French and German energy giants GDF Suez SA (GSZ.FR) and E.ON AG (EOAN.XE) face a EUR553 million fine each for agreeing not to compete on each other's national gas markets, the European Commission said Wednesday.
"Market sharing is one of the worst types of antitrust infringement," said Competition Commissioner Neelie Kroes. "This agreement deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the European Union," she added.
This is the first time the commission has imposed fines for an antitrust infringement in the energy sector, the commission said. The overall amount of EUR1.1 billion is the second highest fine imposed by the commission for a cartel case.
Both E.ON and GDF Suez said they would appeal the decision to the European Union's Court of First Instance. E.ON said the fine was "unreasonable" while GDF Suez disputed the facts behind the reasoning.
Germany's Ruhrgas AG, which is now owned by E.ON, and Gaz de France SA, now part of the GDF Suez group, agreed in 1975 not to sell natural gas transported over their jointly owned Megal pipeline in each other's home markets.
The Megal pipeline transports gas from Russia through southern Germany to the French-German border, and was built in the aftermath of the first oil crisis to bring additional energy to Europe.
Initially, both companies had legal state-granted monopolies in their home markets, but the commission charges them with having continued with the artificial market split after the European gas market was liberalized in 2000, and only abandoned it in 2005.
The companies met on a regular basis to discuss the implementation of the market sharing agreement in the newly liberalized market and monitored each other's actions, the commission said.
GDF Suez says that the legal context of the time when Megal was built was very different from that of the energy market today, and should be taken into account.
E.ON and GDF Suez are the leading suppliers of natural gas in Germany and France, and two of the largest players in the European gas industry, according to the commission.