Eu Competition Law Sector InquiryEu Competition Law Sector InquiryThe overall objective of the Competition Law Sector Inquiry is to address the barriers currently impeding the development of a fully functioning open and competitive energy market throughout the EU by 1 July 2007. The Competition Law Sector Inquiry has highlighted three major “problems areas” which are causing the European internal energy market to not function properly:
It is too highly concentrated (incumbents have very high market shares in their respective national markets). This restricts competition at the wholesale and retail level, as new entrants are dependent on a vertically integrated incumbent for services through the supply chain.
Proposed actionsIn the context of merger control, implementation of structural remedies such as divestiture requirements to prevent further market concentration.Introduction of energy release plans to develop market liquidity and reduce the effect of concentration. This includes electricity virtual power plant auctions and gas release plans which require incumbent companies to sell defined volumes of energy, usually on large scales, combined with the release of network capacity.
Analysis by the national regulators of the conditions in their respective markets in co-operation with competition authorities in order to develop further measures to increase liquidity in the market. Some Member States have already introduced ceilings on ownership of electricity generation and long-term contracts to reduce market power by divestiture of production, asset swaps and contract releases.
It is characterized by a high degree of vertical integration – between generation, supply and network – leading to a lack of equal access and insufficient investment (insufficient unbundling of network and supply activities). Despite current rules on non-discriminatory third party access (TPA), vertically integrated companies are suspected of favoring their affiliates. One concern is that decisions will be taken on the basis of the supply interest of the company rather than in the interest of the network. There is also a lack of necessity for companies to trade on the wholesale markets which hinder the development of liquidity, resulting in non-transparent prices creating distrust among both customers and potential competitors.
A critical example of such an organization is Bovis, a company that uses a network to provide telemedicine services.
The primary reason behind the TPA is that the availability of the network at the market places an undue burden on individual companies, leading to higher costs and increasing risks, particularly for consumers who are unable to access or purchase services for which their services require a license.
A recent study shows that a large percentage of the world’s companies are owned by one, or several or more entities, which is why it is necessary for companies to have a unique licensing structure, or be a separate entity, from all of their others. However, this doesn’t make it easy for a company to create an independent independent mobile phone company without going through a similar regulatory process, such as a common carrier license. These situations are further exacerbated by the fact that many of the large tech companies have their own set of operating systems, and with them a business model.
One way to help ease the transition is the introduction of a third party license (FOSS), a platform that enables companies to sell services through third parties. TPA is the primary way that companies can be self-regulatory while allowing the ability to sell services internationally, and the market share will greatly increase as companies grow in size and reach a larger number of users.
Conclusion
A recent study conducted as part of their “Open Markets Technology Framework” found that over a decade, “companies are increasingly taking legal actions regarding their internet access while allowing certain individuals with greater internet freedoms to access their websites and apps, and thus making it harder for others to access their online business.” In effect, this is a move away from existing systems that allow individuals to purchase a wide range of services at the wholesale or digital market, but allow individuals to access a wide range of services online for free, with a significant disadvantage that individuals and businesses can’t find a way to protect against.
As with any sector of the economy, innovation and entrepreneurship cannot be expected to be mutually exclusive. While there are often many factors at play, such as economic, social and technological, this may give rise to the same type of dynamic whereby different companies can thrive in a time of ever changing competition and demand for innovation. This is another manifestation of the same principles of market management that enabled us to make the current crisis work for us. When companies use the power of its own business model to seek greater control over consumers and to limit risk, market volatility and regulation, there is greater opportunity for innovation to take place. This has been an example of a sector that is beginning to work with other stakeholders to achieve a greater good, yet is still faced with a number of obstacles. The challenges are compounded when a large number of companies have to come together to do business differently from their competitors for the first time, or to manage their risks more effectively in light of new technology and technologies.
Our next article will address some
A critical example of such an organization is Bovis, a company that uses a network to provide telemedicine services.
The primary reason behind the TPA is that the availability of the network at the market places an undue burden on individual companies, leading to higher costs and increasing risks, particularly for consumers who are unable to access or purchase services for which their services require a license.
A recent study shows that a large percentage of the world’s companies are owned by one, or several or more entities, which is why it is necessary for companies to have a unique licensing structure, or be a separate entity, from all of their others. However, this doesn’t make it easy for a company to create an independent independent mobile phone company without going through a similar regulatory process, such as a common carrier license. These situations are further exacerbated by the fact that many of the large tech companies have their own set of operating systems, and with them a business model.
One way to help ease the transition is the introduction of a third party license (FOSS), a platform that enables companies to sell services through third parties. TPA is the primary way that companies can be self-regulatory while allowing the ability to sell services internationally, and the market share will greatly increase as companies grow in size and reach a larger number of users.
Conclusion
A recent study conducted as part of their “Open Markets Technology Framework” found that over a decade, “companies are increasingly taking legal actions regarding their internet access while allowing certain individuals with greater internet freedoms to access their websites and apps, and thus making it harder for others to access their online business.” In effect, this is a move away from existing systems that allow individuals to purchase a wide range of services at the wholesale or digital market, but allow individuals to access a wide range of services online for free, with a significant disadvantage that individuals and businesses can’t find a way to protect against.
As with any sector of the economy, innovation and entrepreneurship cannot be expected to be mutually exclusive. While there are often many factors at play, such as economic, social and technological, this may give rise to the same type of dynamic whereby different companies can thrive in a time of ever changing competition and demand for innovation. This is another manifestation of the same principles of market management that enabled us to make the current crisis work for us. When companies use the power of its own business model to seek greater control over consumers and to limit risk, market volatility and regulation, there is greater opportunity for innovation to take place. This has been an example of a sector that is beginning to work with other stakeholders to achieve a greater good, yet is still faced with a number of obstacles. The challenges are compounded when a large number of companies have to come together to do business differently from their competitors for the first time, or to manage their risks more effectively in light of new technology and technologies.
Our next article will address some
Proposed actionsComplete ownership unbundling as it is considered to be the most effective means to ensure choice for energy users and to encourage investments. This type of proposal has to date been politically unacceptable to some Member States on the basis that it would amount to expropriation of shareholders assets and would endanger security of supply. Currently only a few Member States have implemented full ownership unbundling for energy networks.
Alternatively creation of an independent system operators (ISO) in which vertically integrated companies would remain owners of their network (and receive a regulated return on them) but would not be responsible for their operation, maintenance or development. This solution requires accurate regulation and will not deal with the key issue of disincentives to invest in networks. Such a system is currently applied in the UK. This proposal is a compromise solution in the event that the opposition to ownership separation is insurmountable.
There is a lack of cross-border integration and cross-border competition. Inadequate investment in cross-border connections, long-term legacy contracts and under-utilization of existing capacity, especially through ineffective congestion management, restrict cross-border trading and sales which are essential to create a single market.
Proposed actionsMonitoring of the compliance with use-it-or-lose-it rules.Creation of a regulatory framework to ensure adequate TPA to gas storage facilities including legal unbundling, binding guidelines on TPA, and increased powers of the national regulators.
Creation of a working group to monitor investments in generation, production and network capacity, particularly cross border capacity, and development of a clear framework for investment in networks.
Coordination between transmission system operators (TSOs) to be enhanced through a new legislative framework based on existing associations of TSOs which requires information exchange, technical co-operation, development of standards and monitoring with a view to the development of a regional system of operators.
Are the Commission’s proposed actions likely to achieve