In a decision of 21 March 2017, the French competition authority ("FCA") fined ENGIE €100 million following a settlement decision regarding various practices in the gas and electricity sectors.
By way of background, two kinds of tariffs still exist in France for the supply of natural gas:
- Natural gas can be sold at unregulated market tariffs by any supplier, including ENGIE.
- Alternatively, regulated tariffs, which applied before the liberalisation of the sector, can still be offered to certain categories of customers (consumers and small businesses consuming less than a certain quantity of gas each year). Regulated tariffs are fixed by the government and ENGIE, as the former monopoly supplier in the gas sector, has an exclusive right to offer them.
The FCA objected to three aspects of ENGIE's conduct in this regard:
- First, that ENGIE used its historical database of regulated tariff customers that it still supplies, which it had collated as the country's incumbent monopoly supplier and so was not capable of being duplicated by its competitors, to help agree unregulated tariff supply contracts.
- Second, that ENGIE used the same commercial infrastructure it used to supply natural gas at regulated tariffs to supply customers at unregulated tariffs. According to the FCA, this meant that ENGIE had financially benefited from insufficiently differentiating between the regulated and unregulated sides of its business.
- Lastly, ENGIE wrongfully held out that its supply of gas under its unregulated tariff contracts was more secure than the supply offered by its competitors, given its status of incumbent operator, notwithstanding that, in reality, all suppliers are bound by the same security of supply obligation.
However, the FCA considered, as a mitigating circumstance, that ENGIE may not have been immediately aware of the obligations flowing from its former life as the incumbent monopoly supplier. As a result, and taking into account the fact that ENGIE and the FCA had agreed to enter into a settlement agreement, the FCA imposed a discounted fine of €100 million.
This is the seventh time that the FCA has used its new settlement procedure, which was originally introduced into French law in August 2015.
With thanks to Julie Tirtiaux of Ashurst for her contribution.
If you would like to view any other articles in the Competition newsletter March 2017 please click on the links below:
