Polskie Górnictwo Naftowe i Gazownictwo (PGNiG), delaying - contrary to Act on power generation - the issuance of technical conditions to connect a boiler house to a measuring station, has abused its dominant market position - decided the President of the Office of Competition and Consumer Protection. For the competition restricting practice, PGNiG was imposed a fine of over 41 million zloty

An antimonopoly proceeding on this matter was started this January at the request of the commune in the city of Wysokie Mazowieckie.

At the beginning of 2003, the sole supplier of natural gas and owner of the distribution networks in the area, was Zakład Gazowniczy in Białystok (belonging to PGNiG). In connection with price increase by over 40 percent (which in the result was paid by the end users - inhabitants of Wysokie Mazowieckie), in 2001 the commune began its efforts to obtain a discount and then to be classified in a lower tariff group.

The requirement that a user is classified in a more favourable tariff group, was that over 600 m³ of gas per hour be used from one measuring system. In order to meet this requirement, a decision was made to construct a pipeline, connecting the residential boiler house in Wysokie Mazowieckie with the City Thermal Plant (using 300 and 350 m³ of gas per hour respectively), so that they could use only one measuring point when consuming gas. In September 2001 the commune requested PGNiG to issue technical conditions to start the investment. In accordance with ordinance of the Minister of Economy[1], such an application should be reviewed within 60 days. However, the gas supplier as late as in June 2002 (that is after eight months), agreed to measure gas consumption jointly for the two gas boiler houses.

The President of UOKiK did not share the arguments of PGNiG, which claimed that there were no possibilities for correct operation of a gas network in Wysokie Mazowieckie, once the commune constructed its own gas pipeline within the functioning network owned by PGNiG. The investigation proved that there were technical possibilities that enabled the supply of gas in a new situation without hazard to safety, natural environment or the interests of other consumers. The costs of the investment were fully covered by the commune. In the opinion of the Office, the described actions were a manifestation of abuse by PGNiG of its dominant position in the local gas supply market. It would not have been possible with efficient competition - if a supplier could have been selected. PGNiG without risking the loss of a client, would not have been able to take arbitrary, unlawful decisions, refusing to issue technical conditions of the connection and maintaining the status for eight months.

In view of the above, the President of UOKiK recognised the actions of the gas supplier as abuse of its dominant position, which is an illegal competition restricting practice and imposed a fine  of  41 362 000 zloty. The amount of the penalty was on one hand, due to the fact that PGNiG discontinued the anticompetition practice, and on the other - to the fact that the company obtained financial benefits as a result of the practice. In the opinion of the President of the Office, the fine is commensurable to the extent of breach of public interests. When the penalty was assessed, also its preventive and repressive nature was taken into consideration. It should contribute to the discontinuation of breaching the principles of competition by PGNiG, also in other markets and with other contractors.

The decision may be appealed to the Court of Competition and Consumer Protection.

Additional information:
Elżbieta Anders, Spokesperson of UOKiK
International Relations and Communication Department
Office of Competition and Consumer Protection
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Ph.: (+48 22) 827 28 92, 55 60 106, 55 60 314
E-mail: eanders@uokik.gov.pl

[1] Ordinance of Minister of Economy of 24 August 2000 on detailed requirements applicable to connecting entities to gas networks, turnover in gas fuels, provision of transmission services, network traffic and operation of gas pipelines as well as quality standards of customer service (Journal of Laws No. 77, item 877).