The Commission’s new investigation and EU antitrust enforcement in the gas sector
On 31 March 2022, the European Commission (Commission) announced that it (together with the German Federal Cartel Office (Bundeskartellamt)) had carried out unannounced inspections of several gas companies active in the supply, transmission and storage of natural gas for alleged abuse of a dominant position. The Commission did not disclose specific company names and details on the concrete allegations and markets affected, but press reports and earlier Commission statements1 indicate that the inspections relate to concerns about artificially shortening gas supply, causing higher gas prices in Europe that the Commission has been investigating since autumn 2021.
Abusive behaviour can generally comprise a wide range of exclusionary and exploitative business practices by dominant companies, including directly or indirectly imposing excessive prices or limiting production to the prejudice of consumers (article 102 (a) and (b) TFEU).
At this stage, the Commission’s concrete allegations and theory of harm remain unclear. Abuse of dominance cases in the energy sector are particularly complex in light of the interplay between competition and regulatory issues. That the Commission conducts unannounced inspections is not uncommon in an EU antitrust investigation, and such inspections do not in themselves prejudge the outcome.
If, however, the Commission was to ultimately find sufficient evidence for a violation of EU competition law rules, it would have the power to impose high fines (10 per cent of global group turnover) and behavioural and structural remedies to eliminate the competition concerns identified. In addition, it can impose interim measures where the behaviour at stake is likely to create serious and irreversible harm to competition. Only recently, for the first time, the Commission imposed interim measures in a competition law case, and it is expected that it will use this power more actively in the future.2
EU antitrust enforcement has proven to be a powerful and effective tool for the Commission to integrate the EU internal gas market. In recent years, the Commission successfully completed three abuse of dominance investigations against Gazprom, BEH and TSO Transgaz to dissolve bottlenecks in central and eastern European gas markets.3 The new investigation confirms this general enforcement trend and has now gained significant extra attention in light of Russia’s invasion of Ukraine.
While the ongoing investigation appears to focus on Russian gas supply in Europe, the Commission and national competition authorities are closely monitoring ongoing developments in the European gas markets to ensure that gas prices and cross-border flow of gas in the EU are not negatively affected by anti-competitive business practices of companies active across the entire gas supply chain, from gas/LNG import and wholesale, trading, storage and transmission to retail and distribution. Businesses at all levels of the gas supply chain need to make sure that their practices do not contribute to or benefit from higher gas prices in a way that violates EU and/or national competition laws.