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EU cracks down on French and German gas giants

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Published 12 June 2008

The European Commission said on Thursday it is stepping up an investigation against E.ON and Gaz de France, saying it suspects the two energy utilities of illegally sharing the German and French markets in natural gas.

In a statement on 12 June, the Commission confirmed the investigation relates to "a suspected agreement and/or concerted practice between E.ON and GDF, according to which they would not sell gas in the other party's home market".

"The Commission's preliminary view is that this market-sharing agreement is in violation of EC Treaty rules banning restrictive business practices and cartels," the EU executive said. The investigation is open-ended.

The cartel allegations relate in particular to supplies of natural gas via the MEGAL pipeline, which is jointly owned by E.ON and GDF and transports Russian gas to France and Germany. The probe was opened in July last year following surprise office raids carried out in 2006 (EurActiv 30/07/07). The procedure is now being stepped up with the sending of a formal "letter of objections".

In a statement, Gaz de France said the investigation "concerns events that occurred several years ago before the complete deregulation of the European energy market," adding that these "have now been superseded". Gaz de France will respond during the summer or in September, said Armelle Dillar, a spokeswoman for the company.

E.ON Ruhrgas said it "rejects" the charges, pointing out that the agreements with GDF "were terminated by the companies in 2004 for the sake of clarity".

The probe comes as Brussels seeks to foster more competition onto EU energy markets in an effort to diversify supplies, encourage investment in new infrastructure and ultimately force prices down.

France and Germany last week defeated a Commission proposal that would have forced energy groups to sell-off their transmission grids in an attempt to spur competition. Paris and Berlin had staunchly defended their national energy champions during the negotiations, arguing that large energy firms are in a better position to compete on world markets (EurActiv 09/06/08).

E.ON Ruhrgas AG and GDF are the leading suppliers of natural gas in Germany and France respectively and two of the largest players in the European gas industry.

Launching a wave of antitrust investigations into the energy sector in February 2006, Neelie Kroes, the EU competition commissioner, said antitrust actions go hand in hand with regulatory measures to ensure more liquidity on EU energy markets.

"Competition enforcement is just one partner […] It dances not alone, but in step with regulation. Andris Piebalgs and I myself are fully committed to just that," Kroes said at the time (EurActiv 17/02/06).

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