The European Commission has accepted the commitments offered by the French electricity group EDF. These commitments were offered by EDF in November last year in response to the Commission's concerns that its long term electricity supply contracts breached Article 102 of the TFEU.
The Commission had sent EDF a Statement of Objections in December 2008 setting out its initial concerns in relation to the scope, duration and exclusive nature of EDF's supply contracts with large industrial users. It was concerned that these may prevent other electricity suppliers from entering and expanding in the French electricity market. In response, and without accepting the Commission's allegations, EDF offered binding commitments to address the concerns.
Under the commitments EDF will make sure that every year a significant number of customers are free to contract with other electricity suppliers.
- An average of 65% of the electricity that EDF has contracted with large customers will return to the market every year. This volume will be returned either because the contract ends or because customers will be able to opt-out of their contract for free.
- Future contracts between EDF and large customers will be for no longer than five years (or allow customers to opt-out for free at least every five years).
- Customers will also be able to enter into non-exclusive contracts, allowing customers to partly source their electricity needs from suppliers other than EDF. In this way, competitors can compete to supply a customer which also has a contract with EDF.
These commitments will be binding on EDF for ten years unless EDF's market share drops below 40% for two consecutive years.
EDF has also committed, for 10 years, to remove the resale restrictions on customers which prevent them from reselling electricity they had contracted to purchase from EDF.
The Commission notes that this decision is part of a number of measures aimed at addressing competition problems in French electricity markets. The French government, for example, announced reforms in September 2009 focussed on liberalising the French electricity markets (see Community Week issue 440). (http://tinyurl.com/y9nmqwa)
This is the fifth case in which the Commission has accepted binding commitments from energy companies under the 'Article 9' commitment procedure. All have been alleged Article 102 abuse of dominance cases. Although Article 9 commitments do not result in an infringement decision or penalty fine, and therefore from the Commission's perspective risk watering down the deterrence message, they do have the advantage of introducing a relatively quick market tested remedy, which can be of benefit to consumers and businesses alike.
To view Community Week, Issue 463 - 19 March 2010 in full, Click here. (http://tinyurl.com/ycq7247)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
