RWE Transgas will pay compensations for customers to settle the charges

The Office for the Protection of Competition (UOHS) has imposed a fine of CZK 10 million on RWE Transgas, Inc. in the settlement decision. The RWE was fined for the abuse of its dominant position towards its customers, small-scale consumers and households.

On the basis of an incorrect calculation model the RWE set excessive prices of advance payments. Advance payments were set incorrectly for 129,131 customers – small-scale consumers and households. The difference between the calculation error and the common payment was approximately 10 %. In November 2008 some customers started to pay these advance payments. The Office concluded that the RWE, without objectively justifiable reasons, had not sought appropriate measures to remedy the defective situation – it had not reduced the excessive advance payments for customers who had not asked for it. As a result such customers had been deprived of the disposal of the extra charged financial resources.

This behaviour affected 78,746 customers, who had not asked for the reduction of the incorrectly set advance payments until June 8, 2009. The affected customers were mostly clients of regional gas companies belonging to the RWE Group, in particular Východočeská plynárenská, Severomoravská plynárenská, Severočeská plynárenská, Středočeská plynárenská and Západočeská plynárenská.

The RWE Transgas fully cooperated with the UOHS from the initiation of the administrative proceeding. During the course of the proceeding the RWE accepted the UOHS´s conclusions and acknowledged the legal qualification of the conduct. The RWE also submitted evidence of the scope of the anticompetitive behaviour, especially of its impacts on final consumers. Moreover, in the settlement procedure the RWE Transgas agreed to compensate the damage caused to the overcharged customers. During the final annual billing for natural gas consumption in September 2009 the RWE Transgas will make sure that the customers will be granted eight per cent appreciation of the excessive payment (i.e. difference between correctly and incorrectly set advance payments). Present data indicate that the total amount of compensations for customers in question shall be more than CZK 7 million.

The UOHS commenced an inquiry concerning the excessive advance payments for natural gas in September 2008. The administrative proceeding was initiated in February 2009. In May 2009 the UOHS obtained the “settlement submission” from the RWE. The principle of settlement procedure is recognition of responsibility and legal qualification, or eventually submission of additional evidence on the part of the parties to the proceeding, in exchange for a fine reduction. The main advantage of this procedure is an expedited resolution of the competition concern without subsequent litigation, which has proved good also in this case. In the past, the UOHS has already settled with the companies Kofola and Albatros.

Moreover, several weeks ago the UOHS concluded an investigation into the underground gas storage market in the Czech Republic. The investigation proved that two companies of the Czech RWE group had concluded an internal agreement aiming to reserve more than 90 % of the gas storage capacity owned by the RWE group for the group itself for 25 years. The UOHS suspected that the RWE group’s conduct could meet conditions of the abuse of its dominant position on the market in the form of the essential facilities doctrine by foreclosing the potential or existing rival natural gas suppliers especially on the market of supply of natural gas to small industrial and household customers. As the result of negotiations with the UOHS and the Czech Energy Regulatory Office, the RWE group put forward a proposal to remove the UOHS´s competition concerns which the UOHS accepted. The RWE group committed to gradually release 500 million m3 of its gas storage capacity till 2013 (which accounts for approximately 20 % of the whole market) in favour of the independent gas traders and to reduce the duration of the above agreement till 2020.

External Relations Department