French Competition Authority orders GDF Suez to give competitors access to customer data
On 9 September 2014, the Autorité de la Concurrence issued an interim measures decision ordering GDF Suez to disclose customer data to competing energy suppliers, to enable them to compete on an even footing as the electricity and gas markets open up.
The French energy market has progressively opened to competition since 2000, with electricity and gas markets fully opened to competition for both domestic and non-domestic customers. Historically, the great majority of gas customers were supplied by GDF Suez at the regulated gas sale tariff (TRVG). TRVG sales are considered a public service activity. At the end of 2013, sales at the TRVG still represented approximately 34% of total gas consumption in France. Meanwhile, new entrants, as well as GDF Suez itself, are entitled to supply gas at unregulated "market" prices. Since 2006, the European Commission has been involved in infringement proceedings against France as a result of the continuation of the TRVG for non-domestic customers. The Authority has also recommended the abolition of the TRVG, on the basis that it limits competition. In March 2014, the French legislator enacted a requirement to eliminate the TRVG for large non-domestic customers (with an annual consumption in excess of 30 MWh), in stages between June 2014 and 31 December 2015.
In April 2014, Direct Energie, one of the new market entrants, complained to the Autorité de la Concurrence about 4 types of conduct engaged in by GDF Suez:
- Using information relating to customers supplied on the basis of the TRVG, in order to target them with offers to move on to market rates;
- Creating confusion between "public service" sales of gas on the basis of the TRVG and sales on a competitive "market" basis;
- Using its TRVG customer base to capture customers in retail gas and electricity markets, thereby engaging in unlawful tying; and
- Disparaging its competitors.
The Autorité de la Concurrence identified a number of relevant product markets. As a starting point, the Authority noted the distinction, drawn by the European Commission and other authorities, between the supply of gas to domestic customers, small industrial and commercial customers, and large industrial customers. In France, market definition is complicated by the imperfect substitution between regulated and unregulated offers. Currently customers with an annual consumption in excess of 30 MWh can no longer purchase gas on the basis of the TRVG if they have previously purchased on an unregulated basis, or if they change domicile. This means that while the two options are initially substitutes, they cease to be so as soon as the customer moves to a supply on an unregulated basis. The Authority therefore provisionally concluded that in the case of customers with an annual consumption in excess of 30 MWh, there are 4 relevant markets, two for TRVG supplies, domestic and non-domestic, and two for unregulated supplies, domestic and non-domestic. In contrast, customers with an annual consumption of less than 30 MWh may switch between TRVG supplies and unregulated "market" offers, giving rise, on a provisional basis at this stage of the investigation, to a single non-domestic market for these smaller customers, and a single domestic market, in each case including both TRVG and "market" supplies. The Authority defined the relevant electricity markets in a similar fashion.
The Autorité de la Concurrence noted that GDF Suez is the only supplier of TRVG gas for most of France, and therefore has a dominant position in the two markets for TRVG supplies to domestic and non-domestic customers with an annual consumption above 30 MWh. For customers with an annual consumption of less than 30 MWh, the Authority estimated the share of GDF Suez of each of the domestic and non-domestic markets (TRVG and unregulated) as probably in excess of 80%. In electricity markets, GDF Suez has a small overall share, but a very large share of customers taking unregulated supplies.
The Authority analysed the practices of GDF Suez.
It concluded that the offer by GDF Suez of a combination of TRVG gas supply, and electricity supply on an unregulated basis, together with additional services based on its use of its customer data derived from its TRVG gas supplies, even without any sort of discount for purchasing this "dual fuel" offer, could not be matched by new entrants. The competitors of GDF Suez could not offer TRVG gas supplies as part of a package. The ability of GDF Suez to do so might constitute a significant incentive to sign up to its dual fuel offer, potentially giving rise to exclusionary effects on the electricity market.
The Authority devoted a large part of its analysis of potential abuses to an examination of the use by GDF Suez of customer data. As a result of its historical regulated gas supply, GDF Suez had data on nearly all customers in France, some 11 million of them in 2007. The data included detailed information on customer identification, contact details etc, on the supply site, on the contractual relationship and on customer requests. GDF Suez used the data to facilitate customer switching from regulated to unregulated offers, and to "win back" customers who had switched to competing unregulated offers. This gave GDF Suez a significant advantage over its competitors, potentially excluding competition. The use of data obtained as a result of the performance by GDF Suez of its public service obligations, in a market in which it might be dominant, to exclude new entrants, might infringe Article 102.
The Authority also considered that statements made by GDF Suez, both in media interviews with senior executives and in scripts for sales calls, highlighting the greater security of supply supposedly offered by GDF Suez, might be capable of infringing Article 102. The Authority will investigate this possible category of abuse in more detail, but the idea that it is even contemplating finding an Article 102 abuse in misleading statements is an interesting conflation of antitrust principles and the "unfair competition" principles that apply in a number of jurisdictions.
Finally, the Authority examined a number of contractual arrangements that it believed had the potential to lock customers in to GDF Suez. These included failing to offer contractual terms not exceeding 12 months to customers coming off the TRVG and on to unregulated arrangements, long notice periods for termination and termination penalties that were difficult to customers to understand. The Authority considered that these measures preventing customers from switching away from GDF Suez might exclude competitors, and the risk of an exclusionary effect was sufficiently great that it should investigate whether they amounted to an infringement of Article 102.
The Authority concluded that the conditions for ordering interim measures were satisfied in relation to the gas markets (but not electricity, because EDF was prepared to provide access to its data), because there was a serious and immediate threat to the sector, to residential and small industrial and commercial customers, and to the complainant, and there was a causal connection between the conduct of GDF Suez and the threat. In particular, the Authority noted that GDF Suez had recently intensified the marketing of its unregulated gas offers to customers on TRVG supply arrangements. It also noted the significant risk that the actions of GDF Suez might prevent access to the market in a way that would be difficult to reverse. The approach of the winter heating season was also a significant factor.
The Authority therefore ordered GDF Suez to disclose to authorised gas suppliers certain data contained in its files of TRVG customers, pending a definitive decision. As a result, GDF Suez is required to provide authorised gas suppliers with (i) corporate customer data before 3 November 2014 and (ii) consumer data before 15 December 2014. The contemplated dataset mostly contains personal data as it relates to identified individuals. It includes supply point identification data, annual consumption data, consumption profiles and client contact details. The information will have to be made available via an Internet platform accessible 24/7 that is compliant with the French Data Protection Authority ("CNIL") recommendations issued in June 2014.
The decision is the latest in a series of investigations in the energy sector by the Autorité de la Concurrence, which has repeatedly shown itself to be one of the most active national authorities in the EU in using competition law to tackle obstacles to new entry into energy markets. The decision reflects the particular state of development of competitive energy markets in France, but the principle that former incumbents hold customer data that gives them advantages over new entrants is not new. In 2013, the Authority recommended that EDF should provide data on demand response services to new entrants. The predecessor of the Authority, the Conseil de la Concurrence, ordered France Telecom to provide all Internet service providers with online access to the information that was available to its own Internet business Wanadoo Interactive. It is worth noting that France Telecom was ordered to suspend the sales of Wanadoo Interactive ADSL packs in its commercial outlet until this information was made available. It could order a similar suspension in this case if GDF Suez failed to meet the deadlines imposed in the decision. This decision maintains the reputation of the Authority for being more willing than many of the other competition authorities in Europe to order interim measures. The definitive decision is awaited with interest.
This decision is also of interest from a data protection law point of view. GDF Suez in its capacity as the "data controller" (i.e. the organisation that determines the purposes and manner in which any personal data is, or is to be, processed) will have to enter into a data processing agreement with all authorised gas suppliers willing to have access to the data. The agreement will define the responsibilities of all parties, and the conditions necessary to process the information. As the contemplated dataset is a mixture of corporate customer data (i.e. legal entities) and consumer data (i.e. living individuals), the two types of data will be treated differently. Only the latter benefits from the protection of the French Data Protection Act (DPA). Pursuant to the French DPA, living individuals must be informed of the proposed sharing of their personal data with third parties and they must be provided with the opportunity to object to the communication of their information. The Authority required GDF Suez to send postal or electronic communication to all affected living individuals to satisfy the above requirement and offer them an opportunity to object to the sharing within 30 days. It is interesting to note that the Authority is very precise and detailed in its instructions, as it even provided in its decision the text of the communication to be used by GDF Suez (see Recital 394). This also explains why the Authority made a distinction between the two groups of data subject to disclosure, and provided different deadlines for each group.
Meanwhile, GDF Suez is reported to be planning an appeal.
For further information, please contact Peter Willis or Julie Catala Marty or the partner or member of our Competition & EU Group with whom you normally deal.