Wed, 8 Jul 09:52:53 GMT17

 

EU fines E.ON, GDF Suez for market-sharing deal
08 Jul 2009 09:51:09 GMT
Source: Reuters
* EU fines EON, GDF Suez 553 mln euros each

* Says companies maintained market-sharing agreement

* GDF Suez to appeal against ruling

(Adds GDF Suez statement)

By Bate Felix and Foo Yun Chee

BRUSSELS, July 8 (Reuters) - European Union antitrust regulators imposed a combined fine of more than 1.1 billion euros ($1.54 billion) on German utility E.ON <EONGn.DE> and GDF Suez <GSZ.PA> on Wednesday for secretly carving up gas markets.

The European Commission, the EU's antitrust watchdog, fined each company 553 million euros for agreeing in 1975 not to compete with one another on their national gas markets when they jointly built a pipeline to import Russian gas.

"They maintained the market-sharing agreement after European gas markets were liberalised, and only abandoned it definitely in 2005," the Commission said in a statement.

"This decision sends a strong signal to energy incumbents that the Commission will not tolerate any form of anticompetitive behaviour," EU Competition Commissioner Neelie Kroes said.

The Commission said the fines were the first for an antitrust infringement in the energy sector.

Kroes said the market-sharing agreement had deprived customers of price competition and choice of supplier in two of the largest gas markets in the 27-nation EU.

"The Commission has no alternative but to impose high fines," she said.

GDF Suez said in a statement issued before the ruling that it disagreed with the Commission's conclusions of collusion until 2005 and would appeal against any decision.

"The group also calls attention to the fact that the legal and regulatory context of the time was very different from that of the energy market today," it said.

The biggest Commission fine on a single company was the 1.06-billion-euro penalty imposed on chipmaker Intel Corp in May. Glass maker Saint-Gobain was fined 896 million euros last year for price fixing.

The biggest cartel fine was the more than 1.3 bln euros imposed on a group of companies in the European car glass market last November.

EU CASE CENTRES ON MEGAL PIPELINE

The Commission's case against E.ON and GDF Suez focuses on their jointly-owned MEGAL pipeline from southern Germany to the French-German border.

The MEGAL pipeline is jointly owned and operated by E.ON Ruhrgas and GDF Suez. It transports gas across southern Germany between the German-Czech and German-Austrian borders to the east and the French-German border to the west.

Gas supplier Gaz de France merged with Suez last year to form GDF Suez, Europe's biggest utility by market capitalisation ahead of EDF and E.ON.

E.ON is Europe's largest utility by sales and GDF-Suez Europe's second largest by that measure.

GDF Suez has said the investigation is based on "putative" facts that took place before the opening of Europe's energy market and the business had been competitive for years..

E.ON settled separate EU antitrust charges last year by agreeing to sell its power grid and some generation plants. RWE agreed to dispose of its gas transmission network to settle another antitrust case.

E.ON posted first-quarter adjusted earnings before interest and taxes (EBIT) of 3.1 billion euros. GDF Suez had 5.3 billion euros in earnings before interest, tax, depreciation and amortisation (EBITDA) in the same period. (Additional reporting by Marie Maitre in Paris and Peter Dinkloh in Frankfurt, editing by Timothy Heritage)
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