EC says Bulgarian Energy Holding breached antitrust rules

Written by on August 12, 2014 in Business - Comments Off on EC says Bulgarian Energy Holding breached antitrust rules

The European Commission said on August 12 that its investigation of the Bulgarian Energy Holding (BEH), the umbrella corporation for state-owned companies in the energy sector, reached preliminary conclusions that BEH was in breach of EU competition regulations.

“The European Commission has informed BEH of its preliminary view that territorial restrictions on resale contained in BEH’s electricity supply contracts with traders on the non-regulated Bulgarian wholesale electricity market may breach EU antitrust rules,” the EC said in a statement.

The Commission said that it had concerns that BEH might be hindering competition on the non-regulated wholesale electricity market in Bulgaria by imposing restrictions on where the electricity supplied by BEH may be resold – specifically, whether the electricity can be exported and sold abroad.

BEH’s contracts also contained control and sanctioning mechanisms that allowed the corporation to monitor and punish customers who fail to comply with these territorial restrictions.

“The Commission’s provisional finding is that these territorial restrictions constitute an abuse of BEH’s dominant market position, which is prohibited by Article 102 of the Treaty on the Functioning of the European Union,” the EC said.

The EC opened the investigation against BEH in November 2012 and its “statement of objections” on August 12 was the latest formal step in that process, informing the parties concerned of the objections raised against them.

The addressees can examine the documents in the EC’s investigation file, reply in writing and request an oral hearing to present their comments on the case before representatives of the Commission and national competition authorities. The Commission takes a final decision after the parties have exercised their rights of defence.

Should the Commission conclude that there is sufficient evidence of an infringement, after the parties have exercised their rights of defence, the EC can issue a decision prohibiting the conduct and impose a fine of up to 10 per cent of a company’s annual worldwide turnover.

In the case of BEH, this fine could run as high as 570 million leva (about 291.4 million euro), based on its 2013 financial results.

BEH said in a statement that the EC investigated contract clauses that were no longer applied, emphasising that the preliminary findings did not predetermine the Commission’s final ruling. The company said that it would continue to cooperate with the EC and would draft its reply to the Commission’s statement of objections in the second half of 2014.

(Photo: greenhitma/sxc.hu)

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