E.ON, Gaz de France face charges

European Union regulators charged Gaz de France SA and E.ON AG, Germany's biggest utility, with breaking EU antitrust rules by agreeing not to sell natural gas in each other's markets, stepping up an antitrust crackdown.

Official charges, known as statements of objections, were sent by the Brussels-based European Commission, which can fine companies as much as 10 percent of their annual sales, the regulator said in a statement yesterday. EU officials began a probe into an alleged breach of rules on restrictive business practices by raiding the companies in May 2006.

The EU has increased its scrutiny of companies in the bloc's 340 billion-euro power and gas market. The EU is trying to dismantle energy-market barriers that persist after customers gained the right to choose gas and electricity suppliers under a 2003 European law.

"This is quite significant because statements of objections are the last step before a conviction," said Charles van Sasse van Ysselt, a partner at Dutch law firm NautaDutilh in Brussels. "The commission, which has been using antitrust cases with E.ON and RWE to unbundled their networks, may be following a similar method against GDF."

Paris-based Gaz de France, the operator of Europe's largest gas grid, said in a statement that it received a letter from the commission voicing "suspicions of collusion" with E.ON on pipeline deliveries of gas. E.ON spokesman Christian Drepper said the Dusseldorf-based company is "confident" that it will dispel the EU's concerns.

Megal pipeline

The gas-market charges against E.ON and Gaz de France are one of several EU antitrust cases in the energy sector. In parallel, the EU is considering draft legislation that would require dominant gas and electricity companies to sell their transmission networks, spin off that business or hand over operation of the grid to an independent company.

Last week, EU governments agreed to dilute the legislation, which also needs European Parliament approval.

The June 6 accord among governments would let producers keep their networks without having to hand them over to an independent operator, as long as the parent companies take internal actions to ensure grid-management independence.

The antitrust investigation into gas deliveries through the Megal pipeline, jointly owned by E.ON and Gaz de France, started in May 2006.

The system transports gas across southern Germany between the German-Czech and German-Austrian borders on one side and the French-German border on the other.

E.ON Ruhrgas will collaborate "constructively" with the commission to dispel the charges, E.ON's Essen, Germany-based natural gas unit said in an e-mailed statement yesterday.

The probe concerns transport agreements signed in 1975 which are no longer relevant and were terminated in 2004 for the sake of clarity, E.ON Ruhrgas said.

Gaz de France had 27.4 billion euros of revenue in 2007 while E.ON reported sales of 68.7 billion euros.

The case against E.ON comes three months after the German utility offered to settle another antitrust case in the electricity market.

In February, E.ON offered to sell its power-transmission grid to resolve two EU probes into whether the company has abused its dominant market position.

In addition to the sale of its transmission network, E.ON will also divest 4,800 megawatts generation capacity to competitors.

Agencies

(China Daily 06/13/2008 page17)