Friday, June 20, 2014
Frank P. Maier-Rigaud IESEG School of Management (LEM-CNRS), Department of Economics and Quantitative Methods; NERA Economic Consulting explores The Two Types of Gas Network Foreclosure.
ABSTRACT: Effective competition in the gas sector can only develop further if entrants have access to gas, to the networks needed for transporting the gas and also to customers. This paper discusses network access or, in other words, foreclosure of gas networks in light of recent cases by national competition authorities and the European Commission. Besides providing an overview of some of the most important gas network foreclosure cases and the remedies imposed, it is argued that these cases can be classified in two broad categories based on the incentive structure underlying the abuse, namely quantity and entry foreclosure. Such an economic classification emphasizes the distinct theories of harm underlying the different types of foreclosure cases and thereby sheds light on their respective strengths and weaknesses. In addition this paper explores to what extent vertical integration is required for network foreclosure to occur.