In October 2004 Ofgem received a complaint from a meter operator that certain contracts National Grid entered into with gas suppliers for the provision and maintenance of domestic gas meters had the effect of foreclosing the market to competing meter operators.
In July 2005 Ofgem sent the first formal requests for information and in February 2008 the Authority made a Decision that National Grid had breached the Chapter II prohibition of the Competition Act 1998 (the Act) and Article 82 of the EC Treaty.
Chapter II of the Act prohibits the abuse of a dominant position in a market by one or more undertakings which may affect trade within the UK. Article 82 of the EC Treaty prohibits the abuse of a dominant position in a market by one or more undertakings which may affect trade between Member States.
Ofgem fined National Grid £41.6 million. National Grid appealed to the Competition Appeal Tribunal (CAT) against this decision. In its ruling of 29 April 2009 the CAT upheld Ofgem’s decision confirming that National Grid, by restricting the development of competition in the domestic gas meter market, was in breach of competition law. The CAT reduced the penalty imposed on National Grid to £30 million which still remains the highest penalty for abuse of dominance imposed to date in the UK.