Over the past decade most of Europe's state-owned electricity monopolies have been disbanded. This has been driven by ideology, the desire for short term increased government revenues and shareholder value. This process has been further encouraged,
but not required, by the Electricity Market Directive. The avoidance of market dominance
is of particular importance in this sector as electricity cannot be stored and the potential to exercise market power is much greater than in other commodities. The importance of this phenomena's has been highlighted during the crises in California, but also through the manipulation of the electricity prices in the UK pool and recently on the German power exchange. The market dominance is most threatening on the generation side where parallel evolutions can be observed:
- In certain countries - France, Greece - the market for electricity generation has not been opened and the historical operators dominate these markets.
- In the countries that have seen market opening, political pressure on national merger authorities has weakened mergers control and has allowed market dominance. This is the case notably in Germany and Spain
To demonstrate the extent of this market dominance, the Oko Institut have undertaken an Empirical Analysis of the extent of market concentration across Western Europe. Their report can be accessed below.
To accompany this a broader political briefing prepared by Claude Turmes, the Rapporteur in the European Parliament on the electricity market directive, can also be accessed below.