GDF-Suez and Eon face massive fines

Published on 9 July 2009 at 14:33

Leading with headline "Kroes attacks energy giants," the Dutch daily Trouw reports that the EU Commissioner for Competition Neelie Kroes has slapped fines on two of Europe's largest gas companies — France's GDF-Suez and Germany's Eon — for "abusing their privileged position on the market, and exploiting consumers." The fines of 553 million euros each, will be the largest ever levelled in Europe's energy sector.

Under the terms of a 1975 deal, prompted by a joint plan to build a gas pipeline from Russia, the two companies agreed to refrain from selling gas on each others territories. The deal was not illegal at the time, because state monopolies prevailed in France and Germany, but it remained in force until 2005, long after the deregulation of both markets. Both companies deliberately ignored the European directive stipulating the full liberalisation of the gas market by 2000 to maintain prices at an agreed level. According to the Commissioner, consumers were overcharged for gas, and both companies made excessive profits by preventing competition. The amount of the fines may appear high, but Trouw reports that Eon and GDF-Suez "will have no trouble finding the money." The two companies declared a total of more than eight billion euros in first quarter earnings this year.

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