EU/Competition: Energy

Newsletter 7/2020

The Commission approved 29.06.20 the prolongation of tax exemption measures for non food-based biogas and bio propane used for heating or as motor fuel in Sweden. Under two separate schemes, Sweden exempts from energy and CO₂ taxation (i) biogas that is used in heat generation (former scheme last prolonged in 2018) and (ii) biogas that is used as motor fuel (former scheme last prolonged in 2015). With today’s decisions, the Commission approves for both schemes a 10-year prolongation of the tax exemption (2021-2030), with two modifications: i) limiting the tax exemption to only non-food based biogas and ii) extending the tax exemption to non-food based bio-propane. The objective of the tax exemption is to increase the use of biogas and bio-propane and to reduce the use of fossil fuels and their greenhouse gas emissions, while facilitating the transition towards advanced biofuels. The Commission assessed the measures under EU state aid rules, in particular the Guidelines on State Aid for environmental protection and energy 2014-2020. The Commission found that the tax exemptions were necessary and appropriate for stimulating the production and consumption of domestic and imported biogas and bio propane, without unduly distorting competition in the single market. In addition, the schemes will contribute to the efforts of both Sweden and the EU as a whole to deliver on the Paris agreement and move towards the 2030 renewables and CO₂ targets. On this basis, the Commission concluded that the measures are in line with EU state aid rules. Visit the case dossier here.

The Commission published 26.06.20 a public consultation on the Market Definition Notice used in EU competition law. The current Market Definition Notice dates from 1997, and the Commission now states – unsurprisingly – that the notice may not “address all pertinent questions arising today when defining the relevant product and geographic market”. The Commission has also gained a lot of experience in market definition all these years, techniques have evolved and the EU courts have provided additional guidance. The best practices that can be distilled from these developments may need to be reflected in a revised Market Definition Notice, and the Commission is seeking stakeholders’ feedback on this. The information collected through the public consultation will provide part of the evidence to be used in the evaluation. Stakeholders can submit their views and respond to the consultation until 09.10.20. Visit the consultation here.

The Norwegian government launched 24.06.20 a consultation on a new state aid act for Norway. The new act – as the current act – is mainly focused on implementing all procedural provisions, i.e. the provisions of the act do not include substantive provisions. It proposes clarifications in relation to the stand-still provision and recovery; otherwise it is mostly a technical modernization of the implementation of existing procedural rules and EEA obligations. The deadline for comments is 01.10.20. Visit the consultation here.

The Norwegian mobile communications sector consist of quite concentrated markets, with only two complete networks and Telenor as the incumbent provider. In a decision of 30.06.20 ESA found that Telenor abused its market dominance by a pricing strategy that resulted in rivals making a loss when selling residential mobile broadband services on tablets and laptops. In the view of ESA, during a critical growth phase in mobile data in Norway, Telenor’s wholesale prices for access to its network were higher than the retail prices it charged its own residential users for accessing mobile broadband services on large-screen devices, such as tablets and laptops. The decision rests on the view that, despite an acceleration in consumer demand for mobile data, Telenor’s pricing practices made it impossible for rivals that were dependent on buying wholesale access from Telenor to offer large-screen mobile broadband services to residential users without incurring a loss. According to ESA, these “margin squeeze” practices prevented rival companies from competing viably from 2008 to the end of 2012 in what was an evolving and fast-growing market at the time. ESA found this to be an illegal abuse of dominance pursuant to Article 54 EEA. Telenor has already stated that the decision will be tried at the EFTA Court. A public version of the decision has yet to be published. Visit ESA’s fact sheet on the decision here.

The Norwegian Competition Authority (NCA) has concluded its investigation related to alleged abuse of dominance of Ringnes following commitments proposed by the company. The NCA has investigated Ringnes since 2017. The Authority was concerned that Ringnes’ agreements had tied pubs and restaurants to Ringnes and forced these customers to buy beer exclusively from the company. Such agreements may hinder other breweries and suppliers access to the market, and amount to an infringement of the Competition Act’s prohibition against abuses of a dominant position (Section 11 of the Competition Act). Ringnes has committed not to conclude agreements that give the company exclusive rights to deliver beer to pubs and restaurants. Moreover, it must follow clearly from Ringnes’ agreements that the pubs and restaurants concerned are free to accept deliveries of beer from other breweries and suppliers. The commitments make it possible for other breweries and suppliers to compete effectively with Ringnes on price, as Ringnes has undertaken not to grant discounts that tie pubs and restaurants to Ringnes, or to reward customers that source all their requirements from Ringnes. A trustee will ensure that Ringnes complies with the commitments. If Ringnes should not act in accordance with the submitted commitments, the Authority may reopen the investigation and could possibly impose a fine for non-compliance under the Competition Act. It is the first time the NCA concludes an investigation by adopting a commitment decision, making commitments proposed by the company under investigation legally binding. Read more here.