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Competition

PR(05)19: The EFTA Surveillance Authority opens a sector inquiry into the electricity sector

23.6.2005

The EFTA Surveillance Authority decided yesterday to launch an inquiry into competition in the electricity markets in the EFTA States. Well-functioning energy markets are crucial for the competitiveness of European industry and for delivering to the consumer benefits expected from liberalisation in terms for example, of lower prices.

Electricity prices have risen in several EEA States during 2005 and current forward prices point to further price rises in the future. The incumbent suppliers attribute the price increases to increased costs and technical arguments. However, price rises are of particular concern since complainants express little trust in existing mechanisms of price formation. Liquidity is low on the majority of electricity exchanges in the EEA. This leads to price volatility and may give scope for manipulation.

With respect to the EFTA States in particular, there are concerns relating to bottlenecks, the position of electricity generators, market concentration and cross-ownership between companies involved in generation. There are also issues relating to vertical integration of distribution system operators with suppliers of electricity or generators.

On 13 June 2005, the European Commission also launched a sector inquiry into the energy sector (IP/05/716). The Authority's inquiry will be conducted in parallel with that of the Commission.

The Authority's sector inquiry will seek to identify possible distortions of competition that may be addressed by competition law, and whether to launch infringement proceedings for possible breaches of EEA Articles 53 and 54, in conjunction with Article 59. Enforcement action could follow, either by the Authority, the Commission or by national competition authorities.

To carry out the inquiry, the Authority can require companies and trade associations to supply information, documents or statements. The main results of the inquiry will be published in 2006 in parallel with the Commission.

For further information, please contact Mr Tormod Johansen, tel. (+32)(0)2 286 18 41, or Mr Justin Menezes, tel. (+32)(0)2 286 18 84 of the Competition & State Aid Directorate, or consult the Authority's website on sector inquiries.

23 June 2005




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