Ofgem has welcomed the Competition Appeal Tribunal’s (CAT) decision to uphold OFGEM’s finding that National Grid was in breach of competition law by restricting the development of competition in the domestic gas meter market. In its decision, the CAT ruled that National Grid should face a £30 million financial penalty, which, although lower than the £41.6 million fine imposed by Ofgem, is the highest penalty for abuse of dominance imposed to date in the UK. The CAT also upheld Ofgem’s directions which require National Grid to bring its multi-million pound contracts into compliance with competition law.
Shortly after the domestic gas metering market was opened to competition, National Grid struck long-term contracts with five of the six major energy suppliers to supply and maintain gas meters. These contracts included financial penalties that apply if suppliers replaced more than the small number of meters allowed under contract by National Grid. These contracts severely restrict the rate at which suppliers may replace even National Grid’s older meters with cheaper or more advanced, smarter meters from rival competing meter operators. The CAT upheld Ofgem’s finding that, by restricting competition, National Grid has deprived gas suppliers and gas customers of access to lower prices and improved service.