Summary of Commission Decision of 26 July 2016 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.39317 — E.ON Gas) (notified under document C(2016) 4764)
Date: 2016-07-26
Institutions: European Commission
Subjects: Germany, dominant position, energy transport, gas industry, gas supply, restrictive trade practice, retail trade, wholesale trade








C_2017089EN.01002401.xml










22.3.2017   


EN


Official Journal of the European Union


C 89/24





Summary of Commission Decision
of 26 July 2016
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.39317 — E.ON Gas)
(notified under document C(2016) 4764)
(Only the English text is authentic)
(2017/C 89/07)

On 26 July 2016, 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, having regard to the legitimate interest of undertakings in the protection of their business secrets.

1.   INTRODUCTION









(1)


On 26 July 2016 the Commission adopted a decision (‘the Decision’) terminating the commitments, which were rendered binding by the Commission Decision of 4 May 2010. The Decision is addressed to E.ON SE (‘E.ON’), its indirect subsidiary Uniper Global Commodities SE (‘UGC’ which belongs to E.ON's direct subsidiary Uniper SE (‘Uniper’)) and Open Grid Europe GmbH (‘OGE’).












(2)


On 4 May 2010, the Commission adopted a Decision pursuant to Article 9 of Regulation (EC) No 1/2003 (‘the 2010 Decision’) addressed to E.ON (at the time E.ON AG) including its subsidiaries E.ON Ruhrgas AG (‘E.ON Ruhrgas’, which was later renamed E.ON Global Commodities and subsequently became UGC) and E.ON Gastransport GmbH (‘EGT’, which was later renamed OGE) and thereby made legally binding the commitments which E.ON had offered (‘the Commitments’) in order to remove the Commission's competition concerns relating to E.ON's behaviour regarding the gas markets in Germany (2).












(3)


According to the Commission's preliminary analysis in the 2010 Decision, E.ON's extensive long-term gas transport capacity bookings on the gas transmission system could be considered as a refusal to give access to an essential facility leading to a foreclosure of competitors on the gas supply markets. This might have constituted an infringement of Article 102 TFEU. In a first step, the Commitments provided for the reduction of E.ON's long-term bookings of transport capacity in the grid owned at the time by E.ON in a one-off measure by annulling a certain share of the bookings. In a second step, E.ON committed to further reduce its overall share of bookings below a defined threshold at the latest by 1 October 2015. E.ON also committed to remain below this threshold for a further 10 years from the date when it first reached the threshold.












(4)


Since E.ON reached the long-term threshold defined in the second step of the Commitments on 1 April 2011 for the first time, the Commitments are supposed to remain valid until 1 April 2021.












(5)


The main purpose of the Commitments was to allow for entry of third parties on the German gas supply markets – which were until then characterised by a system of local and regional supply monopolies – by freeing previously blocked gas transport capacities and to open the gas supply markets to competition.












(6)


In 2011, E.ON informed the Commission of its planned divestment of EGT, which was renamed Open Grid Europe (OGE). Apart from this, recently E.ON announced that it would spin off its gas wholesale and trading business, which was responsible for the capacity bookings, in a newly created company called Uniper.




2.   PROCEDURE









(7)


By letter of 24 June 2016, E.ON requested the termination of the Commitments arguing that a material change of the facts on which the 2010 Decision was based has occurred which would allow for a re-opening of the proceedings pursuant to Article 9(2) of Regulation 1/2003. Furhtermore, market circumstances would have changed to an extent that would render the Commitments unnecessary for the future and would justify the termination of the Commmitments. The Monitoring Trustee (also ‘the Trustee’) has provided an opinion confirming E.ON's submission.












(8)


Paragraph 24 of the Commitments refers to Article 9(2) of Regulation 1/2003 for a reopening of the procedure. According to Article 9(2) lit a) of Regulation 1/2003, the ‘Commission may, upon request or on its own initiative, reopen the proceedings: a) where there has been a material change in any of the facts on which the decision was based’.












(9)


As will be set out below, the relevant facts on which the 2010 Decision was based have significantly changed. In addition, the Commission recognises that significant changes in market circumstances justify terminating the Commitments.




3.   MATERIAL CHANGE OF FACTS AND MARKET CIRCUMSTANCES









(10)


Important changes compared to the time when the 2010 Decision was taken relate to the definition of the relevant markets, E.ON's market position on these relevant markets, E.ON's booking quota and the amount of free transport transport capacities as well as the regulatory changes and changes in the commercial behaviour of market participants.





Market definition









(11)


Since 2010, the German gas wholesale and retail markets have experienced significant changes that allow for wider definitions of the respective relevant product markets as well as the relevant geographic markets. Regarding the geographic market, the previously separate market areas in Germany have been merged to ultimately form two large market areas in Germany. In addition, there are no significant bottlenecks between the two market areas so that a national market both for the downstream wholesale market as well as the retail market for the supply of large industrial customers has been defined in recent decisions. With respect to the product market definition, the main change relates to the merging of the H- and the L-gas grids, which allowed lifting this distinction also on the gas supply markets as defined by the German competition authority in 2014.





Dominance









(12)


These changes in the gas supply markets as well as the complementary implementation of the Commitments have led to a significant decrease of E.ON's overall market position on the gas supply markets. E.ON's market share on the national downstream wholesale market is estimated at [25 - 35] % and on the national retail market for the supply of industrial customers at [15 - 25] %. It seems unlikely that E.ON could currently still be considered dominant on these markets.












(13)


Since its divestment of EGT, E.ON does not any longer own or control a gas transport infrastructure. E.ON is, accordingly, no longer dominant in the supply of gas transport capacities.





No risk of abuse that justifies maintaining the Commitments









(14)


The risk of any future abuse of the kind described in the 2010 Decision can be excluded. This results both from compliance with the Commitments by E.ON as well as from changes in the market which render any such behaviour by E.ON or Uniper with its subsidiary UGC unlikely in the future.












(15)


E.ON did not remain close to the booking threshold of 54 % (for H- and L-gas combined), but over time its bookings went far below. There are no indications that E.ON would come close to the booking threshold again in the coming years.












(16)


Moreover, regulatory changes have taken place and the ‘first-come-first-serve-principle’ of capacity bookings was replaced by mandatory auction procedures. Any increased capacity bookings would therefore be the result of a competitive auction procedure. In addition, regulation limits the share of long-term bookings. This creates further opportunities for competitors compared to the situation in 2010.












(17)


Furthermore, market participants have increasingly preferred short-term bookings and there are significant spare transport capacities.




4.   CONCLUSION









(18)


For the reasons set out above the risk of a future foreclosure by E.ON via extensive long-term transport capacity reservations as set out in the 2010 Decision can be considered as excluded for the coming years. It is also not evident that E.ON is still dominant on the relevant gas supply markets. The German gas markets have been opened in the recent years and could not be foreclosed again by abusive behaviour by E.ON of the type described in the 2010 Decision. The Commitments therefore no longer have any purpose.












(19)


The overall assessment therefore shows that there have been significant changes in the gas markets as well as in E.ON's corporate structure which the Commission considers as a material change of facts pursuant to Article 9(2) of Regulation 1/2003 and which allow for a reopening of the procedure. Further, the Commission recognises that market circumstances have changed to an extent that justifies terminating the Commitments.






(1)  OJ L 1, 4.1.2003, p. 1.

(2)  Commission Decision COMP/39.317 in the case E.ON Gas of 4 May 2010.