Energy and environment
Reliable energy supplies at reasonable prices for businesses and consumers and with the minimum environmental impact are crucial to the European economy. The European Union has therefore identified energy as one of its priorities.
In these pages you will find information about what the European Union does to ensure competition in the main energetic sectors: electricity, gas and oil. You can find more about the EU policies related to the energy sector on the pages of the Commission departments for Energy and Transport, Environment and Research.
Liberalisation of the electricity and gas markets
During the 1990s, when most of the national electricity and natural gas markets were still monopolised the European Union and the Member States decided to open these markets to competition gradually. In particular, the European Union decided to
- distinguish clearly between competitive parts of the industry (e.g. supply to customers) and non-competitive parts (e.g. operation of the networks);
- oblige the operators of the non-competitive parts of the industry (e.g. the networks and other infrastructure) to allow third parties to have access to the infrastructure;
- free up the supply side of the market (e.g. remove barriers preventing alternative suppliers from importing or producing energy);
- remove gradually any restrictions on customers from changing their supplier;
- introduce independent regulators to monitor the sector.
The first liberalisation directives were adopted in 1996 (electricity) and 1998 (gas) and should be transposed into Member States' legal systems by 1998 (electricity) and 2000 (gas). The second liberalisation directives were adopted in 2003 and were to be transposed into national law by Member States by 2004, with some provisions entering into force only in 2007) (EU legislation applicable to the electricity and gas markets).
Liberalisation of a similar kind was introduced in a number of other sectors.
Although significant progress had been made, competition was slow to take off, with markets remaining largely national, with relatively little cross-border trade, and highly concentrated. Companies trying to enter the market, business leaders, parliamentarians, and consumer groups were concerned about the slow development of wholesale gas and electricity markets, high prices and limited choice for consumers. The Commission therefore launched a sector inquiry in 2005 to identify the barriers preventing more competition in these markets. The results were published in 2007.
The third liberalisation package
Based on the Commission's energy package of January 2007, including the results of the sector inquiry the Commission brought forward in September 2007 legislative proposals to strengthen competition in the electricity and gas markets.
Given the concerns about concentration in the energy markets, the Commission has been vigilant when controlling mergers. For example, in 2004 the Commission prohibited the proposed merger between EDP and GDP in Portugal; in 2006 it imposed significant remedies in the mergers between GDF and Suez and E.On and MOL.
The Commission has also acted when the conditions imposed by national authorities create unjustified restrictions to mergers of Community dimension. In particular, the Commission has adopted under Article 21 of the Merger Regulation three decisions (two in the framework of the E.ON/Endesa case and one in the Enel/Acciona/Endesa case) to declare that some measures adopted by the Spanish authorities were incompatible with Community law, constituted unjustified restrictions to those mergers and should, therefore, be withdrawn. Given the Spanish authorities' failure to comply with the Commission request to withdraw the illegal measures, the Commission started infringement proceedings under Article 226 EC in the two cases. The European Court of Justice has recently clarified that in relation to the first one of these infringement cases (EON/Endesa) Spain violated EC law by failing to comply with the Commission decisions adopted on 26 September and 20 December 2006. (Read press release on the judgement)
When controlling State aid to energy companies the Commission ensures that any aid is necessary and proportionate. For example, in 2005, the Commission opened the in-depth investigation procedure regarding long-term energy supply contracts in Poland and Hungary between the State and certain energy suppliers and which were rather advantageous for the latter. In 2007, the Commission opened the in-depth investigation procedure on the regulated electricity tariffs in Spain and in France. More information is available on the electricity page.
In antitrust, the Commission carried out inspections in a number of energy companies in 2006. As a result it has opened proceedings in a number of cases. It has also adopted a decision against Distrigas, the incumbent gas supplier in Belgium, concerning its long-term gas supply contracts and making legally binding remedies proposed by Distrigas.