WRITTEN QUESTION E-1711/01

by Paolo Costa (ELDR), Guido Bodrato (PPE-DE), Francesco Rutelli (ELDR), Antonio Di Pietro (ELDR), Patrick Cox (ELDR), Amalia Sartori (PPE-DE), Giovanni Procacci (ELDR), Pietro-Paolo Mennea (ELDR), Luciano Caveri (ELDR), Luciana Sbarbati (ELDR), Jules Maaten (ELDR), Astrid Thors (ELDR), Samuli Pohjamo (ELDR) and Mikko Pesälä (ELDR) to the Commission

(14 June 2001)

Subject: Acquisition by Electricité de France (EDF) of a 3,9 % stake in Montedison

Electricité de France (EDF), the state-owned electrical energy monopoly in France, has announced that it has acquired a 3,9 % stake in Montedison, an industrial holding that controls Edison-Sondel, the main private Italian operator in the energy (electricity and gas) sector.

In contrast with France, where electricity production and the electrical energy market continue to be fully controlled by EDF, a situation which has led the Commission to take formal steps, Italy has embarked on a process of liberalising the gas and electricity market, in full compliance with Community directives.

The EDF's move against Montedison - which follows other controversial attempts to expand its activities, particularly in Spain - raises serious general questions concerning the differences in the extent to which the various national energy markets have been opened up, and their respective timetables for doing so.

An operator such as EDF, whose revenues are absolutely secure due to the fact that it operates a monopoly, is 100 % publicly owned and is not quoted on the stock exchange, is able to penetrate other markets on a completely unreciprocal basis.

In view of the foregoing, what position does the Commission intend to adopt, and what measures does it intend to take, to guarantee the proper functioning of the internal market, given that free competition and non-discrimination between undertakings are an essential prerequisite for the latter?

Answer given by Mrs de Palacio on behalf of the Commission

(12 September 2001)

The Commission, in its meeting of 20 June 2001, had the opportunity to reiterate the need for rapid adoption by the Council and the Parliament of the Commission's March 2001 proposals to liberalise fully Community energy markets (all non-domestic electricity open to competition by 1 January 2003, non domestic gas open to competition by 1 January 2004 and all customers, including domestic, open to competition by 1 January 2005). During its meeting, the Commission underlined that the most effective and appropriate method of redrawing the market opening imbalance and distorsion of competition that result is the rapid adoption of this package.

The Commission agreed that to address distortions of competition and inequalities in the short term before adoption of the further liberalisation proposals it would:

- monitor Member States to ensure timely and proper implementation of the existing electricity and gas liberalisation Directives;

- and ensure that the EC Treaty's competition rules are applied fully in the energy sector. In particular, the Commission will continue to apply the rules of the Treaties on restrictive business practices and abuse of a dominant market position against restrictions and distortions in supply competition and against discrimination in network access, to scrutinise any state aid granted to electricity and gas companies (including state aid in the nuclear sector) and to apply competition rules against limitations on consumers' right to choose a supplier. Examples of such cases treated by the Commission in the last two years are the interventions against joint selling (e.g. GFU and EDF/CNR), reinforcements of dominant positions through mergers (e.g. VEBA/VIAG, EDF/EnBW), privileged network access (e.g. Danish/German and French/British interconnectors), stranded costs schemes and locking-in of key customers (Gas Natural/Endesa).

The Commission also agreed that if adoption of the proposals to further liberalise energy markets were delayed, it would consider adopting itself Decisions or Directives, on the basis of Article 86 (ex Article 90) of the EC Treaty, and notably its third paragraph, to address possible distortions of competition resulting from different levels of liberalisation.

The Commission's discussions underlined the importance of a united European market and of ensuring respect for the fundamental principles of the Internal Market. The Commission also confirmed its determination to create a true Internal Market for energy that contributes to greater security of supply and high quality services of general interest.