The CNMC, Article 3 LDC and electricity commercialisation
29/05/14
On 10 May 2014 the Spanish national competition authority (Comisión Nacional de los Mercados y la Competencia, CNMC) announced that it will investigate electricity operators’ methods to influence its retail clients. The CNMC intends to apply Article 3 of the Competition Act (Ley de Defensa de la Competencia, LDC), which provides a basis for prosecuting unfair competitive conduct that runs contrary to the public interest.
In the past the CNMC has already fined the largest operators for such conduct. For instance on 24 February 2012 (Case S/0213/10, Iberdrola Sur) for moving clients from one affiliate to another without their express consent.
Now, the CNMC enquires into whether electricity operators induced consumers to taking hasted decisions during the transition from Last Resort Tariffs (Tarifas de Último Recurso, TUR) towards the so-called Voluntary Price for Small Consumers (Precio Voluntario para el Pequeño Consumidor, PVPC), whose calculation method and contractual framework is set out in Royal Decree 216/2014.
In a nutshell, consumers will no longer pay a future-oriented price set by means of tendering energy contracts for last resort supply (contratos de energía para el suministro de último recurso, CESUR) and start paying market prices for energy used over each given period. This change is aimed at (i) increasing transparency; (ii) eliminating State intervention, as it was the Government that called for CESUR tenders; and (iii) reducing consumer prices by incentivising more efficient consumption patterns (see preamble to Royal Decree 216/2014).
The CNMC suspects that in the wake of such changes, which are almost impossible to gather for the average consumer, electricity companies may have tried to influence their retail clients, thus curtailing their freedom to decide. This is precisely what the Users and Consumers Office (Oficina de Usuarios y Consumidores, OCU – a consumer protection organisation) said would happen, as explained on its webpage on 10 March 2014 when evaluating the pros and cons of the reform: ‘invoices will become less transparent and the electricity companies will apply aggressive commercial strategies which will be conducive to having consumers pay much higher prices without even being aware of it.’
Consumers will now wait to see whether the information gathered enables the CNMC to find this basic commodity market altered to such a degree that a formal fining procedure is called for. Conversely, the legal community will look out for any development of the criteria for applying Article 3 LDC, which is particular to Spanish competition law.
