Antitrust: Commission accepts commitments by Transgaz to facilitate natural gas exports from Romania

This article is brought to you in association with the European Commission.

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The European Commission has made commitments offered by Transgaz legally binding under EU antitrust rules. The company will make available to the market significant firm capacities for natural gas exports from Romania to neighbouring Member States, in particular Hungary and Bulgaria. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Transgaz has committed to make available capacities at interconnection points for increased natural gas exports from Romania to Hungary and Bulgaria. This will promote the free flow of gas at competitive prices in South Eastern Europe and is a further step towards a single European energy market. Consumers across the region will benefit from greater security of supply of a key transition fuel towards the ultimate objective of an emissions free energy mix, in line with the European Green Deal.”   The Commission’s concerns The Commission announced a formal investigation in June 2017 to assess whether Transgaz, the state-controlled natural gas transmission system operator in Romania, infringed EU antitrust rules by restricting exports of natural gas from Romania. In particular, the Commission was concerned that Transgaz may have carried out such restrictions by:

• underinvesting in or delaying construction of infrastructure for gas exports,
• interconnection tariffs for gas exports that made exports commercially unviable,
• using unfounded technical arguments as a pretext for restricting exports.

These restrictions may have maintained or created barriers to the cross-border flow of natural gas from Romania, one of the EU’s largest natural gas producers, to Hungary and Bulgaria, contrary to the objective of an integrated Energy Union where energy flows freely across borders directed by competitive forces and based on the best possible use of resources.   The commitments Following the opening of the formal investigation, Transgaz offered commitments to address the Commission’s concerns. The Commission then consulted market participants to verify whether the proposed commitments would remove the competition concerns identified by the Commission. In light of the market test, Transgaz has made some amendments to its proposed commitments. The final commitments will ensure that market participants can access significant volumes of export capacities via the interconnection points between Romania and neighbouring Member States. More specifically, Transgaz has committed:

• to make available minimum export capacities of 1.75 billion cubic metres per year at the interconnection point between Romania and Hungary (Csanádpalota). This capacity is equivalent to around one sixth of Hungary’s annual gas consumption;
• to make available minimum export capacities totalling 3.7 billion cubic metres per year at two interconnection points between Romania and Bulgaria (Giurgiu/Ruse and Negru Vodă I/Kardam). This capacity covers more than half of Bulgaria and Greece’s annual gas consumption;
• to ensure that its tariff proposals to the Romanian national energy regulator (ANRE) will not discriminate between export and domestic tariffs in order to avoid interconnection tariffs that would make exports commercially unviable;
• to refrain from using any other means of hindering exports.

The final commitments provide for significant additional capacity compared to the market-tested commitments, in particular to Hungary, by including capacities envisaged for the Romanian section of the first phase of the Bulgaria-Romania-Hungary-Austria (“BRUA”) gas pipeline project. As a result, Transgaz’s participation in this project will also be subject to legally binding deadlines. The commitments will remain in force until 31 December 2026. A trustee will be in charge of monitoring the implementation and compliance with the commitments. The Commission has concluded that the amended commitments address the identified competition concerns and therefore has made them legally binding on Transgaz.     Background Societatea Națională de Transport Gaze Naturale Transgaz S.A. (Transgaz) is the sole manager and operator of the natural gas transmission network in Romania, which includes all interconnectors with neighbouring countries. Romania is the second largest natural gas producer in the EU (after the Netherlands) and has significant gas reserves, including recent discoveries in the Black Sea. Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits the abuse of a dominant position that restricts competition in the EU. Following inspections in June 2016 in Romania, the Commission opened a formal investigation into Transgaz’s behaviour in June 2017 and informed the company about its preliminary competition concerns in September 2018.On 21 September 2018, the Commission invited comments from interested parties on a previous version of the commitments. Article 9 of the EU’s Antitrust Regulation (Regulation 1/2003) allows the Commission to conclude antitrust proceedings by accepting commitments offered by a company. Such a decision does not reach a conclusion on whether EU antitrust rules have been infringed but legally binds the company to respect the commitments. A policy brief on commitment decisions under Article 9 is available here. If Transgaz were to breach the commitments, the Commission could impose a fine of up to 10% of the company’s worldwide turnover, without having to prove an infringement of EU antitrust rules. Supplying secure energy to consumers and businesses is one of the aims of the European Green Deal. A competitive and fully integrated energy market fosters security of supply and free gas flows from Romania to Bulgaria and Hungary contribute to the EU’s greenhouse gas emissions reduction objective in line with the European Green Deal. The Transgaz case complements Commission efforts to enable the free flow of gas at competitive prices and with enhanced security of supply in Central and Eastern European gas markets. In May 2018, the Commission imposed binding obligations on Gazprom to remove contractual restrictions on cross-border gas flows and ensure competitive gas prices inter alia in Bulgaria. In December 2018, the Commission adopted a prohibition decision against the BEH Group to ensure that competitors have access to key gas infrastructure in Bulgaria and can compete freely in the Bulgarian gas market. The full text of today’s Article 9 Commission Decision, the commitments and more information on the investigation will be available on the Commission’s competition website, in the public case register, under the case number 40335.