Taking a tough line in the power struggle

Sectoral inquiry

How free and fair is the energy market? In January 2007, after two years of consultations with industry players, consumers and many others, the European Commission published a report that highlighted just how extensive the obstacles were.

It found that markets were highly concentrated and increasingly integrated from production through to distribution, and incumbent players were colluding, restricting competitors' access to their infrastructure and delaying investment into capacity-building to protect their market share. Vertical integration, as well as increasing incumbents' power, restricts access to essential market information, the inquiry found.

Restricting access to the networks and delaying (in some cases, even preventing) investment in major infrastructure projects all deter potential competitors as well as complicating the operations of existing competitors, it found.

The response of Neelie Kroes, the European commissioner for competition, was a promise to make aggressive use of the executive's anti-trust powers to tackle the problem of collusion by incumbents and, through scrutiny of mergers, to prevent the problem of market concentration worsening.

In her bid to promote competition and encourage new entrants, she said she would particularly focus on forcing companies to sell assets, to ‘unbundle' their upstream and downstream operations and to release more gas through auctions (gas release programmes).