Case T‑136/19
(Publication in extract form)
Bulgarian Energy Holding EAD and Others
v
European Commission
Judgment of the General Court (Fourth Chamber, Extended Composition), 25 October 2023
(Competition – Abuse of a dominant position – Internal market in natural gas – Decision finding an infringement of Article 102 TFEU – Regulated market – Definition of the relevant market – Romanian Transit Pipeline 1 – Holder of an exclusive right to use the Romanian Pipeline 1 – Refusal to grant access – Public supply obligation – State action defence – Transmission system operator – Storage system operator – Anticompetitive strategy – Exclusionary effects – Single and continuous infringement – Rights of the defence)
1. Dominant position – Relevant market – Delimitation – Criteria – Internal market in natural gas – Markets for gas capacity services – No obligation on the Commission to consult the market participants in advance
(Art. 102 TFEU; Commission Notice 97/C 372/03, point 33)
(see paragraphs 75-77)
2. Dominant position – Relevant market – Delimitation – Criteria – Interchangeability – Identification of the relevant competitive conditions – Internal market in natural gas – Markets for gas capacity services – Distinction between primary and secondary markets – Irrelevant
(Art. 102 TFEU; European Parliament and Council Regulation No 715/2009, recital 34 and Art. 2(1)(4), (6), (13), (16), (18), (21) and (22) and Art. 16(3)(a) and Annex I, point 2.2(1) and (4); Commission Decision 2012/490, recital 2 and points 2.2.2(1) and (6) and 2.2.5(1) and (4); Commission Notice 97/C 372/03, points 2 and 3)
(see paragraphs 82-112)
3. Dominant position – Relevant market – Delimitation – Effect of Commission’s previous decision-making practice – None
(Art. 102 TFEU)
(see paragraphs 115, 116, 181, 253)
4. Dominant position – Existence – Evidence – Internal market in natural gas – Markets for gas capacity services – Undertaking controlling third-party access to the transit pipeline – Included
(Art. 102 TFEU)
(see paragraphs 137, 138, 143-150, 159-161, 173-175)
5. Competition – EU rules – Infringements – Attribution – Parent company and subsidiaries – Economic unit – Criteria for assessment – Presumption of decisive influence exercised by the parent company over its wholly owned or almost wholly owned subsidiaries – Rebuttable – Combination of the presumption that a parent company exercises decisive influence over its wholly owned or almost wholly owned subsidiaries with other evidence – Parent company not acting merely as a financial investor
(Art. 102 TFEU)
(see paragraphs 187, 196-208, 212, 217-219)
6. Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Extent of the burden of proof – Reliance on a body of evidence – Need to produce firm, precise and consistent evidence – Judicial review – Scope – Decision leaving a doubt in the mind of the court – Observance of the principle of the presumption of innocence
(Arts 101 and 102 TFEU; Charter of Fundamental Rights of the European Union, Art. 48(1); Council Regulation No 1/2003, Art. 2)
(see paragraphs 226-228, 231, 686, 689)
7. Competition – Administrative procedure – Commission decision finding an infringement – Means of proof – Documentary proof – Assessment of the probative value of a document – Criteria – Document established in immediate connection with the facts or by a direct witness of those facts – High probative value – Probative value of evidence not dating from the infringement period
(Art. 102 TFEU)
(see paragraphs 229, 391-396, 433, 1004, 1005)
8. Competition – Administrative procedure – Commission decision finding an infringement – Decision based on evidence sufficient to establish the existence of the contested infringement – Evidential obligations of undertakings disputing the reality of the infringement – Presentation of another plausible explanation of that facts that differs from the Commission’s explanation
(Art. 102 TFEU)
(see paragraphs 230, 381-390)
9. Dominant position – Abuse – Concept – Ability to restrict competition and exclusionary effect – Criteria for assessment – Judicial review – Review of legality – Scope – Substitution of grounds for the contested decision
(Art. 102 TFEU)
(see paragraphs 232, 234, 1108-1110, 1132)
10. Competition – Administrative procedure – Commission decision finding an infringement – Burden of proof – Judicial review – Review of legality – In-depth review of all the relevant evidence – Purpose and scope
(Arts 102 and 263 TFEU)
(see paragraphs 233, 291, 292, 329, 332, 364, 401, 419, 443, 478, 879-881, 1015, 1089)
11. Dominant position – Abuse – Concept – Ability to restrict competition and exclusionary effect – Criteria for assessment – Not purely hypothetical effects
(Art. 102 TFEU)
(see paragraphs 235-240)
12. Dominant position – Abuse – Concept – Provision of capacity services on a pipeline constituting an essential facility – Refusal by an undertaking in a dominant position to grant access to an essential facility – Obligation to cooperate
(Art. 102 TFEU)
(see paragraphs 254-257, 260-262)
13. Dominant position – Abuse – Concept – Essential facility – Situation of control resulting from the grant of an exclusive right of use – Irrelevance of the nature of such an exclusive right
(Art. 102 TFEU)
(see paragraphs 263-265)
14. Competition – Administrative procedure – Commission decision finding an infringement – Obligation to state reasons – Scope – Requirements arising from the principle of effective judicial protection – Clarity and precision of the operative part of the decision
(Arts 102 and 296, second para., TFEU)
(see paragraphs 299-317)
15. Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Extent of the burden of proof – Use of statements made by complainants in the context of the application of Article 102 TFEU – Whether permissible – Probative value of statements made by a party interested in concluding a contract with the undertaking in a dominant position – Limits – Assessment of the probative value of such statements in the light of other evidence
(Art. 102 TFEU)
(see paragraphs 370-380, 441)
16. Dominant position – Abuse – Concept – Undertaking in a dominant position holding an exclusive right to use the infrastructure in question – Insufficient to suggest that there is an abusive exclusionary practice
(Art. 102 TFEU)
(see paragraphs 473-475)
17. Dominant position – Abuse – Concept – Undertaking in a dominant position holding an exclusive right to use the infrastructure in question – Conditions for the renegotiation of the capacity reservation agreement – Probative value – Relevant evidence
(Art. 102 TFEU)
(see paragraphs 489-492, 495-511, 513-528, 530-541)
18. Dominant position – Abuse – Concept – Objective concept relating to conduct which is such as to influence the structure of a market and having the effect of hindering the maintenance or growth of competition – Obligations on the dominant undertaking – Competition solely on the basis of merit – Criteria for assessment – Possibility, for the undertaking in a dominant position, of preserving and protecting its commercial interests
(Art. 102 TFEU)
(see paragraphs 547, 595-603, 625, 626, 644)
19. Competition – EU rules – Substantive scope – Conduct imposed by State measures – Not included – Conditions
(Art. 102 TFEU)
(see paragraphs 548, 549, 569-583, 616)
20. Action for annulment – Jurisdiction of the EU judicature – Interpretation of the national law of a Member State – Question of fact – Included
(Art. 263 TFEU)
(see paragraphs 740, 741)
21. Dominant position – Abuse – Concept – Ability to restrict competition and exclusionary effect – Criteria for assessment – Taking into account of the regulatory framework applicable to the gas sector – Non-compliance of the conditions for access to the network with that regulatory framework – Need to establish the ability to produce anticompetitive effects
(Art. 102 TFEU)
(see paragraphs 784, 873)
22. Competition – Administrative procedure – Examination of complaints – Obligations of the Commission – Examination of whether the complainant has a legitimate interest – Scope
(Art. 102 TFEU)
(see paragraphs 848, 849)
23. Dominant position – Abuse – Refusal by an undertaking in a dominant position to allow another undertaking access to a product or service necessary for its business – Assessment of whether abusive – Regulatory obligation to grant access – No obligation on the Commission to demonstrate that access to the infrastructure in question is essential
(Art. 102 TFEU)
(see paragraphs 961, 962, 968, 969, 971)
24. Action for annulment – Judgment annulling a measure – Scope – Annulment in full of a Commission decision finding a single and continuous infringement and imposing a fine where there is partial evidence – Conditions – Substitution, by the EU judicature, of the reasoning – Precluded
(Art. 102 TFEU)
(see paragraphs 1119-1131, 1134)
25. Competition – Administrative procedure – Observance of the rights of the defence – Access to the file – Scope
(Art. 102 TFEU; Council Regulation No 1/2003, Art. 27(2); Commission Regulation No 773/2004, Art. 15(1) and (2))
(see paragraphs 1153-1155)
26. Competition – Administrative procedure – Powers of the Commission – Power to take statements – Statements relating to the subject matter of an investigation – Obligation on the Commission to record any meeting conducted by it – Scope – Determination of the information of use for the defence of the undertaking concerned – Infringement – Consequences
Art. 102 TFEU; Council Regulation No 1/2003, Art. 19(1); Commission Regulation No 773/2004, Art. 3)
(see paragraphs 1156-1160, 1170-1176, 1182-1186, 1191)
27. Competition – Administrative procedure – Observance of the rights of the defence – Access to the file – Infringement as a result of an error by the Commission – Conditions – Possibility of the undertaking concerned being better able to ensure its defence had that error not occurred – Scope of that undertaking’s burden of proof
(Art. 102 TFEU; Council Regulation No 1/2003, Art. 19(1) and Art. 27; Commission Regulation No 773/2004, Art. 3 and Art. 15(1) and (2))
(see paragraphs 1177, 1192, 1201-1206, 1208-1214, 1216-1221, 1223, 1226, 1238, 1244, 1245)
28. Competition – Administrative procedure – Observance of the rights of the defence – Access to the file – Infringement as a result of excessive restrictions in the context of a data room procedure – Consequences
(Art. 102 TFEU; Council Regulation No 1/2003, Art. 19(1) and Art. 27; Commission Regulation No 773/2004, Art. 15(1) and (2))
(see paragraphs 1207, 1215)
29. Competition – Administrative procedure – Observance of the rights of the defence – Access to the file – Purpose – Access to the statement of objections addressed to a third-party undertaking – Conditions – Statement of objections capable of assisting the defence of the parties – Burden of proof – Obligation on the undertaking concerned to adduce prima facie evidence of the usefulness of that access for its defence
(Art. 102 TFEU; Commission Regulation No 773/2004, Art. 15(1))
(see paragraphs 1249-1252)
Résumé
At the time of the facts, the applicants, namely the company Bulgarian Energy Holding EAD, which was wholly owned by the Bulgarian State, and its subsidiaries Bulgargaz and Bulgartransgaz (together, ‘the BEH Group’), were active in the energy sector in Bulgaria. Bulgargaz was the public gas supplier in Bulgaria whereas Bulgartransgaz was the gas transmission system operator (‘the TSO’) and the operator of the only natural gas storage facility in Bulgaria (‘the Chiren storage facility’).
During the infringement period (namely 30 July 2010 to 1 January 2015), the supply of gas in Bulgaria depended almost entirely on imports of Russian gas, of which Bulgargaz was the sole or main importer. Bulgargaz was thus also the main supplier of gas to downstream wholesale customers on the market and to end customers, namely undertakings directly connected to the gas transmission network.
The Russian gas was transported to Bulgaria via Ukraine, then Romania, up to the Bulgarian network connection point, mainly through a transit pipeline (‘the Romanian Pipeline 1’) which was managed by Transgaz, the Romanian TSO. During the infringement period, that pipeline ensured the supply of the majority of Bulgarian territory, via the national transmission network which, in turn, was connected to the Chiren storage facility. (1) Under an agreement concluded between Transgaz and Bulgargaz in 2005 (‘the 2005 Agreement’) which remained in force throughout the infringement period, Bulgargaz was granted exclusive use of the Romanian Pipeline 1, in return for a fixed annual fee.
On 18 November 2010, Overgas Inc., an operator in the gas supply market in Bulgaria, lodged with the European Commission an informal complaint against the BEH Group, alleging that it had infringed Article 102 TFEU.
By Decision of 17 December 2018, (2) the European Commission concluded that the BEH Group had committed a single and continuous infringement of Article 102 TFEU between 30 July 2010 and 1 January 2015. More specifically, the Commission found that the BEH Group held, during that period, a dominant position on five separate markets, namely the market for capacity-related services on the gas transmission network, the market for capacity-related services on the Romanian Pipeline 1, the market for capacity-related services for the Chiren storage facility, the downstream wholesale market for the sale of gas, and the market for the retail supply of gas to large end customers connected to the Bulgarian gas transmission network. The Commission alleged that the BEH Group had abused its dominant position by preventing, restricting or delaying third-party access to the transmission network, to the Chiren storage facility and to the Romanian Pipeline 1, thus foreclosing the Bulgarian gas supply markets in order to protect Bulgargaz’s dominant position on those markets. Consequently, the Commission imposed a fine on the BEH Group for the infringement thus established.
The General Court, ruling on the action for annulment brought by the BEH Group which sought, principally, annulment of the contested decision in its entirety, upholds that action in so far as the Commission failed to establish to the requisite legal standard that there was a refusal of access to the three infrastructures held by the BEH Group that was capable of falling within the scope of Article 102 TFEU. In doing so, the Court provides clarification as to the application of Article 102 TFEU to an undertaking in a dominant position which refuses access to an ‘essential facility’, in the light of the case-law in Bronner, (3) where that undertaking is not the owner of that facility. Furthermore, the Court rules on the scope of the requirement of access to the file which is inherent in respect for the rights of the defence in the ‘data room’ procedure, namely in the event of limitations on the right of access to certain elements of the file because of their confidential nature.
Findings of the Court
In the context of its assessment, the Court examines, as a first step, the substance of the case, namely the complaints alleging errors of law and of assessment in the definition of one of the five markets in question, in particular the market for capacity services on the Romanian Pipeline 1, Bulgargaz’s dominant position on that market, the dominant position of the parent company BEH as a financial holding company on the relevant markets, and that group’s abusive conduct. The Court then goes on to analyse the procedural defects relating to an infringement the BEH Group’s rights of defence in terms of access to the file.
As regards the substance of the case, in the first place, the Court finds that, in the context of the definition of the market for capacity services on the Romanian Pipeline 1, the Commission was fully entitled not to draw a distinction between the primary market (namely the market for capacity traded directly by the TSO) and the secondary market (namely the market for capacity traded other than on the primary market), since that distinction is irrelevant for the assessment of whether the applicants held a dominant position in respect of the capacity services on the Romanian Pipeline 1. Furthermore, the Commission did not make errors of law or of assessment when it found that Bulgargaz held a dominant position on that market.
In that regard, it follows from the exclusive right over the Romanian Pipeline 1 that was granted under the 2005 Agreement that Bulgargaz was, throughout the infringement period, the only possible supplier of capacity services on that pipeline on the secondary market. Furthermore, first, under Article 17.1 of the 2005 Agreement, Transgaz could not offer third parties unused capacity without first obtaining Bulgargaz’s consent. Second, under the EU legislation that was applicable at the time, Transgaz could offer such unused capacity to third parties only as short-term and interruptible capacity. Hence, Bulgargaz also controlled third-party access to the primary market for capacity services on the Romanian Pipeline 1. It follows that the Commission was fully entitled to identify Bulgargaz as a supplier on the Romanian Pipeline 1, as it was the only undertaking capable of providing third parties with access to that pipeline. The Court also stated that, although Transgaz had not yet fulfilled its obligations under EU law by taking the necessary measures to enable and facilitate the trade of capacity on the secondary market, in practice, Bulgargaz had, from 1 January 2013, granted Overgas access to the Romanian Pipeline 1. It follows that Transgaz’s failure to fulfil its obligations did not prevent Bulgargaz from being able to offer capacity on that market. Thus, in view of the fact that, during the infringement period, Bulgargaz controlled third-party access to the Romanian Pipeline 1 and that Transgaz could not be identified as a genuine alternative source of supply for third parties wishing to have access to that pipeline, Bulgargaz held a dominant positon on the market for capacity services on the Romanian Pipeline 1.
In the second place, the Court states that the Commission failed to demonstrate that the BEH Group had abused its dominant position in respect of the supply of gas in Bulgaria. In that regard, the Court finds that the elements which the Commission set out regarding access to the Romanian Pipeline 1 in order to establish that all of the alleged restrictions on access existed and, to the extent that they were established, that they were abusive in nature, were insufficient.
First of all, the Court notes that the Commission rightly assessed Bulgargaz’s conduct on the market for capacity services on the Romanian Pipeline 1 in the light of the Bronner case-law. In that regard, the Court states that a refusal by an undertaking in a dominant position to provide a service to which third parties must have access so as to be able to carry out an activity on a neighbouring market, in particular downstream, constitutes an infringement of Article 102 TFEU if three cumulative conditions are satisfied, namely if the refusal is capable of eliminating any competition by the applicant for that service on that market, if it cannot objectively be justified and if the service in question is essential for the exercise of the applicant’s activity, in the sense that there is no actual or potential alternative to that service. In the present case, the Romanian Pipeline 1 was an ‘essential facility’ given that it was the only viable route for the transportation of Russian gas to Bulgaria during the infringement period. In that regard, the Commission was legitimately able to find that, for the purposes of the application of those case-law principles, it was of no consequence that Bulgargaz was not the owner of the infrastructure, but merely the holder of an exclusive right of use, since that right took the form of a situation of control over that infrastructure, enabling Bulgargaz to make third-party access to the pipeline conditional upon its agreement.
Next, the Court finds that the Commission’s evidence as to the reservation of all of the capacity of the Romanian Pipeline 1 under the 2005 Agreement had no probative value since that reservation was not sufficient evidence to establish the alleged abuse on the market for capacity services on that pipeline. The contractual exclusivity granted to Bulgargaz under the 2005 Agreement, even though Bulgargaz used only part of the capacity on the Romanian Pipeline 1, could not constitute an abusive exploitation of Bulgargaz’s dominant position if the Commission did not prove that Bulgargaz’s conduct, in practice, had given it the ability to foreclose competitors from the Bulgarian gas supply markets, in particular within the meaning of the judgment in Bronner and the subsequent case-law (4) regarding a refusal of access to an ‘essential facility’.
In the present case, it follows from the information set out by the Commission that the exclusivity granted to Bulgargaz did not prevent it, from 2013, from accepting a request made by the company Overgas, by granting it access to the unused capacity on the Romanian Pipeline 1. The Court also states that the Commission also failed to establish to the requisite legal standard that Bulgargaz abusively refused requests for access from other third parties.
Lastly, the Court does not accept that any probative value can be given to the Commission’s evidence as regards Bulgargaz’s conduct in the context of the intergovernmental discussions between the Republic of Bulgaria and Romania relating to the renegotiation of the 2005 Agreement. According to the Court, those discussions cannot constitute evidence of a refusal to grant access to the Romanian Pipeline 1. The issues which that negotiation covered, in particular the need to grant Bulgargaz a guaranteed minimum capacity, were not reduced solely to Bulgargaz’s interests, but required the involvement of the Bulgarian authorities in view of Bulgaria’s dependence on the Romanian Pipeline 1 for the security of gas supply to the Bulgarian market. Furthermore, Romania had a clear interest in the renegotiation of the 2005 Agreement in view of the infringement proceedings which the Commission had initiated against it in 2009. In addition, the Court concluded that the Commission had not established to the requisite legal standard that the length of the negotiations was attributable to the applicants.
In the third place, the Court finds that the Commission also failed to establish to the requisite legal standard that the BEH Group had refused access to the transmission network and to the Chiren storage facility before June 2012. By contrast, as regards the latter facility, the Court states that the information in the file demonstrates that Bulgartransgaz’s conduct was capable of restricting competition on the Bulgarian gas supply markets between June 2012 and September 2014. However, in so far as the contested decision reaches the conclusion that the applicants had committed a single and continuous infringement of Article 102 TFEU by refusing third parties access to the three infrastructures and emphasised the interdependence, complementarity and mutual reinforcement of all of the alleged conduct, the Court found that it cannot be inferred from the operative part of the contested decision that that operative part is based on a number of grounds concerning separate forms of abusive conduct each of which would, in itself, be sufficient to justify the operative part.
In those circumstances, the single ground relating to Bulgartransgaz’s conduct in respect of the Chiren storage facility after June 2012 cannot, without substituting the Court’s assessment of the facts for that of the Commission, constitute the essential, or even sufficient, statement of reasons capable of justifying, by itself, the operative part of that decision.
In conclusion, the Commission did not establish to the requisite legal standard the infringement in the form of an abuse of dominant position imputed to the applicants by the contested decision.
As regards the course of the procedure, the Court finds that the Commission committed procedural errors capable of causing an infringement of the BEH Group’s rights of defence in so far as, first, the Commission did not include in the file, or included but in an inappropriate manner, the documents relating to certain meetings that it had had with Overgas and, second, granted insufficient access to those documents.
In particular, as regards the meetings which took place in 2015 and 2016, after the statement of objections was adopted, the Court states that those meetings were aimed at gathering information on the subject matter of the investigation which led to the adoption of the contested decision, and that it was not for the Commission to exclude information from the file by applying its power of discretion as to the potentially incriminatory or exculpatory nature of that document. Consequently, in accordance with Article 19 of Regulation No 1/2003, (5) read in conjunction with Article 3 of Regulation No 773/2004, (6) the Commission was required to record in an appropriate manner the statements made during those meetings and to include in the file the documents relating to them, and to inform the applicants of that fact, since the absence of any written record prevents the Court from ascertaining whether the Commission complied with the provisions of Regulation No 1/2003 and whether the rights of the undertakings and natural persons involved in an investigation were fully respected.
As regards the meetings which took place from 2010 to 2013, before the statement of objections was adopted, the Commission included in the file only brief notes of those meetings whereas the detailed minutes remained confidential. In that regard, the Court states that those brief notes are manifestly insufficient to provide an account of the content of the discussions that actually took place between the Commission and Overgas and, in particular, to provide an account of the nature of the information provided by Overgas on the topics covered. Nothing in the wording of Article 19(1) of Regulation No 1/2003, or the objective which it pursues, supports the inference that the legislature intended to draw a distinction between, on the one hand, ‘brief notes’, made for the purposes of access to the file, and ‘detailed minutes’ intended to remain confidential, on the other. Such an interpretation would be tantamount to depriving the right of access to the file and the principle of equality of arms of all practical effect.
As regards the access to the documents made available in the data room, the Court stated that the applicants’ external representatives had been authorised by the Commission to communicate only the non-confidential version of their data room report to their clients, and that that version did not contain any information that was additional to the brief notes to which the applicants had already had access during the administrative procedure. Redactions made to a data room report to the extent of making it practically equivalent to brief notes risk, according to the Court, compromising the very aim of the data room procedure, which is to protect the confidential information whilst giving access to evidence which a party needs in order to substantiate its position. That is all the more so since the data room procedure, as it took place in the present case, was capable of affecting the rights of defence of the applicants, which were able to exercise those rights only indirectly, through their external representatives.
As the applicants also demonstrated that, had the Commission not committed the errors by refusing the applicants a sufficient degree of access to the file, they would have had access to information that could have enabled them to better ensure their defence during the administrative procedure, the Court finds that the applicants’ rights of defence were infringed.
In view of all of the foregoing considerations, the Court annuls the contested decision in its entirety.