EC Alerts Bulgarian Energy Holding to Suspected Anti-Trust Law Breach

Bulgaria in EU | August 12, 2014, Tuesday // 15:21|  views

Photo by EPA/BGNES

The European Commission has sent a Statement of Objections to the Bulgarian Energy Holding concerning suspected abuse of dominance on the domestic wholesale electricity market.

The EC has informed BEH of its preliminary view that territorial restrictions on resale contained in BEH's electricity supply contracts with traders on the non-regulated Bulgarian wholesale electricity market may breach EU antitrust rules. Such restrictions limit purchasers' freedom to choose where to resell the electricity bought from BEH. The sending of a Statement of Objections does not prejudge the final outcome of the investigation, according to a statement of the EC press office.

The Commission has concerns that BEH, the incumbent state-owned vertically-integrated energy company in Bulgaria, might be hindering competition on the non-regulated wholesale electricity market in Bulgaria by imposing restrictions on where the electricity supplied by BEH may be resold.

The Statement of Objections sets out that a majority of electricity supply contracts entered into between BEH and traders stipulate that electricity supplied by BEH may only be resold within Bulgaria or may only be exported. The contracts also contain control and sanctioning mechanisms which allow BEH to monitor and punish customers who fail to comply with these territorial restrictions.

The Commission's provisional finding is that these territorial restrictions constitute an abuse of BEH's dominant market position, which is prohibited by Article 102 of the Treaty on the Functioning of the European Union (TFEU). Such behavior, if established, has the effect of distorting the allocation of electricity within the Single Market, affecting liquidity and efficiency of electricity markets and raising artificial barriers to trade between Bulgaria and other Member States.

The EC 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.

In a separate investigation, the Commission is investigating whether Bulgarian Energy Holding (BEH), its gas supply subsidiary Bulgargaz and its gas infrastructure subsidiary Bulgartransgaz might be hindering competitors from accessing key gas infrastructures in Bulgaria, in breach of EU antitrust rules. The Commission opened formal proceedings in July 2013.

Article 102 TFEU prohibits the abuse of a dominant market position which may affect trade between Member States. The implementation of this provision is defined in the Antitrust Regulation (Council Regulation (EC) No 1/2003), which can be applied by the Commission and by the national competition authorities of EU Member States.

A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules. The Commission informs the parties concerned in writing of the objections raised against them. The addressees can examine the documents in the Commission's investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities. The Commission takes a final decision after the parties have exercised their rights of defense.

If, after the parties have exercised their rights of defense, the Commission concludes that there is sufficient evidence of an infringement, it can issue a decision prohibiting the conduct and impose a fine of up to 10 % of a company's annual worldwide turnover.

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Tags: European Commission, Bulgarian Energy Holding, EC, anti-trust, EU law, statement of objections, Bulgargaz, Bulgartransgaz, abuse of dominant position, electricity providers, power supply, dominant market position


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