Brussels Energy Brief - June 2008
June 2008
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KEY DEVELOPMENTS
Competition: RWE Offers Commitments to Settle Antitrust Investigation
Patricia Armesto
The European Commission has opened an investigation against RWE, a German energy company. The key concern is that RWE may have used its control over the gas transmission network in the west of Germany to foreclose supply markets, preventing new entrants from gaining access to the infrastructure and thus abusing its dominant position in the region. RWE has proposed commitments that consist of selling its gas transmission system network in the west of Germany to an independent operator. These commitments would create a structural change in the German gas sector and facilitate competition. The Commission intends to market test RWE's proposals with a view to adopting a decision, under which the commitments would be made legally binding in accordance with Article 9 of Regulation 1/2003.
Environment: Commission Launches Public Consultation on Car Labelling Directive
Mélanie Bruneau
The European Commission has launched a public consultation on information provided to consumers about the fuel consumption and CO2 emissions of new cars. Stakeholders and the general public are invited to submit their views on how such information can be made clearer and more consistent. Currently, a label on fuel consumption (expressed in litres per 100km, or miles per gallon) and CO2 emissions (expressed in grammes of CO2 per km) must be displayed on all new cars. Studies have shown that the Car Labelling Directive that is currently in force could be improved. The results of this consultation will help the Commission to draft a proposal to revise the Directive.
Taxation: Eurozone Rejects French Proposals to Cut Fuel Tax
Daniel Kelly
Finance ministers from the 15 EU eurozone countries, meeting in Frankfurt on 2 June 2008, rejected France’s proposal for Europe-wide fuel tax cuts, despite ongoing strike action across the European Union. The soaring cost of fuel has seen protests from fishermen, farmers and hauliers across Europe during June 2008. In response, France announced its proposals for fuel tax cuts, as well as other relief measures such as diverting fuel tax receipts to help households affected by high oil prices and forcing companies to be more transparent about their oil reserves. The Finance Ministers’ Chairman, Jean-Claude Juncker, stated after the meeting that there was “no question” of putting fiscal measures in place to offset soaring oil prices. However, the ministers did acknowledge that other relief measures may need to be put in place and Mr Juncker indicated that these may include Brussels seeking to discourage speculative trading in oil.
State Aid: Commission Requests that Hungary End Long Term Electricity Agreements
Juan Gutiérrez
The European Commission has requested that Hungary end its long term electricity power purchase agreements (PPAs). Around two thirds of the electricity generated in Hungary is sold under PPAs to the State-owned Magyar Villamos Muvek (MVM). The Commission considers that the PPAs concluded between MVM and ten power generators between 1995 and 2001 conferred State aid on the generators that was unlawful and incompatible with Hungary’s obligations since its accession to the European Union on 1 May 2004. The PPAs should be terminated before the end of 2008. In addition, Hungary must recover the aid granted to the generators since 1 May 2004.
Competition: E.ON and Gaz de France Investigated for Market Sharing
Andrea Hamilton
The European Commission has confirmed that it sent a Statement of Objections (SO) to E.ON and Gaz de France (GDF), alleging that E.ON and GDF have shared markets for gas in violation of the European Union’s competition rules. The Commission is reportedly concerned that E.ON and GDF agreed, or participated in a concerted practice, to divide markets for the supply of gas (MEMO/08/394). E.ON and GDF are alleged to have agreed not to sell into each other’s home markets to any significant extent. The Commission suspects that the alleged agreement and/or concerted practice concerns supply of natural gas transported over the MEGAL pipeline, which is jointly owned by E.ON and GDF. The issuance of an SO is a formal part of the Commission’s investigation of E.ON and GDF in which it sets out its initial concerns. E.ON and GDF will have the right to reply to the SO and to request an oral hearing.
Competition: E.ON Commitments Market Tested
Juan Gutiérrez
The European Commission has invited interested parties to submit comments on the commitments offered by E.ON in the context of two cases concerning E.ON's alleged anti-competitive behaviour in the German wholesale electricity market and the German “balancing electricity” markets respectively. “Balancing electricity” is last-minute electricity necessary to maintain the frequency of the current in the grid. The Commission's concerns relate in particular to the withholding of available generation capacity, deterring third parties from investing in new generation capacity, and certain practices as regards the operation of the transmission system. E.ON has offered the following commitments: (i) to divest generation capacity in Germany from different types of technology and fuels to remedy the Commission's concerns on the wholesale electricity market; and (ii) to dispose of its transmission system business, consisting of its extra-high-voltage line network and system operations, to meet the Commission's concerns on the “balancing electricity” market. Interested parties can submit comments within one month. In the light of such comments, the Commission could adopt a decision making the commitments legally binding on E.ON.
Environment: European Parliament Approves Revision of Waste Framework Directive Including for Oil
Jonathan Aitken
On 17 June 2008 the European Parliament, in its second reading on the subject, approved the revisions to the Waste Framework Directive agreed between the European Commission and the EU Council. The European Environment Commissioner, Stavros Dimas, welcomed the vote, stating that the new Directive, with its clearer definitions, greater emphasis on prevention of waste and ambitious new recycling goals, will create a sound legal basis for the functioning of the waste sector. The new Directive will also streamline EU waste legislation by replacing three Directives (the Waste Oils Directive, the Hazardous Waste Directive and the existing Waste Framework Directive) with one.
Trade: EU Launches Investigation into US Biodiesel Imports
Patricia Armesto
On 13 June 2008, the European Union initiated anti-subsidy and anti-dumping investigations into imports of biodiesel from the United States. The complaints were lodged by the European Biodiesel Board, which represents the interests of a major proportion of EU producers of biodiesel. Having examined the complaints, the European Commission has concluded that they fulfil the requirements of the European Union's basic anti-subsidy and anti-dumping regulations in order to initiate proceedings. The Commission will make its provisional findings by 13 March 2009 at the latest, which it will then present to the EU Member States. If the measures proposed by the Commission are considered justified, these would take the form of additional duties on US biodiesel when imported into the European Union.
Mergers: Commission Clears Acquisition of Endesa by Enel and Acciona
Martino Sforza
The European Commission has approved the acquisition of joint control of Endesa S.A., a Spanish energy company active mainly in the electricity sector, through a public takeover bid by ENEL S.p.A., based in Italy, and Acciona S.A., based in Spain. The acquisition of joint control of Endesa by ENEL and Acciona had already been notified and cleared by the Commission on 5 July 2007. On 18 March 2008, however, Enel, E.ON and Acciona concluded another agreement modifying their 2007 agreement. This new agreement substantially modified the scope of the transaction and it therefore required a new notification. Following a fresh analysis, the Commission found that the impact of the amendments on the wholesale supply of electricity in Spain—the only horizontally affected market—is negligible because of the minimal changes in the market shares of the parties as a result of the new agreement.
MERGER NOTIFICATIONS
End May – June 2008
M.5182 - SHELL / BP / AFS / GLOBEFUEL (10 June 2008)
MEETINGS
July 2008
Informal meeting of the Ministers for Environment and Energy (3 – 5 July 2008, Paris)
