CPC sanctioned „Veolia Energy Varna“ EAD for committed abuse of dominant position

15 11 2022

By Decision № 890/10.11.2022, ruled on case № KZK-370/2019, the Commission on Protection of Competition imposed a pecuniary sanction in the amount of BGN 845 794 on „Veolia Energy Varna“ EAD for committed infringement of art.21, point 2 of  LPC. The violation of the law is manifested in an abuse of a dominant position, aimed at restricting trade and technical development on the market of share distribution of heating power in Varna city, carried out by promoting the distribution of heating power without technical devices for its measurement, as well as by unilateral replacement of water meters of customers, served by other share distributors of heating power, thus hindering their activity, which conduct directly or indirectly affects the interests of consumers.

The proceedings before CPC have been initiated upon a formal request from “Holiday and Raisen” EOOD, Varna.

„Veolia Energy Varna“ EAD is the only participant and an undertaking with a dominant position on the market of transmission and supply of heating energy in buildings –condominium in Varna. This market, in turn, has a direct impact on the vertically integrated market for share distribution of heating power in condominiums, where Veolia is a competitor of “Holiday and Raisen” EOOD and the other heating power share distributors.

The analyzed behavior of „Veolia Energy Varna“ EAD is carried out by implementing an overall strategy of restricting the market of share distribution of heating power in Varna city, in the period 2015 - 2020, leading to an outflow of consumers and subsequent reduction in the activity of the heating power share distributors, operating on the market.

The company's strategy is to motivate the customers to leave the heating energy share distribution market through implementation of practices, carried out as a heat transmission enterprise. These practices are generally characterized in promoting allocation by heated volume and maximum power" without regard to the actual amount of the heat energy consumed, as well as the free replacement of individual water meters of customers, who are serviced by heating power share distributors, thus hinder their activity and in the long term affect the consumer interests.

The practices mentioned above, cannot be justified as energy efficient measures. As the replacement of the individual water meters is bound to a specific brand, it limits the demand for other brands of radio transmitting water meters. At the same time, the promotion of heating power share distribution "by heat volume and maximum power" in itself excludes the use of the technical devices that measure and calculate the individual consumption of heat energy, therefore it cannot be treated as an energy efficient measure.

Given this, CPC considers that the mentioned practices, in complex, represent a form of behavior that according to „Veolia Energy Varna“ EAD are aimed at achieving energy efficiency goals, but in reality pursues anti-competitive effects.

Pursuant to Art. 64, para. 1 of the LPC, the decision may be appealed regarding its legality by the parties and by any third party that has a legal interest before the Administrative Court - Sofia Region, within a 14-day period, starting from the date of its notification in accordance with the Administrative Procedure Code, and for third parties - from its publication in the Commission's electronic register.

The full text of the decision is available in the public electronic register of CPC at the internet address: https://reg.cpc.bg