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Brussels, 16th May 2006

Competition: Commission confirms sending Statement of Objections to Distrigas concerning Belgian gas supply market

The European Commission can confirm that it sent on 10th May 2006 a Statement of Objections to Distrigas, part of the Suez Group, concerning the Commission’s concerns that Distrigas is in practice preventing new suppliers from entering the Belgian gas market, in violation of EC Treaty rules on abuse of a dominant market position (Article 82).

The Statement of Objections outlines the Commission’s preliminary view that a significant proportion of the Belgian gas market is unavailable for competition for long periods because Distrigas – the dominant gas supplier in Belgium – has concluded long term gas supply contracts with many of its industrial customers. If confirmed, this would have a particularly worrying effect on competition as a large proportion of other gas sales in Belgium are intra-group sales within the Suez group (e.g. Distrigas sales to Electrabel) and so not accessible to potential new market entrants.

The suspected competition problem identified by the investigation into Distrigas (long-term downstream contracts between wholesalers and industrial customers having the effect of excluding would-be market entrants) illustrates one of the problems identified in the energy sector competition inquiry (see IP/06/174 and MEMO/06/78). The sector inquiry has emphasised the importance of this problem. However, the Distrigas inquiry predates the energy sector inquiry and information collected in the sector inquiry has not been used in the Distrigas inquiry. The Distrigas investigation has been carried out separately.

Information collected in the Distrigas case cannot be used either in the context of the Commission’s current inquiry under the EU Merger Regulation into the proposed merger between Suez and Gaz de France (notified on 10th May 2006). This is because information collected for the purposes of applying the EC Treaty’s rules on restrictive business practices and abuse of a dominant market position (Articles 81 and 82) cannot be used for the purposes of applying the merger regulation and vice versa.

A Statement of Objections is a formal step in Commission anti-trust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. Distrigas has four weeks to reply in writing to the Statement of Objections, setting out all facts known to them which are relevant to their defence against the objections raised by the Commission. They may also propose that the Commission hear persons who may corroborate the facts set out in their submissions. When Distrigas replies to the statement of objections, it will be able to request a hearing to present its comments on the case.

The Commission will only take a decision on whether Distrigas has indeed violated the EC Treaty’s anti-trust rules once it has received the company’s response to the statement of objections.

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