The European Commission Thursday settled its antitrust investigation into GDF Suez's (GSZ.FR) alleged abuse of its dominant position in the French gas market, accepting the company's promise to dramatically reduce its presence in the country's gas import infrastructure.
To settle the case, and escape an antitrust fine, GDF Suez proposed "a major structural reduction of its long-term reservations on French gas import infrastructure capacity," the commission said.
The company has promised to decrease its share of natural gas entry capacity to less than 50% in 2014, from the current two thirds. It has also promised to give other energy companies better access to liquefied natural gas terminals.
"GDF Suez is proud of the fruitful cooperation" with the European Competition authorities, GDF Suez said in a statement. The company also stated that the measures would benefit the French consumers "notably".
The commission has gone after European electricity and gas companies with a heavy hand following a sector inquiry in 2005 which revealed a serious lack of cross border competition, mainly due to the large energy companies' strong hold on distribution infrastructure.
Initially the commission envisaged a political solution, which would have forced European utilities to split ownership of distribution from production. But negotiations failed due to strong pressure from France and Germany to protect their national champions.
Following the failure of the political proposal the commission has taken a different route, using its wide reaching antitrust powers to correct the market failure.
The commission's antitrust investigation against GDF Suez was initially spurred by concern the company's long-term grip on France's import capacity was limiting potential competitors' access to the country's market, resulting in higher prices for consumers.
New companies wanting to enter gas markets need access to gas import infrastructure, such as pipelines and liquefied natural gas terminals, in order to compete for customers, the commission said.
"The remedies offered by GDF Suez provide a real opportunity for competitors to enter the French gas market and so offer energy consumers greater choice of gas supplier and more competitive prices," Competition Commissioner Neelie Kroes said.
The reduction in GDF's presence will also contribute to an integrated and more competitive European energy market, Kroes added.
The settlement does not conclude whether GDF Suez broke the antitrust laws, but it legally binds the company to the commitments it has offered.
If GDF Suez were to go back on its promise, the commission could fine it up to 10% of its total annual turnover without having to prove any violation of the competition rules.
The commission still has antitrust cases in the energy sector open against French electricity company Electricite De France (EDF.FR), Italian gas company ENI (ENI.MI), Swedish electricity transmission operator Svenska Kraftnaet, and Ruhrgas, a subsidiary of energy giant E.ON AG (EOAN.XE), to name a few.
In many of the cases Brussels based antitrust lawyers are expecting the companies to settle with the commission.
Earlier this year, E.ON and GDF Suez were each fined EUR553 million by the commission for agreeing not to compete in each other's national gas markets.
RWE AG (RWE.XE) last year pledged to sell its German gas transmission grid to avert an E.U. antitrust fine, and E.ON agreed to sell its German power transmission grid as well as around 5 gigawatts of power generation capacity to avoid an antitrust fine.