EU slaps E.ON, GDF with hefty fines

BRUSSELS, July 9 (UPI) -- The European Commission slapped Gaz de France-Suez and E.ON with combined penalties of more than $1.6 billion in an effort to dismantle combined markets.

The European Commission in 2008 charged GDF-Suez and Germany's E.ON with establishing illegal arrangements dating back to 1975 for its Megal pipeline. Brussels said the Megal deal included a measure where each company would agree not to sell significant gas volumes in the other's domestic market.

The penalty is the first such measure taken by the European Commission on antitrust issues in the energy sector. It is also the highest such fine ever imposed by Brussels, the Financial Times reports.

"This is very serious," said European Competition Commissioner Neelie Kroes. "Market sharing is one of the worst types of antitrust infringement."

E.ON said the 1975 agreement allows both companies to protect their investments in the pipeline through "agreements about distribution" but stressed that provision was abandoned in 2004.

"The commission assumes the occurrence of market collusion, which never took place between the companies," E.ON chief Bernard Reutersberg said.

GDF, for its part, has said it would launch a formal challenge to the penalty, thought the Times notes the company has already made provisions for the fines in its budgets.