25th Feb 2008 07:00
OFGEM25 February 2008 EMBARGOED UNTIL 07:00 Monday 25 February 2008 OFGEM FINES NATIONAL GRID £41.6M Energy regulator Ofgem has fined National Grid £41.6 million for a breach ofcompetition law that restricted the development of competition in the domesticgas meter market. The decision demonstrates Ofgem's commitment to taking action where there isevidence that a company has acted in a way that restricts competition and harmscustomers. Ofgem's Chairman, Sir John Mogg, said: "Ofgem has imposed a substantial fine onNational Grid for a serious breach of competition law. National Grid has abusedits dominance in the domestic gas metering market, restricting competition andharming consumers. "The abuse has prevented suppliers from contracting with other companies forcheaper metering deals and could discourage suppliers from installing smartmeters." When the metering market was opened to competition, National Grid strucklong-term contracts with five of the six major energy suppliers to supply andmaintain gas meters. These contracts include financial penalties that apply ifsuppliers replaced more than the small number of meters allowed under thecontract by National Grid. They have severely restricted the rate at whichsuppliers can replace even National Grid's older meters with cheaper or moreadvanced meters from rival meter operators. By restricting competition, NationalGrid has deprived gas suppliers and customers of access to lower prices andimproved service. Furthermore, it has curbed innovation in the provision andmaintenance of domestic-sized metering. -ends- Notes to Editors: 1. The Authority decided that National Grid has breached the Chapter IIprohibition of the Competition Act 1998 and Article 82 of the EC Treaty.Chapter II of the Competition Act 1998 prohibits the abuse of a dominantposition in a market by one or more undertakings which may affect trade withinthe UK. Article 82 of the EC Treaty prohibits the abuse of a dominant positionin a market by one or more undertakings which may affect trade between MemberStates. 2. The Authority has concurrent powers with the Office of Fair Trading under theCompetition Act 1998 to investigate and take enforcement action in relation tosuspected infringements of UK and EC competition law. Under the Competition Act1998 the amount of the penalty imposed for an infringement of competition lawmay be up to 10 per cent of the company's worldwide turnover. Any decision thata company has infringed the Competition Act can be appealed to the CompetitionAppeal Tribunal. 3. The Gas and Electricity Markets Authority is the regulator of the gas andelectricity industries in Great Britain. It is supported by Ofgem, which is theOffice of the Gas and Electricity Markets. Ofgem's aim is to bring choice andvalue to all gas and electricity customers by promoting competition andregulating monopolies. For further press information contact: Trevor Loveday: 020 7901 7288Mark Wiltsher: 020 7901 7006Chris Lock : 020 7901 7225 Out of hours contact: 07774 728971 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
National Grid