EU/Competition: Energy

Newsletter 1/2021

The EFTA Surveillance Authority (ESA) adopted 16.12.20 revised guidelines for assessing state aid for sectors exposed to the European carbon market, the Emissions Trading System (ETS). The guidelines will allow Norway and the other EEA/EFTA States to compensate certain sectors to avoid so-called carbon leakage. The revised ETS guidelines entered into force 01.01.21 to coincide with the start of a new ETS trading period, and will replace the previous guidelines adopted in 2012. The revised guidelines will consider aid compatible only for sectors deemed to be at genuine risk of carbon leakage and facing competitive pressure due to their strong exposure to international trade. Incentive effect will also be a part of the assessment criteria, and compensation will be conditional upon additional de-carbonisation efforts by the companies concerned. The guidelines will enable Norway (and Iceland) to compensate companies in at-risk sectors for so-called indirect emissions costs. As a part of the ETS, companies operating in the EEA/EFTA States are subject to additional costs for emitting greenhouse gases, which results in higher electricity prices. The guidelines allow for state aid to be granted to support a green transition, including the modernisation, diversification, and sustainable transformation of the energy sector. Visit the new guidelines here.

The Commission adopted 15.12.20 a proposal to revise the EEA rules on Trans-European Networks for Energy (the TEN-E Regulation) to better support the modernisation of Europe’s cross-border energy infrastructure. The Commission’s proposal includes: (i) an obligation for all projects to meet mandatory sustainability criteria and to follow the ‘do no harm’ principle; (ii) an update of the infrastructure categories eligible for support through the TEN-E policy, ending support for oil and natural gas infrastructure; (iii) a new focus on offshore electricity grids with provisions facilitating more integrated onshore and offshore infrastructure planning and implementation through the introduction of offshore one-stop-shops; (iv) a new focus on hydrogen infrastructure including transport and certain types of electrolysers; (v) upgraded rules to promote the uptake of smart electricity grids to facilitate rapid electrification and scale up renewable electricity generation; (vi) new provisions on smart grid investments for integrating clean gases (like biogas and renewable hydrogen) into the existing networks; (vii) continued attention to the modernisation of electricity grids and storage and carbon transportation networks; (viii) new provisions on support for projects connecting the EEA with third countries (Projects of Mutual Interest or PMIs) that demonstrate their contribution to overall energy and climate objectives in terms of security of supply and decarbonisation; (ix) a revised governance framework to enhance the infrastructure planning process and ensure it is aligned with climate goals and energy system integration principles, through increased stakeholder involvement throughout the process, a reinforced role of the EU Agency for the Cooperation of Energy Regulators (ACER) and improved oversight by the Commission; (x) measures to simplify administrative procedures, accelerating project implementation, shortening permitting procedures for PCIs to avoid delays in projects that facilitate the energy transition, and strengthening transparency and participation in consultations. Visit the proposal here.

The Norwegian Competition Authority (NCA) warns in a Statement of Objections (SO) of 15.12.20 that it is considering imposing fines totaling NOK 21 billion on Norgesgruppen, Coop and Rema 1000. The NCA’s preliminary assessment is that the three grocery chains have cooperated in a way that may have led to higher grocery prices. The cooperation concerns the chains’ so-called price hunting practices. According to the NCA, the grocery chains have allegedly agreed to allow their employees to access each other’s grocery stores with a view to scan shelf prices. These employees, referred to as “price hunters”, have collected a substantial amount of price information. The Authority’s preliminary assessment is that the grocery chains have used the price information collected to coordinate prices. This may, according to the NCA, have resulted in higher grocery prices to the detriment of consumers. These practices have been ongoing since 2011. The NCA’s preliminary view is that the practices in question have restricted competition by object, and that fines should be imposed. The NCA has informed the grocery chains in a Statement of Objections that it is considering imposing a fine of NOK 8.8 billion on Norgesgruppen ASA, a fine of NOK 4.8 billion on Coop Norge AS and a fine of NOK 7.4 billion on Rema 1000 AS. The level of these fines, if adopted, will be record high not only in Norway but even from a global perspective. The grocery chains have been invited to submit their comments on the SO by 15.04.20.

The two proposals were made public 15.12.20. The Digital Services Act: The Digital Services Act will introduce a series of new, harmonised EEA-wide obligations for digital services, graduated on the basis of those services’ size and impact, such as: (i) Rules for the removal of illegal goods, services or content online; (ii) Safeguards for users whose content has been erroneously deleted by platforms; (iii) New obligations for very large platforms to take risk-based action to prevent abuse of their systems; (iv) Wide-ranging transparency measures, including on online advertising and on the algorithms used to recommend content to users; (v) New powers to scrutinize how platforms work, including by facilitating access by researchers to key platform data; (vi) New rules on traceability of business users in online market places, to help track down sellers of illegal goods or services; (vii) A cooperation process among public authorities to ensure effective enforcement across the single market. Platforms that reach more than 10% of the EU’s population (45 million users) are considered systemic in nature, and are subject not only to specific obligations to control their own risks, but also to a new oversight structure. This new accountability framework will be comprised of a board of national Digital Services Coordinators, with special powers for the Commission in supervising very large platforms including the ability to sanction them directly. The Digital Markets Act: The Digital Markets Act will (i) Apply only to major providers of the core platform services most prone to unfair practices, such as search engines, social networks or online intermediation services, which meet the objective legislative criteria to be designated as gatekeepers; (ii) Define quantitative thresholds as a basis to identify presumed gatekeepers. The Commission will also have powers to designate companies as gatekeepers following a market investigation; (iii) Prohibit a number of practices which are clearly unfair, such as blocking users from un-installing any pre-installed software or apps; (iv) Require gatekeepers to proactively put in place certain measures, such as targeted measures allowing the software of third parties to properly function and interoperate with their own services; (v) Impose sanctions for non-compliance, which could include fines of up to 10% of the gatekeeper’s worldwide turnover, to ensure the effectiveness of the new rules. For recurrent infringers, these sanctions may also involve the obligation to take structural measures, potentially extending to divestiture of certain businesses, where no other equally effective alternative measure is available to ensure compliance; (vi) Allow the Commission to carry out targeted market investigations to assess whether new gatekeeper practices and services need to be added to these rules, in order to ensure that the new gatekeeper rules keep up with the fast pace of digital markets. The European Parliament and the Member States will discuss the Commission’s proposals in the ordinary legislative procedure. Visit the proposal for a Digital Services Act here. Visit the proposal for a Digital Markets Act here.