# C_2013251EN.01000401.xml

| 31.8.2013 | EN | Official Journal of the European Union | C 251/4 |
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31.8.2013

EN

Official Journal of the European Union

C 251/4

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Summary of Commission Decision

of 10 April 2013

relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement

(Case AT.39727 — CEZ)

(notified under document C(2013) 1997 final)

(Only the English text is authentic)

2013/C 251/04

On 10 April 2013, the Commission adopted a decision relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement. In accordance with the provisions of Article 30 of Council Regulation (EC) No 1/2003
   (1), the Commission herewith publishes the names of the parties and the main content of the decision, including any penalties imposed, having regard to the legitimate interest of undertakings in the protection of their business secrets.

On 10 April 2013, the Commission adopted a decision relating to a proceeding under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the EEA Agreement. In accordance with the provisions of Article 30 of Council Regulation (EC) No 1/2003

1

the Commission herewith publishes the names of the parties and the main content of the decision, including any penalties imposed, having regard to the legitimate interest of undertakings in the protection of their business secrets.

1.   INTRODUCTION

INTRODUCTION

| (1) | The case concerns the company ČEZ, a.s. (‘CEZ’). The adoption of the decision makes legally binding upon CEZ the commitments which the company proposed following the Commission's preliminary findings that CEZ may have abused its dominant position on the Czech market for generation and wholesale supply of electricity. The concern of the Commission was that CEZ may have prevented new market entry by means of making a pre-emptive reservation in the Czech electricity transmission network. |
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(1)

The case concerns the company ČEZ, a.s. (‘CEZ’). The adoption of the decision makes legally binding upon CEZ the commitments which the company proposed following the Commission's preliminary findings that CEZ may have abused its dominant position on the Czech market for generation and wholesale supply of electricity. The concern of the Commission was that CEZ may have prevented new market entry by means of making a pre-emptive reservation in the Czech electricity transmission network.

2.   PROCEDURE

PROCEDURE

| (2) | On 11 July 2011, the Commission opened proceedings with a view to adopting a decision under Chapter III of Regulation (EC) No 1/2003 and on 26 June 2012, adopted a preliminary assessment as referred to in Article 9(1) of Regulation (EC) No 1/2003 which set out the Commission’s preliminary competition concerns; these related to CEZ's pre-emptive reservation made in the Czech electricity transmission network which may have prevented competitors from entering the market for generation and wholesale supply of electricity. |
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(2)

On 11 July 2011, the Commission opened proceedings with a view to adopting a decision under Chapter III of Regulation (EC) No 1/2003 and on 26 June 2012, adopted a preliminary assessment as referred to in Article 9(1) of Regulation (EC) No 1/2003 which set out the Commission’s preliminary competition concerns; these related to CEZ's pre-emptive reservation made in the Czech electricity transmission network which may have prevented competitors from entering the market for generation and wholesale supply of electricity.

| (3) | This preliminary assessment was notified to CEZ on 28 June 2012. |
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(3)

This preliminary assessment was notified to CEZ on 28 June 2012.

| (4) | On 3 July 2012, CEZ submitted commitments to the Commission in response to the preliminary assessment. |
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(4)

On 3 July 2012, CEZ submitted commitments to the Commission in response to the preliminary assessment.

| (5) | On 10 July 2012, a notice was published in the Official Journal of the European Union pursuant to Article 27(4) of Regulation (EC) No 1/2003 (2), summarising the case and the commitments and inviting interested third parties to give their observations on the commitments within one month following publication. |
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(5)

On 10 July 2012, a notice was published in the Official Journal of the European Union pursuant to Article 27(4) of Regulation (EC) No 1/2003 (2), summarising the case and the commitments and inviting interested third parties to give their observations on the commitments within one month following publication.

Official Journal of the European Union

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| (6) | On 6 March 2013, CEZ submitted an amended commitment proposal. |
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(6)

On 6 March 2013, CEZ submitted an amended commitment proposal.

3.   THE CONCERNS EXPRESSED IN THE PRELIMINARY ASSESSMENT

THE CONCERNS EXPRESSED IN THE PRELIMINARY ASSESSMENT

| (7) | According to the preliminary assessment the relevant product market was considered to be generation and wholesale supply of electricity and the geographic market was considered to be national. Further, the Commission took the preliminary view that CEZ was, during the relevant period of time, dominant on the market for generation and wholesale supply of electricity in the Czech Republic. |
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(7)

According to the preliminary assessment the relevant product market was considered to be generation and wholesale supply of electricity and the geographic market was considered to be national. Further, the Commission took the preliminary view that CEZ was, during the relevant period of time, dominant on the market for generation and wholesale supply of electricity in the Czech Republic.

| (8) | In the preliminary assessment, the Commission raised the concern that CEZ may have abused its dominant position on the market for generation and wholesale supply of electricity in the Czech Republic. More specifically, CEZ may have pursued a strategy of preventing new market entry. As part of that strategy, in January 2007, CEZ may have made a potentially pre-emptive reservation in the Czech electricity transmission system. |
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(8)

In the preliminary assessment, the Commission raised the concern that CEZ may have abused its dominant position on the market for generation and wholesale supply of electricity in the Czech Republic. More specifically, CEZ may have pursued a strategy of preventing new market entry. As part of that strategy, in January 2007, CEZ may have made a potentially pre-emptive reservation in the Czech electricity transmission system.

| (9) | The reservation made by CEZ referred to two alternative projects: lignite-fired or gas-fired capacity. However, according to the Commission's preliminary conclusion, this reservation did not correspond to genuine generation projects. |
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(9)

The reservation made by CEZ referred to two alternative projects: lignite-fired or gas-fired capacity. However, according to the Commission's preliminary conclusion, this reservation did not correspond to genuine generation projects.

| (10) | As a result of CEZ's potentially pre-emptive reservation, the available transmission capacity which could have been otherwise used by CEZ' competitors was exhausted. Consequently, CEZ's competitors could have been prevented from access to the transmission network system, an input indispensable for every large scale electricity generator. |
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(10)

As a result of CEZ's potentially pre-emptive reservation, the available transmission capacity which could have been otherwise used by CEZ' competitors was exhausted. Consequently, CEZ's competitors could have been prevented from access to the transmission network system, an input indispensable for every large scale electricity generator.

4.   THE COMMITMENTS AND THE MARKET TEST

THE COMMITMENTS AND THE MARKET TEST

| (11) | CEZ did not agree with the Commission's preliminary assessment. Nevertheless, it offered commitments, the key element of which were as follows:






  — | CEZ will divest one of the following generation assets to a suitable purchaser to be approved by the Commission and which must not raise prima facie competition concerns:






  — | Pocerady lignite-fired power plant (1 000 MW), |
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(11)

CEZ did not agree with the Commission's preliminary assessment. Nevertheless, it offered commitments, the key element of which were as follows:

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CEZ will divest one of the following generation assets to a suitable purchaser to be approved by the Commission and which must not raise prima facie competition concerns:

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Pocerady lignite-fired power plant (1 000 MW),

| — | Chvaletice lignite-fired power plant (800 MW), |
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Chvaletice lignite-fired power plant (800 MW),

| — | Detmarovice coal-fired power plant (800 MW), |
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Detmarovice coal-fired power plant (800 MW),

| — | Melnik III lignite-fired power plant (500 MW) and Tisova lignite-fired power plants (Tisova I — 184 MW and Tisova II — 112 MW); both power plants (Melnik III and Tisova) can be sold separately. |
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Melnik III lignite-fired power plant (500 MW) and Tisova lignite-fired power plants (Tisova I — 184 MW and Tisova II — 112 MW); both power plants (Melnik III and Tisova) can be sold separately.

| — | CEZ may not, for a period of 10 years, acquire direct or indirect influence over the divested generation asset. |
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CEZ may not, for a period of 10 years, acquire direct or indirect influence over the divested generation asset.

| (12) | The observations received in response to the market test notice pursuant to Article 27(4) of Regulation (EC) No 1/2003 raised some doubts as to the suitability of the Detmarovice power plant to meet the identified competition concerns. In order to take account of the results of the market test, CEZ removed the Detmarovice power plant from the list of proposed commitments. In addition, the observation received identified a limited number of technical and/or legal issues which could have impact on the operation of individual power plants. The commitments were clarified accordingly to take those comments into account. |
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(12)

The observations received in response to the market test notice pursuant to Article 27(4) of Regulation (EC) No 1/2003 raised some doubts as to the suitability of the Detmarovice power plant to meet the identified competition concerns. In order to take account of the results of the market test, CEZ removed the Detmarovice power plant from the list of proposed commitments. In addition, the observation received identified a limited number of technical and/or legal issues which could have impact on the operation of individual power plants. The commitments were clarified accordingly to take those comments into account.

| (13) | CEZ submitted an amended version of the commitments on 6 March 2013. |
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(13)

CEZ submitted an amended version of the commitments on 6 March 2013.

5.   PROPORTIONALITY OF THE FINAL COMMITMENTS

PROPORTIONALITY OF THE FINAL COMMITMENTS

| (14) | The commitments in their final form are sufficient to address the concerns identified by the Commission in its preliminary assessments without being disproportionate. |
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(14)

The commitments in their final form are sufficient to address the concerns identified by the Commission in its preliminary assessments without being disproportionate.

| (15) | Given that the conduct which gave rise to the Commission's concerns consisted of pre-emptive booking of transmission capacity which in turn effectively prevented or at least delayed new entry into the Czech electricity market, transfer of some of CEZ's generation capacity to a competitor represents a clear-cut solution to the identified competition concerns. Transfer of generation capacity is necessary in this case as no other type of remedy can effectively address the effects of CEZ's conduct. |
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(15)

Given that the conduct which gave rise to the Commission's concerns consisted of pre-emptive booking of transmission capacity which in turn effectively prevented or at least delayed new entry into the Czech electricity market, transfer of some of CEZ's generation capacity to a competitor represents a clear-cut solution to the identified competition concerns. Transfer of generation capacity is necessary in this case as no other type of remedy can effectively address the effects of CEZ's conduct.

6.   CONCLUSION

CONCLUSION

| (16) | The decision makes the commitments binding on CEZ. |
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(16)

The decision makes the commitments binding on CEZ.

| (17) | CEZ's compliance with the conditions and obligations under the commitments is to be monitored by a trustee independent from CEZ and approved by the Commission. |
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(17)

CEZ's compliance with the conditions and obligations under the commitments is to be monitored by a trustee independent from CEZ and approved by the Commission.

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(1)  OJ L 1, 4.1.2003, p. 1.

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(2)  OJ C 202, 10.7.2012, p. 1.

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