5.9.2001EN Official Journal of the European Communities C 247/11

Notice pursuant to Article 19(3) of Council Regulation No 17 (1) concerning case COMP/E-3/37.921 — Viking Cable

(2001/C 247/04)

(Text with EEA relevance)

I. The notification rights and obligations under the Shareholder Agreement to Statnett. The assignment was made after the Norwegian On 11 July 2000, the Commission received a notification Parliament announced the principle that Statnett should pursuant to Articles 2 and 4 of Regulation No 17 of three own and operate all new international interconnectors. agreements concluded between PreussenElektra (now ‘E.ON Energie’), Statkraft, Statnett and Viking Cable AS. The agreements concern the creation of a joint venture (JV), Viking Cable AS, for the construction and operation of a new sub-sea cable between Norway and for the trans- IV. The purpose of the agreements mission of high-voltage electricity. Viking Cable AS has been set up in order to build a new high-voltage sub-sea cable (‘interconnector’) between Norway and Germany. The joint venture company will be owned on II. The Parties a 50/50 basis by Statnett and E.ON Energie. The new cable will have a transmission capacity of 600 MW and is scheduled to E.ON Energie is active in the production, transmission, enter into operation in late 2004. The agreements provide for distribution and trading of electricity. Following the merger an exchange of electricity between Norway, which has a between VEBA and VIAG, E.ON Energie is the largest hydropower electricity system, and Germany, with a subsidiary of the E.ON AG Group with its registered seat in predominantly thermal-based electricity system. The main Germany. purpose is to export electricity from Norway to Germany through a firm power delivery. By building the new cable, E.ON Energie seeks to avoid constructing a new power plant Statkraft SF is a Norwegian State-owned company active in the in Germany. production, supply and trade of electricity.

The power delivery will take place through a firm power Statnett SF is a Norwegian State-owned company responsible delivery from Statkraft to E.ON Energie and through a for the operation of the national grid. short-term exchange between the two companies. The firm power delivery will have a maximum output of 600 MW and 1 200 GWh per year during 25 years after the commissioning Viking Cable AS is JV company owned and operated by of the cable. To the extent that the transmission capacity is not Statnett and E.ON Energie. It has as its object the construction, occupied by the firm power delivery, it will be used for management, financing, maintenance and operation of the short-term exchanges via the NordPool spot exchange in Viking Cable and the transportation of electricity in the Norway. Such short-term exchanges, with a duration of one Viking Cable. It will not engage in trade of electricity. day or less, will be triggered automatically when there is a certain price difference between the NordPool spot price and E.ON Energie’s marginal cost of production. The Parties intend to base the price difference on the reference price of either of III. The agreements the two German power exchanges (the Leipzig Power Exchange Three agreements were notified: and the Electricity Exchange in Frankfurt am Main) rather than on E.ON Energie’s marginal cost, once the power exchanges are sufficiently established to provide a respected spot price. The (i) The General Agreement of 5 May 1993 concluded between earnings from the short-term exchange will be shared equally E.ON Energie and Statkraft concerning the firm power by E.ON Energie and Statkraft. delivery from Statkraft to E.ON Energie and the mutual electricity exchange between the Parties via the Viking Cable. The agreements provide that the Statkraft and E.ON Energie will have the exclusive rights to use the Viking Cable for a period of 25 years. (ii) The Shareholders Agreement of 5 May 1993 concluded between E.ON Energie and Statkraft containing the terms of the functioning of Viking Cable AS. V. The market

(iii) The Master Agreement of 25 August 1993 between The new cable will be used by the parties for the transmission Statkraft and Statnett by which Statkraft assigns all of its of electricity between Norway and Germany. There are currently no other direct electricity transmission links but (1) OJ 13, 21.2.1962, p. 204/62. only lines going through neighbouring countries. C 247/12EN Official Journal of the European Communities 5.9.2001

Today, electricity can be transmitted between Norway and investment. To secure the viability of the investment in trans- Germany through a number of transmission lines including mission capacity via the new cable, the notifying parties that it the Skagerakk cable between Norway and western , is necessary to have long-term arrangement over the same the Kontiskan cable between and western Denmark, lifespan as a normal power plant, i.e. approximately 25 the cable between eastern Denmark and Germany, years. Moreover, the fulfilment of the Power Exchange the between Germany and Sweden and the Arrangements is dependent upon that full transmission SwePol link between Sweden and Poland. capacity on the Viking Cable being available to the Parties on demand. However, some of these links are partly or entirely blocked by long-term reservation agreements. Other links may not be According to the Parties, it is not possible to make trans- commercially viable links due to transportation fees, their mission capacity available to third parties. The only way geographical location and network congestion. As for the third parties will have access to electricity transmitted Skagerakk cable, which links Norway to Denmark, its full through the cable will be via NordPool where the short-term transmission capacity of 1 000 MW has been made available exchange on the Norwegian side will take place. E.ON Energie to the NordPool power exchange from 1 January 2001. In will specify a daily plan for the firm power delivery and the order to allocate the scarce capacity at the Danish-German short-term exchange volumes. Once the short-term volumes network, auctions are held on a daily, monthly and yearly are settled and communicated to the NordPool spot exchange basis. E.On Energie has a long-term reservation right of at noon the day before trading, they cannot be changed. If 300 MW at the Danish-German border for the EV3 power there remains available after the short-term volumes have plant situated in Denmark. The responsible network been settled, E.ON Energie may change (renominate) the firm operators are bound to apply transparent and non-discrimi- power volume at very short notice, even on the day of delivery. natory criteria when granting third parties access to their This high degree of flexibility can only be ensured if E.ON networks. The responsible network operators, E.ON Netz and Energie and Statkraft have the entire transmission capacity at Eltra, have been planning necessary reinforcements of the their disposal. existing interconnector capacity at the Danish/German border independently of the Viking Cable project. Reinforcements could be in place by the time the Viking Cable will be oper- ational. VII. Intention of the Commission

E.ON Netz has furthermore expressed its intention to reinforce The construction of the Viking Cable will result in new its network in northern Germany by the time the Viking Cable capacity being added to the transmission connections will be operational in order to avoid that the operation of the between Germany and Norway. It also requires substantial Viking Cable will cause new or increased congestion in investments by the notifying parties. The Commission takes northern Germany. the preliminary view that the notified agreements will not restrict competition in the sense of Article 81 nor will they be contrary to Article 82 of the EC Treaty. Consequently, the At present, it could be questioned whether all of the above- Commission intends to take a favourable view towards the mentioned transmission lines form part of the same product agreements. Before doing so, it invites interested third parties and geographic market. However, since the notified agreements to send their observations, within one month from the date of will not have any effect contrary to the competition rules on publication of this notice, by fax or by mail to the following any transmission market, or any possible other market, e.g. the address, quoting the reference Case E-3/37.921 to: supply markets in Gemany and Norway, it is not necessary, in this context, to give a precise market definition. European Commission Directorate-General for Competition VI. Arguments of the Parties Directorate E, Unit E-3 Rue Joseph II/Jozef II-straat 70 The construction and operation of sub-sea cables covering long B-1000 Brussels distances in deep waters is very capital intensive. The Power Exchange Agreements must therefore be long-term to ensure Fax (32-2) 295 01 28.