On 21 March 2017, the French Competition Authority ("FCA") fined French gas and electricity giant Engie (formerly called Gaz de France) 100 million euros for having abused its dominant position from July 2004 until November 2014 by using its historical customer data and commercial infrastructure derived from its former legal monopoly status as gas provider, in order to sell new gas and electricity supply contracts, post-deregulation, to private individuals and small businesses.
- State of the gas and electricity marketsGas and electricity supply used to be State monopolies, until the adoption of EU directives in the late 1990s which opened those markets to competition, effective in the 2000s. In France, the gas market was opened progressively, first to certain industrial sites, then to consumers in July 2007. On the French gas supply market, Engie holds to this day a very significant 79% market share for private individuals and 63% for small business customers, which establishes its dominant position.
- Engie's abuse of its dominant positionThe FCA found that Engie abused its dominant position by using its historical customer data in order to sell its new gas contracts to its former customers who had changed supplier following the opening of the gas supply market to competition. Similarly, Engie was found to have used this historical data to enter the electricity market and sell its electricity supply contracts to new customers. This was found to result in a distortion of competition because as the former State monopoly for gas supply, Engie had a comprehensive data file that comprises the contact details of almost all French gas consumers, with which the new entrants on the de-regulated gas market could not compete. Indeed, prior to the present decision, the FCA had ordered Engie, as a conservatory measure, to grant other gas suppliers access to its customers' contact details and to information relative to their gas consumption (FCA decision no. 14-MC-02 of 9 September 2014, confirmed by the Paris Court of Appeals on 31 October 2014). Despite having complied with this conservatory measure, Engie was sanctioned by the FCA in the present decision for the abuse of its dominant position from July 2004 until November 2014.
Furthermore, Engie sold its market-price gas and electricity contracts using the same business infrastructure it had developed as a State monopoly (such as trademarks, sales teams, website, general terms etc.), thus, according to the FCA, further distorting competition.
Finally, Engie claimed post-deregulation that it had a better security of gas supply than other suppliers, which was found to be misleading for consumers as all gas suppliers have in fact the same supply obligations and may be equally impacted in the event of a significant gas shortage at the national level.
- Market aggravating circumstances Engie's abuse of its dominant position was found aggravated by the fact that consumers were considered to have a very low level of market knowledge, especially regarding the opening of the gas and electricity markets to competition. Statistics were used to show that almost 50% of French consumers did not know that they may change gas supplier. Therefore, Engie was found to have had a significant advantage on the market as the incumbent operator compared to new market entrants.
- Engie's defense before the FCA Notwithstanding that Engie did not deny the allegations and had requested lenient treatment from the FCA, Engie has now appealed the FCA's 100-million euro fine before the Paris Court of Appeals.
FCA decision no. 17-D-06