ANTI-COMPETITIVE CONDUCT ON THE POWER EXCHANGE
PRESS RELEASE
PRESS RELEASE
THE COMPETITION AUTHORITY HAS OPENED AN INVESTIGATION INTO ENEL AND ENEL PRODUZIONE TO ASCERTAIN ANTI-COMPETITIVE CONDUCT REGARDING PRICE-SETTING ON THE POWER EXCHANGE
At its meeting on 6 April 2005, the Competition Authority resolved to open an investigation into the Enel and Enel Produzione companies in respect of an alleged abuse of a dominant position for setting prices on the Power Exchange.
The Authority's decision followed a report from the Gas and Electric Power Authority (AEEG) regarding a number of price anomalies discovered in June 2004 and January 2005 in relation both to the purchase prices of electric power (the so-called single national rate) on the first day market, and in the various zonal rates charged by the producers depending upon the place in which the power enters the national transmission network.
A previous fact-finding survey conducted jointly by the Authority and AEEG had shown that in the benchmark period 1 April-30 September 2004, Enel Produzione had an absolutely dominant role in setting the energy price on the centralised supply market (the Power Exchange). Through this strength, Enel Produzione was nevertheless able to set the price of energy for the whole of the wholesale market.
The information provided by AEEG in its report to the Competition Authority provided a few clues that suggested that in addition to the specific conduct during the benchmark period, Enel had not merely lawfully exercised its existing market power through its subsidiary company Enel Produzione, but had acted as a dominant company ever since the electricity exchange had begun operations, through abusive conduct designed to expand its market strength over several relevant geographic areas, limiting the competitive capacity of third parties wherever this was potentially possible.
On the basis of this information, it appears likely that throughout the period beginning with the start-up of the so-called " Power Exchange" (1 April 2004), Enel has conducted itself, alternating between trying to exclude its competitors and adopting nonaggressive price policies.
In particular, Enel seems to have exploited its price-setting power on the Macrosud geographic area (centre-north, centre and southern islands) where it is still absolutely indispensable practically all day long, in order to condition import/export flows from his zone towards the bordering interconnected zones to keep prices very high, and therefore extend its capacity to dictate wholesale energy prices on different and contiguous geographic markets (the North macrozone and MacroSicily).
Considering that the conduct of Enel S.p.A., through its subsidiary company Enel Produzione S.p.A., on the Italian electric power wholesale markets since the start-up of the centralised supply system on 1 April 2004 could constitute abuse of dominant position, implemented by defining zonal differentials and transport capacity rates set in order to hamper the competitive capacity of other operators, the Authority has resolved to open an investigation into Enel S.p.A. and Enel Produzione to ascertain whether they have violated article 82 of the EC treaty.
Lastly, with regard to the AEEG report regarding alleged collusion between the companies tendering to import power in the month of January 2005, the Authority considers that no evidence currently exists of any anti-competitive agreements.
The investigation will be completed by 31 March 2006.
Rome, 13 April 2005