On 22 January 2018, the Bulgarian Commission for Protection of Competition (CPC) has launched an extended investigation into the energy market for suspected cartel activity.
The probe was triggered by accusations from businesses that licensed energy traders are colluding to keep energy prices artificially high, despite the traders’ insistence that energy costs in Bulgaria are market-oriented.
The CPC`s intervention comes after increased tension in the energy sector with the insolvency of the energy-trading company Future Energy, which retreated from the Bulgarian market on 1 December 2017 after being unable to fulfil contracts.
Soon after, the Association of the Organisations of Bulgarian Employers (AOBE), representing many of the country’s top business and industry groups, called for all energy deals to be conducted through the Independent Bulgarian Energy Exchange (IBEE). Protesting the established practice of energy producers to trade electricity outside the regulated market, the AOBE charged that energy could be obtained at better prices by limiting the number of energy traders.
As a result, the Energy Committee of the Bulgarian parliament tabled a proposal to amend the Energy Trading Rules so that energy producers with 5 mW capacity can only sell power through the IBEE.
This proposal, which came into force on 1 January 2018, was endorsed by the Chairman of the Energy and Waters Regulatory Commission (EWRC) for promising to increase transparency in the market.
Despite this amendment, the CPC – citing the public importance of the energy sector – will proceed with the investigation, and a wide-ranging sector analysis to gain a detailed picture of the current market and come up with measures to boost competitiveness.
These moves could bring reduced energy prices to the Bulgarian market, and increase the competitiveness of Bulgarian industry. The CPC’s last sector analysis conducted in 2013, a review of energy production, trade, transmission and supply for the period between 2006 and 2012, uncovered infringement under Articles 15 and 21 of the Competition Protection Act.
Ultimately, the CPC levelled BGN 6 million in fines against top supply and distribution companies in the Bulgarian energy market for discriminating against licensed electricity traders, and restricting the free trade of electricity.
For further information, please contact Kostadin Sirleshtov, Assen Georgiev and Tatyana Yosifova.