In 2016, the Hellenic Competition Commission’s (HCC) intense investigatory activity was reflected in nine (9) Statements of Objections (SOs), including the one concerning the allegedly perennial cartel in the construction sector spanning over a period of 27 years and involving the entire sector and many foreign players.
During the past year, the HCC diversified its attention into various sectors and types of violations. An evident prioritization of cartel infringements, with an emphasis in public procurement markets, was coupled with a focus in the energy sector and privatizations, together with the continuation of the consolidation of the super-market sector.
An apparent drop in the number of completed cases is more likely due to resource allocation rather than a deliberate softening in enforcement. In particular, the HCC accepted commitments by the incumbent energy providers DEI (electricity) and DEPA (natural gas) and cleared eight (8) notified acquisitions across various industries, including the Phase II clearance of the Piraeus Port Authority’s (OLP) acquisition by Chinese shipping giant COSCO and the acquisition of 14 regional airports by the German transport company FRAPORT.
In the area of advocacy, the HCC introduced a Settlement procedure for cartel infringement (which you can read all about here) and announced adjustments to its point system for the prioritization of antitrust cases.
Commitments by the Public Power Corporation (DEI) addressing abuse of dominance concerns with regard to the supply of electricity to Aluminium of Greece (HCC 621/2015)
A long-standing and episodic standoff between DEI (incumbent producer and supplier of electricity in Greece) and Aluminium of Greece (ALUMINIUM) unfolded before the HCC in July 2015.
ALUMINIUM is a manufacturer of aluminium, a subsidiary of the MYTILINEOS Group and DEI’s biggest high voltage electricity consumer, by far. Until 2006, it purchased electricity pursuant to a preferential contract with DEI dated in 1960. DEI terminated this contract and placed ALUMINIUM under a standard high voltage category of electricity consumers, depriving it of its favorable terms of supply. As a result of two consecutive state-imposed price increases in the 2007-2008 period, the two parties resorted to RAE’s1 arbitration to solve a technical dispute, which led them, during the years that followed, to negotiating new contract terms. In 2013, DEI’s initial proposal was rejected by RAE’s arbitration, which adjusted the contract terms in favor of ALUMINIUM. DEI responded by applying for annulment of the decision and by terminating the existing supply arrangement with ALUMINIUM. It alleged that the new supply terms constituted an illegal state aid, and invited ALUMINIUM to agree on a standard non-individualized high voltage supply contract. ALUMINIUM refused and filed a complaint before the HCC alleging abuse of dominance. Two weeks later, DEI rescinded its termination notice and resumed the negotiations with ALUMINIUM, but claimed that RAE’s arbitration was manifestly erroneous and resulted in below cost pricing. DEI was then charging based on the earlier (rejected) offer, whereas ALUMINIUM paid the bill up to the amount of RAE’s arbitration terms, thus nurturing a very substantial economic dispute over the resulting difference. In early 2014, DEI adopted a rebate scheme for each category of customers which resulted in ALUMINIUM receiving a 15-25% rebate, but still no common ground was achieved in the negotiations that followed. One year later, DEI decided to cease the supply of electricity to ALUMINIUM, but the incumbent transmission operator (ADMIE) refused to execute it, claiming a lacuna in law. Meanwhile, the European Commission rejected DEI’s assertions regarding illegal state aid.
ALUMINIUM accused DEI before the HCC of constructive refusal to supply, due to its several attempted termination notices, and of unfair (excessive and discriminatory) pricing, particularly on the grounds of RAE’s arbitration.
The HCC acknowledged that DEI was in all probability dominant in the production and supply markets for electricity (both wholesale and retail), that ALUMINIUM was dependent upon DEI’s supply and that in case of termination, it would suffer irreparable damage. It also noted that PROTERGIA (MYTILINEOS Group) was DEI’s biggest competitor in Greece, and that the alleged practices could be construed as intimidating the Group into exclusion from another market. As regards the refusal to supply allegations, the HCC found that DEI’s attempt to cease the supply of electricity was very likely to constitute a measure disproportionate to its goal, taking into account in particular that the alleged debts owed by ALUMINIUM were not yet asserted by a court or based on a valid agreement. DEI should have therefore waited for the conclusion of the negotiations or of any judicial and extrajudicial procedures. Concerning the unfair pricing allegations, the HCC reiterated the principles of fair, objective, and reasonable treatment of customers, which, in its view, should guide DEI to provide ALUMINIUM with an individualized rebate scheme, and not to place it under a standard category of consumers without even awaiting for a court judgment in its favor.
Consequently, DEI offered amended commitments, based on which it would rescind its cease-of-supply notice, resume negotiations with ALUMINIUM on pricing, and abstain from similar practices until the parties concluded their negotiations or resolved the pricing dispute through other means. The HCC accepted the commitments, considering that they would allow the parties to negotiate reasonable pricing terms in good faith within a period of three (3) months, without risking any serious damage to ALUMINIUM’s operation or to the public interest.
In accepting commitments by an incumbent energy provider enjoying market power close to a monopoly for its customers and a monopsony amidst its suppliers, the HCC gave particular weight to the characteristics of the Greek electricity markets which, albeit being immature, have recently shown ‘intensive signs of successful efforts to be liberalized’ and of materializing efficiencies. In October 2016, the parties announced that they agreed on a 33% rebate scheme for the supply of ALUMINIUM. Charges may increase in case the aluminium stock rates exceed a certain amount.
DEI is the third incumbent energy supplier that suffers from ALUMINIUM’s complaints and the HCC’s intolerance to abusive practices in the energy sector. In 2012, DESFA was fined for not complying with ALUMINIUM’s request to access and use the natural gas transmission network in order to receive natural gas orders from a thirdparty source (HCC 555/VII/2012). The same case resulted in DEPA committing before the HCC to adopt several measures with a view to liberalizing the Greek supply market of natural gas (HCC 551/VII/2012).
1 RAE (Regulatory Authority for Energy) is Greece’s independent energy regulator. For more on RAE and the structure of Greece’s energy markets, visit www.rae.gr.