Brussels, 11/10/2007 (Agence Europe) - On Thursday 11 October 2007, the European Commission adopted a decision making commitments, offered by Distrigas to open the Belgian gas market, legally binding. Objective: to end the abuse of dominant market position by this operator. By reducing the period for, and maximum volume in, the contracts concluded by Distrigas, the Commission is hoping for other gas suppliers to compete with Distrigas to build up a portfolio of customers, and thereby encourage competition on the Belgian gas market. A Distrigas spokesperson welcomed the end to the investigation, which had lasted a year.
Distrigas dominates the Belgian gas market, especially suppliers to companies. Current contracts can last up to 20 years, which, according to the Commission, prevents market newcomers exercising effective competition.
To appease these fears, Distrigas has proposed to conclude no new gas supply contracts with gas resellers with a duration of over two years. The maximum duration of new contracts with other large gas customers (industrial consumers and electricity generators) would be five years, except for new gas fired power plants. Furthermore, Distrigas would ensure that an average of 70% of the gas that it has contracted to supply to these customers would return to the market every year (in principle because the contract ends). Distrigas has some flexibility to meet this average over the lifetime of the commitments, but each year at least 65% of its total contracted volumes must return to the market. The commitments also ensure that, even if Distrigas' sales volumes decrease, it would be able to tie a fixed volume of gas for more than a year ahead. This fixed volume represents about 20% of the total sales to these customers. The commitments also ensure that the rights of Distrigas' existing customers with long-term contracts would not be affected. For such customers, Distrigas will grant unilateral termination rights with prior notice and without indemnity and these contracts will be treated as short term contracts for the purpose of the commitments. The effect of these commitments is to ensure that Distrigas does not tie an excessive proportion of customers for more than one year ahead, while allowing Distrigas as much flexibility as possible in managing its portfolio of contracts.
The Commission decision legally binds Distrigas to the commitments it offered until 31 December 2010 and ends the Commission's investigation. If Distrigas were to break its commitments, the Commission could impose a fine of up to 10 percent of Distrigas' total turnover without having to prove any violation of the EC Treaty's competition rules.
A spokesperson from DG Competition has said that if Thursday's decision in itself only focuses on Distrigas, it would be advisable that other companies in similar situations considered the percentages retained in the Distrigas affair when they examined whether they were in compliance with Community law. It should be noted that the investigation into the French market in a parallel case in July 2007, focusing on Gaz de France, is still ongoing. (cd/ol)