1. Gas Regional Initiative North - North West DG COMP’s perspective Walter Tretton, DG Competition, Energy & Environment Unit 4th Stakeholder Group Meeting, London 13.11.2008

2. 2 Regulation vs Competition Law Enforcement CompetitiveEnergyMarketsCompetitiveEnergyMarkets Ex-ante: design of the market 3rd Liberalisation Package; GRIs Cases and Implementation of remedies: Structural Behavior Ex-post: competition law Sometimes also ex ante: e.g. Mergers Sometimes also ex post: regulatory remedies, fines

3. 3 DG COMP strongly supports 3rd Package Essential Package elements Effective unbundling Effective oversight Cross-border integration and cooperation Improvements in gas specifics  will lead to increased competitiveness  BUT: not even optimists see a quick emergence of a truly pan-European gas market

4. 4 DG COMP strongly supports GRIs’ priorities It is necessary to focus as a first step on regional integration promoted by regional initiatives The main GRI priorities Interoperability Transparency Hubs Interconnection are essential requirements for market integration will contribute to enhancing competition …if real progress is made

5. 5 DG COMP listens to Stakeholders Our CL enforcement does not happen in a vacuum DG COMP has acquired significant market knowledge through individual cases through Sector Inquiry But to understand the market COMP depends on regulators traders, suppliers infrastructure operators customers

6. 6 DG COMP influences markets (1) In MERGERS we want to protect markets from negative horizontal or vertical effects many mergers enhance efficiency some are (also) problematic Remedies are necessary (and usually found) DONG/Elsam/E2 : –Storage divestment –GRP – hub enhancing swap element GdF/Suez: –Distrigaz divestment and divestment of SPE –Infrastructure remedies (Fluxys governance)

7. 7 DG COMP influences markets (2) In ANTITRUST we want to protect markets: from anticompetitive agreements (Art.81) from abusive behaviour by dominant companies (Art 82) There can be –fines (Art.7/Reg. 1/2003) –cease and desist orders (Art 7) –remedies (ordered: Art 7; accepted Art 9) Remedies in Art 9 gas cases: –Distrigaz: limitation of LT downstream agreements –RWE: divestment of German transmission grid

8. 8 DG COMP influences markets (3) ANTITRUST (cont): In a number of cases proceedings have been initiated ENI (affecting also D): Art 82 EC –pipeline capacity hoarding and strategic underinvestment Gaz de France Art 82 EC –long term capacity booking and strategic underinvestment Gaz de France and E.ON: Art.81 EC In the normal course of business… –concerted practices in connection with MEGAL unless there is a settlement or unless we find that we got it wrong initially this will lead to an SO and then an Art.7 decision Remedies? Fines? Other cases in the pipeline?

9. 9 DG COMP influences markets (4) In STATE AID we want to protect markets: from market distorting government action So far more activity in electricity than in gas Potential areas of concern: –regulated tariffs –other state measures giving aid to suppliers or large users Another task: –ensure compatibility of 20/20/20 Package with Internal Market –Environmental Aid Guidelines

10. 10 …and helps DG TREN to influence markets In ART 22 EXEMPTION PROCEDURES we want to protect markets through applying the competition criterion from possible negative side effects of exemptions, often no or only minimal corrective action needed –UK and Dutch LNG terminals –BBL => exemptions are a good example of how –national and EU level –regulatory and competition approach can work together

11. 11 Wrapping it up Regulation and competition law enforcement are complementary –ex ante vs ex post remedies to market problems GRI and contact with GRI stakeholders is vital for COMP –to understand market developments –to understand market problems and needs GRI’s success or a failure matters to COMP –Any good job you are doing beforehand…..

12. 12 Wrapping it up (2) …reduces our need to fix it afterwards!