ENI/TRANS TUNISIAN PIPELINE
PRESS RELEASE
PRESS RELEASE
The Competition Authority has commenced an investigation into an alleged abuse of dominant position by ENI on the gas market
At its meeting on 27 January 2005, the Competition Authority resolved to commence an investigation pursuant to section 14 of the Competition Act into the ENI S.p.A. company (hereafter ENI) and Trans-Tunisian Pipeline Company Ltd (hereafter TTPC), to ascertain the alleged existence of an abuse of dominant position designed to prevent the entrance of ENI's competitors on the Italian gas sales market, in violation of article 82 of the EC Treaty.
At the origin of the investigation was the ENI project to increase the transport capacity of the gas pipeline running through Tunisia from Oued Saf Saf on the border with Algeria to Cap Bon on the Mediterranean coast, to import Algerian gas into Italy. The TTPC company, which is wholly controlled by ENI, has exclusive transport rights over the gas pipeline, which is the property of the Tunisian state company Sotugat, until 2019.
Between 2002 and 2003, TTPC had decided to increase the transport capacity of the gas pipeline, and following the procedure for the award pro quota of the new additional capacity, in March 2003 signed ship or pay transport contracts with a number of Italian shippers to import Algerian gas into Italy as from the thermal year 2007-2008 (but in view of the current level of saturation of the pipeline, this could only be possible after increasing its capacity).
The validity of the contract was conditional upon a number of conditions precedent being met by 30 June 2003, originally, and then at TTPC's request, by 30 October 2003.
The evidence acquired revealed that the request to extend this deadline for meeting the conditions precedent, and TTPC's subsequent decision to consider that the conditions had not been met (in November 2003), had been the result of a decision by the controlling company ENI, a company holding a dominant position on the national wholesale gas supply market. For in view of the revised forecasts regarding the medium-term gas supply and demand prospects, ENI had considered that if the shippers had, as a result of the increased capacity, imported the gas from 2007-2008, this would have boosted the oversupply of gas that could threaten its commercial policies, and the possibility of honouring its take or pay obligations towards the foreign gas suppliers.
The market entry in 2008 of four ENI competitors, despite the fact that they had agreed to sign transport contracts wholly covering the cost of the investment to be made, and adequately remunerated TTPC's international carrier operations, was intended to be hampered by arguments having to do with the ENI's needs on the downstream market of the international gas pipe line. In practice, ENI allegedly intended to hamper the market entry of its competitors by insisting on an interpretation - to its own advantage - of the conditions precedent attached to the transport contracts.
The Authority therefore resolved to commence an investigation to see whether or not ENI and TTPC had abused their dominant position to exclude competition, specifically on the international Algerian gas transport market in Italy, with the effect of hampering and/or preventing the entry of independent operators onto the Italian wholesale natural gas supply market. The investigation is to be concluded by 31 December 2005.
Rome, 4 February 2005