Energy Market Dominance – Detailed Explanation With At Least 6 Case Laws

1. Introduction

Energy market dominance refers to a situation in which an undertaking or group of undertakings possesses substantial economic power in the production, generation, transmission, distribution, storage, wholesale supply or retail sale of energy, enabling it to behave independently of competitors, consumers and other market participants.

Energy markets are particularly vulnerable to dominance because they often involve:

High capital investment and substantial entry barriers.

Natural monopolies in electricity transmission and distribution.

Control over essential infrastructure, including pipelines, grids and terminals.

Limited availability of alternative energy suppliers.

Long-term supply agreements and exclusive purchasing arrangements.

Dependence on electricity balancing, storage and network access.

Vertical integration between generation, transmission and retail supply.

An important legal distinction: Dominance itself is generally not unlawful. Competition law prohibits the abuse of a dominant position, such as exclusionary conduct, discriminatory access, excessive pricing in appropriate circumstances, predatory pricing and anticompetitive tying.

Energy market dominance must therefore be assessed by examining both the undertaking's market power and its actual or potential conduct.

2. Economic Characteristics of Energy Market Dominance

A. Infrastructure-based dominance

An undertaking controlling essential energy infrastructure may enjoy substantial market power.

Examples include:

Electricity transmission networks.

Natural gas pipelines.

LNG import terminals.

Electricity interconnectors.

Strategic fuel storage facilities.

Regional distribution networks.

Where duplication is economically impractical, competing undertakings may become dependent on the infrastructure owner's access decisions.

B. Generation-based dominance

A power generator may become dominant where it controls a substantial proportion of available generation capacity.

Dominance may be strengthened by:

Ownership of low-cost generation facilities.

Control over hydropower resources.

Ownership of nuclear or thermal generation plants.

Limited availability of alternative generating capacity.

Strategic withdrawal of generating capacity during peak demand.

C. Wholesale energy market dominance

Wholesale dominance arises where a supplier can influence electricity or gas prices because competing suppliers cannot adequately replace its output.

For example, a generator controlling essential peak-time capacity may be able to influence wholesale electricity prices.

D. Retail energy market dominance

Retail dominance may arise where consumers have limited alternatives because of customer lock-in, exclusive contracts, switching barriers, bundled services or control over distribution channels.

3. Legal Framework Governing Energy Market Dominance

A. European Union competition law

Article 102 TFEU prohibits the abuse of a dominant position within the internal market where trade between Member States may be affected.

Relevant forms of abuse include:

Unfair or excessive purchase or selling prices.

Limiting production, markets or technical development.

Applying discriminatory conditions to equivalent transactions.

Imposing supplementary obligations unrelated to the contract's subject matter.

Refusing access to essential infrastructure in circumstances where such refusal constitutes an abuse.

Article 101 TFEU also applies where energy companies engage in restrictive agreements, including market allocation, price-fixing and coordinated capacity restrictions.

B. United States competition law

The principal provisions are:

Sherman Act, Section 1 – anticompetitive agreements.

Sherman Act, Section 2 – monopolization and attempted monopolization.

Clayton Act – anticompetitive mergers and acquisitions.

Federal Energy Regulatory Commission (FERC) regulatory framework.

Energy companies may face competition-law scrutiny for strategic withholding, exclusionary conduct, collusion and manipulation of wholesale electricity markets.

C. United Kingdom competition law

The principal provisions include:

Competition Act 1998, Chapter I.

Competition Act 1998, Chapter II.

Enterprise Act 2002.

Electricity Act 1989.

Gas Act 1986.

The Competition and Markets Authority (CMA) and Ofgem play important roles in competition enforcement and energy-market regulation.

D. Morocco's competition framework

For Morocco, the principal legal framework includes:

Law No. 104-12 on Freedom of Prices and Competition.

Law No. 20-13 relating to the Competition Council.

Law No. 48-15 concerning the regulation of the electricity sector and the creation of the National Electricity Regulatory Authority (ANRE).

Applicable sectoral legislation governing electricity, renewable energy and natural gas activities.

The Competition Council examines anticompetitive practices and abuses of dominance, while ANRE performs sector-specific regulatory functions.

A critical issue is the interaction between general competition enforcement and sectoral regulation, particularly where access to electricity networks, renewable energy infrastructure or electricity-market facilities is concerned.

4. Determination of Dominant Position in Energy Markets

Competition authorities generally examine the following factors.

A. Market definition

The relevant market may be divided into:

The geographic market may be national, regional or local depending on transmission constraints, interconnection capacity and regulatory conditions.

B. Market share

A high market share may indicate dominance, but it is not conclusive.

Authorities also consider:

Installed generation capacity.

Actual electricity production.

Available capacity during peak demand.

Control over essential infrastructure.

Import and export possibilities.

Competitors' ability to expand production.

C. Barriers to entry

Energy markets frequently involve substantial barriers, including:

High infrastructure investment.

Government licensing requirements.

Limited access to transmission networks.

Scarcity of suitable generation sites.

Long-term power purchase agreements.

Control over fuel supplies.

Technical and regulatory restrictions.

D. Vertical integration

Vertical integration occurs when the same undertaking operates at different levels of the energy supply chain.

For example, a company may control electricity generation, transmission infrastructure and retail distribution.

Such integration can create competitive advantages but may also enable the company to discriminate against independent generators or rival electricity retailers.

5. Important Forms of Abuse of Dominance in Energy Markets

A. Refusal to provide network access

A dominant transmission operator may refuse access to competing electricity generators without objective justification.

This can prevent renewable energy producers from supplying electricity to customers.

B. Excessive pricing

A dominant energy supplier may charge prices significantly above competitive levels, taking advantage of the absence of effective alternatives.

However, high energy prices alone do not establish an abuse. Cost structures, investment risks, regulatory arrangements and market conditions must be considered.

C. Predatory pricing

A dominant undertaking may temporarily reduce prices below relevant cost benchmarks to eliminate competing energy suppliers and subsequently increase prices.

D. Capacity withholding

A dominant electricity generator may deliberately keep available generating capacity out of the market to create artificial scarcity and increase wholesale prices.

E. Margin squeeze

A vertically integrated energy company may charge independent retailers high wholesale prices while maintaining low retail prices, leaving competitors unable to compete profitably.

F. Exclusive supply agreements

A dominant energy undertaking may enter into long-term exclusive agreements with industrial consumers, preventing rival suppliers from accessing significant customers.

G. Discriminatory grid access

A transmission or distribution operator may provide favourable access conditions to affiliated companies while imposing delays, additional charges or restrictive technical requirements on competing suppliers.

H. Market foreclosure through renewable energy infrastructure

Dominant companies may restrict access to:

Grid connection capacity.

Battery storage facilities.

Electricity balancing services.

Renewable energy purchase arrangements.

Interconnection infrastructure.

Such conduct can weaken competition and discourage investment in alternative energy technologies.

6. At Least 8 Important Case Laws and Competition Decisions

The following decisions are particularly relevant. Some are judicial judgments, while others are European Commission enforcement decisions or commitments decisions. The distinction matters because not every important competition precedent is a court judgment.

Case 1: United Brands Company v Commission (1978)

Citation: Case 27/76, [1978] ECR 207.

Legal principle: Definition of dominance and economic independence.

The European Court of Justice explained that a dominant position involves economic strength enabling an undertaking to prevent effective competition and behave to an appreciable extent independently of competitors, customers and consumers.

Relevance to energy markets:

This principle applies when examining electricity generators, gas suppliers and infrastructure operators.

An energy company controlling a substantial proportion of generation capacity may possess dominance if competing suppliers cannot sufficiently constrain its commercial decisions.

Importance: Market share must be assessed together with economic strength, entry barriers and competitive constraints.

Case 2: E.ON Electricity (German Wholesale Electricity Market, 2008)

Reference: European Commission, Case COMP/39.388.

Legal principle: Capacity withholding and abuse of market power.

The European Commission investigated E.ON's position in the German wholesale electricity market, particularly concerns surrounding the strategic withholding of generation capacity.

The investigation resulted in commitments involving the disposal of generation capacity and transmission-related assets.

Relevance to energy markets:

A dominant generator may manipulate the supply available in wholesale electricity markets by withholding capacity.

This can:

Artificially increase electricity prices.

Create scarcity during peak demand.

Disadvantage competing generators.

Distort wholesale market signals.

Importance: The case demonstrates why available generating capacity and incentives to withhold output are important in assessing energy market dominance.

Case 3: RWE Gas Foreclosure (2009)

Reference: European Commission, Case COMP/39.402.

Legal principle: Network foreclosure and discriminatory access.

The European Commission investigated RWE's control over gas transmission infrastructure and concerns that its network position could disadvantage competing gas suppliers.

RWE offered commitments involving the divestiture of its gas transmission network, which addressed the Commission's concerns.

Relevance to energy markets:

A vertically integrated gas company can exploit its control over essential infrastructure to disadvantage independent suppliers.

Potential abuses include:

Refusal of network access.

Discriminatory transportation conditions.

Delays in connection.

Preferential treatment of affiliated suppliers.

Importance: Structural separation can be an effective remedy where behavioural commitments are insufficient to address persistent foreclosure concerns.

Case 4: GDF Suez Gas Market Foreclosure (2009)

Reference: European Commission, Case COMP/39.401.

Legal principle: Market sharing and territorial restrictions.

The European Commission examined restrictions associated with natural gas markets between France and Germany.

The proceedings concerned historical arrangements that restricted competition between the undertakings in their respective national markets.

Relevance to energy markets:

Dominant energy companies may protect their market positions through territorial restrictions, long-term supply arrangements and limitations on cross-border trade.

Importance: Energy market dominance must be assessed in the context of cross-border competition and market integration, rather than simply examining the domestic market position of individual suppliers.

Case 5: ENI Gas Foreclosure (2010)

Reference: European Commission, Case COMP/39.315.

Legal principle: Abuse through control of essential gas infrastructure.

The European Commission investigated ENI's control over international gas transmission pipelines and concerns regarding restrictions on competitors' access to gas transportation capacity.

The investigation resulted in commitments involving the divestiture of interests in international gas pipelines.

Relevance to energy markets:

Control over gas transportation infrastructure can allow an undertaking to restrict competitors' access to supply markets.

The case illustrates the importance of:

Transparent capacity allocation.

Non-discriminatory network access.

Independent infrastructure operation.

Adequate cross-border transportation capacity.

Importance: Infrastructure ownership can become a source of exclusionary market power when competitors cannot obtain economically viable alternative access.

Case 6: Swedish Interconnectors (2010)

Reference: European Commission, Case COMP/39.351.

Legal principle: Restrictions on cross-border electricity transmission.

The European Commission investigated restrictions associated with the Swedish electricity transmission system and the availability of interconnector capacity.

The proceedings addressed concerns that transmission restrictions could impede electricity trade between Sweden and neighbouring markets.

Relevance to energy markets:

A dominant network operator may influence competition by restricting cross-border transmission capacity.

This may:

Fragment electricity markets.

Reduce imports from competing generators.

Increase regional electricity prices.

Protect domestic suppliers from competitive pressure.

Importance: Access to interconnectors is an important element in determining whether a national electricity supplier is genuinely constrained by foreign competition.

Case 7: Greek Lignite and Electricity Markets (2012)

Reference: European Commission proceedings, Case COMP/38.700; related litigation included Case C-553/12 P, Commission v DEI.

Legal principle: State-created advantages and unequal access to essential resources.

The dispute concerned the privileged access of the Greek Public Power Corporation (DEI) to lignite resources, which were important for relatively low-cost electricity generation.

The European Commission considered that the preferential access arrangements could reinforce DEI's dominant position in electricity markets.

Relevance to energy markets:

Dominance may be reinforced where a company has preferential access to:

Low-cost fuel.

Natural resources.

Publicly controlled infrastructure.

Government-supported generation facilities.

Importance: Competition authorities may intervene where State-created advantages distort competition and prevent rival energy suppliers from competing on equal terms.

Case 8: Bulgarian Energy Holding (BEH) (2018)

Reference: European Commission, Case AT.39849.

Legal principle: Abuse of dominance through restrictions on wholesale electricity and gas trading.

The European Commission examined restrictions imposed by the Bulgarian Energy Holding group on the resale of electricity and gas.

The investigation concerned limitations that affected the ability of independent traders to compete and trade across markets.

Relevance to energy markets:

A dominant energy supplier may use restrictive trading conditions to prevent the development of competitive wholesale markets.

Such restrictions can affect:

Independent energy traders.

Cross-border supply.

Wholesale liquidity.

Competition among electricity suppliers.

Importance: Wholesale market access and the freedom to resell energy are important components of effective competition.

7. Application of Energy Market Dominance in Morocco

Morocco provides an important example of the relationship between energy-sector liberalisation, infrastructure control and competition regulation.

A. Role of ONEE

The National Office of Electricity and Drinking Water (ONEE) has historically occupied a central position in electricity generation, transmission and distribution.

Its position raises competition questions concerning:

Access to electricity transmission infrastructure.

Independent renewable energy generation.

Electricity purchase arrangements.

Grid connection conditions.

Competition between public and private energy operators.

B. Role of ANRE

The National Electricity Regulatory Authority (ANRE) is responsible for important aspects of electricity-sector regulation.

Its functions include:

Regulating electricity network-use tariffs.

Ensuring transparent and equitable network access.

Addressing disputes between network users and operators.

Supervising compliance with applicable electricity-sector requirements.

These functions are particularly important for preventing infrastructure operators from favouring affiliated energy businesses.

mem.gov.ma+1

C. Competition Council

Under Law No. 104-12:

Article 6 prohibits anticompetitive agreements.

Article 7 prohibits abuse of dominant position and economic dependence.

Article 8 addresses certain predatory pricing practices.

These provisions can apply to energy companies operating as economic undertakings.

WIPO

D. Competition Council Opinion No. A/1/24 (28 March 2024)

This opinion concerns the electricity sector in Morocco.

It is particularly relevant to the relationship between electricity-market opening, competition and sectoral regulation.

It should be distinguished from an infringement judgment: it is a regulatory competition opinion, not a judicial finding that a particular company abused dominance.

Practical significance: It provides an important starting point for examining market structure, access conditions and the development of competition in Morocco's electricity sector.

Chambers and Partners

E. Challenges in Morocco

The principal competition concerns include:

Concentration in electricity generation.

Dependence on centralised transmission infrastructure.

Unequal access to grid connections.

Restrictions affecting independent renewable energy producers.

Limited wholesale electricity competition.

Long-term electricity purchase arrangements.

Potential discrimination between public and private operators.

An important qualification is that Morocco does not operate a fully competitive wholesale electricity market. Its competition analysis must therefore account for the actual regulated and liberalised market segments.

Chambers and Partners+1

8. Remedies for Energy Market Dominance

Competition authorities may impose several remedies depending on the nature and seriousness of the abuse.

Structural remedies

Structural remedies may be appropriate where vertical integration creates persistent incentives and opportunities for exclusionary conduct.

For example, separating electricity transmission from generation and retail supply can reduce the possibility of discriminatory network access.

Behavioural remedies

Behavioural remedies may include:

Publishing network-access criteria.

Applying uniform connection procedures.

Prohibiting discriminatory tariffs.

Providing transparent capacity information.

Removing unjustified exclusivity clauses.

Interim measures

Where exclusionary conduct threatens serious and immediate competitive harm, authorities may consider interim intervention, subject to the applicable statutory requirements.

9. Emerging Competition Issues in Energy Markets

A. Renewable energy dominance

Large renewable energy companies may obtain substantial advantages through control over solar farms, wind farms, land, grid connections and long-term purchase agreements.

B. Battery storage dominance

Companies controlling large-scale battery storage infrastructure may influence balancing services and peak electricity supply.

C. Artificial intelligence and energy pricing

AI-based systems can create competition concerns when dominant energy suppliers use algorithms to coordinate pricing, discriminate between customers or strategically withhold capacity.

D. Smart grid dominance

Control over smart meters, grid-management software and energy-consumption data can create new entry barriers for competing suppliers.

E. Electric vehicle charging infrastructure

A dominant charging-network operator may foreclose competition through exclusive charging agreements, discriminatory access or incompatible payment systems.

F. Hydrogen market dominance

Companies controlling hydrogen production, transportation infrastructure and storage facilities may obtain strategic advantages that prevent new entrants from competing.

G. Cross-border energy dominance

Control over international electricity interconnectors and gas pipelines may allow companies to restrict imports, exports and regional market integration.

10. Important Legal Principles Emerging from the Cases

The eight cases establish several important competition-law principles:

These principles demonstrate that dominance in energy markets is not restricted to high market shares. It can also arise from control over infrastructure, essential resources, supply arrangements and access to customers.

11. Critical Analysis

Energy market dominance presents a distinctive challenge because competition authorities must balance two objectives.

First, maintaining energy security: Energy infrastructure requires significant investment, reliable capacity, long-term planning and technical coordination.

Second, preserving effective competition: Energy companies should not exploit their infrastructure, market position or regulatory advantages to exclude competing suppliers.

Overly aggressive intervention may discourage investment in energy infrastructure. Conversely, insufficient intervention may allow dominant companies to maintain market power and prevent market liberalisation.

A particularly important issue is the distinction between legitimate monopoly infrastructure and abusive monopoly conduct.

For example, an electricity transmission network may constitute a natural monopoly because constructing competing transmission networks would be economically inefficient. However, this does not automatically justify discriminatory access conditions or preferential treatment of affiliated generators.

The appropriate approach is therefore to preserve efficient infrastructure arrangements while ensuring transparent, proportionate and non-discriminatory access.

12. Conclusion

Energy market dominance is a significant area of competition law because energy is an essential economic resource and energy infrastructure frequently possesses natural-monopoly characteristics.

The cases involving United Brands, E.ON, RWE, GDF Suez, ENI, Swedish Interconnectors, Greek Lignite and Bulgarian Energy Holding demonstrate how competition law addresses exclusionary practices, infrastructure foreclosure, capacity withholding, territorial restrictions and discriminatory access.

In Morocco, Law No. 104-12, Law No. 48-15 and the regulatory functions of ANRE provide an important framework for addressing these concerns.

Ultimately, effective regulation of energy market dominance requires a combination of competition enforcement, infrastructure-access regulation, transparency, structural safeguards and investment protection.

The central legal principle is that an undertaking may legitimately become dominant through efficiency, investment or innovation, but it must not exploit that dominance to eliminate competition, restrict market access or harm consumers.

13. Additional Case-Law Research Note

For academic and examination purposes, it is important to distinguish between the international cases above and Moroccan precedents.

The eight cases provide comparative competition-law authorities; they are not eight Moroccan judicial decisions. Morocco's Opinion No. A/1/24 is a relevant sectoral opinion, but should not be represented as an abuse-of-dominance judgment.

The Moroccan statutory provisions and institutional framework are therefore particularly important when applying these comparative principles to domestic energy markets.

Suggested examination proposition: Energy market dominance should be controlled not by prohibiting market leadership itself, but by preventing the abusive exploitation of infrastructure, generation capacity, essential resources and vertical integration.