The procedures for awarding major waterway concessions for hydroelectric purposes in the autonomous province of Bolzano distort competition by flagrantly violating the established par condicio (fair conditions) principles in the soon to be concluded assignment of hydroelectric concessions.

The Opinion issued by the Antitrust Authority, which reserves the right to treat the SEL-ENEL PRODUZIONE and SEL-EDISON joint venture as a collusive agreement, was communicated to Parliament and Government as well as the Province itself, which is being allowed two months to provide a formal response.

The Antitrust Authority recalled how the bidding principle had been incorporated in the Trentino Alto Adige regional regulations on hydroelectric concessions in order to avoid Community infringement proceedings. The autonomous Province of Bolzano, however, decided to regulate the issuance, extension and re-issue procedures with rules that were proposed before the 2006 financial law (law no. 266, December 23, 2005) came into effect. According to the earlier provisions, concession assignments do not involve out-and-out competitive bidding, but rather the comparative evaluation of different offers on the basis of qualitative criteria, leaving significant discretionary leeway for the granting entity – the Provincial Council of Bolzano. In essence, the Province enjoys considerable discretionary powers for meeting the December 31, 2010, deadline for concessionary assignments that will, in effect, crystallize the market until the year 2041.

This situation has provoked additional competition-related concerns, given the fact that SEL, which is under the exclusive control of the Province itself, is also a candidate in the assignment procedure.  This invokes a blatant conflict of interest between the entity with discretionary powers for evaluating the competing projects and an assignment candidate controlled by the granting entity itself. Furthermore, SEL and Enel Produzione S.p.A. recently established a joint venture for sharing the management of the hydroelectric concessions being issued and re-issued to these two companies. This development threatens to eliminate the potential 'rival' role of the exiting concessionary, Enel Produzione, and extends the effects of the conflict of interest between the Province and SEL to Enel Produzione itself.

Similar problems could interrelate with the joint venture that SEL and Edison S.p.A. established in 2008.

Rome - December 30, 2009