In the April edition of the e-bulletin we reported that the European Commission (the "Commission") had made its intentions clear to subject the financial service industry and the energy market to an in-depth competition law analysis. On 13 June, European Union-wide sector inquiries were launched with the overall aim of exploring whether competition is working in these areas and if consumers have begun benefiting from integration.
First out in the study into financial services will be retail banking, specifically payment cards. Integration of European retail banking is lagging behind and conditions for market entry will be investigated along with the degree of effective choice for consumers and SMEs. Business insurance is another segment highlighted by the Commission. Progress towards integrating EU financial services is also being accomplished by freedom of establishment and freedom to provide services rules.
Gas and Electricity
The sector inquiry into gas and electricity will be divided into two separate inquiries, due to the fact that integration of the electricity market is further advanced. Concern has been voiced by consumers and new market entrants about limited choice and rising prises. One of the aims of the inquiry will be to examine the reasons for the recent energy price rises.
Integration between national markets has been slow and price differences and barriers to entry remain. One such barrier which will be studied is long-term agreements. The success of cross-border interconnectors will also have to be assessed.
In carrying out these sector investigations, the watchdog will be cooperating with national regulators and consumer organisations. Market players will be invited to express their concerns. The process will start off as a broad information-gathering exercise which will give the Commission a comprehensive outline of the market.
The power of the European watchdog to conduct these types of wide-ranging examinations stems from the Modernisation Regulation (Regulation 1/2003), which gives it the right to request information, take statements and conduct inspections. Sector investigations may produce a wide range of outcomes and the market is being looked at as a whole to single out any type of competition problems which might be present. The Commission, or indeed a member state, may use the findings of the study to open proceedings into individual firms.
The main results will be published in 2006.