ENI-TRANS TUNISIAN PIPELINE
PRESS RELEASE
PRESS RELEASE
ENI FINED €290M FOR ABUSE OF DOMINANT MARKET POSITION IN WHOLESALE SUPPLY OF NATURAL GAS
The company must increase transport capacity by 6.5 billion cubic metres in two steps by 1 October 2008. Recent undertakings viewed positively.
The Italian Competition Authority, at its meeting on 15 February 2006, decided that ENI had abused its dominant market position by hindering, from March 2007, the entry of independent operators into the national market for the wholesale supply of natural gas.
Specifically, the conduct under review consisted in discontinuing work on upgrades to the TTPC gas pipeline, which had been begun some time before, and for which “ship or pay” transport contracts had been signed with a number of shippers.
For this reason, the Authority has imposed a fine of Euro 290 million, ordering ENI to desist from its anti-competitive conduct and, through its subsidiary Trans Tunisian Pipeline Company Ltd., to give third parties access, by 1 October 2008, to 6.5 billion cubic metres p.a. of additional gas transport capacity via the TTPC pipeline. ENI must guarantee that a first tranche of the additional capacity, equivalent to 3.2 billion cubic metres p.a., comes on line no later than 1 April 2008, and a second tranche, equivalent to 3.3 billion cubic metres, no later than 1 October 2008. These increases are the subject of clear undertakings already agreed to by the company.
Within 30 days, ENI must also provide the Authority with documentation on the procedure for allocating the second tranche of the additional TTPC capacity to prove that the criteria to be used are indeed objective and not discriminatory. Within 90 days thereafter, it must submit to the Authority a progress report on the allocation procedure for the second tranche of the additional capacity on the TTPC.
In any case, the violation demonstrated will mean, for the period from March 2007 (the date by which the upgrade to the TTCP gas pipeline was originally supposed to be completed) and April 2008, a shortfall of 6.5 billion cubic metres of gas in the market. For the remaining period from April 2008 to October 2008, the effect has been quantified at a loss to the market of 3.3 billion cubic metres of gas. The cumulative effect of the anti-competitive conduct in question, taking into account the measures proposed by ENI regarding the TTPC gas pipeline, is therefore equivalent to 9.8 billion cubic metres of gas over a period of 19 months. This is a substantial volume, whether compared to annual consumption (80 billion cubic metres of gas in 2004 and about 86 billion cubic metres in 2005) or to the proportion supplied by ENI (approximately 53 billion cubic metres in 2004).
In the view of the Competition Authority, which began its investigation on 27 January 2005, ENI’s conduct constitutes a serious breach of Article 82 of the Treaty of Rome. In setting the amount of the fine, the Authority also took into consideration the mitigating circumstance that ENI, during the course of the proceedings, began the procedure for allocating the additional capacity resulting from the first upgrade to the TTPC pipeline. ENI’s recent undertakings were thus viewed favourably by the Authority.
Rome, 15 February 2006