Antitrust Law Daily Wrap Up, ANTITRUST NEWS: EC accepts BEH’s commitments to open up Bulgarian wholesale electricity market, (Dec 10, 2015)

By Michael Menzhuber, J.D., LL.M.

The commitments offered by Bulgarian Energy Holding (BEH) to end competition restrictions on Bulgaria’s wholesale electricity market have been rendered legally binding on BEH and its subsidiaries, the European Commission (EC) announced today.

The EC had concerns that BEH, the State-owned Bulgarian energy incumbent, may have abused its dominant position on the market for the wholesale supply of electricity at freely negotiated prices (therefore non-regulated prices), in breach of European Union (EU) antitrust rules (Article 102 of the Treaty on the Functioning of the European Union - TFEU). In particular, the EC investigated clauses in electricity supply contracts concluded between BEH’s production subsidiaries and third parties, such as traders.

To address the EC’s concerns, BEH will set up a newly-created power exchange in Bulgaria, with the assistance of an independent third party with expertise in the area, and transfer control of the ownership of the new power exchange to the Bulgarian Ministry of Finance. These measures will ensure the independence of the power exchange.

To ensure liquidity, BEH will offer minimum stipulated volumes of electricity on the Bulgarian power exchange for a period of five years. These volumes will be put for sale in the day-ahead market, with a maximum price based on the marginal costs of BEH’s production subsidiaries. The volumes offered will vary on an hour-by-hour basis, in line with the pattern of consumption of electricity in Bulgaria.

After market testing the commitments initially offered by BEH, the EC is satisfied that these commitments will address its competition concerns by: (1) making it easier to trade electricity; (2) improving price transparency on the market; and (3) promoting the integration of the Bulgarian wholesale electricity market with neighboring countries’ markets.

The formal proceedings to investigate whether BEH may be abusing its dominant market position in the wholesale electricity market in Bulgaria were opened by the EC on November 27, 2012. The EC issued a Statement of Objections in August of 2014 and market tested BEH’s initial commitments in June 2015.

In a separate matter, the EC is investigating whether BEH, its gas supply subsidiary Bulgargaz, and its gas infrastructure subsidiary Bulgartransgaz might be preventing competitors from accessing key gas infrastructures in Bulgaria, in breach of EU antitrust rules. The EC opened formal proceedings in July 2013 and sent a Statement of Objections in March 2015.

News: Antitrust