CELEX: 32021M10139
Language: en
Date: 2021-11-26 00:00:00
Title: Commission Decision of 26/11/2021 declaring a concentration to be compatible with the common market (Case No COMP/M.10139 - DESFA / COPELOUZOU / DEPA / GASLOG / BTG / GASTRADE) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

EUROPEAN COMMISSION
                                                               Brussels, 26.11.2021
                                                               C(2021) 8778 final
                                                                                PUBLIC VERSION
                                                                 In the published version of this decision,
                                                                 some information has been omitted
                                                                 pursuant to Article 17(2) of Council
                                                                 Regulation (EC) No 139/2004 concerning
                                                                 non-disclosure of business secrets and
                                                                 other    confidential information. The
                                                                 omissions are shown thus […]. Where
                                                                 possible the information omitted has been
                                                                 replaced by ranges of figures or a general
                                                                 description.
                                                               Hellenic Gas Transmission System Operator
                                                               S.A. (DESFA)
                                                               357 – 359 Mesogeion Ave.
                                                               15231 – Chalandri
                                                               Greece
                                                               DEPA Commercial S.A.
                                                               92 Marinou Antypa St.
                                                               14121 – Iraklio, Attica
                                                               Greece
                                                               GasLog Cyprus Investments Ltd.
                                                               69 Akti Miaouli St.
                                                               18537 – Piraeus
                                                               Greece
                                                               Bulgartransgaz EAD
                                                               Residential complex “Lyulin” 2, No.
                                                               66 “Pancho Vladigerov” Blvd.
                                                               1336 – Sofia
                                                               Bulgaria
                                                               Ms Copelouzou
                                                               c/o Niki Trombouki
                                                               Junction of 197 Kifissias Ave. & 40-42
                                                               Anavryton St.
                                                               15124 – Marousi
                                                               Greece
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER-REGISTRY@ec.europa.eu.
 ---pagebreak--- Subject:            Case M.10139 – DESFA / COPELOUZOU / DEPA / GASLOG / BTG /
                    GASTRADE
                    Commission decision pursuant to Article 6(1)(b) of Council Regulation
                    No 139/20041 and Article 57 of the Agreement on the European Economic
                    Area2
Dear Sir or Madam,
(1)       On 20 October 2021, the European Commission received notification of a proposed
          concentration pursuant to Article 4 of the Merger Regulation by which Hellenic Gas
          Transmission System Operator S.A. (“DESFA”, Greece), Ms. Asimina‐Eleni
          Copelouzou (“Ms Copelouzou”, Greece), DEPA Commercial S.A. (“DEPA
          Commercial”, Greece), GasLog Cyprus Investments Limited (“GasLog”, Cyprus)
          and Bulgartransgaz EAD (“BTG”, Bulgaria) acquire within the meaning of Article
          3(1)(b) and 3(4) of the Merger Regulation joint control of GASTRADE Limited
          Construction and Technical Company of Natural Gas S.A. (“GASTRADE”, Greece)
          (“the Transaction”).3 DESFA, Ms Copelouzou, DEPA Commercial, GasLog and
          BTG are designated hereinafter as the “notifying parties” and together with
          GASTRADE as the “parties”.
1.        THE PARTIES
1.1.      DESFA
(2)       DESFA owns, operates, maintains, manages, exploits and develops the Greek high-
          pressure gas transmission network, the National Natural Gas Transmission System
          (the “NNGTS”), and as such is the Greek gas Transmission System Operator
          (“TSO”). It also owns and operates the Liquefied Natural Gas (LNG) terminal
          located on Revithoussa island, Greece (the “Revithoussa LNG Terminal” or
          “Revithoussa”). DESFA’s overall system (i.e. including the NNGTS and
          Revithoussa LNG Terminal) is referred to as the Greek National Natural Gas System
          (“NNGS”).
(3)       DESFA is ultimately controlled by the Italian investment bank Cassa Depositi e
          Prestiti S.p.A. (“CDP”)4 . CDP controls DESFA through Snam S.p.A. (“Snam”),
          which in turn controls DESFA via “SENFLUGA ENERGY INFRASTRUCTURE
          HOLDINGS SOCIETE ANONYME” (“Senfluga”). Senfluga holds 66% of the
          shares in, and voting rights of, DESFA. The Hellenic Republic holds the remaining
          34% participation in, and voting rights of, DESFA. Decisions in relation to DESFA's
          commercial strategy are adopted by simple majority and quorum. Senfluga, holding
          a majority of shares and voting rights, can therefore adopt such decisions. The
1    OJ L 24, 29.1.2004, p. 1 (the ’Merger Regulation’). With effect from 1 December 2009, the Treaty on the
     Functioning of the European Union (the ‘TFEU’) has introduced certain changes, such as the replacement
     of ‘Community’ by ‘Union’ and ‘common market’ by ‘internal market’. The t erminology of the TFEU
     will be used throughout this decision.
2    OJ L 1, 3.1.1994, p. 3 (the ‘EEA Agreement’).
3    Publication in the Official Journal of the European Union No C 435, 28.10.2021, p. 8.
4    See Commission decision of July 12, 2013, in Case M.6887 SNAM/ GISCI/ TIGF. Snam is the holding
     company of the Snam Group, which controls the main gas TSO in Italy, and has several participations in
     companies active in gas transmission and storage throughout the EU.
                                                           2
 ---pagebreak---           Hellenic Republic does not have any veto rights beyond those normally accorded to
          protect the financial interests of a minority shareholder. 5 Senfluga’s sole control over
          DESFA was confirmed by the Commission in Case M.8953 - SNAM/DESFA.6 In
          view of this, CDP via Senfluga exercises decisive influence, and thus has sole
          control, over DESFA.
1.2.      Ms Copelouzou
(4)       Ms Copelouzou is the founding shareholder of GASTRADE. She is an individual
          and, with the exception of GASTRADE, has no other activities in the gas sector. 7
1.3.      GasLog
(5)       GasLog is an owner, operator and manager of LNG vessels. GasLog owns and
          manages 33 LNG vessels, which are chartered to customers. GasLog also provides
          ship management services to its own fleet. GasLog has technical and commercial
          background, resources, and know-how to operate and maintain GASTRADE’s
          proposed Floating Storage and Regasification Unit (“FSRU”).
(6)       GasLog is a wholly-owned (indirect) subsidiary of GasLog Ltd., incorporated in
          Bermuda and listed on the New York Stock Exchange. GasLog Ltd. is effectively
          controlled by Mr. Peter G. Livanos.
1.4.      DEPA Commercial
(7)       DEPA Commercial is Greece’s major gas supplier. It is active in the supply,
          wholesale and retail trading of natural gas. It is also active in the retail supply of
          electricity (through EPA Attikis).
5    Form CO, paragraphs 140-143.
6    See Case M.8953 - SNAM/DESFA, paragraphs 6-7. Following the Commission’s decision in that case,
     the shareholding structure of Senfluga changed, albeit with no impact on its controlling structure.
     Specifically, Damco Energy SA (“Damco”), which is controlled by [description of Damco’s shareholding
     structure], made a financial investment in Senfluga in return for 10% of the non -voting shares (preferential
     shares) in Senfluga. The acquisition by Damco of a 10% share in Senfluga has been structured so to
     ensure that Damco remains only a financial shareholder with no voting and very limited information rights
     (passive shareholder) (Form CO, paragraph 138). Therefore, the quality of control in DESFA did not
     change following the entry of Damco into Senfluga’s shareholding structure. The Parties have confirmed
     that, other than Damco, no other entity or person related to the Copelouzos Group holds a passive
     minority participation in Senfluga nor in DESFA (Form CO, paragraph 155). In the Commission’s
     preliminary market investigation, a market player raised a concern in relation to whether the Transaction
     could result in the Copelouzos Group, which is active in the Greek energy sector, benefitting through
     gaining access to commercially sensitive information due to Damco’s share s in Senfluga. However, the
     Notifying Parties submit that the only right granted to Damco is the right to receive the minimum
     information provided under the law as a ‘minority shareholder’; it cannot be precluded under the
     applicable corporate law (L.4548/2018) but has been substantially curtailed so as to exclude the provision
     to Damco of any commercially sensitive information. The Greek Energy Regulator’s (“RAE”) Decision
     no 1100/2019 of 28 November 2019 approving the acquisition of a 10% shareholding of Damco over
     Senfluga confirmed that Damco would not be exercising any rights and no control over Senfluga or
     DESFA, and that the transaction would not result in a violation of the unbundling rules or DESFA’s
     certification. Damco was considered by RAE as to be falling under the scope of a financial investor (Form
     CO, paragraphs 146-147).
7    Ms Copelouzou holds minority stakes, but no control, in [description of Ms Copelouzou’s minority
     shareholdings]. All these companies are unrelated to the gas sector (Form CO, paragraph 133).
                                                           3
 ---pagebreak--- (8)        DEPA Commercial is currently owned by the Hellenic Republic Asset Development
           Fund (“HRADF”)8 (65%) and by Hellenic Petroleum SA (“HELPE”)9 (35%).
1.5.       BTG
(9)        BTG is a Bulgarian state-owned licenced independent operator of natural gas
           transmission and storage in Bulgaria.10 Its capital is fully owned by Bulgarian
           Energy Holding (“BEH”), which is 100% owned by the Bulgarian State.
(10)       The Parties submit that, despite BEH owning BTG, the regulatory framework in
           Bulgaria, as well as BTG’s Articles of Association, guarantee that BEH does not
           exercise decisive influence over BTG.11
(11)       The Commission notes, however, that certain aspects in the governance of BTG
           might lead to the conclusion that BEH is in a position to exercise decisive influence
           in relation to the strategic business behaviour of BTG. In particular, BEH owns
           shares in BTG to 100% of the shares in BTG. In addition, BTG has a two-tier system
           of management, which consists of a Supervisory Board and a Management Board.
           The Management Board manages and represents BTG, while the Supervisory Board
           supervises and controls the activities of the Management Board. 12 The members of
           both the Supervisory Board and the Management Board are nominated through
           regulated competitions. However, BEH has a veto right with respect to the
           appointment of the nominated members of the Supervisory Board. The Supervisory
8    The HRADF was established by the provisions of Greek Law 3986/2011 on 1 July 2011. It is not a public
     entity and is governed by private law. It is an undertaking entrusted with the development of the Greek
     State’s assets and serves the public interest at large. The assets transferred to it by the State do not form
     part of its share capital and the HRADF is not deemed to exercise control over DEPA Commercial for
     competition law purposes but rather acts as a public authority (Form CO, p aragraph 127.1). (See Decision
     of the Hellenic Competition Commission 672/2018, para. 40).
9    HELPE is an energy group based in Greece, with activities spanning across the energy value chain and
     presence in seven countries. Its shares are primarily listed on the Athens Stock Exchange with a secondary
     listing on the London Stock Exchange. HELPE’s shareholding in DEPA Commercial is not accompanied
     by rights that provide control over DEPA (Form CO, paragraph 127.2.) (See Decision 38 of the Bulgarian
     Commission on Protection of Competition (14 January 2021), section 2.2).
10 BTG’s acquisition of control over GASTRADE was unconditionally cleared by the Bulgarian competition
     authority on 14 January 2021, Decision 38 of the Bulgarian Commission on Protection of Competition, 14
     January 2021 (Form CO, Annex 17).
11 According to the parties, BEH, which holds a 50% stake in the IGB Interconnector Project (Form CO,
     footnote 104), is a holding company whose participation in its subsidiaries is limited to exercising its
     shareholder rights, i.e. supervising their activity without interfering directly in the management and day -
     to-day operation. In addition, the parties submit that BTG is independent in terms of decision making from
     BEH (and other companies integrated in the holding structure of BEH) and that internal assurances are in
     place which re-enforce the status of independence of BTG (e.g. its Articles of Association and the
     Compliance Program provide that BEH shall not determine BTG’s activity, and BTG shall not acce pt
     orders from BEH and its representatives when performing activities relevant to the operation of the
     transmission network, the overall management of the network and investments). See Form CO, paragraphs
     164-165. See also Decision 38 of the Bulgarian Commission on Protection of Competition (14 January
     2021) clearing BTG’s acquisition of a stake in GASTRADE which states in its Section 2.1 that
     “According to the documents submitted by the notifiers, there are no prerequisites for direct or indirect
     determination of [BTG]'s competitive behavior with regard to its current activities and the management of
     the network or in relation to the activities necessary for the preparation of the 10 -year network
     development plan by the sole owner of its capital. Therefore, there is no exercise of control within the
     meaning of Art. 22 of the LPC by BEH in its capacity of a sole owner of [BTG].” (See Form CO, footnote
     102). See also response to RFI10, para. 25.
12 See response to RFI10, paragraph 6.
                                                              4
 ---pagebreak---          Board, in turn, appoints and releases from office the members of the Management
         Board. Furthermore, the Supervisory Board approves the short and long-term
         financial plans of BTG, which are proposed by the Management Board. 13
(12)     For the purposes of this Decision, the question of whether BEH exercises control
         over BTG can be left open, as the Transaction does not lead to serious doubts as to
         its compatibility with the internal market regardless of whether BEH exercises
         control over BTG. Hence, the competitive assessment of the Transaction will be
         conducted on the basis that BEH controls BTG.
1.6.     GASTRADE
(13)     GASTRADE is currently jointly controlled by Ms Copelouzou (40%), DEPA
         Commercial (20%), GasLog (20%) and BTG (20%) (hereafter: the “Existing
         Shareholders”) (see recital (17) below concerning GASTRADE’s control structure
         prior to the Transaction).
(14)     GASTRADE is the owner, licence holder and developer of the Alexandroupolis
         LNG Terminal (“Alexandroupolis”), a proposed facility to be located offshore of
         Alexandroupolis in Northern Greece. It will consist of an offshore FSRU for the
         reception, storage and regasification of LNG, and permanent offshore installations.
         Figure 1: Image of the proposed FSRU
(15)     It also comprises a subsea and onshore gas transmission pipeline, which will
         transmit the gas from the FSRU to Greece’s NNGTS.
13   See response to RFI10, paragraphs 8 et seq.; paragraphs 17 et seq.
                                                          5
 ---pagebreak---  ---pagebreak---           Therefore, each of the Notifying Parties will have the power to reject proposed
          strategic decisions regarding […]and will thus be able to produce a deadlock
          situation. Similarly, pursuant to the SHA, none of the shareholders can on its own
          block or pass a resolution in relation to “Board Reserved Matters”, which include
          […], or “Matters Reserved for Shareholder Approval”, which includes […].18
(20)      Each shareholder will have the right […]19 .20 Decisions over the revocation of the
          appointment of the Managing Director21 will require […].22 Therefore, each of the
          Notifying Parties […] will thus be able to produce a deadlock.
(21)      A deadlock would arise if […].23 In case of a deadlock, […].24 . It follows that all
          shareholders must reach a common understanding in determining the commercial
          policy of GASTRADE and that they will have joint control over GASTRADE.
(22)      Given that the Existing Shareholders already exert joint control prior to the
          Transaction, the only merger-specific change in the structure of control pertains to
          DESFA’s entry into GASTRADE’s shareholding, which will be the focus of the
          present decision.
2.2.      GASTRADE is a full-function joint venture
(23)      GASTRADE will be performing on a lasting basis all the functions of an
          autonomous undertaking operating in the market for gas import infrastructure.
(24)      First, GASTRADE will have an independent management dedicated to its day-to-
          day operations, namely, a Board of Directors and a Managing Director, and
          (assuming a positive FID from its shareholders) will hire further personnel and
          commence construction.25
(25)      Second, GASTRADE will have its own presence on the market and it is anticipated
          that it will achieve the majority of its turnover with third parties. In addition, any
          agreement between GASTRADE and a shareholder will be at arms’ length and on
          the basis of prevailing market terms at the time.
16   The FID to be taken by GASTRADE’s General Meeting constitutes GASTRADE’s shareholders’ final
     decision to proceed with the investment for the Alexandroupolis LNG Terminal as well as the
     construction and operation thereof (Form CO, footnote 105).
17   Clause 7.3 SHA.
18   Form CO, paragraph 198.
19   Clauses 6.3 and 6.7 SHA.
20   Clause 6.18 SHA. In addition, pursuant to Clause 6.6 SHA, the Chairman [information regarding
     GASTRADE’s internal organisation, based on GASTRADE’s Shareholders Agreement].
21   The Managing Director will [information regarding GASTRADE’s internal organisation, based on
     GASTRADE’s Shareholders Agreement] (see Schedule 4 SHA).
22   Clause 6.24 and Schedule 4 SHA, Part 2, point 3.
23   Clause 9.1 SHA.
24   Clause 11.2 SHA (there are separate provisions for [information regarding GASTRADE’s internal
     organisation, based on GASTRADE’s Shareholders Agreement]; see Clause 10 SHA).
25   GASTRADE will not employ its own staff until the FID (the shareholders are contributing resources for
     the development of the project at this stage). After the FID (anticipated later in 2021), GASTRADE will
     hire and employ its own staff, which will be paid from GASTRADE’s budget as an operating expense
     (OPEX), in accordance with the company’s business plan. Form CO, paragraphs 201 - 204.
                                                          7
 ---pagebreak--- (26)     Third, GASTRADE has secured financial resources via public subsidies and private
         funds so that it conducts its business activity independently from its parents.
(27)     Fourth, GASTRADE has obtained the majority of regulatory licenses required for
         the operation of the Alexandroupolis LNG Terminal and GASTRADE’s Articles of
         Association anticipate that it will have a 50-year duration and will therefore operate
         on a lasting basis.
(28)     Therefore, GASTRADE will be a full-function joint venture.
3.       UNION DIMENSION
(29)     The undertakings concerned have a combined aggregate world-wide turnover of
         more than EUR 5 000 million (in 2020, SNAM/CDP: EUR […] million; Ms
         Copelouzou: EUR […] million; DEPA Commercial: EUR 550 million; GasLog:
         EUR 715 million; BTG26 : EUR 189 million)27 . Three of them have a Union-wide
         turnover in excess of EUR 250 million (in 2020, SNAM/CDP: EUR […] million; Ms
         Copelouzou: EUR […] million; DEPA Commercial: EUR […] million; GasLog:
         EUR […] million; BTG: EUR […]million), but not all Parties achieve more than
         two-thirds of their aggregate Union-wide turnover within one and the same Member
         State. The notified operation therefore has a Union dimension pursuant to Article
         1(2) of the Merger Regulation.
4.       RELEVANT MARKETS
4.1.     Introduction
(30)     Natural gas originates in oilfields or natural gas fields. After being processed and
         purified at a treatment plant, natural gas can be supplied either in gaseous form
         through pipelines or in liquid form, as LNG. When supplied as LNG, natural gas is
         converted into liquid form in a liquefaction plant, transported in specially-designed
         LNG tankers and then delivered for regasification at a receiving terminal at the point
         of destination or used directly as LNG for certain specific applications. Once
         regasified, LNG is transported in the pipeline network where it is mixed with
         "piped" natural gas. It is then distributed and supplied to end customers.
(31)     In the previous decisional practice of the Commission, 28 the gas markets have been
         segmented into (i) the production and exploration for natural gas, (ii) gas wholesale
         supply, (iii) gas transmission (via high pressure systems), (iv) gas distribution (via
26   As noted in paragraph (12), the competitive assessment of the Transaction will be conducted on the basis
     that BEH controls BTG. Although in this section the turnover of BTG alone is taken into consideration,
     the assessment on the Transaction’s Union dimension would not change if BEH’s turnover would be
     considered instead, as the latter would in any case include the turnover of BTG.
27 Turnover calculated in accordance with Article 5 of the Merger Regulation.
28 Cases M.9641 SNAM/FSI/OLT; M.3440 ENI/EDP/GDP; M.3294 EXXONMOBIL/BEB; M.3293
     Shell/BEB; M.4180 Gaz de France/Suez; M.3868 DONG/Elsam/ Energi E.
                                                             8
 ---pagebreak---            low pressure systems), (v) gas storage, (vi) gas trading, (vii) gas supply to end
           customers29 and (viii) the market for infrastructure for gas imports.
(32)       DESFA, BEH and GASTRADE are active in the market for infrastructure for gas
           imports into Greece. DESFA operates the Revithoussa LNG Terminal and, as the
           TSO, the interconnection points where import pipelines interconnect with the
           NNGTS. GASTRADE is the developer and future operator of the Alexandroupolis
           LNG Terminal. BEH, through BTG, operates the Bulgarian natural gas transmission
           system, which connects to the Greek NNGTS at the Greek-Bulgarian border.30
4.2.       Product market definition
4.2.1. Infrastructure for gas imports, including a possible sub-segment for regasification
           services
(33)       In previous decisions, the Commission considered the question whether the market
           for infrastructure for gas imports could be sub-segmented into the following
           markets: (i) regasification services for the import of liquid natural gas; (ii)
           interconnection points with international gas pipelines; and (iii) underground gas
           storage.31 The Commission has generally ultimately left open the exact market
           definition, though it did conclude in one decision that underground gas storage
           represented a separate market.32
(34)       The Notifying Parties submit that there is a single product market for regasification
           terminals and pipelines, as these two are interchangeable facilities that are used to
           carry out the import of gas and that, from the end customer’s perspective, the form of
           the gas immediately before it is added to the network is immaterial. 33 In any event,
           the Notifying Parties submit that the exact market definition can be left open as, in
           their view, the Transaction does not raise competition concerns regardless of the
           market definition adopted.
(35)       The results of the market investigation conducted in the present case indicated that
           most entities that import gas in Greece do so by using both pipelines and
           regasification terminals.34 The majority of those respondents who provided a definite
           answer consider that regasification terminals and pipelines are interchangeable
           facilities in order to carry out the import of gas. However, a number of respondents
           consider the two types of infrastructures to be more complementary than
29   This market can be further subdivided according to different types of users (big and industrial, small and
     medium enterprises, households, etc.).
30   BEH also holds a 50% stake in ICGB AD, which will operate the “Interconnector Greece -Bulgaria”
      pipeline, which is expected to be operational by mid -2022 and will interconnect the Bulgarian
      transmission system with the NNGTS. However, IGB’s entry point to the NNGTS will only be able to
      cater for gas flows from Greece to Bulgaria and not the other way around. In order for IGB to be offered
      entry capacity to the NNGTS, a regulatory procedure pursuant to Reg. 2017/459 shall be implemented
      first, and if positive, IGB will have to proceed with the required investments. Consequently, IGB is not
      considered an import infrastructure into Greece. See Form CO, paragraph 353 et seq.: Form CO, fn. 326.
31   Cases M.5649 RREEF FUND/ ENDESA/ UFG/ SAGGAS, paragraphs 11-15; M.8771 Total/Engie,
     paragraphs 23-27.
32   Case M.1383 Exxon / Mobil, recital 69.
33   Form CO, paragraph 268.
34   See replies to question 4 of Questionnaire 1 to customers.
                                                           9
 ---pagebreak---          substitutable solutions.35 Respondents pointed specifically to the different costs and
         timelines involved in the planning of gas imports, as well as the complementary
         needs served by the different import infrastructure. In this respect, one customer
         submitted that “[p]ipeline gas provides a steadier supply stream - LNG terminals
         usually cater for flexibility, system reserves, seasonal spikes etc., but may also be
         partly used as a long-term supply solution”.36
(36)     The Commission considers that, for the purposes of this decision, it may be left open
         whether pipelines and regasification terminals belong to the same relevant product
         market or belong to separate relevant product markets, as the Transaction does not
         lead to serious doubts as to its compatibility with the internal market, regardless of
         the market definition adopted.
4.2.2. Gas transmission
(37)     The transmission of natural gas consists of physical gas transportation services via
         high-pressure pipelines to gas wholesale suppliers that aim to resell their gas either
         to other gas wholesalers, to distributors, or to large industrial customers that are
         directly connected to the gas transmission network.
(38)     In its decisional practice, the Commission has consistently considered gas networks
         as natural monopolies.37 The Notifying Parties do not challenge this conclusion.
(39)     The results of the market investigation confirm that the              conclusions reached by the
         Commission in its previous practice are still valid                   for Greece today. 38 The
         Commission therefore considers that gas networks for                 the transmission of gas are
         natural monopolies and each of them constitute a distinct            product market.
4.2.3. Gas storage
(40)     In previous decisions, the Commission has defined a separate relevant product
         market for the storage of natural gas.39
(41)     The Notifying Parties consider that a gas storage market has not yet developed in
         Greece. The current situation where there is no large-scale gas storage in Greece
         would change if the prospective underground natural gas storage (“UGS”) project in
         South Kavala, Greece comes to fruition. 40 The Notifying Parties consider that the
         temporary storage at a LNG terminal does not compete with gas storage
         infrastructure as they have very different characteristics in terms of capacity and
35  See replies to question 8.1, Questionnaire 1 to customers; question 4.1, Questionnaire 2 to competitors.
36  See replies to question 8.1 of Questionnaire 1 to customers.
37  Cases M.9641 SNAM/FSI/OLT, paragraph 29; M.6984 EPH/ STREDOSLOVENSKA ENERGETIKA,
    paragraph 25; M.3696 E.ON/MOL, recital 97.
38  See replies to question 14 of Questionnaire 1 to customers; question 11 of Questionnaire 2 to competitors.
39  Cases M.5467 RWE / Essent; M.3410 Total / Gaz de France. The Commission also considered a further
    distinction between pore and cavern storage facilities, as well as between storage facilitie s suited for the
    storage of high calorific value (H-gas) and storage facilities suited for the storage of low calorific value
    (L-gas), but it ultimately left these questions open.
40  Form CO, paragraphs 242-249. An international public tender process is currently underway by the
    Hellenic Republic Asset Development Fund for the concession of the use, development and operation of
    the South Kavala UGS. The final stage of this tender will most likely take place early in 2022 and the
    Parties cannot safely estimate its date of entry into operation.
                                                            10
 ---pagebreak---          duration of storage, and fulfil different purposes, and that the Alexandroupolis LNG
         Terminal cannot be considered a storage facility. 41
(42)     The results of the market investigation confirm that a gas storage market has not yet
         developed in Greece. A number of respondents confirmed that there is currently no
         storage facility for natural gas in Greece.42 A clear majority of customers also
         confirmed that short-term storage provided by LNG terminals cannot be considered
         as equivalent to underground gas storage services. 43
(43)     In view of the above, the Commission considers that gas storage belongs to a
         separate market. As the Parties are not active in such a market and there is currently
         no gas storage market in Greece, in this Decision gas storage will not be dealt with
         further.
4.3.     Geographic market definition
4.3.1. Infrastructure for gas imports
(44)     In past decisions, the Commission considered that the market for infrastructure for
         gas imports, including LNG regasification terminals, was national in scope but
         ultimately left open whether the geographic scope was national or wider. 44
(45)     The Notifying Parties submit that, given Greece’s land and sea borders, the
         positioning of gas import infrastructure in the wider region, and the technical
         specifications of the Greek gas infrastructure, in this case the market should not be
         delineated on a national basis, but should instead comprise at least Greece, the
         Balkans and countries of South and Eastern Europe, as well as Turkey. 45 In any
         event, the Notifying Parties submit that the exact market definition can be left open
         as the Transaction does not raise concerns regardless of the market definition.
(46)     The Parties submit that the consumption centre for natural gas in Greece is in the
         southern part of Greece, mainly around the Athens (Attica) area. Furthermore, there
         are physical limitations to the flow of gas within Greece due to the diameter of the
         pipelines between Komotini and Karperi (in the North-East of Greece) and to the
         South of the Nea Messimvria compressor station (see Figure 4 below), as well as the
         capacity of the existing compressor station at Nea Messimvria. These limitations do
         not apply to the same extent to both directions, i.e. greater amounts of gas can flow
         from the South to North than the other way around. 46
(47)     The results    of the market investigation with regard to the geographic scope of the
         market for     infrastructure for gas imports point to it being national in scope. The
         majority of     competitors submitted that the market is national in scope. 47 A slight
         majority of     those customers who provided a definitive answer confirmed that they
41   Form CO, paragraphs 250-262.
42   See replies to question 15 of Questionnaire 1 to customers; question 12 of Questionnaire 2 to competitors.
43   See replies to question 16 of Questionnaire 1 to customers.
44   Cases M.9641 SNAM/FSI/OLT, paragraph 36; M.5649 RREEF FUND/ ENDESA/ UFG/ SAGGAS,
     paras. 16-18; M.8771 Total/Engie, paragraphs 35-37.
45   Form CO, paragraphs 281-282.
46   Form CO, paragraph 540 et seq.
47   See replies to question 14 of Questionnaire 2 to competitors.
                                                           11
 ---pagebreak---         would select gas import infrastructure in all of Greece for their sales of gas in
        Greece.48
(48)    However, a number of respondents pointed to a bottleneck in the NNGTS, allowing
        for limited gas flow between the North-eastern part of Greece (where the
        Alexandroupolis Terminal is located) and the rest of Greece. In this respect, one
        respondent noted that “[d]ue to the bottleneck in Komotini, gas originating from the
        Alexandroupolis terminal is expected to mainly be fed to the IGB [Interconnector
        Greece-Bulgaria]”. The location of the terminal is illustrated in Figure 3, and in
        Figure 4 the “bottleneck” is illustrated by identifying the parts of the transmission
        system whose diameter is narrower than 36 inches.
        Figure 3: Location of the Alexandroupolis LNG Terminal
48  See replies to question 17 of Questionnaire 1 to customers.
                                                          12
 ---pagebreak---                   Figure 4: Current entry points and pipeline diameter in the NNGTS 49
(49)     The Commission notes that the bottleneck indeed leads to a situation where the
         volumes per day of gas that can be injected in the north of Greece are higher if the
         gas does not have to pass through the bottleneck to the south of Greece. While taking
         account of this “bottleneck”, the Commission notes that the cost of using the
         transmission system in Greece does not depend on the distance between the
         particular entry and exit point but DESFA charges for entry and exit to the system,
         meaning that transmission costs are largely homogenous throughout the NNGTS,
         regardless of where the gas enters and exits the system. 50 Furthermore, as illustrated
         in Table 2 below, not all gas import infrastructures located in Northern Greece are
         affected by the bottleneck as much as the Alexandroupolis Terminal. In fact, all
         other gas import infrastructures that are subject to the bottlenecks in gas flow from
         North to South of Greece51 have more capacity for gas to be injected into the
         NNGTS going to Southern Greece. This indicates that capacity constraints for
         injecting gas into the NNGTS going to Southern Greece does also depend on the
         specific gas import infrastructure, and is not only location-specific. The Commission
         further notes that a gas import infrastructure that is connected to the NNGTS would
         also be capable of serving the import of natural gas into neighbouring countries,
         where such countries are sufficiently interconnected with the NNGTS. In light of
         the above, including the responses to the market investigation and the view of the
         Notifying Parties, the Commission considers that the geographic market for gas
49  Form CO, Figure 15. Installation of new compressors at Kipi and Ampelia, and compressor upgrade at
    Nea Messimvria, are expected to be operational by the end of 2023.
50 Form CO, paragraph 338
51 I.e. the interconnection point with the Bulgarian transmission system in Sidirokastro, the interconnection
    point with the Turkish transmission system in Kipi, the interconnection point with TAP in N. Mesimvria.
                                                          13
 ---pagebreak---         import infrastructure and the possible sub-segment for regasification terminals is
        national, or even wider (comprising Greece and other countries in South East
        Europe). For the purposes of this Decision, the question can be left open, as the
        Transaction does not lead to serious doubts as to its compatibility with the internal
        market regardless of the market definition adopted in this respect.
4.3.2. Gas transmission
(50)    In its past decisional practice, the Commission has generally considered the market
        for gas transmission to be national, although noting that the region covered by the
        physical infrastructure grid constitutes the narrowest possible delineation of the
        geographic market.52
(51)    The Notifying Parties note that in Greece the Trans Adriatic Pipeline (“TAP”)
        (running across Greece from the Turkish border to Albania and into Italy) is now
        operational and is thus a second balancing zone or entry-exit system where the
        amount of gas put into the system balances with the amount taken out (in addition to
        the balancing zone associated with DESFA’s transmission network). Given that it is
        an international pipeline its balancing zone is wider than Greece. However, given
        that TAP cannot currently be used for physical gas transportation services between
        two points in Greece, on a conservative basis the Parties provided their analysis of
        the market for the transmission of natural gas as the NNGTS balancing zone
        encompassing the territory of Greece. 53
(52)    A majority of the respondents confirmed in the market investigation that the
        Commission’s decisional practice of considering the market for gas transmission
        systems as being national, covering the physical infrastructure grid, is still valid for
        Greece today54 . In this respect, one customer noted that “DESFA is the only TSO
        operating on national scale.”55 The Commission therefore considers the market for
        gas transmission to be national in scope, in line with its decisional practice.
     Market definition summary
(53)    For the purposes of this Decision, the competitive assessment will be based on the
        following relevant markets:
        (a)      Overall market for infrastructure of gas imports in Greece or wider and its
                 possible sub-segment of regasification terminals in Greece or wider; and
        (b)      Gas transmission in Greece.
52  Cases M.9641 SNAM/FSI/OLT, paragraph 40; M.6984 EPH/ STREDOSLOVENSKA ENERGETIKA,
    paragraph 25; M.3696 E.ON/MOL, recital 126.
53 Form CO, paragraphs 304-305.
54 See replies to question 28 of Questionnaire 1 to customers; question 25 of Questionnaire 2 to competitors.
55 See replies to question 28.1 of Questionnaire 1 to customers.
                                                         14
 ---pagebreak--- 5.      COMPETITIVE ASSESSMENT
5.1.    Affected markets
(54)    Both DESFA and GASTRADE are active in Greece in the market for infrastructure
        for gas imports, and the possible sub-segment of regasification terminals. BEH,
        through BTG, is also active in the operation of gas import infrastructure into Greece
        (via pipelines) as it operates the Bulgarian natural gas transmission system, which
        connects to the NNGTS at the Greek-Bulgarian border. Tables 1 and 2 below show
        the extent of their activities and overlap.
(55)    Moreover, DESFA is active in Greece in the gas transmission market. Customers of
        regasification terminals (i.e. some LNG gas importers) need transmission services to
        deliver the commodity to their customers once their LNG loads are processed and
        converted back to a gaseous state. Therefore, the gas transmission market is
        downstream of the market for infrastructure for gas imports and its possible sub-
        segments.
(56)    The Transaction would lead to the following horizontally-affected markets: (i)
        overall market for infrastructure for gas imports in Greece; and (ii) regasification
        terminals in Greece. The Transaction would lead to the following vertically-affected
        markets: (i) gas transmission in Greece (downstream) and market for infrastructure
        for gas imports in Greece (upstream). The Commission will assess whether the
        Transaction could lead to competition concerns with respect to these relationships in
        sections 5.2 – 5.4 below
5.2.    Horizontal non-coordinated effects in the market for infrastructure for gas
        imports
5.2.1. Analytical framework
(57)    Under Article 2(2) and 2(3) of the Merger Regulation, the Commission must assess
        whether a proposed concentration would significantly impede effective competition
        in the internal market or in a substantial part of it, in particular through the creation
        or strengthening of a dominant position.
(58)    In this respect, a merger may entail horizontal and/or non-horizontal effects.
        Horizontal effects are those deriving from a concentration where the undertakings
        concerned are actual or potential competitors of each other in one or more of the
        relevant markets concerned. Non-horizontal effects are those deriving from a
        concentration where the undertakings concerned are active in different relevant
        markets.
(59)    The Commission appraises horizontal effects in accordance with the guidance set out
        in the relevant notice, that is to say the Horizontal Merger Guidelines. 56 The
        Horizontal Merger Guidelines distinguish between two main ways in which mergers
        between actual or potential competitors on the same relevant market may
56   Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
     concentrations between undertakings ("Horizontal Merger Guidelines"), OJ C 31, 05.02.2004.
                                                       15
 ---pagebreak---          significantly impede effective competition, namely non-coordinated and coordinated
         effects.57
(60)     The Horizontal Merger Guidelines list a number of factors which may influence
         whether or not significant horizontal non-coordinated effects are likely to result from
         a merger, such as the large market shares of the merging firms, the fact that the
         merging firms are close competitors, the limited possibilities for customers to switch
         suppliers, or the fact that the merger would eliminate an important competitive force.
         That list of factors applies equally, regardless of whether a merger would create or
         strengthen a dominant position, or would otherwise significantly impede effective
         competition due to non-coordinated effects. Furthermore, not all of these factors
         need to be present to make significant non-coordinated effects likely and it is not an
         exhaustive list.58 Finally, the Horizontal Merger Guidelines describe a number of
         factors, which could counteract the harmful effects of the merger on competition,
         including the buyer power, entry and efficiencies.
5.2.2. Market shares
(61)     Tables 1 - 2 below show market shares for pipelines and regasification terminals for
         Greece. As the question of whether the geographic scope of the market is national or
         wider than national was left open, the market shares and the assessment below are
         done based on the narrowest plausible (i.e. national) market.
(62)     Revithoussa is currently the only LNG terminal providing regasification services in
         Greece. Alexandroupolis is due to become operational in the provision of
         regasification services in 2023. Motor Oil Hellas intends to develop a third LNG
         terminal in Greece, also due to be operational in 2023. Tables 3 – 4 below show the
         markets for these three terminals for the possible sub-segment of regasification
         terminals.
(63)     Tables 1 - 4 below show market shares based on volumes, measured in million cubic
         meters per day (“mcm/d”), that can be injected into the NNGTS at the relevant entry
         point. Tables 1 and 3 show market shares based on the technical or physical capacity
         of the import infrastructure. Tables 2 and 4 show market shares based on the
         unconditional or firm capacity, i.e. the volume that can be guaranteed to be available
         for injection from each infrastructure into the transmission system. For any given gas
         import infrastructure, its firm capacity may be lower than the technical capacity of
         the infrastructure if not all of the gas that the infrastructure could send-out to the
         transmission system can be accepted by the transmission system. Tables 2 and 4
         demonstrate the degree of closeness of competition or otherwise of GASTRADE to
         its competitors and the limited increment that results from the Transaction (which is
         particularly important given Alexandroupolis’ focus on exporting gas).
(64)     Table 1 shows the technical or physical capacity of the gas import infrastructures in
         Greece, i.e. for pipelines and regasification terminals. GASTRADE’s regasification
         terminal is planned to be operational in 2023, and thus market shares are shown
57 In the present decision, the Commission has not found evidence that the Transaction would raise serious
     doubts as regards its compatibility with the internal market with respect to coordinated effects in any of
     the horizontally affected markets. During the market investigation, the Commission received no concerns
     about possible anti-competitive coordinated effects arising from the Transaction.
58 Horizontal Merger Guidelines, paragraph 26.
                                                          16
 ---pagebreak---         primarily for 2023 (but shares are also for the time before that). For 2023 Table 1
        shows market shares based on both (i) the full technical or physical capacity (for
        Alexandroupolis that is [10-20] mcm/d) and (ii) excluding the capacity that is
        already reserved59 and which therefore can be thought of as not competing with other
        sources (for Alexandroupolis the capacity excluding that which is already reserved
        is [5-10] mcm/d.60 ). For Alexandroupolis, this unbooked capacity is the gas that
        would be used in north-eastern Greece and exported to Bulgaria and beyond.
(65)    Table 2 shows the unconditional/firm capacity for gas to be injected into the NNGTS
        for use in Greece, including “Southern Greece” (i.e. west of the bottleneck at
        Komotini). For Alexandroupolis, that is 0.7 mcm/d.
59  GASTRADE has already booked between [30-40]% and [40-50]% of the Alexandroupolis LNG
    Terminal’ capacity for ten years, and [10-20] % for the following five years.
60 The booked capacity for 2023 for Alexandroupolis is [40-50]%, which equals [5-10] mcm/d; excluding
    that reserved capacity for Alexandroupolis gives a remaining capacity of [5-10] mcm/d (i.e. [10-20]mcm/d
    minus [5-10] mcm/d).
                                                          17
 ---pagebreak---  ---pagebreak---  ---pagebreak---  ---pagebreak---          the Parties not being close competitors, due to the different characteristics of
         DESFA’s and GASTRADE’s terminals.69
         The highly regulated nature of the gas market
(69)     The Notifying Parties submit that DESFA and GASTRADE’s gas import
         infrastructures are subject to a stringent sectoral regulatory framework, which
         requires them to comply with the principles of objectiveness, neutrality,
         transparency, impartiality and non-discrimination, and which prevents them from
         exercising any form of market power. 70
(70)     DESFA and GASTRADE are bound by third-party access (“TPA”) rules. Article 32
         of EU Directive 2009/73/EC (the “Gas Directive”)71 provides for regulated TPA to
         gas transmission systems and LNG facilities “based on tariffs, applicable to all
         eligible customers, including supply undertakings, and applied objectively and
         without discrimination between system users”. It also mandates that access to the
         transmission system may only be refused in very limited instances (e.g., lack of
         capacity). In the case of refusal, the TSO must provide “duly substantiated reasons”.
         Access rules to the NNGTS and to the Revithoussa LNG Terminal include the
         NNGTS Network Code, which sets the rules for third party access. 72
(71)     GASTRADE received an Exemption Decision from RAE73 , following a review by
         the Commission74 , from TPA obligations for the capacity that has already been
         booked and only for the period of the bookings. GASTRADE has already booked
         between [30-40]% and [40-50]% of the Alexandroupolis LNG Terminal’ capacity for
         ten years, and [10-20]% for the following five years. For the remaining capacity (i.e.
         the capacity not already booked), it must provide access under the TPA rules.
(72)     The Notifying Parties submit that rejections of applications for TPA are very rare.
         Since 2010, DESFA has refused access to Revithoussa on only […] occasions (and
         to the NNGTS on only […] occasions).75
(73)     The Notifying Parties submit that there is no scope for GASTRADE’s shareholders
         to influence the process of allocating the available (i.e. not already booked) capacity
         at Alexandroupolis as that will be done in accordance with the Terminal Access
         Code ("TAC"), which will be approved and subsequently monitored by RAE.
69  Form CO, paragraph 532.
70  Form CO, paragraphs 603-604.
71  Transposed to Greek law by law 4001/2011, as amended.
72  Form CO, paragraph 382-384.
73  RAE decision 1580/2020 “Final Decision of the Greek Regulatory Authority for Energy on the Exemption
    Application of GASTRADE SA”,
74  Commission Decision C(2020) 8377 of 25.11.2020 on the exemption of the Alexandroupolis Independent
    Natural Gas System LNG Terminal from the requirements regarding third party access and tariff
    regulation.
75  Form CO, paragraphs 386-392. The grounds for refusal of access were, for the NNGTS, mainly due to
    unavailable capacity, incomplete or late submission of the request, or inadequate provision of guarantees
    required, while for Revithoussa the grounds were mainly due to unavailable storage space, or in complete
    or late submission of the request.
                                                         21
 ---pagebreak---          GASTRADE shall offer on a regular basis the remaining available capacity through
         market-based arrangements such as auctions or open season procedures.76
(74)     The Notifying Parties submit that the procedure for scheduling unloadings of LNG
         from a vessel and allocating capacity at Revithoussa, approved by RAE77 , is based
         on an auction, and that DESFA must allocate its available regasification capacity on
         the basis of transparent and non-discriminatory tenders.78
(75)     TPA must be provided under pre-defined regulated tariffs. The tariffs for the
         Revithoussa LNG Terminal are calculated yearly based on coefficients approved by
         RAE, in accordance with the provisions of the Tariff Regulation for the NNGS,
         which sets the calculation methodology (also approved by RAE) and revised at the
         end of every four-year “regulatory period”.79 For the Alexandroupolis LNG
         Terminal the tariffs for the non-exempted capacity will also be pre-defined to a large
         extent.80 The Notifying Parties submit that therefore GASTRADE’s tariffs cannot be
         influenced by its shareholders for the entire lifetime of the Terminal. 81
(76)     While certain costs facing users would be similar whichever terminal is used, the
         tariffs for regasification at the two terminals are very different. This is because they
         are offering different operational models to their users. GASTRADE will provide
         long-term products, i.e. users of Alexandroupolis will be able to reserve long-term
         regasification capacity on a constant daily basis (which the users book on a long-
         term use-it-or-lose-it (“LT UIOLI”) basis). GASTRADE’s service will guarantee
         each user a base/stable send-out or flow rate for their gas into the NNGTS
         throughout the year through a process of borrowing and lending with other users
         (similar to a virtual pipeline). Revithoussa’s offer is different. Each user of
         Revithoussa is given a maximum of 18 days as temporary storage time, during which
         the user has to regasify the entire volume of the LNG delivered by the vessel. Thus
         in order to inject regular volumes into the NNGTS, a user of Revithoussa would
         either need to have further unloading slots (i.e. additional deliveries by vessel) or
         acquire LNG from other users' reserves at Revithoussa in the secondary market. 82
(77)     While GASTRADE's business plan is based on a tariff of [10-20]€/1,000m3 ,
         Revithoussa's tariff for 2021 is 4.73 €/1,000m3 . This difference reflects the fact that
         the two terminals do not have the same tariff methodology or cost structure, and that
76  Form CO, paragraphs 446-449. The TAC is currently under public consultation with RAE and will be
    approved by RAE prior to its publication. RAE’s Exemption Decision of December 2020 set out the
    conditions and guidelines under which such system will be formulated.
77  6th revision of the Network Code, RAE Decision 1433/2020 (Government Gazette Issue B’
    4799/30.10.2020).
78  Form CO, paragraphs 402-407.
79  Form CO, paragraph 95. As set out in L. 4001/2011 and the applicable NNGS Network Code. See RAE
    Decision 1434/2020 Gov. Gazette B’ 4801/30.10.2020 approved the 5th Amendment of the Tariff
    Regulation for the Basic Activities of the National Natural Gas System (NNGS).
80  Form CO, paragraphs 453-454. GASTRADE’s tariffs will be subject to: (1) RAE’s Exemption Decision
    setting out the main tariff principles of the tariff methodology; (2) GASTRADE’s prospective Tariff Code
    setting out the exact calculation methodology for different products, which is subject to RAE’s ap proval;
    (3) the EU Commission’s State Aid Decision SA.55526 of 17 June 2021, prescribing in detail the
    mechanism to avoid overcompensation. RAE will monitor the implementation of this mechanism.
81  Form CO, paragraph 465.
82  Form CO, paragraph 563.
                                                             22
 ---pagebreak---         the cost of Revithoussa is socialised due to its role in Greece’s security of supply. 83
        Currently, 50% of Revithoussa’s Required Revenue84 cost is socialised to the
        transmission system tariffs and is thereby borne by all transmission system users.
        This percentage can be adjusted by RAE every regulatory period, based on a cost-
        benefit analysis.85
(78)    The Notifying Parties submit that this means there will not be any competition
        between the terminals on price.86 Revithoussa users will consider the
        Alexandroupolis terminal only in cases when demand exceeds capacity of the
        Revithoussa terminal, as well as for reasons of security of supply and diversification
        of sources of supply. Users will primarily choose which terminal to use based on
        factors other than the parameters of competition, as evidenced by the long-term
        bookings already secured by Gastrade despite its tariff being very different to that at
        Revithoussa.87
        The existence of alternative routes (current and future) for gas imports into Greece
        via pipelines and via LNG regasification terminals by different operators
(79)    The Notifying Parties submit that there are alternative routes for gas imports into
        Greece via pipelines and via LNG regasification terminals by different operators.
        Existing routes consist of the import pipelines and LNG terminals from (i) BTG’s
        network at Sidirokastro, (ii) Botaş’ network at Kipi, (iii) DESFA’s Revithoussa LNG
        Terminal, and (iv) the TAP pipeline88 . The market has seen recent entry by the TAP
        pipeline, and entry of other infrastructure is expected. There are existing LNG
        terminals in Turkey89 which can be used to bring gas into Greece via the Turkish
        pipeline network or into Bulgaria via the Balkan Stream. In addition, RAE has
        granted Motor Oil Hellas a licence for an FSRU LNG terminal to be situated at Ag.
        Theodori, Corinth (relatively near Revithoussa). 90
        The different technical characteristics between the two terminals, which limit the
        competitive dynamics between them
(80)    According to the Notifying Parties, a key factor in determining whether and in what
        way terminals compete with each other is capacity, i.e. the amount of gas that can be
        injected from each terminal (or pipeline) into the NNGTS on a firm capacity basis
        without restrictions on exit. For the reasons explained below, the Notifying Parties
        consider that the terminals are not in direct competition: Alexandroupolis will be
        used mainly to export gas to Bulgaria and possibly beyond, while Revithoussa will
        be used mainly to import gas for consumption in Greece.
83  Form CO, paragraph 39.3.
84  See footnote 103.
85  Form CO, paragraph 95.
86  Form CO, paragraph 39.3.
87  Form CO, paragraph 628.
88  TAP shareholders are: Snam (20%), BP (20%), SOCAR (20%), Fluxys (19%), Enagás (16%) and Axpo
    (5%). None of these shareholders have sole or joint control over TAP.
89  Botaş’ terminal at Marmara Ereğlisi (North West Turkey), Egegaz’s FSRU and land -based terminal at
    Aliağa (in the Aegean region of Turkey), and Botaş’ FSRU at Dörtyol (Southern Turkey). Botaş’ is
    tendering for construction of a new terminal in the Gulf of Saros in northwest Turkey (relatively near
    Alexandroupolis) which should be operational by mid -2022. Users of these terminals can import into
    Greece given the connection between the Greek and Turkish networks at Kipi (Form CO, footnote 20).
90  Form CO, paragraphs 31-32.
                                                         23
 ---pagebreak--- (81)     The Notifying Parties submit that there are substantial objective differences between
         the Revithoussa LNG Terminal and the Alexandroupolis LNG Terminal, by which
         many customers would not consider them close alternatives. 91 When choosing
         import infrastructure, users consider the access conditions of each import
         infrastructure. For example they take into account factors such as terminal temporary
         storage capacity, size of vessels that can be accommodated (Revithoussa can
         accommodate larger vessels), and the operational model of each terminal.92
         Differences in the operational models of Alexandroupolis and Revithoussa are
         outlined in (76) above.
(82)     Users may also consider security of supply and the diversification of the sources of
         gas. For such factors the terminals are complementary. 93
(83)     The Notifying Parties submit that the Alexandroupolis LNG Terminal is expected to
         be used primarily for exporting gas to Bulgaria and the wider South East Europe
         region.94 This is reflected in GASTRADE’s business rationale, which is to act
         primarily for exports to the wider region, and also due to the Alexandroupolis LNG
         Terminal’s geographic location as well as the currently existing technical
         configuration of the Greek NNGTS. 95
(84)     In contrast, imports through the Revithoussa LNG Terminal, which has unlimited
         access to the Greek market and is located near Athens and the main consumption
         centre for natural gas in Greece, are generally consumed in Greece. 96 In addition a
         third LNG regasification terminal operated by Motor Oil Hellas in Ag. Theodori,
         located relatively close to Revithoussa, is expected to be operational around the same
         time as the Alexandroupolis terminal and is expected to exert competition
         constraints on DESFA with regard to supply of LNG regasification services for use
         in the Greek market.97
91  Form CO, paragraph 538.
92  Form CO, paragraphs 555-556. Elements of the operational model of each terminal are: the time assigned
    for the unloading of an LNG vessel and the possibility to re-schedule an unloading at short notice; the
    temporary storage period of LNG in the tanks of the LNG facility; the possibility to specify the daily
    regasification rate of the stored LNG, on a day-ahead and within-day basis; the amount of LNG facility
    losses allocated to a User; the possibility to trade capacity (including regasification capacity and storage
    space) in the secondary market; the possibility to conclude in -tank LNG transactions; etc. For example, it
    is important for a User who delivers gas to a power plant, to be able to adjust, even during the course of a
    day, the quantity to be re-gasified and delivered to this customer during that day.
93  Form CO, paragraph 559.
94  The Alexandroupolis LNG Terminal’s status as being mainly export infrastructure is reflect ed in the
    Exemption Decision (chapter 3.1.2). RAE notes that in the Balkan region, the Alexandroupolis LNG
    Terminal is expected to boost the gas -to-gas competition in an area that still depends strongly on Russian
    gas. This is the main reason why Alexandroupolis has been an integral part of the infrastructure
    enforcement efforts in the region, along with IGB, IBS and the reverse flow of the Trans -Balkan (see
    Projects of Common Interest, Central and South Eastern Europe energy connectivity (CESEC) initiative ,
    GRIs). Form CO, footnote 381.
95  Form CO, paragraph 35.
96  Form CO, paragraphs 539-548.
97  When considering the amount of gas each terminal will be able to inject into the NNGTS for use west of
    Komotini in 2024, Revithoussa (DESFA) will have a share of [30-40]%, Ag. Theodori (Motor Oil Hellas)
    [20-30]%, and Alexandroupolis (GASTRADE) [0-5]%.
                                                            24
 ---pagebreak---         Technical limitations of the NNGTS
(85)    In addition to the main consumption centre being located around Athens, the
        Notifying Parties submit that the fact that parts of the NNGS are of smaller diameter,
        24 inches and 30 inches compared to 36 inches, results in two technically narrow
        areas of the system: one at the north-east branch, and one at the branch south of Nea
        Messimvria (the interconnection point with TAP). Figure 4 above shows the current
        entry points to the NNGTS and the corresponding pipeline diameters.
(86)    Due to this current configuration of the NNGTS (including the so-called
        "bottlenecks" within Greece), the amount of gas that can be injected unconditionally
        from each terminal differs significantly.
(87)    According to the Notifying Parties:
        (a)      For unconditional delivery into the NNGTS in Greece: Under the current
                 configuration, Alexandroupolis will be able to send around [0-5] mcm/d into
                 the NNGTS west of Komotini on a firm basis and thus for use in the main
                 consumption centre in the South of Greece. This amount accounts only for a
                 small part of gas import infrastructure (around [0-5]%, see Table 2 above).
                 Under the current configuration of the Greek transmission system, this
                 amount could increase to up to 8.16 mcm/d (i.e. [10-20]% of the total and
                 existing capacity) via competing capacity products, that is at the expense of a
                 corresponding decrease in volume allocated to competing infrastructures in
                 the (northern) entry points of the Greek transmission system, i.e. from the
                 Turkish network and the Bulgarian and Trans Adriatic Pipeline (TAP)
                 interconnections. Any further increases would require an upgrade of the
                 Greek transmission system, which has not been decided yet. Therefore, while
                 the Parties’ combined market shares are high in terms of technical capacity,
                 the actual increment brought by the Transaction for use in Greece (around [0-
                 5]%) is relatively low given the existing limitations of the Greek transmission
                 system. In contrast, a user of Revithoussa may inject up to [10-20] mcm/d
                 unconditionally.       Therefore, Alexandroupolis is a significantly less
                 straightforward alternative than Revithoussa for users in Greece. 98
        (b)      As mentioned above, GASTRADE has already booked between [30-40]%
                 and [40-50]% of the Alexandroupolis LNG Terminal’ capacity for ten years,
                 and [10-20]% for the following five years, under the Exemption Decision. 99
                 GASTRADE estimates that those bookings at Alexandroupolis [information
                 regarding booked capacities] the [0-5] mcm/d that can be injected into the
                 NNGTS west of Komotini. Therefore, customers who will book non-
                 exempted capacity at the Alexandroupolis Terminal in the future will do so
                 [information regarding booked capacities] customers choosing between
                 Revithoussa and Alexandroupolis in the future. 100 The Parties therefore
98  Form CO, paragraph 39.1.1. These differences are also reflected in access to the VTP: users of
    Revithoussa will have full access whereas, currently, users of Alexandroupolis will have limited access to
    the VTP (given that only [0-5] mcm a day can be delivered from Alexandroupolis to the VTP on a firm
    basis and redelivered to an exit point without restrictions) (Form CO, paragraph 537).
99 Supra, para. 71.
100 Form CO, paragraph 535.
                                                            25
 ---pagebreak---                   submit that for this non-exempted capacity of the Alexandroupolis Terminal,
                  competition with the Revithoussa Terminal will be limited.
         (c)      For delivery to Bulgaria (or other countries thereafter): A user of
                  Alexandroupolis may inject up to [10-20] mcm/d (assuming that the IGB is
                  operational by 2023). A user of Revithoussa may inject up to 5.7 mcm/d
                  through Sidirokastro. Therefore, a user looking to deliver gas from LNG
                  from Greece to Bulgaria could in theory use any of the two LNG terminals.
                  However, according to the Notifying Parties, greater capacity is available for
                  exit at IGB (accessible from Alexandroupolis not Revithoussa) than
                  Sidirokastro101 (accessible from Revithoussa and only to a very small extent
                  from Alexandroupolis).102 The Parties therefore submit that for users
                  intending to import LNG into Greece, with the aim to regasify and further
                  import it into Bulgaria, the two terminals will not be competing closely.
5.2.4. The Commission’s assessment
(88)     The market shares in the market for gas import infrastructure into Greece, including
         the possible sub-segment of regasification terminals, are given in Tables 1 – 4 above.
(89)     The market shares of the Parties (DESFA, BEH and GASTRADE) in the overall
         market for gas import infrastructure into Greece will range, from 2023, from [60-
         70]% to [80-90]% (depending on whether the market shares that are used are based
         the infrastructures’ technical capacity or firm/unconditional capacity, and whether
         reserved capacity is included or excluded). The increment that will result from the
         Transaction will range from [0-5]% to [20-30]%.
(90)     The market shares of the Parties (DESFA and GASTRADE) in the possible sub-
         segment for regasification terminals in Greece will range, from 2023, from [60-70]%
         - [90-100]%. The increment that will result from the Transaction will range from [0-
         5]% to [30-40]%.
(91)     In both cases (the market for gas import infrastructure and the sub-segment for
         regasification terminals), the lower bound of the increment equates to the
         firm/unconditional capacity that GASTRADE can inject into the NNGTS for exit
         anywhere in Greece.
(92)     Despite market shares being high, the Commission considers that the Transaction
         does not raise serious doubts as to its compatibility with the internal market with
         regard to horizontal non-coordinated effects, based on the reasons outlined below.
101 The technical exit capacity of Sidirokastron is 64.8 GWh/D, while the technical capacity of the
    Alexandroupolis LNG Terminal that can be used for exporting gas to Bulgaria exclusively through the
    IGB is [100-200] GWh/D. The IGB entry point in Komotini is very close to Alexandroupolis (Form CO,
    paragraph 39.1.2).
102 Form CO, paragraphs 566-569. For export to Bulgaria, there is a difference in the overall exit tariffs a user
    of Alexandroupolis and a user of Revithoussa will have to pay, as for the time being a user of Revithoussa
    would have to pay Exit/Entry to Sidirokastro/Kulata, whereas a user of Alexandroupolis would also pay
    the cost of using the IGB.
                                                        26
 ---pagebreak---          Regulated tariffs
(93)     A transaction bringing about a horizontal overlap can cause a significant impediment
         to effective competition, by increasing the parties’ market power in a way that would
         allow them to increase prices in their market. 103
(94)     The Commission is of the view that the present Transaction is not likely to lead to an
         increase of prices in the market for gas import infrastructure in Greece (including a
         possible sub-segmentation for LNG terminals) for the reasons set out below.
(95)     The tariffs of both terminals will be subject to regulatory supervision, as outlined in
         (75) above. Revithoussa’s tariffs are fully regulated104 , and Alexandroupolis’
         underlying tariff methodology and certain basic parameters, based on which the final
         charges for the use of the facility will be determined, are already set for 25 years.
(96)     The proposed initial tariff105 for Alexandroupolis is already set based on the Market
         Test106 and agreed by the users that have booked capacity already, as approved by
         RAE. Alexandroupolis’ tariff will be in line with the provisions of the Exemption
         Decision and the mechanism for the return of any overcompensation as is defined in
         the State Aid Decision adopted by the Commission.107 The tariff must in principle
         stay stable throughout the duration of the exemption. 108
(97)     There are only three ways in which Alexandroupolis’ tariff could change109 and the
         methodology for each is set out in the Exemption Decision (and for over-
         compensation also in the State Aid Decision). GASTRADE may (with the changes
         overseen by RAE):
         (a)     Reduce the tariff if the maximum internal return rate (“IRR”) permitted is
                 exceeded (e.g. due to increased utilisation versus the business plan). The
                 reduction to bring it in line with the maximum IRR permitted would be
                 according to an overcompensation mechanism decided in the State Aid
                 Decision. It will be triggered automatically;
         (b)     Increase the tariff in case the actual revenues of GASTRADE are below the
                 "Required Revenues" (the Revenues that cover the maximum 10.5%
                 Weighted Average Cost of Capital (WACC)); or
103 See Horizontal Merger Guidelines, paragraph 8.
104 Revithoussa’s revenues are regulated on a ‘cost-plus’ basis in the sense that the Regulated Services Tariffs
    are determined according to the Required Revenue recovery principle for the Regulated Services provided
    by DESFA (as the NNGS Operator), in such a way that the criteria describe d in the relevant national and
    European legislation are fulfilled. The Required Revenue for each Regulated Service is determined each
    year of the Regulatory Period by RAE’s Tariff Approval. Form CO, paragraphs 617-618.
105 The average tariff calculated and signed with the users that have pre-booked capacity at Alexandroupolis
    via the market test.
106 The Market Test was the competitive market testing process conducted by GASTRADE, closely regulated
    by RAE, whereby all potential users were invited to indicate their interest in contracting capacity. As a
    result, GASTRADE allocated part of its capacity for 15 years under long -term agreements with ten
    customers (Form CO, paragraph 105).
107 SA.55526 on the approval of €166.7 million Greek public support for constru ction of LNG terminal in
    Alexandroupolis, 17.06.2021.
108 Form CO, paragraphs 482-484.
109 Form CO, paragraph 485.
                                                         27
 ---pagebreak---         (c)       Increase the tariff, as per the provisions of the Bidding Phase Guidelines and
                  the ARCAs, if […]. Such proposed increases in tariffs need to be submitted
                  to RAE and shall remain within the terms of the Exemption Decision and the
                  provisions of the ARCAs. […].
(98)    Therefore, while Alexandroupolis’ tariff could change, GASTRADE cannot make
        any changes that are outside the methodology and all changes would be overseen by
        RAE (the Greek Energy Regulator).
(99)    In relation to the tariffs, one respondent to the market investigation submitted that,
        although the Revithoussa tariffs are regulated and approved by RAE, it is DESFA
        who proposes the methodology and utilisation forecasts to conclude on the
        appropriate level of the tariffs.110 In that sense according to this respondent, DESFA
        might have some room to influence the tariffs in the two terminals, in a way that
        would allow for costs and expenses shifting.
(100) However, this concern is not confirmed by the overall results of the market
        investigation. A clear majority of the customers and a majority of competitors
        submitted that sectoral regulation adopted by RAE is effective in preventing the
        operators of LNG terminals from exercising any form of market power.111 One
        respondent noted in this regard “The fact that the access and the tariff levels are
        monitored closely by the Greek regulator, is preventive for LNG terminal operators
        to exercise market power”. Another respondent commented “The regulatory
        framework safeguards the effective operation of the market in Greece”.
(101) The Commission notes that, even if certain parameters of the tariff calculation
        methodology are proposed by DESFA, such proposals must be in accordance with
        criteria described in the relevant national and European legislation. 112 In addition, the
        tariffs coefficients are recalculated by the operator and approved by RAE on a
        regular basis, based on the actual data of revenues for the past year.113
(102) The Commission therefore considers that changes to Alexandroupolis’ tariff are
        beyond the control of its shareholders and that the Parties will not be able to
        influence them in order to impact competition between the Alexandroupolis and
        Revithoussa terminals. Therefore, the Parties are prevented from exercising market
        power and there is no scope for Transaction-specific effects on pricing.
        Closeness of competition - different business models and tariff levels
(103) The Commission considers that competition between the Alexandroupolis terminal
        (controlled by GASTRADE) and the Revithoussa terminal (controlled by DESFA) is
        limited (at least in the short term) because of the limited capacity of the Greek
        transmission infrastructure to accept additional gas from Alexandroupolis under the
        current configuration. As explained in recital (87):
110 See confidential replies to question 44.1 of Questionnaire 1 to customers.
111 See replies to question 38 of Questionnaire 1 to customers; question 32 of Questionnaire 2 to competitors.
112 L. 4001/2011 and Regulation (EC) 715/2009 of the European Parliament and of the Council of 13 July
    2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No
    1775/2005.
113 Form CO, para. 412 et seq.
                                                          28
 ---pagebreak---          (a)      For unconditional delivery into the NNGTS in Greece a user of
                  Alexandroupolis may only inject up to [0-5] mcm/d, while a user of
                  Revithoussa may inject up to [10-20] mcm/d. The actual increment brought
                  about by the Transaction in the market for gas import infrastructure into
                  Greece is therefore relatively low, accounting for only [0-5]% of the gas
                  import infrastructure capacity in Greece (see Table 2 above) or only [0-5]%
                  of the regasification capacity in Greece.
         (b)      For delivery to Bulgaria (or other countries thereafter) a user of
                  Alexandroupolis may inject up to [10-20] mcm/d (assuming that the IGB is
                  operational by 2023), while a user of Revithoussa may inject up to 5.7 mcm/d
                  through Sidirokastro. The Commission therefore considers that for users
                  intending to import LNG into Greece, with the aim to regasify and further
                  import it into Bulgaria, the two terminals will not be competing closely.
(104) While competition between the two terminals for the import of gas is limited due to
         the current configuration of the NNGTS, the Commission does note that:
         (a)      Excluding the reserved capacity, the capacity of Alexandroupolis from 2023
                  will be [5-10] mcm/d. From 2023 it will [information regarding capacities] be
                  able to inject up to [0-5] mcm/d unconditional delivery into the NNGTS for
                  use in Greece. However, that could change. Depending on the competing
                  capacity products that may be introduced, the volume of gas that could be
                  injected from Alexandroupolis into the NNGTS for exit to Southern Greece
                  (West of Komotini) could increase and, therefore, all of the [5-10] mcm/d of
                  non-reserved capacity of Alexandroupolis (representing [10-20]% of the total
                  existing and planned capacity for gas import infrastructure into Greece) could
                  potentially be fully injected into the Greek system for consumption in Greece
                  (depending on the outcome of the competition with, e.g., TAP and Botaş for
                  the competing capacity products). In that scenario, Alexandroupolis would be
                  in direct competition with gas import capacities in Revithoussa and other gas
                  importers for imports of gas into Greece.
         (b)      Revithoussa and Alexandroupolis could compete for users intending to
                  import gas into Greece, with the aim to further export that gas into Bulgaria
                  and other countries in south eastern Europe, even if the transmission of the
                  gas booked in each terminal takes place through different pipelines (via IGB
                  in the case of Alexandroupolis, and via Sidirokastro in the case of
                  Revithoussa).114
(105) Therefore, both terminals could potentially compete for additional sales of gas into
         Greece and outside Greece via Bulgaria.
114 The Notifying Parties state that, while it is possible that some of the gas imported via the Revithoussa
    LNG Terminal has historically been exported to Bulgaria, they cannot identify definitively which of the
    LNG unloaded at the Revithoussa LNG Terminal is consumed in the Greek market or exported because
    DESFA implements an entry/exit gas transmission system (Form CO, paragraph 571). The Notifying
    Parties submit that users do not base their infrastructure choice on the cost of gas transmission, noting
    that, for gas transmission, DESFA charges for entry to and exit from the system, not the distance between
    particular entry and exit points (Form CO, paragraph 338). Therefore, looking at transmission costs, for
    exporting gas to Bulgaria (and beyond), it appears that Revithoussa is a viable competitor and that
    Alexandroupolis, despite its location, does not have a competitive advantage.
                                                          29
 ---pagebreak--- (106) Some respondents to the market investigation considered this to be the case, noting
        “…that both terminals are suitable for delivering gas into Bulgaria and other
        Southern European countries” and “GASTRADE could also serve the whole of
        Greece (as Revithoussa can serve also the north of Greece at this moment)”.115
        However, while the views of respondents on whether Revithoussa and
        Alexandroupolis will compete for imports to customers in Bulgaria and South East
        Europe was inconclusive, a slight majority of respondents thought Revithoussa and
        Alexandroupolis will not compete for customers for gas imports both into Greece as
        a whole or into the South of Greece.116
(107) The Commission does nonetheless consider that the two terminals will not be close
        competitors for the reasons set out below.
(108) Even for the gas that the Alexandroupolis terminal will be able to provide in the
        Greek market117 , there would be no close competition with the Revithoussa terminal
        due to the different operation models followed by the two terminals (see recital
        (76)), which translate into significantly different tariff methodologies and different
        tariff levels applied. As noted in (77) above, Alexandroupolis’ tariff is [10-
        20]€/1,000m3 , while Revithoussa's tariff for 2021 is 4.73 €/1,000m3 .
(109) Alexandroupolis operates under a commercial regime subject to regulatory
        constraints and the Exemption Decision, and the same tariffs will be applicable for
        the exempted and for the non-exempted part of Alexandroupolis' capacity, without
        any discrimination.
(110) Revithoussa on the other hand is not a merchant/commercially driven business; but
        rather it operates a fully regulated business model (due to its historically important
        role of ensuring security of supply and diversification of natural gas sources). The
        cost of Revithoussa is socialised (i.e. paid by all transmission system users) due to its
        role in Greece’s security of supply. 118 Currently, 50% of Revithoussa’s Required
        Revenue119 cost is socialised to the transmission system tariffs and is thereby borne
        by all transmission system users. This leads to the Revithoussa tariff being
        significantly lower than the tariff that will be applied at the Alexandroupolis
        Terminal.
(111) The results of the market investigation, while mixed, indicate that the main criteria
        users will consider when choosing between Alexandroupolis and Revithoussa for
        their gas imports are the available capacity in the transmission system, the tariff
        applied by the terminal and the location of the terminal.120 These are not factors the
        parties will be able to impact after the Transaction.
(112) Therefore, the Commission considers that a user of Alexandroupolis is more likely
        to choose that terminal mainly due to the available capacity, in particular to further
        export gas via the IGB, and the different operational model.
115 See replies to question 36 of Questionnaire 1 to customers; question 30 of Questionnaire 2 to competitors.
116 See replies to questions 30-32 of Questionnaire 1 to customers.
117 Supra, para. (65)
118 Form CO, paragraph 39.3.
119 See footnote 103.
120 See replies to question 33 of Questionnaire 1 to customers; question 27 of Questionnaire 2 to competitors.
                                                          30
 ---pagebreak--- (113) In this respect, the Commission notes that although the tariff that will be applied in
         the Alexandroupolis Terminal is [difference in tariff] higher than the one in the
         Revithoussa Terminal, users have nonetheless already booked in advance between
         [30-40]% and [40-50]% of the Alexandroupolis LNG Terminal’s capacity for ten
         years.121 The Commission considers that these users were likely attracted by the
         different operational model offered by the Alexandroupolis terminal vis-à-vis the
         Revithoussa Terminal, as well as the fact that the Alexandroupolis Terminal is more
         suitable for the import of gas into Greece with the aim of further importing it into
         Bulgaria122 . Indeed, these users would have no incentive to opt for a more expensive
         LNG Terminal, if their needs could have been equally satisfied by a [difference in
         tariff] more inexpensive LNG Terminal (i.e. Revithoussa), given that the latter
         would also have the capacity to accommodate such users.123 The Commission
         considers this as a clear indication that the two terminals are not close competitors.
(114) The Commission is therefore of the view that the Revithoussa Terminal and the
         Alexandroupolis Terminal will not be close competitors.
         Guaranteed access and regulated Third-Party Access (TPA)
(115) The Commission identified a potential theory of harm from its preliminary market
         investigation that because Revithoussa’s revenues are guaranteed, while
         Alexandroupolis’ revenues are not, DESFA could have an incentive to divert users
         from Revithoussa to the more expensive terminal in Alexandroupolis, while still
         earning the regulated revenues at Revithoussa.
(116) Against this possibility, the Notifying Parties’ submit that, for the limited volume for
         which users may have a choice between Revithoussa and Alexandroupolis, DESFA
         has neither the ability nor incentive to deviate users from the Revithoussa to
         Alexandroupolis because:124
         (a)      it has no ability to influence users to divert, as capacity at Revithoussa is
                  subject to TPA and is allocated via open auctions which, as a rule, involve
                  pre-defined standard products, take place according to pre-defined rules set
                  out in the NNGS Network Code, and the tariffs for which are set by RAE;
         (b)      it has no incentive to reduce its 100% revenues in Revithoussa – and put at
                  risk their recoverability over the long term – for a short term increase in its
                  GASTRADE dividends (in which DESFA has only 20% of the shares).
(117) A majority of the respondents to the Commission’s market investigation stated that
         TPA regulation and other regulatory measures are effective in preventing LNG
         operators from exercising market power.125 In this respect, one market participant
         noted that “[t]he regulatory framework safeguards the effective operation of the
         market in Greece”, while another submitted that “[t]he fact that the access and the
121 Supra, paragraph 71.
122 Supra, paragraph 80 et seq.
123 In 2020 the Revithoussa Terminal was utilised at 44% of its capacity. See Form CO, paragraph 39.4.
124 Form CO, paragraphs 625-635.
125 See replies to question 38 of Questionnaire 1 to customers; question 32 of Questionnaire 2 to competitors.
                                                          31
 ---pagebreak---         tariff levels are monitored closely by the Greek regulator, is preventive for LNG
        terminal operators to exercise market power.” 126
(118) Furthermore, RAE told the Commission that “There are no concerns whatsoever
        about violation of third-party access rules”.127
(119) Therefore, the Commission concludes that the TPA rules are effective in preventing
        DESFA from discriminating in relation to granting access or forcing users to use one
        terminal over the other.
        Influence of GASTRADE’s other shareholders
(120) Further to existing regulatory constraints, DESFA’s ability to influence
        GASTRADE’s activities is limited as it will only hold a 20% stake. The Commission
        considers that the interests of the other four shareholders (each of whom will also
        have a 20% stake) will prevent DESFA from imposing decisions that may go against
        GASTRADE´s commercial interest (e.g. delaying the accommodation of customers,
        reducing the quality of service) and favour Revithoussa.
        Future entry in the market for gas import infrastructure
(121) The gas market in Greece is still developing and a number of recent and new entries
        of considerable value are identified in the market for infrastructure of gas imports.
        As set out in Tables 1 and 2 above, there is a number of planned gas import
        infrastructures that will inter into operation by 2023. The overall capacity of the
        market in 2023 will be [60-70] mcm/d, which is roughly double of the current
        overall capacity of 32.3 mcm/d. In 2023, the competitors of DESFA, GASTRADE
        and BEH will account for [30-40]% of the overall import capacity to the NNGTS 128
        Through-put agreements
(122) A respondent to the market investigation raised concerns that the Transaction would
        grant DESFA the ability to prevent the Alexandroupolis Terminal from concluding
        so-called through-put agreements with future operators of LNG regasification
        terminals in Greece. According to this respondent, such through-put agreements
        would enable LNG Terminal operators to combine their capacity products, in a way
        that would create a single virtual LNG tank, from which customers could buy natural
        gas regardless of which part of the NNGTS they are located in.129 This way, the
        parties to a through-put agreement would not be constrained by the bottlenecks of
        the transmission system affecting their location, and would thus be able to provide
        their LNG services throughout Greece. 130
(123) With respect to this concern, the Parties submit131 that such through-put agreements
        are not provided for in the relevant legal framework, and therefore there is no clear
        understanding of how such agreements would operate. In any case, under the current
126 See replies to question 38 of Questionnaire 1 to customers
127 See replies to DG COMP from RAE dated 25/05/2021 and 29/09/2021.
128 See Table 1.
129 See this respondent’s reply to Request for Information (RFI) dated 9 November 2021.
130 See replies to question 19.1 of Questionnaire 2 to competitors.
131 See para. 2.1 et seq. of the Parties’ response of 11 November 2021 to RFI 9.
                                                           32
 ---pagebreak---          legal framework, such agreements could only amount to agreements according to
         which one terminal would regasify LNG on behalf of the other. Accordingly, the
         Parties submit that such agreements could only be envisaged through mutual
         bookings between LNG terminal operators of regasification capacity at each other’s
         terminals and not through actual trade of natural gas quantities between two
         terminals, since such trade would not be allowed to operators of natural gas system
         in Greece, pursuant to sectoral regulation. 132 In this light, GASTRADE would not be
         able to enter into such agreements with other LNG Terminal operators, as the
         allocation of their capacities is subject to TPA rules. Any amendment to such rules,
         allowing for the facilitation of such through-put agreements, would entail prior
         involvement and approval of RAE and the adoption of transparent rules in this
         respect.
(124) In addition, the Parties argue that GASTRADE never envisaged entering into any
         form of through-put agreements with other operators of LNG terminals, as is
         evidenced by the absence of any such reference in GASTRADE’s business plan.
(125) Finally, the Parties submit that even if in the future GASTRADE would have an
         interest in entering into any exchange-agreement with another LNG terminal
         operator, DESFA would have no ability to veto it. The conclusion of such an
         agreement either would fall under the competences of the Managing Director of
         GASTRADE, or would constitute a reserved matter of the Board of Directors or a
         Shareholder Reserved Matter. In the latter case, a decision is adopted by
         shareholders holding 70% of the shares. Since DESFA will hold 20%, it would not
         have the ability to veto such a decision.
(126) In correspondence with the Commission, RAE submitted that it was not aware of the
         nature of such through-put agreements.133 RAE confirmed that the only agreements
         between infrastructure operators foreseen in the regulatory framework are
         Interconnection Agreements that pertain to issues such as quality of gas,
         measurements and matching of daily nominations. Based on the current regulatory
         framework, no other agreements can be concluded between LNG terminal operators,
         as any such agreements would have to be reflected in their Access Codes. According
         to RAE, any other agreements with regard to LNG capacities would have to either be
         concluded between an LNG terminal operator and its users, or between different
         users of LNG terminals. RAE could therefore not endorse the concern of this
         respondent.
(127) The Commission notes that the respondent who raised the concern on through-put
         agreements did not provide clear information on how such agreements operate. This
         is likely due to the fact that such agreements are not well established in the LNG
         market.134
(128) In any case, the Commission does not consider the concerns raised on through-put
         agreements as substantiated for the following reasons:
132 L. 4001/2011 and EU Directive 2009/73.
133 See RAE’s response to the Commission’s RFI dated 9 November 2021.
134 In response to question 1 of RFI dated 9 November 2021, this respondent points to the recent introduction
    of an “LNG virtual hub” in Spain, as an example of through -put agreements in the LNG sector. According
    to the cited press release dated 1 April 2020, this “LNG virtual hub” was at that point the only one in the
    world. See https://www mibgas.es/en/news/mibgas -launches-unique-lng-hub-world-press-release.
                                                          33
 ---pagebreak--- (129) First, and to the extent that such through-put agreements do not pertain to mutual
        capacity reservations between LNG terminal operators, their conclusion is not
        possible under the current regulatory regime, as confirmed by RAE.135
(130) Second, as noted in para. (120), DESFA will not have the ability to influence
        GASTRADE with regard to the signing or rejecting of through-put agreements. As
        DESFA will hold only 20% of the shares in GASTRADE, the interests of the
        remaining shareholders will prevent GASTRADE from declining or not pursuing
        agreements with other market participants, which would be to its own benefit, in
        order to favour DESFA.
(131) Third, as noted in para. (115) et seq. and to the extent that through-put agreements,
        as envisaged by the respondent raising the relevant concern, pertain to mutual
        capacity reservations between LNG terminal operators, the Alexandroupolis
        Terminal, as well as any future LNG terminals will be subject to stringent TPA
        obligations. A future entrant in the supply of LNG infrastructure would suffer no
        detriment from the Transaction in respect to through-put agreements, since it would
        still be able to book capacities at the Alexandroupolis Terminal under the TPA
        scheme, on a non-discriminatory basis and under pre-defined tariffs, to the extent
        this would be foreseen by sectoral regulation.
5.2.5. Conclusion on horizontal non-coordinated effects
(132) Based on the foregoing, the Commission considers that the Transaction does not
        raise serious doubts as to its compatibility with the internal market with respect to
        horizontal non-coordinated effects in the market for infrastructure for gas imports
        (and its possible sub-segment including regasification terminals).
5.3.    Horizontal coordinated effects in the market for infrastructure for gas imports
5.3.1. Analytical framework
(133) GASTRADE, DESFA and BTG are active in the market for gas import
        infrastructures for Greece. There are no other markets where GASTRADE and at
        least two of its parents remain active. In this light, the possibility of the Transaction
        giving rise to coordinated effects between DESFA, GASTRADE and BEH in the
        market for gas import infrastructure is assessed below.
(134) As set out in the Horizontal Merger Guidelines, 136 to find coordinated effects
        evidence is needed that the horizontal merger changes the nature of competition in
        such a way that firms that previously were not coordinating their behaviour are now
        significantly more likely to coordinate and raise prices or otherwise harm effective
        competition. A merger may also make coordination easier, more stable or more
        effective for firms that were coordinating prior to the merger. 137
135 Supra, para. (126)
136 Horizontal Merger Guidelines, paragraphs 22, 39 et seq
137 Horizontal Merger Guidelines, paragraph 22(b).
                                                        34
 ---pagebreak--- 5.3.2. The Notifying Parties’ view
(135) The Notifying Parties submit that the Transaction will not give rise to coordinated
        effects and that GASTRADE cannot be construed as an instrument for producing or
        reinforcing coordination between the parent companies.138 In particular, the
        Notifying Parties emphasise the stringent sectoral regulation at EU and national
        level, which results in there being no scope for coordination between DESFA and
        BTG’s activities outside of the GASTRADE joint venture in the market for gas
        imports infrastructure. Other than that market, the Notifying Parties submit that there
        are no closely related neighbouring markets nor any markets upstream or
        downstream from GASTRADE where at least two parent companies are active.
5.3.3. The Commission’s assessment
(136) According to the Horizontal Merger Guidelines, coordination is more likely to
        emerge if competitors can easily arrive at a common perception as to how the
        coordination should work.139 Generally, the less complex and more stable the
        economic environment, the easier it is for the firms to reach a common
        understanding on the terms of coordination. 140
(137) As regards the overall market for infrastructure for gas imports in Greece, the
        Commission considers that the Transaction will not lead to an economic
        environment that will favour coordination between DESFA, GASTRADE and BEH.
(138) First, as explained above141 , tariffs applied by operators of gas import infrastructure
        are extensively regulated and operators are subject to TPA rules. It is therefore
        unlikely that DESFA, GASTRADE and BEH will have the ability to coordinate with
        the aim of increasing tariffs, reducing overall gas import capacity in the market or
        denying access to their infrastructure.
(139) Second, a number of operators, with different market shares and different
        infrastructure (pipelines, regasification terminals), will remain active in the market.
        Currently, apart from DESFA and BEH, there are another two operators of gas
        import infrastructure in Greece, namely TAP, operating the TAP pipeline, and Botas,
        operating the Turkish gas transmission network, which is interconnected with the
        NNGTS, and which together account for [20-30]% of the overall import capacity to
        the NNGTS. […].142 By then, the competitors of DESFA, GASTRADE and BEH
        will account for [30-40]% of the import capacity to the NNGTS. The significant
        number of different gas import infrastructure operators in Greece and their respective
        capacities will render coordination between DESFA, GASTRADE and BEH
        unlikely.143
(140) Third, the gas market in Greece is still developing and a number of recent and new
        entries of considerable value are identified in the market for infrastructure of gas
        imports. Apart from the imminent entrants set out in Tables 1 and 2 above, there are
138 Form CO, paragraphs 753-765.
139 Horizontal Merger Guidelines, paragraph 43.
140 Horizontal Merger Guidelines, paragraph 44.
141 See Table 1.
142 Idem.
143 See Horizontal Merger Guidelines, paragraph 45.
                                                    35
 ---pagebreak---         a number of planned interconnecting pipelines, namely the Interconnector Greece –
        North Macedonia, Poseidon and EastMed. 144 Such volatility with regard to market
        participants would generally not allow for sustainable coordination between
        competitors.145
(141) Fourth, as illustrated in Table 1, the different operators will also be highly
        asymmetrical in terms of market shares and capacities. Furthermore, as indicated by
        the significant difference between the tariffs of the Revithoussa and the
        Alexandroupolis LNG terminals146 , cost structures are also likely to be highly
        asymmetric. Such asymmetry in the market for gas import infrastructure would
        render coordination between the competitors unlikely. 147 The Transaction will
        therefore not change the nature of competition and the competitors would remain
        differentiated, implying a limited risk of increased coordination.
(142) Lastly, DESFA, GASTRADE and BEH operate different kinds of gas import
        infrastructure (i.e. regasification terminal and interconnection pipeline). Comments
        provided by a number of respondents in the market investigation indicate that the
        two types of infrastructure are more complementary than substitutable solutions. 148
        Respondents pointed specifically to the different costs and timelines involved in the
        planning of gas imports, as well as the complementary needs served by the different
        import infrastructure. In this respect, one customer submitted that “[p]ipeline gas
        provides a steadier supply stream - LNG terminals usually cater for flexibility,
        system reserves, seasonal spikes etc., but may also be partly used as a long-term
        supply solution”.149 Furthermore, the Parties note that utilisation of the Revithoussa
        LNG Terminal has historically been dependent on price differences between LNG
        and piped gas,150 which are not controlled by the import infrastructure operators.
        With respect to the LNG terminals operated by DESFA and GASTRADE, they also
        present significant differences between them regarding their operational models and
        tariffs applied.151 In this respect, the Transaction would have limited impact on the
        nature of competition between DESFA, GASTRADE and BEH in the market for gas
        import infrastructure in Greece and would not make a coordination between them
        more likely.
(143) Apart from the likelihood of coordination to emerge in a market, the Commission
        also assesses whether such coordination would be sustainable and successful in
        attaining the expected outcome.
(144) Coordination is not sustainable unless the consequences of deviation are sufficiently
        severe to convince coordinating firms that it is in their best interest to adhere to the
        terms of coordination (i.e. deterrent mechanisms). 152
144 Form CO, paragraph 717.
145 See Horizontal Merger Guidelines, paragraph 45.
146 Supra, (77)
147 See Horizontal Merger Guidelines, paragraph 48.
148 See replies to question 8.1 of Questionnaire 1 to customers; question 4.1 of Questionnaire 2 to
    competitors.
149 See replies to question 8.1 of Questionnaire 1 to customers.
150 Form CO, paragraph 505.
151 Supra, (77) et seq.
152 See Horizontal Merger Guidelines, paragraphs 52.
                                                          36
 ---pagebreak--- (145) In the present case, no credible deterrent mechanism could be applied by either
          DESFA, GASTRADE or BEH, with the aim of preventing deviation from
          coordination, as all competitors in the market for gas import infrastructure have no
          option but to provide their services under the regulated tariffs and in accordance with
          TPA rules. Furthermore, the market’s existing transparency, which results from
          sectoral regulation, would make any attempt of a competitor to apply such deterrent
          mechanisms visible to RAE, who is in charge of supervising the market and
          enforcing adherence to regulation.
(146) Coordination is also not effective in attaining the expected outcome by the
          coordinating competitors, if actions of non-coordinating firms are able to jeopardize
          such outcome.153
(147) As mentioned above,154 in 2023 there will be 6 undertakings active in gas import
          infrastructure in Greece 2023, whereas in 2020 the undertakings active on that
          market were only 3. Likewise, the overall capacity of that market will be [60-70]
          mcm/d in 2023, which is roughly double of the current overall capacity of 32.3
          mcm/d.155 These additional entrants and the capacity that will be brought by them
          will be sufficient to offset any attempt by DESFA, GASTRADE and BEH to
          coordinate with the aim of increasing tariffs, reducing capacities or reducing
          innovation.
5.3.4. Conclusion on horizontal coordinated effects
(148) In light of the above considerations, the Commission considers that the Transaction
          does not raise serious doubts as to its compatibility with the internal market with
          respect to horizontal coordinated effects in the market for gas import infrastructure
          in Greece.
5.4.      Non-horizontal effects
(149) Customers of regasification terminals (i.e. LNG gas importers) need transmission
          and/or storage capacity in order to deliver the commodity to their customers once
          their LNG loads are processed and converted back to a gaseous state. Therefore, the
          Transaction will bring about a vertical relationship in Greece between the upstream
          market for infrastructure for gas imports (and its possible sub-segment including
          regasification terminals), where DESFA and GASTRADE are both active, and the
          downstream market for gas transmission, where DESFA has a natural monopoly. 156
5.4.1. Analytical framework
(150) Non-horizontal effects may principally arise when mergers give rise to foreclosure.
          A merger is said to result in foreclosure where actual or potential rivals' access to
          supplies or markets is hampered or eliminated as a result of the merger, thereby
153 See Horizontal Merger Guidelines, paragraph 56.
154 Supra, (139)
155 See Table 1.
156 The Existing Shareholders are also active in the following vertically-related markets: LNG transport (in
     light of GasLog’s activities) and wholesale natural gas supply (in light of DEPA Commercial’s activities).
     However, as these vertical relations exist already, independent ly of and prior to DESFA’s entry into
     GASTRADE, they will not be discussed further in this Decision.
                                                          37
 ---pagebreak---         reducing these companies' ability and/or incentive to compete. Such foreclosure may
        discourage entry or expansion of rivals or encourage their exit. Such foreclosure is
        regarded as anti-competitive where the merging companies — and, possibly, some of
        its competitors as well — are as a result able to profitably increase the price charged
        to consumers.157
5.4.2. The Notifying Parties’ view
(151) The Notifying Parties submit that there is no risk of foreclosure as a result of this
        Transaction because (with its ownership of the Revithoussa LNG Terminal) DESFA
        is already vertically integrated, so there is a pre-existing vertical relationship
        between DESFA’s NNGTS activities and the upstream market of gas import
        infrastructure, and access to gas transportation in Greece is subject to a strict
        regulatory framework, including third-party access at tariffs defined on the basis of
        the criteria established by RAE.158
5.4.3. The Commission’s assessment
(152) DESFA is the only Transmission System Operator in Greece and the market for gas
        transmission constitutes a natural monopoly. The Transaction therefore gives rise to
        vertically affected markets for gas import infrastructure upstream (where both
        DESFA and GASTRADE are active) and gas transmission downstream (where
        DESFA holds a natural monopoly).
(153) The Commission notes that the vertical effects in the affected markets are not
        adequately represented through the classic schemes of input and customer
        foreclosure.159
(154) First, although the market for gas import infrastructure is upstream the market for
        gas transmission, operators of such gas import infrastructure cannot conceivably
        foreclose input from a gas transmission operator, as in the case of Greece there is
        only one gas transmission system, to which all gas import infrastructure is
        connected.
(155) Second, DESFA as operator of the gas transmission system in the downstream is in
        fact not a customer of the gas import infrastructure in the upstream. Therefore,
        DESFA could not foreclose operators of gas import infrastructure, by not purchasing
        their services, since there is no customer/supplier relation between the two markets.
        It is in fact the gas importer/wholesaler who is the customer of both the gas import
        infrastructure and the gas transmission system.
(156) Instead, the Commission considers that the two relevant foreclosure theories are a)
        the restriction by DESFA of the provision of gas transmission services to upstream
        gas import infrastructure providers; b) the strategic limitation of investments by
        DESFA in the NNGTS, in order to limit the interconnection of competing projects to
        the NNGTS, and thus favour its own regasification projects.
157 Non-horizontal Merger Guidelines, paragraph 29.
158 Form CO, paragraph 650.
159 See Guidelines on Non-Horizontal Mergers, paragraphs 31 et seq,: 58 et seq.
                                                      38
 ---pagebreak--- (157) Regardless of DESFA’s monopoly in the gas transmission market, the Commission
        considers that the Transaction will not raise serious doubts as to its compatibility
        with the internal market with respect to non-horizontal effects with respect to both
        foreclosure theories defined above, for the reasons explained below.
        A. Restriction by DESFA of the provision of gas transmission services to upstream
        gas import infrastructure providers
        Ability to foreclose
(158) Gas transmission is subject to national legislation160 monitored by RAE in order to
        guarantee all users of the network the freedom of access on equal terms to the
        transmission network, as well as impartiality and neutrality of the respective service.
        In communications held with the Commission, 161 RAE expressed its confidence in
        the effective implementation of such legislation. Likewise, the majority of those
        respondents in the market investigation who expressed an opinion submitted that
        sectoral regulation for gas transmission is effective to prevent DESFA from
        exercising market power on the downstream gas transmission market.162 DESFA
        would therefore have no ability to restrict the provision of gas transmission services
        to upstream gas import infrastructure providers.
        Incentive to foreclose
(159) As described above, although the market for gas transmission is downstream to the
        market for gas import infrastructure, there is no customer relationship between the
        operator of gas import infrastructure and the TSO or vice-versa. It is in fact the users
        of the gas import infrastructure (e.g. gas importers / wholesalers) who book capacity
        with the Transmission System and are charged for such capacities by the TSO. There
        is therefore no direct vertical link between DESFA and GASTRADE with regard to
        the supply chain of natural gas, but rather between DESFA as TSO and
        GASTRADE’s users. DESFA would therefore have no incentive to foreclose
        competing gas import infrastructure from access to the NNGTS.
        B. Strategic limitation of investments by DESFA in the NNGTS, limiting the
        interconnection of competing projects to the NNGTS.
(160) The Commission notes that a vertical link exists between the TSO and gas import
        infrastructure with respect to interconnection of such infrastructure to the NNGTS.
        In this regard, some respondents raised concerns that DESFA may have an incentive
        to strategically limit investments in the NNGTS in order to limit the interconnection
        of competing projects to the NNGTS, and thus favour its own regasification
        projects.163 The Commission notes, however, that DESFA is already vertically
        integrated with its ownership of the Revithoussa LNG terminal, so there is a pre-
        existing vertical relationship between DESFA’s role as TSO and the upstream
        market of gas import infrastructure. Thus, any harm based on a strategic limitation of
        investment to the NNGTS would not be merger specific.
160 L. 4001/2011 as amended, transposing the Gas Directive to Greek law.
161 RAE’s replies dated 25.05.2021 to the Commission’s questions.
162 See replies to question 45 of Questionnaire 1 to customers; question 38 of Questionnaire 2 to competitors.
163 See replies to question 19.1 of Questionnaire 2 to competitors; confidential replies to question 44.1 of
    Questionnaire 1 to customers.
                                                          39
 ---pagebreak--- (161) In any case, the Commission does not consider that DESFA would have neither the
        ability, nor the incentive to limit the interconnection of competing projects to the
        NNGTS.
        Ability to foreclose
(162) DESFA has no discretion on whether to undertake or reject investments in the
        NNGTS with respect to interconnection of competing projects.164 Such investments
        are undertaken under the “Ten Year Development Plan” (“TYDP”), which is
        updated each year based on a regulated procedure. In particular, each year DESFA
        submits an updated TYDP to public consultation, where DESFA’s competitors may
        provide their feedback on the investment proposals. After assessing the outcome of
        the consultation, DESFA submits the TYDP to RAE for approval. RAE, taking into
        consideration the results of the public consultation, may require modifications to the
        TYDP, particularly in relation to the inclusion or removal of proposed investments.
(163) If RAE is convinced about the necessity of an investment to the NNGTS, DESFA is
        obliged to undertake it even if it would benefit a competitor. Likewise, if RAE
        concludes that an investment proposed by DESFA fails a cost-benefit analysis,
        DESFA may not include it in the TYDP. RAE monitors and evaluates the
        implementation of the TYDP on a continuous basis. In this light, DESFA has no
        ability to limit investments which would benefit is competitors, or promote
        investments which favour its own interest.
        Incentives to foreclose
(164) DESFA has no incentive to limit investments in the NNGTS. DESFA has rather a
        financial interest in undertaking such investments, even if those would benefit its
        competitors. As the TSO, DESFA earns a regulated return from every project it
        invests in the NNGTS.165 In addition, DESFA will keep earning its regulated returns
        from the Revithoussa Terminal, which are not subject to price competition.166
(165) With respect to the investment for the connection of the Alexandroupolis LNG
        terminal with the NNGTS, the decision has already been taken by DESFA pre-
        Transaction. This project is already part of the TYDP 2021-2030, as approved by
        RAE.167
(166) That DESFA has neither the ability nor the incentive to foreclose access to the
        NNGTS from its competing gas import infrastructure is confirmed also by the result
        of the market investigation. The majority of both customers and competitors who
        expressed an opinion were of the view that DESFA would have no ability or
        incentive to hinder access to the NNGTS for its competitors, or treat its own gas
        import infrastructure preferentially vis-à-vis those of its competitors.168
164 Form CO, paragraph 668 et seq.
165 Such projects are included in the Regulated Asset Basis (RAB) and remunerated by the Weighted Average
    Cost of Capital (WACC), which is currently at 7.5%. See Form CO, paragraph 681.
166 Form CO, paragraph 627.2.
167 “NNGS Development Plan 2021-2030”, page 16. Available at https://www.desfa.gr/userfiles/5fd9503d-
    e7c5-4ed8-9993-a84700d 05071/TYDP%202021%202030%20-%20fin_clean.pdf
168 See replies to question 44 of Questionnaire 1 to customers; question 37 of Questionnaire 2 to competitors.
                                                          40
 ---pagebreak--- 5.4.4. Conclusion on non-horizontal effects
(167) In light of the above considerations, the Commission considers that the Transaction
       does not raise serious doubts as to its compatibility with the internal market with
       respect to non-horizontal effects in the markets for gas import infrastructure in the
       upstream (where both DESFA and GASTRADE are active) and gas transmission in
       the downstream.
6.     CONCLUSION
(168) For the above reasons, the European Commission has decided not to oppose the
       Transaction and to declare it compatible with the internal market and with the EEA
       Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger
       Regulation and Article 57 of the EEA Agreement.
                                                    For the Commission
                                                    (Signed)
                                                    Margrethe VESTAGER
                                                    Executive Vice-President
                                                41