electricity market in Bulgaria on 27 November 2012 and issued a Statement of Objections in August 2014. BEH's initial commitments were market tested in June 2015.
In a separate investigation, the Commission is investigating whether BEH, its gas supply subsidiary Bulgargaz and its gas infrastructure subsidiary Bulgartransgaz might be preventing competitors from accessing key gas infrastructures in Bulgaria, in breach of EU antitrust rules. The Commission opened formal proceedings in July 2013 and sent a Statement of Objections in March 2015.
Article 9 of the EU's Antitrust Regulation (Regulation 1/2003) allows the Commission to conclude antitrust proceedings by making commitments offered by a company legally binding. Such a decision does not conclude that there is an infringement of the EU antitrust rules but legally binds the companies concerned to respect the commitments offered. If the company breaks such commitments, the Commission can impose a fine of up to 10% of the company's worldwide turnover, without having to find an infringement of the antitrust rules. A policy brief on commitment decisions under Article 9 is available here.
More information, including the full non-confidential version of the commitments, will be made available on the Commission's competition website in the public case register under case number 39767, once any confidentiality issues have been resolved.