For the moment this is no more than a warning

Energy news: vendors develop combined offers electricity/gas. These are at risk, from the legal point of view, as seen for other sectors (1)

Anne Lapierre: The dual offers give EDF and gas of France a clear competitive advantage. Because they can use their client files to sell another product than that of their original activity - easy for EDF to provide gas to electricity customers, and vice versa for gas of France. For these two companies, customer acquisition cost is so low. They are thus clear advantage over other operators. That said, the manner in which they are now their dual offers is not an abuse of a dominant position.

Laure Givry: It would be different if EDF used his position to enter the market of gas, or gas of France of electricity: If one or the other was coupled supply electricity/gas offerings by providing significant discounts, this would fall under the abuse of dominant position. But, for the moment, there is not - in any case on accessible information - tariff offer coupled with price reductions directly related to the simultaneous purchase of gas and electricity. It would therefore a not additional to cross the yellow line and switch in the abuse. For the moment, this is no more than a warning.

E.n.: Can this risk of abuse of dominant position stop gas and electrical in their desires of convergence

L.G.: I do not think, because we are at the beginning of this convergence. In addition, EDF and gas of France are very aware of the issue and implement their respective offers with great caution. They know that the risks are tariff and that should not be that price reductions are the only concurrency of a supply of gas and electricity, if there is a risk of related offer (prohibited by the law of competition, Editor's note).

E.n.: therefore, consumers have really interest to choose a combined offer

A.L.: Yes, because they want a simple answer and unique to their dual need gas and electricity - it is for this reason that the supply of providers develops. Furthermore, competition is very strong, there will inevitably be a small financial interest, a consumer, to choose a combined offer. With the total opening of the market on July 1, 2007, each provider will obviously try to offer more sexy than that of its competitor... Dominant operators must ensure that their combined offerings lead on with minimalist rebates, not on the price of the global supply (to avoid falling into the related supply and abuse of dominant position, Editor's note), but on the services that come with. To differentiate on the dual offers, they will therefore only a very small margin of manoeuvre. Their combined offer will be slightly more interesting than two offers electricity and gas agreements separately. But slightly only...

E.n.: How to establish the boundary between acceptable drawback and that of the abuse of dominant position

L.G.: If the price of electricity is from 32 EUR/MWh and the 20 euros/MWh gas when these two energies are purchased separately, and a dominant provider offers a 10 reduction on all of the consumption of a client in a coupled offer - i.e. If it agrees a discount only because it is a dual supply.This is clearly a case of abuse of dominant position. However, when the offer is complex, it is much less clear. Abuse of dominant position can hide in ancillary benefits...

A.L.: On such offers, it is much more difficult to distinguish, in the price, what is the pure service.

E.n.: How to control the absence of abuse of dominant position

L.G.: It falls within the competition authorities, which have powers of investigation. Clues can alert - complaints from competitors or monitoring of changes in market shares which, if they remain too stable, can generate queries.

E.n.: EDF and gas of France by contrast, alternative providers may, grant discounts on dual offers...

L.G.: quite. This practice is prohibited only to companies in a dominant position because, by definition, they have market power and can have much larger economies of scale. Thus, by a small sacrifice, they are likely to prevent the introduction or development of smaller operators.

E.n.: Customers who want a combined offer electricity/gas do not, therefore, interest to go to alternative suppliers

A.L.: They have interest if alternative providers to which they turn have production capacity. Because, if they provide on the market, they will find it difficult to be more competitive than the dominant operators. This is why Direct Energy has made a formal request for access to nuclear MW (2) and Poweo is building its first gas plant. These providers cannot, today, less than the market price bid because they do not have the financial surface of the great monopolists. They will therefore be able to offer interesting customers discounts if they find a way to escape from the fluctuation in market prices.

E.n.: Is this issue of the dual offers similar to what happened in telecommunications

L.G.: Can actually draw a parallel with telecommunications, but with the postal sector. In 2001, the competition Council ordered France Télécom to suspend related offers. In 2004, he denounced the anti-competitive nature of certain discounts contained in commercial contracts of the position intended for large accounts (see box below).

Laure Givry, associate counsel, Anne Lapierre, counsel, members of the energy, law firm Norton Rose group

1 See box p. 3.

2 Direct energy has asked the authorities to organize access to nuclear energy for alternative suppliers by July 1, 2007, on the model of what was done for the électro-intensifs in the consortium. See also energy news no. 122, pp. 10-11.

BOX .

Vigilant coupled offers competition Council

The competition Council has in the past, complained of the combined offers that posed problem under the competition law. In a decision of 19 December 2001, he directed and France Télécom to suspend packages combining benefits in competition with other monopoly (local communications and telephone line subscription, for example). He believes that "this type of practice is likely to give a decisive advance France Telecom competitors and is gravity and urgency justifying the precautionary measures."

In 2004, a similar problem arises with the position. In a decision of 30 November 2004, the competition Council denounced "the anti-competitive nature of certain discounts contained in its commercial contracts for major accounts." The mail order sector enjoyed rebates coupling and fidelity - practices characterized as abuse of dominant position by the competition Council. Mail is then committed, for the products or services in competition on which she would be in a dominant position, to "do not practice of coupling including base discounts would be incorporated by the added sales of two or more benefits belonging to distinct markets, as well as fidelity rebates based on the progression of the turnover of the beneficiaries". -