EU Commission rules gas contracts illegal

Nov 02, 2004 01:00 AM

The European Union Commission ruled gas contracts between state-owned Gaz de France and Italy's ENI and Enel are illegal.
Under the contracts, Gaz de France transported natural gas from northern Europe through France for ENI, and swapped LNG bought in Nigeria for Enel. Both contracts included a clause which prohibited the Italian firms from selling the gas in France.

In a statement, the EU Commission said these terms were anti-competitive. They "restrict the territory in which the parties could use the gas and was aimed at segmenting national markets." Regulators didn't impose any fines since the industry is in the process of being deregulated and the parties have stopped the illegal practice.
But EU Competition Commissioner Mario Monti said he acted to insure the success of deregulation. Regulators simultaneously warned they would display „much less clemency“ if it found other gas deals with such restrictive clauses.

EU regulators in the past have investigated import energy contracts. In 2003, regulators reached an agreement with Gazprom to allow ENI to resell the gas it bought from the Russian company.
And in 2002, the EU Commission reached an agreement with Nigeria LNG to delete a clause preventing one of its European customers to resell the gas outside its national borders.

Source: Dow Jones
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