A366 - ANTI-COMPETITIVE CONDUCT ON THE POWER EXCHANGE
PRESS RELEASE
PRESS RELEASE
ENERGY: ANTITRUST AUTHORITY SAYS ENEL MUST SELL 1,000 MW OF CAPACITY IN 2007 AT MARKET PRICES
A deal equivalent to about 3% of national electricity demand. The Authority accepts and renders obligatory the commitments presented by the company to close the investigation into its alleged abuse of a dominant position in the Electricity Exchange. New powers under the law applied for the first time.
In 2007 ENEL, through its subsidiary ENEL Produzione, must sell 1,000 MW of virtual capacity, equivalent to approximately 3% of national demand for electricity, on conditions which are in line with those prevailing on the Electricity Exchange. The Italian Competition Authority, at its meeting on 20 December 2006, accepted and rendered compulsory commitments presented by the company which were more wide-ranging than those originally proposed. In 2008 ENEL has undertaken to sell 700 MW, subject to an assessment of its ability to exercise unilateral power in determining market prices (its so-called "pivotal role"), based on the structural nature of supply and demand.
The divestment is to take place in the Macrozona Sud (Southern Region) using financial instruments in the form of two-way differential contracts whereby ENEL must pay the other contracting party a positive financial compensation when the price in the Southern Region is higher than the contract price, whereas ENEL will receive the price differential from the other party in the case where the price in the Southern Region is lower than the contract price.
In the Authority's view, the quantities involved in the commitments are such as to reduce significantly ENEL's pivotal role in the markets in question, thus satisfying the anti-competitive concerns which gave rise to the investigation.
The Authority will keep a close watch on the implementation of the commitments and reserves the right to reopen the proceeding if the situation should change as regards any of the factors on which the decision was based, or if ENEL should not live up to its commitments.
The Authority, on 6 April 2005, had opened an investigation into possible abuse by ENEL of a dominant position, based on conduct inherent in the company's strategies for supplying the wholesale electricity market. On 17 October 2006, in the light of the new procedures introduced in Article 14 ter of law no. 248 of 4 August 2006, ENEL and ENEL Produzione had presented commitments which were published by the Authority in order to judge reaction in the marketplace.
ENEL had initially offered to sell 700 MW of virtual capacity in each of the two years under consideration. Subsequently, following the outcome of the public consultation carried out by the Authority and the observations expressed by the Autorità per l’Energia (Gas and Electric Power Authority, or AEEG), ENEL made a change to its commitments, undertaking to divest itself of 1,000 MW in 2007 and proposing to sell virtual capacity of 700 MW in 2008, subject to an assessment of its pivotal market role. It also reduced the supplier price for virtual capacity by around €3 per MW/h as compared with the prices in the originally proposed commitments. The contract prices will be made public when the sale procedure begins.
The closure of the investigation into ENEL and ENEL Produzione with the acceptance of the commitments which have now been made binding is the first application by the Italian Competition Authority of Article 14 ter, whereby it is possible to present measures to eliminate the anti-competitive behaviour under investigation. The Authority, where it deems these measures suitable for the purpose, may render them obligatory for the companies involved and close the proceeding without ascertaining a misdemeanour.
Rome, 27 December 2006