SNAM-TARIFFE DI VETTORIAMENTO
PRESS RELEASE
The Authority finds Snam liable for abuse of dominant position
Following an investigation that began on 6 November 1997, the Antitrust Authority has found the Snam company liable in respect of offences under Section 3 of the Antitrust Act, by abusing its dominant position on two markets: the transport of natural gas through the national gas pipeline network, and the primary distribution of natural gas. Considering the serious nature and duration of the offences, Snam has been fined 3,584 million lire, equivalent to 9 percent of the 1997 turnover from transporting natural gas for third parties.
The cases of abuse of dominant position by Snam were: 1) its rejection of the request from Assomineraria (the association representing the national natural gas companies) to use Snam’s natural gas pipeline national network, including gas to be used for purposes other than those provided by Law no. 9 of 1991, namely gas for electricity-generation and in-house consumption; 2) its rejection of Assomineraria’s request to review and revise the charges set out in the 22 December 1994 agreement for the transport of nationally-produced natural gas; and 3) Snam’s insistence on controlling the end use of the natural gas transported on behalf of the Edison Gas company.
Snam is the proprietor of the national gas pipeline network which is an essential infrastructure, and is essential for the transport and primary distribution of gas.
The same infrastructure is also needed by the private gas producers in order to transport their gas and be able to compete against Snam in the post-primary distribution network. At the end of 1997, the Snam network exceeded 28,000 kilometres in length, accounting for 96.5% of the total Italian network. The primary network accounts for 16,000 kilometres of this, while the remainder belongs to the secondary network. In 1997, Snam also sold 53,100 million cubic metres of its own gas on the primary distribution market, accounting for an aggregate share of just over 92%. Snam's total share of gas imported into Italy is about 94%.
In view of Snam’s dominant position on the natural gas transport market, the Authority ruled that Snam is subject to a general prohibition on implementing strategies that constitute an offence under Section 3 of the Antitrust Act. In other words, the Authority concluded that there was no justification for Snam's refusal to grant its present and potential competitors access to its own national gas pipeline network, and that they were therefore entitled to have their natural gas transported for them in cases other than those provided by Section 12 of Law no. 9/91.
Secondly, the Authority ruled that the method used under the Snam/Assomineraria agreement of 22 December 1994 to calculate the price charged for transporting gas spread all of Snam’s costs (including any costs which might derive from inefficiency) for the transport of all gas, taking its own and third party’s gas together, through its pipeline network. This method of calculating the charges enabled Snam to set a price-level independently of the actual demand by third parties for the use of its transport facilities, and was therefore likely to impose unjustifiably onerous contractual conditions.
Thirdly, the Authority ruled that the constraint imposed by Snam on Edison Gas, requiring the latter to permit Snam to ensure that the gas was only for electricity consumption and in-house consumption as a condition for its delivery, constituted a direct restriction on the capacity of Edison Gas to effectively compete against Snam on the primary distribution market, which was tantamount to a refusal to grant access to its gas pipeline network.
Rome, 10 March 1999