The Battle Continues: EU Competition Commissioner Kroes Challenges the Energy Industry in Europe

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On January 10, 2007, the European Commission published its study on the future of Europe’s energy sector based on a broad inquiry into the gas and electricity markets.

Main findings of the European Commissions's sector inquiry:

The report identifies five main problem areas in the electricity and gas markets:

?? The wholesale market is too concentrated. The liberalization movement initiated more than

ten years ago in Europe[1] has been insufficiently carried out. National energy champions

remain the essential market players and new entrants are fighting an uphill battle.

?? Insufficient unbundling of energy networks leads to a real threat to the security of supply.

Unbundling remains weak because many incumbents in Europe are tied with long-term

contracts giving a handful of players major control over essential inputs in markets.

?? The lack of European market integration confirms the unwillingness of market players to play

the liberalization game.

?? A lack of market transparency and of access to essential information prevents new entrants

from competing against national champions.

?? Price formation in the gas and electricity sector is still unclear, resulting in consumer mistrust.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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