Article 2
This Decision is addressed to: Ferroatlántica SL Po de la Castellana 86, 7a E 28046 Madrid Energie Baden-Württemberg AG (EnBW) Durlacher Alle 93 D 76131 Karlsruhe Done at Brussels, 26 September 2001. For the Commission Mario Monti Member of the Commission (1) See the final report of the Hearing Officer in OJ C 42, 18.2.2004. (2) OJ L 395, 30.12.1989, p. 1; corrected version OJ L 257, 21.9.1990, p. 13. (3) OJ L 180, 9.7.1997, p. 1. (4) OJ C 42, 18.2.2004. (5) These figures include the turnover of OEW and EDF for the purpose of calculating the relevant turnover in accordance with the provisions of the Merger Regulation. (6) Endesa, Iberdrola, Unión Fenosa, Hidrocantábrico and other small generators. (7) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk. (8) Report C-60/00 on the Endesa/Iberdrola merger. (9) Article 21 of Royal Decree-Law No 6/2000 of 23 June 2000 on urgent measures to step up competition in goods and services markets (Spanish Official Gazette No 151, 24.6.2000, p. 22440). However, this in no way entails the disappearance of the pool. Article 21 of Royal-Decree Law No 6/2000 itself states that (as of 2003) traders will be able to conclude contracts for the acquisition of electricity from national producers in the normal way and concludes that "this energy may be sold to eligible customers or be incorporated into the existing daily or intradaily markets" (i.e. the pool). (10) Article 6 of Royal Decree-Law No 6/1999 of 16 April 1999 on urgent measures to liberalise markets and strengthen competition (Spanish Official Gazette No 92, 17.4.1999, p. 14350). (11) Article 19 of Royal Decree-Law No 6/2000. (12) Bilateral contracts represent less than 5 % of the total energy sold in the wholesale market. (13) Cases IV/M.1659 - Preussen Elektra/EZH, IV/M.1557 - EDF/Louis Dreyfus, COMP/M.1673 - VEBA/VIAG, COMP/M.1803 - Electrabel/Eon and COMP/M.1853 - EDF/EnBW. (14) Cases COMP/M.2353 - RWE/Hidroeléctrica del Cantábrico and COMP/M.2340 - EDP/Cajastur/Caser/Hidroeléctrica del Cantábrico. (15) The Spanish authorities consider that, as regards the energy offered to the pool (wholesale market) under freely competitive conditions and the demand for that energy, the geographic limits are the borders of mainland Spain. However, in the case of the retail market (supplies to final consumers) the Spanish authorities feel that, although the market could be said to be a national one, in geographic terms, the relevant geographic market is regional or even local. Nevertheless, according to the investigations carried out by the Commission, the retail market in electricity also appears to be of national dimensions. For the purposes of this Decision, however, a precise definition of the retail market for eligible customers is not necessary, since the analysis relates solely to the wholesale market or pool. (16) Source: Comisión Nacional de la Energía (National Energy Commission). (17) The reason for the fall in Hidrocantábrico's market share in 2001 is that it corresponds to an especially rainy period in which huge quantities of electricity derived from hydroelectric power were put on the market. Only 18 % of Hidrocantábrico's generating capacity comes from hydroelectric power plants. (18) The Merger Regulation does not define the concept of a group in the abstract, but sets out to establish whether the companies are entitled to run the activities of the undertaking (as in the case of EDF vis-à-vis EnBW). (19) In its Decision on Case COMP/M.1853 - EDF/EnBW, the Commission stated that "pursuant to the Shareholder Agreement [between EDF and OEW]* EDF is the sole industrial partner whereas OEW will be the regional partner. [confidential]* As long as OEW's regional interests and its profit interest are sufficiently respected, it appears very unlikely that OEW has an incentive to actively oppose the business strategy EDF chooses within EnBW." (20) Report C-60/00 on the Endesa/Iberdrola merger. (21) Report C-54/00 on the Unión Eléctrica Fenosa/Hidroeléctrica del Cantábrico merger. (22) Report C-54/00 on the Unión Eléctrica Fenosa/Hidroeléctrica del Cantábrico merger. (23) Hydroelectric power accounts for approximately 50 % of Iberdrola's generating capacity. (24) Hydroelectric power accounts for about 36 % of Endesa's generating capacity. (25) For reasons to do with the safety of the electrical system in particular, the "commercial capacity" is the only part of the total physical capacity which is really useful for exchanges. The commercial capacity between systems is not the sum of the transmission capacities associated with the different components of the grid (lines) which make up the interconnection: it is significantly lower, as the operation of the interconnected electrical systems requires operating conditions and safety margins to be taken into account. The system operator establishes the available commercial capacity for different periods of time, ranging from a year, through a fortnight to a day, determining with great precision what resources can be used, depending on the availability and operating schedules of the system's components. (26) Source: Red Eléctrica de España, the operator of the Spanish grid. (27) This means that whatever happens to the system, the commercial interconnection capacity will never fall below 550 MW. (28) Capacity ratio = theoretical international interconnection capacity/installed capacity (excluding special scheme). (29) Spanish Official Gazette No 285, 28.11.1997, p. 35097. (30) The new plants in San Roque, Castellón, Escombreras, etc. (31) Grupo Villar Mir, for example, argues that in all the cases in which the Commission or the Community courts have accepted the creation of a collective dominant position as a valid criterion for banning a merger, the notifying parties were part of the oligopoly or duopoly in a dominant position (Gencor/Lonrho, Nestlé/Perrier, Kali & Salz) and that although the Commission has decided in previous cases that a merger creates competition problems in that it reduces the number of operators competing on the market (Nestlé/Perrier), the position of third parties in the market is never the criterion which leads to the banning of a notified operation. EnBW argues that Articles 8(3) and 2(3) of the Merger Regulation imply that the ban must not be applied to mergers which allegedly reinforce the collective dominant position of third parties other than the Parties affected by the merger. (32) Case IV/M.1383 - Exxon/Mobil. (33) Recital 225 of the Decision and recital 228, which reads as follows: "The Commission considers that the creation or reinforcement of a dominant position by a third party is not excluded from the scope of application of Article 2(3) of the Merger Regulation. In addition, it should be borne in mind that Gasunie [the third party occupying a dominant position]* is a JV in which one of the Parties to the concentration has a substantial interest" (emphasis added). (34) See the Exxon/Mobil Decision referred to above. (35) The Spanish National Energy Commission forecasts that energy consumption in Spain will grow by over 12 % between 2001 and 2005. (36) Case COMP/M.1853 - EDF/EnBW. (37) Report C-60/00 on the Endesa/Iberdrola merger. Report C-54/00 on the Unión Eléctrica Fenosa/Hidroeléctrica del Cantábrico merger. (38) Report C-54/00 on the Unión Eléctrica Fenosa/Hidroeléctrica del Cantábrico merger. (39) The average price of electricity on the generating market fell from ESP 7,46 (EUR 0,04) in March 2000 to ESP 4,31 (EUR 0,03) in March 2001. (40) Between 37,5 % (Switzerland and Austria compared to Spain and Portugal) and 90 % (France compared to Italy). (41) Article 16 of Royal Decree-Law No 6/2000 of 23 June 2000 provides that "electricity producers whose installed generating capacity under the ordinary scheme throughout mainland Spain, on the date of entry into force of this Decree-Law, exceeds 40 % of the total [Endesa]* may not increase their installed capacity for a period of five years. For producers whose share of such installed capacity is less than 40 % but more than 20 % [Iberdrola]*, the period shall be three years". Hidrocantábrico could take advantage of the above restrictions in order to gain extra market share, in particular in view of the fact that, according to data compiled by the Spanish National Energy Commission, electricity consumption is expected to grow by a total of around 12 % between 2001 and 2005. (42) Source: Spanish Ministry of Economic Affairs. (43) In its reply to the statement of objections, EnBW states that an extra 7500 MW of generating capacity should be operational by 2003. According to the Commission's information, the additional installed capacity to be operational by 2003 would be less than 5000 MW. (44) In particular, Hidrocantábrico has a permit to build a plant in Navarre with an installed capacity of 400 MW. (45) Endesa, Iberdrola, Unión Fenosa and Hidrocantábrico each hold 10 % of REE's equity. (46) Article 12 of Law No 2000-108 of 10 February 2000 provides that "Within Electricité de France, the department operating the public electricity transmission network shall carry out its tasks ..." (emphasis added). (47) Article 14 of Law No 2000-108 of 10 February 2000.