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Commission Decision of 9 December 2004 declaring a concentration incompatible with the common market pursuant to Article 8(3) of the Council Regulation (EEC) No 4064/89 (Merger Regulation (ECMR)) (Case No COMP/M.3440 — EDP/ENI/GDP) (notified under document number C(2004) 4715) (Only the English version is authentic) (Text with EEA relevance) (2005/801/EC)

EU Decision 2005/801 · Adopted 9 December 2004 · Extends to United Kingdom

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Commission Decision

of 9 December 2004

declaring a concentration incompatible with the common market pursuant to Article 8(3) of the Council Regulation (EEC) No 4064/89 (Merger Regulation (ECMR))

(Case No COMP/M.3440 — EDP/ENI/GDP)

(notified under document number C(2004) 4715)

(Only the English version is authentic)

(Text with EEA relevance)

(2005/801/EC)

On 9 December 2004 the Commission adopted a Decision in a merger case under Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakingsf1, and in particular Article 8(3) of that Regulation. A non-confidential version of the full Decision can be found in the authentic language of the case and in the working languages of the Commission on the website of the Directorate-General for Competition, at the following address: http://europa.eu.int/comm/competition/index_en.html

Annotations to the whole text

Footnotes

f1

OJ L 395, 30.12.1989, p. 1. Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 9.7.1997, p. 1).

Contents

  1. THE PARTIES
  2. (1)Division (1)
  3. (2)Division (2)
  4. (3)Division (3)
  5. (4)Division (4)
  6. THE OPERATION
  7. (5)Division (5)
  8. (6)Division (6)
  9. RELEVANT MARKET
  10. RELEVANT ELECTRICITY MARKET
  11. RELEVANT PRODUCT MARKET
  12. (7)Taking into consideration the specifics of the Portuguese markets and the competitive and regulatory framework, the Commission has reached the conclusion that the following markets should indeed be distinguished:
  13. (8)Division (8)
  14. (9)Division (9)
  15. (10)Division (10)
  16. (11)Division (11)
  17. (12)Division (12)
  18. (13)Division (13)
  19. (14)Division (14)
  20. Wholesale electricity
  21. (15)Division (15)
  22. (16)Division (16)
  23. Balancing power and ancillary services
  24. (17)Division (17)
  25. (18)Division (18)
  26. (19)Division (19)
  27. Transmission and distribution
  28. (20)Division (20)
  29. Retail supply of electricity
  30. (21)Division (21)
  31. (22)Division (22)
  32. GEOGRAPHICAL MARKETS IN ELECTRICITY
  33. (23)Division (23)
  34. (24)The parties argued that an Iberian trading market called MIBEL would be established very soon and would thus lead to an Iberian market. This view has not been confirmed by the in-depth investigation carried out by the Commission. It appears that (1) the current level of interconnections between Spain and Portugal is not sufficient to consider the existence of a single market in the Iberian peninsula and (2) it is highly unlikely that the electricity wholesale market will become Iberian in scope in the near future for the following reasons:
  35. RELEVANT NATURAL GAS MARKETS
  36. PRODUCT MARKET
  37. (25)The Commission has identified four distinct gas product markets which will be affected by the operation:
  38. (26)Division (26)
  39. (27)Division (27)
  40. GEOGRAPHICAL MARKET
  41. (28)Division (28)
  42. COMPETITIVE ASSESSMENT
  43. ELECTRICITY MARKETS
  44. WHOLESALE MARKET
  45. EDP holds a dominant position on the wholesale market for electricity in Portugal
  46. (29)Division (29)
  47. (30)Division (30)
  48. (31)Division (31)
  49. (32)Division (32)
  50. The operation will strengthen EDP’s dominant position, due to both horizontal and vertical effects
  51. Horizontal effects: removal of a significant competitor
  52. (33)Division (33)
  53. (34)Division (34)
  54. Non-horizontal effects: raising rivals’ costs
  55. Privileged and preferential access to the Portuguese gas infrastructure (Sines LNG terminal, import pipeline and Carriço underground storage)
  56. (35)Division (35)
  57. (36)Division (36)
  58. (37)Division (37)
  59. (38)Division (38)
  60. (39)Division (39)
  61. (40)Division (40)
  62. Ability to manage the constraints in the gas supply to CCGTs to the detriment of competing CCGTs
  63. (41)Division (41)
  64. Ability and incentive to control gas price and raise rivals’ costs, thereby foreclosing its actual and potential and deterring entry
  65. (42)Division (42)
  66. Access to proprietary information about EDP competitors’ costs, conferring it a significant advantage:
  67. (43)Division (43)
  68. Access to the daily gas nomination of its main proprietary information about its competitors’ costs, conferring it a significant advantage;
  69. (44)Division (44)
  70. (45)Division (45)
  71. ANCILLARY SERVICES
  72. (46)Division (46)
  73. RETAIL MARKETS FOR ELECTRICITY IN PORTUGAL
  74. EDP holds a dominant position on the retail markets for electricity in Portugal
  75. (47)Division (47)
  76. (48)Division (48)
  77. Strengthening of EDP’ dominant position on the retail market for electricity in Portugal
  78. (49)Division (49)
  79. (50)Division (50)
  80. GAS MARKETS
  81. GDP HAS A DOMINANT POSITION ON THE PORTUGUESE GAS MARKETS
  82. (51)Division (51)
  83. (52)Division (52)
  84. STRENGTHENING OF GDP’S DOMINANT POSITION ON THE PORTUGUESE GAS MARKETS
  85. Gas supply to power producers (CCGTs)
  86. (53)Division (53)
  87. Gas supply to LDCs (local distribution company)
  88. (54)Division (54)
  89. Supply to gas to LICs (large industrial customers)
  90. (55)Division (55)
  91. (56)Division (56)
  92. (57)Division (57)
  93. Gas supply to small customers
  94. (58)Division (58)
  95. (59)Division (59)
  96. (60)Division (60)
  97. (61)Division (61)
  98. COMMITMENTS PROPOSED BY THE NOTIFYING PARTIES
  99. (62)The parties have submitted commitments on 28 October 2004 and an improved version on 17 November 2004. The 17 November 2004 commitments are summarised below, using the parties’ numbering:
  100. ASSESSMENT OF THE COMMITMENTS PROPOSED
  101. COMMITMENTS ON ELECTRICITY
  102. WHOLESALE ELECTRICITY MARKET
  103. Horizontal effects of the operation (removal of GDP as the most likely entrant)
  104. (63)Division (63)
  105. (64)Division (64)
  106. (65)Division (65)
  107. (66)Division (66)
  108. (67)Division (67)
  109. (68)Division (68)
  110. Non-horizontal effects (raising rival costs)
  111. EDP’s privileged and preferential access to the Portuguese gas infrastructure
  112. (69)Division (69)
  113. (70)Division (70)
  114. (71)Division (71)
  115. Other vertical impacts of the merger
  116. (72)Division (72)
  117. MARKET FOR ANCILLARY SERVICES
  118. (73)Division (73)
  119. (74)Division (74)
  120. RETAIL SUPPLY OF ELECTRICITY
  121. (75)Division (75)
  122. (76)Division (76)
  123. NATURAL GAS MARKETS
  124. GAS SUPPLY TO POWER PRODUCERS (CUSTOMER FORECLOSURE)
  125. (77)Division (77)
  126. (78)Division (78)
  127. GAS SUPPLY TO LDCS (CUSTOMER FORECLOSURE)
  128. (79)Division (79)
  129. GAS SUPPLY TO LARGE INDUSTRIAL CUSTOMERS (LICS)
  130. (80)Division (80)
  131. (81)Division (81)
  132. GAS SUPPLY TO SMALL CUSTOMERS
  133. (82)Division (82)
  134. LATE REMEDIES
  135. (83)Division (83)
  136. (84)Division (84)
  137. CONCLUSION
  138. (85)Division (85)