On 23 February 2010, the Court of Appeal (“CA”) reduced the fine imposed on National Grid by half, but upheld the finding of an abuse of a dominant position. The Gas and Electricity Market Authority (“Ofgem”) originally fined National Grid in 2008 for imposing long term gas metering contracts which had restricted competing meter operators from entering the market or expanding their business. The agreements also bundled meter provision with maintenance services and provided for early replacement charges. The Competition Appeal Tribunal (“CAT”) upheld Ofgem's decision on appeal, but reduced the fines. National Grid appealed to the CA and was partially successful. While the CA upheld the finding of exclusionary abuse of a dominant position, it decided to further reduce the fine to £15m, approximately 1.5 per cent of National Grid's turnover. In doing so, the CA took the view that the CAT had not given sufficient consideration to the following mitigating factors:

  • Ofgem had been aware of the contractual arrangements and had not indicated concerns at the time;
  • the abuse regarding early replacement charges was a novel infringement; and
  • the abuse did not cover agreements for new or replacement meters, but only meters which were already installed when the agreement was concluded

Ofgem press release

Please click here to see Ofgem's press release

History of fines

National Grid was fined £41.6m by Ofgem in 2008. On appeal the fine was reduced to: £30m by the CAT in April 2009; and £15m, by the CA in February 2010.