Vertical Natural Gas Transportation Capacity, Upstream Commodity Contracts and EU Competition Law

Because the EU depends on a very small number of external suppliers for its natural gas, energy security issues inevitably arise. In theory, competition law should regulate and adjudicate such issues. Yet, because contracts between EU companies and producers are highly sensitive and politically charged, the application of EU competition law to natural gas contracts is far from clear.

This important book, drawing on ECJ case law, Commission administrative cases and inquiries, and the full range of relevant legal and economic theory, provides an extremely valuable and detailed study of how EU competition law can be applied to long-term natural gas capacity reservation and commodity contracts. Issues and topics such as the following arise in the course of the analysis:

• Third Gas Market Directive provisions;
• Article 102 TFEU cases on strategic under-investment;
• pre-liberation or “legacy” gas contracts (e.g., with Algeria and Russia);
• “right of first refusal”;
• take-or-pay requirement;
• third-party access;
• ownership unbundling;
• effect of elimination of priority access regimes;
• short-term trading;
• spot markets; and
• law and economics of vertical restraints.

Focusing on the foreclosing effect of long-term upstream commodity contracts, the author recommends restrictions on the use of capacity reservation contracts, and analyses the efficacy of security of supply as a competition law defence in cases relating to such contracts. In addition to its substantial value to academics and policymakers as a significant contribution to competition law theory and practice, this book will also be widely welcomed by all concerned with European energy security or the changes in the traditional contractual structures underpinning EU natural gas trade. With a foreword by Jonathan Sterns.