The European Commission imposed a fine of 553 million euros each on Germany's E.ON and France's GDF Suez, Europe's largest utilities, for agreeing to not compete on respective gas markets in the first antitrust fine ever slapped on utilities in the EU.
In a separate case, GDF Suez agreed to limit the gas it imports into France to less than half by 2014 from two-thirds, after the Commission found the group had reserved most of the country's import capacity for the long term.
"The ruling is a clear signal to utilities that the Commission is making sure that they give up past monopoly positions," said Alexandros Chatzinerantzis, a lawyer at Linklaters. "It shows it will crack down with tangible fines on large players if it finds them to have blocked access to customers."
Since the beginning of the century, the Commission has been seeking to get more utilities active in regions which used to have only one supplier for decades.
While millions of customers are able to choose between several suppliers, former monopoly providers were able to best exploit their new freedom and become even larger, while prices for households have been rising for years.
The gas agreement between GDF Suez and E.ON refers to the 600-kilometre MEGAL pipeline which crosses Germany from the Czech Republic to France.
When the companies built the pipeline they - legally - agreed to not sell gas in each other's markets, but maintained that agreement after 2000 when an EU directive opened markets to competition, the Commission said.
"This decision sends a strong signal to energy incumbents that the Commission will not tolerate any form of anticompetitive behaviour," EU Competition Commissioner Neelie Kroes said. "Market sharing is one of the worst types of antitrust infringement. This agreement deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the EU. The Commission has no alternative but to impose high fines," she added.
GDF Suez and E.ON deny wrongdoing
The firms denied any wrongdoing and said they would appeal at the European Union's Court of First Instance. E.ON said the alleged anti-competitive practices were linked to agreements that expired in 2004 and that the business had been competitive for years.
GDF Suez said it was in "complete disagreement" that it has colluded with E.ON until 2005 to limit competition on their respective markets. "GDF SUEZ reiterates that it has always sought to develop and strengthen its presence in Germany. Currently, the Group is E.ON's main foreign competitor in the German natural gas market and a key player in opening the German energy market," it said, adding it will file an appeal with the European Court of First Instance.
Gas supplier Gaz de France merged with Suez last July to become the GDF Suez group.
"That's a high fine considering the fact that it's referring to actions in the past," said Clifford Chance lawyer Peter Rosin.
The Commission would have been able to fine the companies a maximum of 10% of their annual sales, which amounted to more than 80 billion euros for each of them.
Share prices, forecasts unaffected
Shares of both companies have already priced in the fines since news reports starting last week alerted investors, analysts said.
E.ON shares advanced 3.8% to 23.69 euros at 14:23 GMT while GDF Suez shares were up 0.2% to 25.12 euros, compared to a 1.7% rise of the DJ Stoxx European utility index.
The fine represents 8.4% of GDF Suez' 2008 net income of 6.5 billion euros. The utility has not given a forecast for 2009 net income. It is also about 10% of E.ON's 2008 adjusted net income and about half of its 2008 net income.
The company's forecasts for 2009 - unchanged adjusted earnings before interest and taxes and 10% lower adjusted net income - may not be affected as the company could adjust its earnings for the effects from the fine.
E.ON settled separate EU antitrust charges last year by agreeing to sell its power grid and some generation plants. RWE agreed to dispose of its gas transmission network to settle another antitrust case.
France's energy regulator CRE welcomed GDF Suez' offer to cut its share of long-term gas import capacity to 50%, down from two-thirds. The import capacity GDF Suez is proposing to free up is equivalent to around 60 terawatt hours of gas consumption.
The French utility said it would immediately start the handover of significant market capacities at the Montoir-de-Bretagne and Fos Cavaou tanker terminals and at the Taisnieres and Obergailbach gas entry points in France.
It is not acknowledging any wrongdoing with its proposal, the Commission said.
(EurActiv with Reuters.)
