The European Commission this week released a preliminary decision that a Bulgarian energy firm and its subsidiaries were violating the EU’s competition rules, and announced in-depth investigations of projects in Spain and Belgium.
The Commission notified incumbent state-owned Bulgarian Energy Holding (BEH) that it had reached a preliminary conclusion that the firm and its subsidiaries may be in violation of antitrust rules by blocking competitors’ access to gas infrastructure in the country. BEH is vertically integrated, supplying gas while its subsidiaries, Bulgargaz and Bulgartransgaz, own or control Bulgaria’s gas transmission network, the country’s only gas storage facility, and the main gas import pipeline, the Commission said.
The Commission launched its investigation in July 2013, to determine whether BEH was abusing its dominant market position by blocking competitors’ access to the infrastructure. The initial review, which does not prejudge the outcome of the case, found reason for concern that BEH and its subsidiaries are hindering access to the gas transmission network, storage facility, and unused reserve capacity on the pipeline.
“EU antitrust rules are an important tool to contribute to the Energy Union,” Margrethe Vestager, the commissioner in charge of competition policy, said in a statement. “We need to break down barriers so that EU citizens and businesses can enjoy more competitive energy prices and security of supply. To compete on the Bulgarian gas supply markets, companies need access to BEH’s gas infrastructure. The Commission must make sure that fair access is granted.”
This was not the first time BEH has come under the Commission’s antitrust microscope. The commission sent an unrelated statement of objections to the firm in August 2014, voicing concern about possible territorial restrictions in the firm’s electricity supply contracts with traders on the wholesale market, the commission said.
BEH and its subsidiaries will have the chance to respond to the Commission’s concerns and request a hearing, if desired, before the Commission issues its final decision on both matters.
Also this week the Commission announced it was opening two in-depth investigations into possible breaches of competition rules.
In Spain, the Commission is looking into the country’s planned construction of a high-speed rail test center near Malaga. The bulk of the €358.6 million project, announced in 2013, would be funded by the EU Regional Development Fund and the rest by the Spanish government. EU rules on state aid require a project to pursue a common interest and address a market failure. The Commission has questioned the lack of private investors in the project, Centro de Ensayos de Alta Tecnología Ferroviaria (CEATF), whether the center would be open to all potential users in the bloc, and projections that the project will “remain vastly loss making.”
“The initial investigation has revealed that demand for such a railway test center seems low and public opposition, especially on environmental grounds, appears quite strong,” the Commission said. “It is therefore doubtful that the project would further an objective of common interest. The Commission also has concerns that the measure might give a selective advantage to CEATF as compared to other high-speed railway testing facilities in the EU that operate without state support.”
State aid rules are also the concern in the Commission’s in-depth investigation into contracts between Brussels authorities and French outdoor advertising firm JC Decaux. That investigation was opened after a complaint by competitor Clear Channel Belgium, the Commission said, and concerns two public contracts with the French company. The first concern relates to a contract Belgium’s capital had with JC Decaux between 1984 and 1999, which allowed the company the use of advertising panels in Brussels in exchange for provision of public furniture like maps and public toilets. A subsequent contract in 1999 called for the company to install new panels and pay rent to the city, at the same time phasing out use of the old panels by 2010. The Commission said the company continued to use a number of the old panels after the deadline without paying rent or tax, which could amount to an unfair advantage over competitors.
The second contract concerns the Villo bike rental system in greater Brussels, for which JC Decaux won an exclusive concession in 2008 to provide the service, following a tender procedure. The Villo system is funded by users and use of advertising panels at the bike stops. However, Brussels granted the company additional rent and tax exemptions, which could amount to overcompensation in violation of EU competition rules, the Commission said.
In both in-depth investigations, the Commission will gather more evidence and give interested parties the opportunity to comment.