Notice pursuant to Article 19(3) of Council Regulation No 17 concerning case COMP/E-3/37.921 — Viking Cable (Text with EEA relevance)
Date: 2001-09-05
Institutions: European Commission
Subjects: Germany, Norway, economic concentration, electrical energy, energy transport, sea

5.9.2001

EN

Official Journal of the European Communities

C 247/11

Notice pursuant to Article 19(3) of Council Regulation No 17 (1) concerning case COMP/E-3/37.921
(cid:151) Viking Cable

(2001/C 247/04)

(Text with EEA relevance)

I. The notification

the Commission received a notification
On 11 July 2000,
pursuant to Articles 2 and 4 of Regulation No 17 of three
agreements concluded between PreussenElektra (now (cid:145)E.ON
Energie(cid:146)), Statkraft, Statnett
and Viking Cable AS. The
agreements concern the creation of a joint venture (JV),
for the construction and operation of a
Viking Cable AS,
new sub-sea cable between Norway and Germany for the trans-
mission of high-voltage electricity.

II. The Parties

E.ON Energie is active in the production,
transmission,
distribution and trading of electricity. Following the merger
between VEBA and VIAG, E.ON Energie is
the largest
subsidiary of the E.ON AG Group with its registered seat in
Germany.

Statkraft SF is a Norwegian State-owned company active in the
production, supply and trade of electricity.

Statnett SF is a Norwegian State-owned company responsible
for the operation of the national grid.

Viking Cable AS is JV company owned and operated by
Statnett and E.ON Energie. It has as its object the construction,
management,
the
Viking Cable and the transportation of electricity in the
Viking Cable. It will not engage in trade of electricity.

financing, maintenance and operation of

III. The agreements

Three agreements were notified:

(i) The General Agreement of 5 May 1993 concluded between
E.ON Energie and Statkraft concerning the firm power
delivery from Statkraft to E.ON Energie and the mutual
electricity exchange between the Parties via the Viking
Cable.

(ii) The Shareholders Agreement of 5 May 1993 concluded
between E.ON Energie and Statkraft containing the terms
of the functioning of Viking Cable AS.

rights and obligations under the Shareholder Agreement to
Statnett. The assignment was made after the Norwegian
Parliament announced the principle that Statnett should
own and operate all new international interconnectors.

IV. The purpose of the agreements

Viking Cable AS has been set up in order to build a new
high-voltage sub-sea cable ((cid:145)interconnector(cid:146)) between Norway
and Germany. The joint venture company will be owned on
a 50/50 basis by Statnett and E.ON Energie. The new cable will
have a transmission capacity of 600 MW and is scheduled to
enter into operation in late 2004. The agreements provide for
an exchange of electricity between Norway, which has a
hydropower
a
system,
predominantly thermal-based electricity system. The main
purpose is to export electricity from Norway to Germany
through a firm power delivery. By building the new cable,
E.ON Energie seeks to avoid constructing a new power plant
in Germany.

and Germany, with

electricity

take place through a firm power
The power delivery will
delivery from Statkraft
to E.ON Energie and through a
short-term exchange between the two companies. The firm
power delivery will have a maximum output of 600 MW and
1 200 GWh per year during 25 years after the commissioning
of the cable. To the extent that the transmission capacity is not
it will be used for
occupied by the firm power delivery,
short-term exchanges via the NordPool
spot exchange in
Norway. Such short-term exchanges, with a duration of one
day or less, will be triggered automatically when there is a
certain price difference between the NordPool spot price and
E.ON Energie’s marginal cost of production. The Parties intend
to base the price difference on the reference price of either of
the two German power exchanges (the Leipzig Power Exchange
and the Electricity Exchange in Frankfurt am Main) rather than
on E.ON Energie’s marginal cost, once the power exchanges are
sufficiently established to provide a respected spot price. The
earnings from the short-term exchange will be shared equally
by E.ON Energie and Statkraft.

The agreements provide that the Statkraft and E.ON Energie
will have the exclusive rights to use the Viking Cable for a
period of 25 years.

(iii) The Master Agreement of 25 August 1993 between
Statkraft and Statnett by which Statkraft assigns all of its

(1) OJ 13, 21.2.1962, p. 204/62.

V. The market

The new cable will be used by the parties for the transmission
of electricity between Norway and Germany. There are
currently no other direct electricity transmission links but
only lines going through neighbouring countries.

C 247/12

EN

Official Journal of the European Communities

5.9.2001

Today, electricity can be transmitted between Norway and
Germany through a number of transmission lines including
the Skagerakk cable between Norway and western Denmark,
the Kontiskan cable between Sweden and western Denmark,
the Kontek cable between eastern Denmark and Germany,
the Baltic cable between Germany and Sweden and the
SwePol link between Sweden and Poland.

However, some of these links are partly or entirely blocked by
long-term reservation agreements. Other links may not be
commercially viable links due to transportation fees,
their
location and network congestion. As for the
geographical
Skagerakk cable, which links Norway to Denmark,
its full
transmission capacity of 1 000 MW has been made available
In
to the NordPool power exchange from 1 January 2001.
order to allocate the scarce capacity at the Danish-German
network, auctions are held on a daily, monthly and yearly
basis. E.On Energie has a long-term reservation right of
300 MW at the Danish-German border for the EV3 power
plant
network
operators are bound to apply transparent and non-discrimi-
natory criteria when granting third parties access to their
networks. The responsible network operators, E.ON Netz and
the
Eltra, have been planning necessary reinforcements of
existing interconnector capacity at the Danish/German border
independently of
the Viking Cable project. Reinforcements
could be in place by the time the Viking Cable will be oper-
ational.

in Denmark. The

responsible

situated

E.ON Netz has furthermore expressed its intention to reinforce
its network in northern Germany by the time the Viking Cable
will be operational in order to avoid that the operation of the
increased congestion in
Viking Cable will cause new or
northern Germany.

At present, it could be questioned whether all of the above-
mentioned transmission lines form part of the same product
and geographic market. However, since the notified agreements
will not have any effect contrary to the competition rules on
any transmission market, or any possible other market, e.g. the
supply markets in Gemany and Norway, it is not necessary, in
this context, to give a precise market definition.

VI. Arguments of the Parties

The construction and operation of sub-sea cables covering long
distances in deep waters is very capital intensive. The Power
Exchange Agreements must therefore be long-term to ensure

investment. To secure the viability of the investment in trans-
mission capacity via the new cable, the notifying parties that it
is necessary to have long-term arrangement over the same
i.e. approximately 25
lifespan as a normal power plant,
the Power Exchange
fulfilment of
years. Moreover,
Arrangements
transmission
capacity on the Viking Cable being available to the Parties on
demand.

is dependent upon that

full

the

According to the Parties,
it is not possible to make trans-
mission capacity available to third parties. The only way
third parties will have
to electricity transmitted
access
through the cable will be via NordPool where the short-term
exchange on the Norwegian side will take place. E.ON Energie
will specify a daily plan for the firm power delivery and the
short-term exchange volumes. Once the short-term volumes
are settled and communicated to the NordPool spot exchange
at noon the day before trading, they cannot be changed. If
there remains available after the short-term volumes have
been settled, E.ON Energie may change (renominate) the firm
power volume at very short notice, even on the day of delivery.
This high degree of flexibility can only be ensured if E.ON
Energie and Statkraft have the entire transmission capacity at
their disposal.

VII. Intention of the Commission

added

the Viking Cable will result

in new
The construction of
transmission connections
capacity being
to the
between Germany and Norway.
It also requires substantial
investments by the notifying parties. The Commission takes
the preliminary view that
the notified agreements will not
restrict competition in the sense of Article 81 nor will they
be contrary to Article 82 of the EC Treaty. Consequently, the
Commission intends to take a favourable view towards the
agreements. Before doing so, it invites interested third parties
to send their observations, within one month from the date of
publication of this notice, by fax or by mail to the following
address, quoting the reference Case E-3/37.921 to:

European Commission
Directorate-General for Competition
Directorate E, Unit E-3
Rue Joseph II/Jozef II-straat 70
B-1000 Brussels

Fax (32-2) 295 01 28.