Judgment on an appeal by National Grid plc under section 46 of the Competition Act 1998 (“the 1998 Act”) against a decision of the Gas and Electricity Markets Authority (“the Authority”) published on 21 February 2008. In that decision (“the Decision”) the Authority found that National Grid had abused its dominant position in the market in Great Britain for the provision of domestic-sized gas meters, contrary to section 18 of the 1998 Act and Article 82 of the EC Treaty. The Decision imposed a fine of £41.6 million on National Grid and ordered National Grid to put an end to the infringement.
The Tribunal dismissed National Grid’s appeal but varied the fine imposed on National Grid to £30 million.
The Tribunal upheld the Authority’s findings on market definition and dominance. It also upheld the finding in the Decision that the early replacement provisions of contracts entered into between National Grid and gas suppliers in respect of meters rented as at 1 January 2004 (“the Legacy MSAs”) constitute an abuse of a dominant position. The contracts clearly have a foreclosure effect in discouraging gas suppliers from moving more of their business to competing gas meter operators and hence are likely to delay the reduction of National Grid’s market share in the market for the provision of domestic-sized meters. The Tribunal found that the disproportionate nature of the early replacement charges in the Legacy MSAs was amply demonstrated by the comparison carried out by the Authority between the terms of the National Grid contracts and those of competing meter operators.
However the Tribunal concluded that a fine of £30 million properly reflected the seriousness of the infringement and the mitigating factor arising from the Authority’s involvement in the development of the Legacy MSAs.
