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Ofgem consults on EPEX’s commitments following Competition Act investigation

Ofgem is consulting on commitments offered by EPEX and its parent EEX after an investigation was opened into the power exchange company under the Competition Act.

Ofgem launched the investigation in December 2018 into whether EPEX had abused a dominant position by failing to take the steps required to enable rival Nord Pool to participate in certain electricity trading auctions between the Great Britain and Irish energy markets. 

EPEX’s actions in preventing Nord Pool from entering the market are likely to have distorted competition.  Any such distortion has the potential to lead to an increase in fees or a reduction in service or choice for customers using the power exchange and ultimately worse outcomes for energy consumers.

As a result of the investigation, EPEX has committed to taking the steps required of it to enable Nord Pool - EPEX’s main competitor in Great Britain - to participate in these auctions and also to carry out an internal review of its competition law training. 

Ofgem is minded to close the investigation with the acceptance of commitments. The commitments address Ofgem’s concerns and should ensure that Nord Pool is able to access the auctions by 23 July 2019.  

Ofgem will consider any comments raised in the public consultation prior to determining whether to accept the commitments.

Notes to editors

  • Ofgem has the power to investigate potential infringements of competition law.  These powers are held concurrently with the Competition and Markets Authority and the Northern Ireland Authority for Utility Regulation.
  • Where Ofgem has begun an investigation under section 25 of the Competition Act 1998, it may accept commitments to take such action as it considers appropriate for the purposes of addressing the competition concerns it has identified. When Ofgem has formally accepted commitments, it must close its investigation into the conduct that was the subject of the investigation.
  • The offer of commitments by EPEX and EEX does not constitute an admission that there has been an infringement of Chapter II of the CA98 or Article 102 TFEU.
  • The consultation will be open for 11 working days for responses. 
  • The arrangements to implement the auctions between the GB and Irish markets (which went live in October 2018) were intended to provide for both Nord Pool and EPEX, as the two power exchanges operating in GB, to participate.  To date, only EPEX has been able to do so. 
  • The GB electricity near-term trading market operates a competitive model, with two competing power exchanges, which are both also Nominated Electricity Market Operators designated to perform single day ahead and single intraday coupling with other European electricity markets. The two Nominated Electricity Market Operators in GB are EPEX and Nord Pool.   
  • Nominated Electricity Market Operator is a market operator designated by the competent authority of the European Union Member State to participate in single day-ahead coupling and/or single intraday coupling.

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Original article link: https://www.ofgem.gov.uk/publications-and-updates/ofgem-consults-epex-s-commitments-following-competition-act-investigation

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