Abstract

http://ssrn.com/abstract=1438650
 


 



Long-Term Contracts and Competition on European Gas Markets - Has the Commission Struck the Right Balance


Aldo Spanjer


Leiden Law School

June 1, 2009

Competition and Regulation in Network Industries, Vol. 10, No. 2, pp. 189-204, 2009

Abstract:     
This article examines whether the balance currently struck by the European Commission between long-term contracting and the introduction of competition will ensure a sustainable level of competition on European gas markets, i.e. competition that not impedes investments. It examines whether this balance – which can be derived from a recently closed antitrust case against Distrigas – takes proper account of the benefits of long-term contracting. The current balance recognizes the possibility of efficiencies related to long-term contracts. This article uses the transaction cost economics framework to assess this balance, because this science of contract explicitly focuses on contracts and their ex-post properties. It turns out that the Commission’s balance is inadequate because the advantages of long-term contracting in terms of mitigating opportunistic regulatory behaviour are not acknowledged. One likely consequence is that the Commission will intervene, and force adaptations to long-term contracts, more often than efficient.

Keywords: natural gas, regulation, liberalization, long-term contracts

Accepted Paper Series


Not Available For Download

Date posted: July 26, 2009  

Suggested Citation

Spanjer, Aldo, Long-Term Contracts and Competition on European Gas Markets - Has the Commission Struck the Right Balance (June 1, 2009). Competition and Regulation in Network Industries, Vol. 10, No. 2, pp. 189-204, 2009. Available at SSRN: http://ssrn.com/abstract=1438650

Contact Information

Aldo Spanjer (Contact Author)
Leiden Law School ( email )
P.O. Box 9520
Leiden, NL-2300RA
Netherlands
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