French Competition Authority fines ENGIE €100m for abuse of dominance

ENGIE has used its historical client database resulting from its historical monopoly of gas supply, to sell its market-price gas and electricity, and used a misleading selling point to induce the consumers to choose its offers rather than its competitors’.

This decision on the merits follows an interim decision issued on 09 September 2014, essentially upheld by the Paris Court of Appeal on 31 October 2014, which required ENGIE to give access to its competitors, at its own expense, to some data of its client database.

The context of the liberalisation of the gas and electricity markets

From the beginning of the 2000’s and following the adoption of European Directives, the French natural gas and electricity retail markets have been opened up to competition. The purpose was to remove the incumbent operator's’ historical monopoly and to diversify the range of offers proposed to consumers.

French public authorities wanted the incumbent former monopoly holders (ENGIE, former GDF-Suez, for gas, and EDF for electricity) to maintain, for all the French consumers (residential and non-residential customers, ie, private individuals and small business customers), “regulated tariffs on gas” (Tarifs réglementés de vente du gaz - TRV).

Consequently, since the opening of the natural gas and electricity markets, two offers are available to consumers: (i) the so-called “market” offers proposed by all the suppliers (alternative and historical suppliers), who freely determine prices in accordance with their commercial strategies and (ii) the TRV offers, proposed only by historical suppliers (ENGIE for gas, and EDF for electricity), whose prices are determined and regulated by the Government.

Consumers are authorized to move freely from one contract to another.

The confusion of means related to the public service activities and competitive activities

Considering that ENGIE abused of its position of incumbent former monopoly holder in a context of liberalization, the company Direct Energie (alternative natural gas supplier) and the consumer association UFC-QUE CHOISIR filed a complaint before the FCA.

The FCA underlines that an operator holding a dominant position “must be careful to avoid any abusive use of resources that cannot be employed by newcomers entering the market opened to competition at a reasonable cost and within acceptable periods of time”.

The FCA did not blame ENGIE for the detention of its client database but for the use of this database in view to win back its former TRV subscribers who had changed their energy supplier. Yet, this database, essentially constituted during the monopoly period, could not be used at a reasonable cost and within an acceptable period of time by competitors.

This “win back” practice had already been sanctioned by the FCA in a case concerning also a former monopoly holder (France Télécom) which used its client files, within the DOM (French Overseas Department), to win back the former subscribers which had moved to a competitor1.

The abusive use of its former status of historical supplier by ENGIE in a favourable context

The FCA indicates that the opening up of the market to competition is a special context, in which the historical supplier has a significant market power compared to its competitors, in particular by its “advantageous reputation and good image”.

This advantage is corroborated by the fact that the consumer has a very low level of knowledge of the functioning of the market. As a matter of fact, the consumer tends to favour the historical operator on the latter’s competitors, especially when the historical operator suggests that it offers better security than its competitors.

In the present case, and in order to incite customers to choose its offers, ENGIE used a misleading selling point to consumers, according to which it guaranteed a better security of gas supply than its competitors.

The advantage of a settlement procedure for ENGIE

The present case, relative to the liberalization of the natural gas and electricity markets, confirms the principles laid down by the FCA decision-making practice by pointing out that the operators that formerly held a monopoly must not use their position to restrict or prevent the emergence of an efficient competition on a newly liberalised market2.

ENGIE did not challenge the objections formulated by the FCA and accepted the terms of the settlement setting a €100m fine.

ENGIE could have decided to partially challenge the objections if the new settlement procedure introduced by the “Macron Law” would have made it possible. So far, this settlement procedure does not allow a party to partially challenge the objections while investigating officers tend to state large objections in the first stage, even some of them may be abandoned at the stage of the report. In this regard, it seems that the French legislator consider making a law allowing parties to challenge part of the objections in case of a settlement procedure.

Finally, the FCA does not impose to ENGIE, an injunction to continue to give access to its competitors, at its own expense, to some data included in the TRV client files, so that they may propose their own offers to these clients.

1 Decision 09-D-24 of July 28, 2009 concerning practices implemented by France Télécom on different market of fixed telephony and Internet access markets in the French Overseas Departments (DOM)
2 Decision 05-D-59 of November 7, 2005, concerning practices implemented by France Télécom in the wholesale market for broadband Internet access (ADSL) and Decision 12-D-25 of December 18, 2012 concerning practices implemented in the railway freight sector