1 Competition in the Energy Sector – The EU Perspective Prof. Dr. Hans Vedder – University of Groningen 1

Overview Competition in the EU Energy Sector Overview of main trends 2 Overview Competition in the EU Energy Sector Overview of main trends Application to EU-Russia Energy Dominance Foreclosure Market Partitioning

Competition in EU Energy 3 Competition in EU Energy EU competition law consists of (inter alia) Prohibition of restrictive agreements Prohibition of abuse of dominance Both applied in the energy sector Market sharing / partitioning arrangements Vertically integrated companies using networks to foreclose access increase prices or discriminate

Competition in EU Energy 4 Competition in EU Energy Purpose is to come to an internal energy market Free movement Undistorted conditions of competition But: Low degree of interpenetration High levels of concentration Commission information asymmetry Sector inquiry and

EU Russia Energy Gazprom is the EU’s largest third country supplier 5 EU Russia Energy Gazprom is the EU’s largest third country supplier EU is Gazprom’s largest export destination EU is becoming increasingly import dependent Result: an increasingly close and difficult relationship Difficulty: EU competition and Gazprom

EU competition and the upstream gas sector 6 EU competition and the upstream gas sector Several earlier cases involving market partitioning (destination clauses etc.) Difficulty to find right balance between Market access and opening  lower prices, high contestability Need to recoup upstream investments  high prices, low contestability

EU competition law and Gazprom 7 EU competition law and Gazprom Sept. 2011 - Dawn Raids Sept. 2012 – Commission confirms opening of proceedings ex. Art. 102 TFEU Market partitioning Restricting diversification of supply Unfair prices Current investigation, but politically sensitive

Thank you for your attention h.h.b.vedder@rug.nl 8 Thank you for your attention h.h.b.vedder@rug.nl