Energy sector inquiry : Market power and concentration in the EU energy markets

摘要

On June 2005 the DG Competition launched a sector inquiry on the European electricity and gas markets in order to evaluate the level of competition. Releasing its preliminary results in February 2006, the DG Competition stated that the level was unsatisfactory. In January 2007, the Commission confirmed it and clearly affirmed that further actions would be necessary to create competitive energy markets in the European Union. rnWithout discussing all the items that the DG Competition evaluated, we would like to analyse in this paper the economic approach the DG Competition considered to measure market concentration and market power. We would like to discuss on how it succeeded in defining the relevant market in order to use structural indicators which give the scope for exercising market power. rnOne issue that arises with the move to open some energy activities to competition is market power. This issue is of particular interest to policymakers and legislators as they consider electric power and natural gas industries restructuring. The exploitation of market power can significantly erode the consumer benefits that would be expected to result from the transition from regulated to competitive markets. The shift to reliance on competitive market prices instead of regulated rates raises the possibility that some firms could drive up prices by exercising market power. rnAny attempt to measure or understand the potential for market power must begin with a clear definition of the relevant market that identifies both the geographic area and the products included. Often concentration measures are used as a first screen for the potential for market power. Authorities have long relied on projected changes in concentration measures as a significant part of their analyses of the impact of structural changes in market. To measure market concentration in Europe, the sector inquiry took as the relevant market each industry separately (natural gas and electricity) at a national level. Therefore, the concentration levels were high and also the market power of firms in several European countries.