EU energy companies to face crackdown over collusion, cartels

Jan 10, 2007, 12:15 GMT

Brussels - The European Commission on Wednesday vowed to crackdown on European energy companies accused of running illegal cartels and market-share collusion which keep prices high for consumers.

In a sweeping move to break-up integrated energy companies, officials said the commission - the European Union's executive arm - wanted European energy giants to either sell off gas pipelines and electricity grids to independent operators or put such infrastructure operations under separate management.

The moves are deemed essential to resolve a conflict of interest inherent in the current European system of vertical integration of supply and network activities in the energy sector.

The EU executive has also warned of other moves to stamp out an array of illegal market practices in a sector which has so far escaped total liberalization.

Uncompetitive practices rampant in the sector included high levels of market concentration, vertical integration of supply, generation and infrastructure and possible collusion between operators to share markets, the commission said.

EU officials have also accused energy companies of failing to ensure transparency in the sector, running a questionable pricing system, not allowing enough cross-border activity and an extremely high level of protection.

The crackdown is part of a wider package of measures on increasing energy efficiency, reducing energy consumption and expanding EU cooperation with energy producers also being released by the commission on Wednesday.

Recent disputes between the commission and member states such as Spain and France over their attempts to block cross-border takeovers in the energy sector illustrate the problems facing the sector, say officials.

However, EU heavyweights France and Germany have voiced strong opposition to any moves to break up their domestic energy firms.

Paris has warned that a full separation of network ownership from production capacity would hamper investment and threaten security of supply.

Energy sector competition - and the EU's increasing reliance on foreign energy suppliers including Russia - will top the agenda of the bloc's summit in March.