Case COMP/39.315 – ENI (Abuse of Dominant Position)

1. Case COMP/39.315 – ENI(Abuse of Dominant Position) International Competition Law Dushanka Dovichinska 24 Nov 2010

2. Outline • Subject matter • The Addressee • Procedural Steps under Regulation (EC) No 1/2003 • Opening of the proceedings • Preliminary Assessment • Proposed Commitments • Commission Notice • Proportionality of the Final Commitments • Conclusion

3. 1. Subject Matter • The Decision was addressed to ENI Spa ("ENI") and concerned ENI's conduct on the gas transportation market to Italy and on the gas supply markets in Italy. • Commission came to the conclusion that ENI hold a dominant position on the market for transport of gas to Italy and on the gas supply markets in Italy and might had foreclosed competition in the Italian gas supply markets by way of a refusal to supply gas transport services to third parties by: • Capacity hoarding (refusing to grant competitors access to capacity available on the transport network) • Capacity degradation (granting access in an impractical manner) • Strategic underinvestment (strategically limiting investment)

4. 2.The Addressee • ENI is an Italian-state controlled company active at multiple levels of the production, transportation and supply chains in the energy sector, predominantly in natural gas and oil; it is a fully integrated gas company, with activities in the production and import of gas, in the gas transmission and storage, in the downstream gas distribution business and in the business of international transportation services. • In 2008, ENI had net profit of EUR 8.8 billion

5. 3. Procedural Steps • May 2006, an inspection in ENI’s premises • On 20 Apr 2007, the Commission initiated proceedings against ENI • On 6 Mar 2009 the Commission adopted a Statement of Objections • On 4 Feb 2010, ENI submitted commitments to the Commission in response to the concerns raised in the Statement of Objections • On 5 Mar 2010, a notice was published in the Off. Journal of the EU • On 8 July 2010 ENI submitted revised commitments (the "Final Commitments") • On 9 Sep 2010, the Advisory Committee on Restrictive Practices and Dominant Positions was consulted • On 13 Sep 2010, the Hearing Officer issued his final report.

6. 4. Opening of the Proceedings • On 20 April 2007, the Commission initiated antitrust proceedings concerning: capacity hoarding and strategic underinvestment against ENI S.p.A. and its subsidiaries • No conclusive proof of infringement

7. 5. Preliminary Assessment • The system of infrastructures to import gas into Italy • Relevant markets • The relevant product markets (supply of gas vs. gas transport services) • The relevant geographic markets (the routes constitute one relevant market) • ENI's dominant position on the relevant markets • Substantial part of the internal market • The competitive concern of a refusal to supply strategy • Capacity hoarding (reduced access despite a steady demand) • Capacity degradation (e.g. delayed allocation of capacity, short-term basis) • Strategic limitation of investment (kept a tight control over transport) • Conclusion (protected profit, negative effects on competition) • Effect on trade between Member States

8. 6. Proposed Commitments • ENI did not agree with the findings of the Commission’s Statement of Objections, but offered commitments to divest: • its current shareholdings in companies related to international gas transmission pipelines to a suitable purchaser • its stakes in the transmission system operators (the TSO's) • its entire shareholding in Eni Gas Transport GmbH • its entire shareholding in Eni Gas Transport Deutschland S.p.A • auxiliary equipment necessary for the operation of the transmission network • intangible assets necessary for the operation of the transmission network • not to renew or prolong contracts

9. 7. Commission Notice • The Commission received 14 responses from interested third parties, namely from shippers, some vertically integrated TSO's and two regulators. • In response to the market test, ENI submitted a revised proposal for commitments ("Final Commitments") on 8 July 2010, which took account of the comments received. • The Commission considered the Final Commitments sufficient to effectively remove the competition concerns expressed in the Statement of Objections.

10. 8. Proportionality of the Final Commitments • Principle of proportionality: the measures adopted by EU institutions must be suitable and not exceed what is appropriate and necessary for attaining the objective pursued. • Commitments were not imposed by the Commission for an established infringement but voluntarily proposed by the undertaking seeking to bring the procedure to an end. • The Final Commitments were necessary and sufficient to address the concerns identified by the Commission without being disproportionate.

11. …Aside • According to Article 9 of Regulation 1/2003 (the EU antitrust law), the Commission may decide in cases where it intends to conclude antitrust violations to make commitments legally binding on companies that offer them. These, so-called Article 9 settlement decisions allow the Commission to resolve competition concerns more rapidly. Because they represent a settlement, Article 9 decisions do not conclude on the existence of an infringement. But were a company to break legally binding commitments, the Commission could impose a fine of up to 10% of the total annual turnover without, in this case, having to prove the violation either.

12. 9. Conclusion • The Commission made the Commitments, offered by the undertaking concerned to meet the Commission’s concerns expressed in its Statement of Objections, binding upon it. The decision did not conclude whether or not there had been or still was an infringement. • The Commission considered that there are no longer grounds for action and the proceedings in this case should therefore be brought to an end.

13. References • Case documents, available on: http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39315

14. Thank You For Your Attention