VJ-176/2001 AND VJ-175/2001
THE ABUSE OF DOMINANT POSITION BY DÉMÁSZ AND TITÁSZ
On 17 September 2002, the Dél-magyarországi Áramszolgáltató Rt. (hereinafter DÉMÁSZ) was found to have abused of its dominant position on the market of services related to street-lighting and was fined HUF 45 million.
DÉMÁSZ is the monopoly electricity distributor in the region of South Hungary. Although the liberalisation of Hungarian electricity market will start in January 2003, some related markets, like the market of services related to street lighting (1. planning, construction and modernisation; 2. operation; and 3. maintenance of the street light system) were legally liberalised a few years ago. In this recently opened market the monopoly electricity distributors are present on their respective territory and occupy a strong position.
According to the Competition Council, in the present case it is not necessary to prove that the DÉMÁSZ has a dominant position on the market of street-lighting services. It is sufficient to take in consideration that the undertaking has a significant market share, that it has a monopoly on the related market of electricity distribution and that every market participant is dependent on the DÉMÁSZ in many ways. In fact, the DÉMÁSZ - as the local electricity distributor - has to provide information on the system for any planning activity and it has to give its approval before the start of any construction or modernisation of street lighting. Such behaviour is unfortunately not regulated in details by relevant laws.
The Competition Council has ruled that DÉMÁSZ has abused of its dominant position by:
making its consent to the modernisation plan of street-lighting dependent on not only technical or security aspects, but also questions regarding the ownership and operation of the system. This behaviour not only caused significant delays to modernisation but also put the other party in an unfairly difficult situation during negotiations.
giving its consent to the modernisation of the street light system only in the event that the Közvil Rt. buys the replaced old lamps, thus causing unjustified expenses. Közvil Rt. is a firm founded in 2001 whose main activity is the modernisation of street lighting for Hungarian municipalities.
unreasonably hindering the stipulation of contracts necessary for the operation of the modernised street light system.
offering electricity and repairing of eventual faults with conditions that were more favourable than its general conditions to municipalities where DÉMÁSZ was charged with the modernisation of street lighting, while not offering these favourable conditions to municipalities where other companies were assigned of the same task. This is a discriminatory behaviour.
stipulating with certain municipalities long-term contracts on providing all the services related to street lighting with penalty provisions that impeded or at least limited the municipalities` possibility as eligible customer to purchase electricity for street-lighting from other distributors after liberalisation.
All these five market behaviours are by themselves abuses, but considered together they show a common scope on the DÉMÁSZ`s side, which is to hinder and delay the entry on the market of new participants.
The Vj-175/2001 case raised similar questions and was dealt by the GVH in parallel with the previous matter; the decision was taken on the same day. In that case, another regional electricity distributor, the Tiszántúli Áramszolgáltató Rt. (hereinafter TITÁSZ) was found to have similarly abused of its dominant position and was imposed a fine of HUF 65 million.
Among the five kinds of abuses committed by DÉMÁSZ and described above, only the second and the fifth behaviours were shown by TITÁSZ. Besides, TITÁSZ made the provision of information necessary for planning dependent on questions regarding the implementation of modernisation.
The fine was higher because both TITÁSZ`s turnover and the examined municipalities were bigger.
September 17, 2002. Budapest