The European Commission ('Commission') has opened a formal competition investigation against Czech electricity incumbent CEZ for potential abuse of dominance. This is the latest in a string of abuse of dominance investigations of incumbent energy providers since the Commission's 2007 sector inquiry.
The Commission conducted dawn raids on the Czech electricity market in November 2009, targeting CEZ and Energetický a průmyslový holding ('EPH'). The Commission stated at that time that it had reason to believe that action carried out by CEZ, unilaterally or together with other players, may have led to a substantial distortion of competition. This may have enhanced CEZ's dominant position and breached Article 102 TFEU by excluding competitors and raising prices on the Czech wholesale electricity market.
The Commission now states that its more focussed formal investigation will assess whether CEZ has abused its dominant position by "hoarding capacity in the transmission network" which may have prevented the entry of competitors into the Czech wholesale electricity market.
In response, CEZ said that the Commission's statement showed it had been "fully cleared of several serious accusations", in particular that it has not engaged in any cartel conduct. This has, however, not been confirmed by the Commission. What is clear is that the energy sector remains an enforcement priority for the Commission.
The other company subject to the Commission's 2009 dawn raid, EPH, was not mentioned in the Commission's recent announcement. EPH is facing ongoing proceedings by the Commission for allegedly obstructing the Commission's dawn raid. The Commission alleges that, during the inspection at EPH's premises, EPH failed to open encrypted e-mails and diverted incoming e-mails. The Commission takes the view that these actions amount to a breach of the companies' obligations to submit to the inspection and to produce information required by the inspectors in complete form.
To view Community Week, Issue 530, 22nd July 2011 in full, Click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
