Final Report of the Hearing Officer (1)

BEH Gas

AT.39849

(2019/C 121/05)

Introduction

(1) The draft decision concerns an abuse of dominance by Bulgarian Energy Holding EAD (‘BEH’), and its wholly owned subsidiaries Bulgargaz EAD (‘Bulgargaz’) and Bulgartransgaz EAD (‘Bulgartransgaz’) (together referred to as the ‘BEH group’), refusing to grant other undertakings access to key gas transport and storage infrastructure controlled by the BEH group, thereby protecting the dominant position of its supply arm (Bulgargaz) on the gas supply markets in the Republic of Bulgaria (‘Bulgaria’), in violation of Article 102 TFEU (the ‘Draft Decision’).

The written procedure

(2) The Commission carried out a number of investigative measures between 2010 and 2018 in relation to the gas markets in Bulgaria. These included requests for information (‘RFIs’) to the BEH group, several third parties and the Bulgarian energy regulator. In addition, the Commission has received spontaneous submissions from Overgas Inc. AD (‘Overgas’), as well as from the BEH group.

(3) On 4 July 2013, the Commission initiated proceedings within the meaning of Article 2(1) of Regulation (EC) No 773/2004 ( 2 ) and Article 11(6) of Regulation (EC) No 1/2003 ( 3 )

(4) On 23 March 2015, the Commission adopted a statement of objections (the ‘SO’), which was notified to BEH, Bulgargaz and Bulgartransgaz on that day. In the SO, the Commission came to the preliminary conclusion that the BEH group abused its dominant position in breach of Article 102 of the TFEU and Article 54 of the EEA Agreement. More specifically, the Commission took the preliminary view that, since the liberalisation of the Bulgarian gas markets in 2007, the BEH group employed a strategy of protecting its supply arm (Bulgargaz) by refusing other companies access to key gas transport and storage infrastructure controlled by the BEH group, notably to (i) the domestic Bulgarian transmission network, (ii) the only gas storage facility in Bulgaria ‘Chiren’ and (iii) the only viable gas import pipeline into Bulgaria (the ‘Romanian Transit Pipeline 1’), through capacity hoarding. The BEH group is thereby suspected to have protected its dominant position on the downstream gas supply markets in Bulgaria. The SO stated that the infringement started at the earliest on 1 January 2007 and that it was still ongoing at the time of the SO.

(5) Following the SO, access to the Commission's file was granted to Bulgargaz and Bulgartransgaz on 2 April and to BEH on 8 April 2015.

(6) BEH, Bulgargaz and Bulgartransgaz submitted their replies to the SO respectively on 9 July, 10 July and 17 July 2015, within the set time limits.

The participation of an interested third person in the proceedings

(7) On 27 March 2015, I have admitted Overgas as an interested third person in the present proceedings after it had demonstrated a sufficient interest in accordance with Article 5 of Decision 2011/695/EU. Overgas was informed of the nature and subject matter of the proceedings in accordance with Article 13(1) of Regulation (EC) No 773/2004, and was provided with an opportunity to make its views known.

The absence of an oral hearing

(8) An oral hearing was scheduled for 6 October 2015 at the BEH group's request. However, the BEH group withdrew its request by letter of 4 September 2015. Instead it asked for a technical meeting at case team level, which took place at the Commission's premises in October 2015. Subsequently, the Commission also met with the BEH group on numerous occasions, including in December 2015, April, July and October 2016, and March 2017.

The Letter of Facts

(9) On 26 September 2016, the Commission sent a letter to the BEH group, drawing its attention to a number of specific items of evidence relating to the Commission's existing objections (the ‘Letter of Facts’).

(10) Following the Letter of Facts, further access to the Commission's updated file was granted to the BEH group on 25 November 2016, upon its request to receive all accessible documents from the Commission's file registered in the period between the adoption of the SO and the sending of the Letter of Facts.

(11) The BEH group submitted its written replies to the Letter of Facts on 9 December 2016, in which it requested the Commission to convene an oral hearing. The Commission rejected this request on 22 December 2016, in view of the BEH group's unconditional withdrawal of the request for an oral hearing following the receipt of the SO. The BEH group did not approach the Hearing Officer following this rejection.

(12) In its replies, the BEH group maintains that the allegations said to be supported by each entry in the Letter of Facts are expressed in very vague terms without specific reference to the SO. According to the BEH group, this lack of detail in the Letter of Facts inhibited the preparation of a full response and has therefore allegedly infringed their rights of defence.

(13) Even if it is true that the Letter of Facts did not specifically refer to the corresponding entry of the SO, it nevertheless lists all documents used to further support the objections set out in the SO and for each of the thus listed documents the Letter of Facts provides the BEH group with precise information on the manner in which each relevant part supports the objections set out in the SO (or provides updated information). I thus consider the BEH group's procedural criticisms of the Letter of Facts to be unwarranted.

Spontaneous submissions

(14) Between October 2016 and June 2018, the BEH group made a number of spontaneous submissions concerning the duration of the alleged infringement, the revised value of sales, mitigating circumstances that should reduce the final amount of the fine, comments on a certain document obtained via further access to file and a supplement to the BEH group's defence in light of Case AT.39816 – Upstream gas supplies in Central and Eastern Europe .

Further access to file

(15) In January 2018, the BEH group sought further access to file as regards complete minutes of any Commission discussions with Overgas, as well as to a less redacted version of a certain identified document that was part of the earlier access to file. It received access to the latter document by the end of January 2018, as well as a confirmation that three additional meetings were held between the Commission and Overgas, one of which the BEH group was not previously informed about as it took place after the Letter of Facts was issued. Subsequently, in March 2018, the BEH group received access to summaries of the minutes of the three additional meetings to which it had not yet obtained access previously. The BEH group was also informed by the Commission that access to more detailed versions of any of the minutes could not be granted, referring to overlapping information already provided as part of certain submissions to the Commission and confirming that the Commission had neither relied on the detailed minutes nor included them in the Letter of Facts.

(16) By letter of late March 2018, the BEH group addressed a request for further access to file to the Hearing Officer, as regards the more detailed minutes of the abovementioned meetings. The BEH group also invited the Hearing Officer to verify whether an updated index of the case file was necessary and to ask the Commission to provide it with such updated index as well as the justification of confidentiality claims in relation to the more detailed versions of the meeting minutes. Upon my intervention, the Directorate-General for Competition (‘DG Competition’) obtained Overgas' consent to provide access to more detailed versions of the meeting minutes to the BEH group's external advisers in a data room. The BEH group accepted this opportunity, while reserving its full rights. As regards the request for an updated index of the case file and relevant confidentiality claims, I could only give my initial views since Article 3(7) of Decision 2011/695/EU requires any issue regarding the effective exercise of the procedural rights of the parties concerned to be raised by those persons with DG Competition first.

(17) In June 2018, the BEH group made two further access to file requests to DG Competition, both of which were rejected by DG Competition.

(18) By the end of June 2018, the BEH group, via its external advisors, was granted access to a data room (the ‘Data Room’), where it could review the more detailed confidential versions of the minutes of meetings held between the Commission and Overgas throughout the entire investigation. The external advisors participating in the Data Room have expressed their views and conclusions over the content of the minutes in two reports, one confidential and one non-confidential. The non-confidential report was shared with the BEH group.

(19) In July 2018, the BEH group re-approached the Hearing Officer, maintaining some of its earlier requests to DG Competition to receive (i) full or less redacted versions of certain submissions to the Commission, referred to in paragraph (15), above, (ii) confidentiality claims in relation to the more detailed versions of the meeting minutes, and (iii) an updated index of the case file, both as referred to in paragraph (16), above. I rejected this request in its entirety in October 2018, considering that no further access to any of this information was necessary for the proper exercise of the BEH group's right to be heard at that stage.

(20) In November 2018, after the draft decision and related documents had already been sent to the Advisory Committee in accordance with Article 14(3) of Regulation (EC) No 1/2003, the BEH group sent a letter to the Hearing Officer requesting further access to file, following rejections that had already been made by DG Competition in July 2018 ( 4 ) . I concluded that the BEH group's request came too late to be acceptable at this late stage of the proceedings ( 5 ) , and was in any event unwarranted based on the requirements of Article 7 of Decision 2011/695/EU.

The Draft Decision

(21) The Commission finds in the Draft Decision that BEH, Bulgargaz and Bulgartransgaz have committed a single and continuous infringement of Article 102 TFEU from 30 July 2010 until 1 January 2015.

(22) In accordance with Article 16 of Decision 2011/695/EU, I have examined whether the Draft Decision deals only with objections in respect of which the parties have been afforded the opportunity of making known their views. I conclude that it does.

(23) Overall, I consider that the effective exercise of procedural rights has been respected in this case.

Brussels, 12 December 2018. Joos STRAGIER

(1) Pursuant to Articles 16 and 17 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2) Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ L 123, 27.4.2004, p. 18), last amended by Commission Regulation (EU) 2015/1348 of 3 August 2015 (OJ L 208, 5.8.2015, p. 3) (‘Regulation (EC) No 773/2004’).

(3) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1) (‘Regulation (EC) No 1/2003’).

(4) The Parties requested full access to the minutes of eight meetings that took place between the Commission and Overgas (access to which was given through the Data Room: see paragraph 18) as well as access to the statement of objections in the separate Case AT.39816 – Upstream gas supplies in Central and Eastern Europe insofar as it related to the Bulgarian market, and its underlying documents.

(5) Five days earlier, the Parties had also been informed by DG Competition that it had reached an advanced stage in its investigation and that the procedural steps in this case would soon be finalised.