Hydrogen Infrastructure Competition Concerns

1. Introduction

Hydrogen infrastructure is becoming a critical component of the energy transition. It includes hydrogen production facilities, pipelines, storage terminals, liquefaction facilities, import/export terminals, refuelling stations, compression systems, ports, electrolysers, hydrogen hubs and associated electricity infrastructure.

From a competition-law perspective, hydrogen infrastructure presents a distinctive problem: many infrastructure components have high fixed costs, network effects, geographic constraints and economies of scale. These characteristics can produce natural-monopoly conditions or substantial market power before the hydrogen market itself becomes mature.

Competition concerns may therefore arise not only from conventional cartels or exclusionary conduct, but also from control over essential infrastructure, vertical integration, discriminatory access, state subsidies, joint ventures, infrastructure reservation, interoperability restrictions and strategic control of scarce hydrogen corridors.

2. Why Hydrogen Infrastructure Creates Competition Risks

Hydrogen infrastructure can generate market power at several levels:

Production → Aggregation → Transportation → Storage → Distribution → Refuelling/Industrial Consumption

A firm controlling an infrastructure bottleneck may be able to disadvantage competitors operating upstream or downstream.

Principal sources of market power

1. High capital costs
2. Limited pipeline routes
3. Port and terminal scarcity
4. Economies of scale
5. Network effects
6. Long-term capacity reservations
7. Vertical integration
8. Government subsidies
9. Technical interoperability requirements
10. Control over hydrogen standards and certification

The competition problem is therefore potentially broader than price discrimination.

3. Essential-Facility Concerns

One of the most important competition issues is whether particular hydrogen infrastructure constitutes an essential facility.

Examples could include:

• the only hydrogen pipeline connecting two industrial clusters;
• the only hydrogen import terminal serving a region;
• a strategically located storage cavern;
• a unique hydrogen refuelling corridor;
• a port capable of handling hydrogen-derived fuels;
• a hydrogen compression or liquefaction facility that competitors cannot economically duplicate.

If infrastructure is indispensable and duplication is economically or technically impracticable, an infrastructure owner may acquire substantial bottleneck power.

The owner could potentially:

• refuse access;
• charge excessive access fees;
• discriminate between affiliated and independent users;
• delay connection;
• reserve capacity for itself;
• provide inferior technical conditions to rivals.

4. Relevant Case Laws on Essential Infrastructure

1. Oscar Bronner GmbH & Co. KG v Mediaprint

The Court of Justice established a demanding standard for compulsory access to infrastructure controlled by a dominant undertaking.

The relevant principles include:

• the facility must be indispensable;
• duplication must be impossible or economically unreasonable;
• refusal must be capable of eliminating effective competition;
• there must be no objective justification.

Application to hydrogen

A hydrogen pipeline operator should not automatically be required to provide access merely because competitors would benefit from using it.

However, where a pipeline is genuinely indispensable and cannot reasonably be replicated, Article 102 TFEU-style essential-facility principles may become relevant.

2. IMS Health GmbH & Co OHG v NDC Health GmbH

The Court developed the exceptional circumstances surrounding compulsory licensing/access where an indispensable resource is controlled by a dominant undertaking.

The case is relevant to hydrogen infrastructure because infrastructure may involve:

• proprietary technical systems;
• network architecture;
• geographic bottlenecks;
• access standards;
• data necessary for infrastructure utilisation.

The key lesson is that competition law must balance property rights and infrastructure investment incentives against the preservation of downstream competition.

3. Commercial Solvents Corp v Commission

The case established that a dominant undertaking controlling an upstream input cannot exploit that position to eliminate competition in a downstream market.

Hydrogen application

Suppose an undertaking controls:

• hydrogen production, and
• the only pipeline supplying hydrogen to industrial customers.

If it supplies its own downstream hydrogen business while restricting independent producers' pipeline access, the arrangement could raise serious leveraging and foreclosure concerns.

5. Vertical Integration

Hydrogen markets are particularly susceptible to vertical integration.

A single company could control:

Electrolyser → Hydrogen production → Pipeline → Storage → Refuelling station

Vertical integration is not inherently unlawful. It can produce efficiencies and reduce transaction costs.

The competition concern arises when an integrated operator uses an upstream bottleneck to disadvantage downstream competitors.

Potential strategies include:

• discriminatory connection terms;
• preferential capacity allocation;
• discriminatory balancing charges;
• higher access prices for competitors;
• inferior service quality;
• technical incompatibility;
• tying infrastructure access to hydrogen purchases.

6. Refusal to Deal and Infrastructure Access

4. Bronner

Bronner is particularly important because hydrogen infrastructure owners may argue that forced access interferes with their investment incentives.

Competition authorities therefore need to distinguish between:

ordinary commercial infrastructure
and
genuinely indispensable infrastructure.

For example, if three alternative hydrogen pipelines can be constructed economically, compulsory access becomes much harder to justify.

But if a unique pipeline connects an industrial hydrogen cluster to a port and duplication would require billions in investment and years of construction, the competition analysis becomes considerably stronger.

7. Discriminatory Access

Even where an infrastructure operator provides access to competitors, discrimination can occur through:

• connection fees;
• capacity allocation;
• scheduling;
• pressure requirements;
• purity standards;
• balancing arrangements;
• maintenance periods;
• congestion management.

This creates the possibility of non-price foreclosure.

For hydrogen infrastructure, this may be particularly significant because hydrogen transportation involves technical specifications concerning:

• purity;
• pressure;
• compression;
• blending;
• leakage;
• metering;
• safety standards.

A seemingly technical requirement can therefore become a competitive exclusion mechanism.

8. Energy Infrastructure Precedents

5. GTI v Commission / Deutsche Telekom-type regulated-network principles

Competition law and sector regulation have repeatedly confronted the problem of dominant network operators controlling infrastructure necessary for downstream competition.

The broader principle is that network ownership can confer structural market power, especially where duplication is inefficient.

Hydrogen networks may eventually require similar regulatory safeguards.

9. Abuse Through Excessive Pricing

A hydrogen infrastructure monopoly could potentially charge excessive access prices.

This is particularly relevant where:

• infrastructure has been heavily subsidised by the state;
• construction costs have already been recovered;
• competitors cannot build alternatives;
• customers cannot switch networks.

6. United Brands v Commission

The Court recognised excessive pricing as potentially abusive under Article 102 TFEU.

The case provides the traditional framework for assessing whether prices are disproportionate to the economic value of the service.

Hydrogen application

Suppose a publicly subsidised hydrogen terminal becomes the only practical import facility.

If its operator subsequently imposes extraordinarily high access charges on independent hydrogen suppliers, competition authorities could examine whether the pricing constitutes an abuse of dominance.

10. Predatory Pricing

The opposite problem may also arise.

A dominant hydrogen infrastructure operator could temporarily charge below-cost prices to prevent competing infrastructure from developing.

For example:

1. A new pipeline operator enters.
2. The incumbent dramatically reduces transportation charges.
3. Competitors cannot cover operating costs.
4. Rival infrastructure investment becomes commercially unattractive.
5. After the competitor exits, prices rise.

This can be analysed through the established principles concerning predatory pricing.

7. AKZO Chemie BV v Commission

AKZO remains a central precedent concerning predatory pricing.

Its broader relevance to hydrogen is that low prices are not automatically pro-competitive where a dominant undertaking uses pricing strategically to eliminate competitors.

11. Capacity Hoarding

One of the most distinctive hydrogen infrastructure concerns is strategic capacity reservation.

An incumbent may reserve:

80% of pipeline capacity but actually use only 40%.

The unused capacity prevents competitors from obtaining access.

This can create artificial scarcity.

Capacity hoarding can therefore function as a form of exclusion even where the operator technically offers third-party access.

Possible regulatory responses include:

• use-it-or-lose-it rules;
• mandatory capacity release;
• transparent allocation procedures;
• congestion-management rules;
• prohibition of discriminatory reservations.

12. Long-Term Contracts

Hydrogen infrastructure often requires long-term investment.

Operators may therefore enter into 10-, 15- or 20-year contracts.

Long-term agreements can provide legitimate investment certainty.

However, excessive contractual commitments may foreclose competitors.

For example:

A dominant pipeline operator signs exclusive transportation agreements with almost all major hydrogen consumers.

A new infrastructure operator may then be unable to obtain sufficient customers to finance entry.

This creates a tension between:

investment certainty
and
market foreclosure.

13. Exclusive Dealing

8. Tomra Systems ASA v Commission

Tomra concerned exclusionary arrangements involving dominant-market purchasing relationships.

The case illustrates how exclusivity can foreclose competitors even where customers technically retain some alternatives.

Hydrogen application

A dominant hydrogen infrastructure operator might require customers to transport all hydrogen through its network.

Alternatively, an infrastructure company could require producers to sell all output through its distribution system.

Such arrangements may substantially reduce contestability.

14. Joint Ventures and Infrastructure Sharing

Hydrogen infrastructure will frequently require cooperation between:

• energy companies;
• industrial gas companies;
• pipeline operators;
• ports;
• utilities;
• automobile manufacturers;
• governments;
• infrastructure funds.

Joint ventures can produce enormous efficiencies.

But they can also become vehicles for coordination.

Competition authorities should examine whether the venture:

• exchanges competitively sensitive information;
• coordinates prices;
• allocates customers;
• excludes independent operators;
• controls access to infrastructure;
• prevents alternative networks.

15. Cartel Risks

Hydrogen infrastructure suppliers may have repeated interactions in concentrated markets.

Potential cartel conduct includes agreements concerning:

• pipeline tariffs;
• construction costs;
• hydrogen transportation prices;
• terminal fees;
• refuelling prices;
• capacity allocation;
• customers;
• geographic territories.

Infrastructure construction also presents bid-rigging risks, particularly for publicly funded hydrogen projects.

16. Construction and Procurement Cartels

Hydrogen infrastructure projects can involve extremely large public tenders.

For example:

• hydrogen pipeline construction;
• electrolyser installation;
• storage facilities;
• port conversion;
• hydrogen refuelling corridors.

A small number of specialised engineering companies may have the capacity to bid.

This creates risks of:

• bid rotation;
• market allocation;
• cover bidding;
• subcontracting arrangements designed to disguise collusion.

Competition authorities should therefore scrutinise procurement data and bidding patterns.

17. State Aid and Subsidy Distortions

Hydrogen infrastructure is heavily dependent on public policy.

Governments may provide:

• capital grants;
• tax credits;
• concessional loans;
• infrastructure guarantees;
• land;
• electricity subsidies;
• capacity payments;
• contracts for difference.

These policies can accelerate hydrogen deployment.

But selective subsidies may also strengthen particular firms' market positions.

The competition question becomes:

Is the subsidy correcting a market failure or creating an entrenched infrastructure monopoly?

18. State-Owned Enterprises

A state-owned hydrogen infrastructure company can present a special neutrality problem.

The undertaking may simultaneously:

• own infrastructure;
• operate hydrogen production;
• regulate access;
• receive public funding;
• influence technical standards.

This creates potential regulatory and competitive conflicts of interest.

The state may unintentionally create an infrastructure operator that enjoys advantages unavailable to private competitors.

19. Subsidised Infrastructure and Crowding Out

A publicly funded hydrogen pipeline may make private competing investment uneconomic.

This is not necessarily harmful.

Duplicating infrastructure may be wasteful.

But competition policy must distinguish between:

efficient natural monopoly
and
unnecessarily protected monopoly.

The appropriate solution may therefore be regulated open access rather than forced infrastructure duplication.

20. Hydrogen Refuelling Networks

Hydrogen mobility creates another infrastructure bottleneck.

A company controlling a large network of hydrogen refuelling stations may obtain market power through:

• geographic coverage;
• fleet contracts;
• station density;
• exclusive agreements;
• interoperability restrictions.

This becomes particularly important if vehicle manufacturers or logistics companies depend upon a particular refuelling network.

A dominant network could potentially disadvantage competing hydrogen suppliers through discriminatory access or exclusivity.

21. Network Effects and Tipping

Hydrogen infrastructure can display strong network effects.

More users → greater infrastructure utilisation → lower average costs → more users.

This can create a positive feedback loop.

Eventually:

One infrastructure network becomes commercially dominant, even if several networks were initially viable.

Network effects are not inherently anticompetitive. However, once dominance emerges, exclusionary conduct can make the market difficult to contest.

22. Interoperability and Standards

Hydrogen infrastructure requires technical compatibility.

Competition concerns can arise if a dominant operator controls standards.

For example:

• proprietary connectors;
• proprietary metering;
• proprietary compression technology;
• incompatible purity specifications;
• closed data interfaces.

Technical standards can therefore become strategic barriers to entry.

A dominant undertaking may have an incentive to design standards that favour its own infrastructure.

23. Standards as a Competition Instrument

Standard-setting organisations themselves can present competition risks.

Companies may collectively agree on a standard that:

• improves interoperability; or
• excludes alternative technologies.

The distinction depends on the circumstances.

A genuinely open hydrogen standard can increase competition.

A closed standard controlled by incumbent infrastructure providers can instead create a collective entry barrier.

24. Environmental Objectives and Competition

Hydrogen infrastructure raises an unusual competition-law issue because cooperation may be justified by environmental objectives.

For example, competitors may need to cooperate to build:

• shared pipelines;
• storage facilities;
• ports;
• refuelling corridors.

Such cooperation can reduce duplication and accelerate decarbonisation.

Competition law should therefore avoid treating every infrastructure-sharing arrangement as inherently suspicious.

The correct question is:

Does the cooperation achieve environmental or infrastructure efficiencies while preserving meaningful competition?

25. Relevant Case: Wouters

9. Wouters v Algemene Raad van de Nederlandse Orde van Advocaten

Wouters illustrates the broader principle that certain restrictive arrangements may need to be assessed in their regulatory and legitimate-objective context.

Applied conceptually to hydrogen infrastructure, cooperation necessary to achieve legitimate safety, environmental or technical objectives may receive a more nuanced assessment.

However, the environmental objective cannot automatically immunise cartel-like conduct.

26. Digital Infrastructure and Hydrogen

Modern hydrogen infrastructure will increasingly depend on:

• AI forecasting;
• digital twins;
• automated pipeline management;
• smart-metering systems;
• predictive maintenance;
• digital booking platforms;
• capacity-allocation algorithms.

This creates another layer of competition risk.

A dominant infrastructure platform could use data to:

• identify rivals' production levels;
• discriminate in capacity allocation;
• predict competitor entry;
• optimise prices differently for rivals;
• restrict access algorithmically.

Thus, hydrogen infrastructure competition may eventually combine physical bottlenecks with digital bottlenecks.

27. Data as an Infrastructure Asset

A pipeline operator may possess valuable information concerning:

• hydrogen demand;
• production volumes;
• storage levels;
• transportation schedules;
• customer consumption;
• capacity availability.

If the same company competes downstream, access to such information could create a significant competitive advantage.

This produces a classic vertical-information asymmetry problem.

Possible safeguards include:

• information firewalls;
• independent system operators;
• aggregated disclosure;
• confidentiality rules;
• non-discrimination obligations.

28. Merger-Control Concerns

Hydrogen infrastructure consolidation could produce significant merger risks.

For example:

Pipeline operator + hydrogen producer

or

Port + hydrogen terminal + storage operator

or

Refuelling network + hydrogen supplier

A merger may eliminate an important potential competitor.

Authorities should examine:

• horizontal overlaps;
• vertical foreclosure;
• access to infrastructure;
• control of critical routes;
• entry barriers;
• countervailing buyer power;
• future hydrogen demand.

29. Potential Competition

Hydrogen markets are currently developing in many jurisdictions.

Traditional market-share analysis may therefore underestimate competition concerns.

An infrastructure operator with only a moderate market share today could control infrastructure that determines future market structure.

Competition authorities should therefore consider:

• pipeline projects under development;
• future terminals;
• planned electrolysers;
• alternative hydrogen carriers;
• ammonia imports;
• liquid organic hydrogen carriers;
• electrification as a substitute.

30. Geographic Market Definition

Hydrogen infrastructure markets may be highly geographic.

A pipeline's relevant market may correspond to:

• a hydrogen valley;
• industrial cluster;
• port region;
• national network;
• cross-border corridor.

Unlike conventional commodities, hydrogen transportation costs can materially affect market boundaries.

A monopoly over one corridor may therefore coexist with competition elsewhere.

31. Cross-Border Infrastructure

Cross-border hydrogen networks raise additional concerns:

• discriminatory cross-border access;
• divergent technical standards;
• national infrastructure monopolies;
• capacity reservation;
• state subsidies;
• export restrictions;
• regulatory fragmentation.

A dominant operator in one country could potentially use its infrastructure position to disadvantage foreign competitors.

This makes cooperation between competition authorities and energy regulators particularly important.

32. Regulatory Remedies

Competition authorities and energy regulators could employ several remedies.

Structural remedies

• divestiture;
• separation of infrastructure and production;
• independent system operators;
• ownership unbundling.

Behavioural remedies

• non-discriminatory access;
• transparent tariffs;
• capacity release;
• prohibition of exclusivity;
• information firewalls;
• interoperability obligations.

Regulatory remedies

• regulated third-party access;
• tariff regulation;
• open-access requirements;
• independent dispute resolution;
• capacity-allocation rules.

33. Six Core Case-Law Principles

34. Overall Competition-Law Framework

A competition authority examining hydrogen infrastructure should ask:

Step 1 — Identify the infrastructure

Is it:

• pipeline;
• storage;
• terminal;
• refuelling station;
• port;
• compression facility;
• digital booking platform?

Step 2 — Identify the bottleneck

Can competitors realistically duplicate it?

Step 3 — Determine market power

Consider:

• market share;
• network effects;
• switching costs;
• geographic constraints;
• capacity;
• entry barriers.

Step 4 — Examine conduct

Look for:

• refusal to supply;
• discriminatory access;
• excessive pricing;
• predatory pricing;
• exclusivity;
• capacity hoarding;
• tying;
• technical foreclosure.

Step 5 — Consider efficiencies

Assess whether conduct produces:

• lower infrastructure costs;
• greater utilisation;
• safety benefits;
• interoperability;
• environmental benefits.

Step 6 — Select remedies

Use the least restrictive remedy capable of preserving effective competition.

35. Conclusion

Hydrogen infrastructure is likely to become a strategic competition bottleneck during the transition to a hydrogen economy. The greatest risk may not initially be conventional cartel behaviour but the emergence of infrastructure operators capable of controlling access to essential pipelines, terminals, storage facilities, ports and refuelling networks.

The central competition-law challenge is therefore to prevent infrastructure ownership from becoming a mechanism for downstream market foreclosure while preserving incentives to make enormous long-term investments.

The established principles from Bronner, IMS Health, Commercial Solvents, United Brands, AKZO, Tomra and Wouters provide useful foundations. However, hydrogen markets will require their application alongside energy regulation, state-aid controls, merger review, environmental policy and infrastructure-access rules.

The optimal regulatory model is likely to combine open and non-discriminatory access, transparent capacity allocation, appropriate unbundling, interoperability, merger scrutiny and carefully designed public subsidies. This can permit hydrogen infrastructure to develop at scale without allowing early infrastructure control to permanently determine the competitive structure of the future hydrogen economy.