CONSORZIO PER IL NUCLEO DI INDUSTRIALIZZAZIONE CAMPOBASSO-BOIANO/SOCIETA' GASDOTTI DEL MEZZOGIORNO (Start of full phase investigation)
PRESS RELEASE
The Italian Competition Authority, on the basis of a complaint filed by the Consortium for the Industrialization of the Campobasso-Boiano area (Consorzio per il nucleo di industrializzazione Campobasso-Boiano), initiated a proceeding against SNAM and Southern Italy Gas Transmission Company (Società Gasdotti del Mezzogiorno).
The two firms' conduct within the areas of overlapping of their respective activities lets to suppose, in fact, the existence of an agreement restricting competition between the two firms and, therefore, to consider SGM's behaviour against the Consortium as an abuse of dominant position.
Southern Italy Gas Transmission Company (SGM), which is controlled by Edison Gas, deals with the natural gas transportation and distribution in the Lazio, Molise, Campania and Puglie regions, where the firm owns and operates a gas pipeline extended to nearly 600 km.
SNAM is a Eni Group company and owns 96 per cent of the national transportation network supplying high pressure natural gas. In 1995, such a network was 25,000 km. long on the whole.
The Consortium, after having built a natural gas transportation pipeline serving its industrial area, had requested SGM to be connected to the gas network. SGM tied this concession down to the management of the Consortium's pipeline and to its own direct supply to the associate industrial users. The Consortium considered such SGM's terms too burdensome and, therefore, contracted for the running of its pipeline with another company (Molise Gestioni), which offered better conditions. The Consortium asked again for the connection to the gas pipeline, but SGM refused, considering that the commercial practice in the sector of natural gas industrial supply does not provide for a third party to intervene in the relationship that exists between gas supplier and user. Given that the Consortium was prevented from beginning the natural gas distribution to its associate industrial users, it requested SNAM to be connected to the pipeline owned by the firm in the same area. On November 7th, 1996 (as the investigation was starting), the Consortium had not yet received any response from SNAM. Hence, at present, it seems that SNAM does not rival SGM, who is likely to be the only natural gas provider serving industrial users in the Campobasso-Boiano area.
On the basis of the above mentioned findings, the Authority deems that:
(a) the existence of an agreement between SNAM and SGM cannot be excluded. On the one hand, such an agreement binds SNAM not to compete with SGM within the areas where the pipelines owned by both the firms are based; on the other hand, SGM is committed to apply to its industrial users the same contractual terms as SNAM's, according to the contract undersigned by the company and the Industrialists' Associations;
(b) following such agreements, SGM should hold a dominant position, since it would be able to operate regardless of competitors and users, and would abuse this dominant position, by refusing the Consortium's connection to its own natural gas transportation network.