Swiss gas suppliers are under pressure due to the energy crisis exacerbated by Russia’s invasion of Ukraine. The government implemented legal measures for collective procurement, but concerns about competition arose from the Competition Commission. Proposed regulatory changes aim to streamline dispute resolution by designating the Federal Office of Energy as the sole authority, potentially sidelining the Competition Commission. This shift could impact market competition and consumer prices, raising fears of a return to monopolistic practices.
The Swiss Gas Industry Faces a Critical Crossroads
The ongoing energy crisis has put immense pressure on Swiss gas suppliers. Following Russia’s invasion of Ukraine on February 24, 2022, the urgency to secure natural gas became paramount to prevent shortages. In response, the federal government took action on March 7, establishing legal frameworks that would allow gas industry representatives to collaborate on procurement for the impending winter. However, the Competition Commission (Weko) raised concerns, emphasizing that the energy crisis must not be used as a pretext to undermine competition.
After weeks of negotiations, even the Federal Council attempted to mediate the situation. Martin Schmid, FDP senator and president of the Swiss Gas Industry Association, expressed his frustration at the time, noting that while the gas industry was eager to initiate a collective procurement strategy, Weko hesitated to assure them there would be no antitrust repercussions. This indecision resulted in suppliers waiting for months, leading to gas purchases at the peak of prices, costing them hundreds of millions of francs more than necessary.
Proposed Changes to Regulation in the Gas Market
Fast forward more than two years, and the gas sector is now pushing back. Parliament is currently deliberating a gas solidarity agreement aimed at crisis management, initiated in collaboration with Germany and Italy. A proposed amendment from the Senate committee, which includes Gas Association President Schmid, seeks to designate the Federal Office of Energy (BfE) as the sole authority for resolving disputes in the gas sector.
The current regulatory framework involves multiple bodies, including Weko and the price supervisor, which is not uncommon in various markets, such as telecommunications. If the proposed amendment is passed, it would significantly alter the landscape of the gas market by removing Weko’s oversight on critical issues, as confirmed by Weko’s Deputy Director, Carole Söhner-Bührer.
This legal shift could also impact the price supervisor, who recently negotiated tariff agreements with the gas industry. The price supervisor is now assessing how the proposed changes might affect its operations, according to Simon Pfister, head of the energy department.
Schmid emphasizes the need for clarity in roles to prevent jurisdictional confusion during future crises. Without proper governance, the solidarity agreement with Italy and Germany could become ineffective.
However, there’s suspicion in Bern that the proposed legal adjustment might stem from a longstanding discontent with Weko within the gas industry. After Weko’s landmark decision in 2020 to fully liberalize the gas market, the industry faced increased competition and diminishing profit margins that had previously been guaranteed by a monopolistic structure.
If this amendment passes, it could effectively sideline Weko and potentially the price supervisor, a scenario that concerns gas consumers and independent suppliers. René Baggenstos, managing director of IG Energiegase, argues that Weko’s involvement has been critical in fostering competition, allowing consumers to save significantly—up to 70 percent in some cases—by switching suppliers.
Weko, for its part, defends its actions during the crisis, stating that it never opposed rapid collective procurement. Söhner-Bührer clarifies that the focus was on preventing excessive costs from being passed on to consumers, a significant risk in the natural gas market.
As the debate over the proposed legal changes continues, the implications for the gas industry and consumers remain uncertain. The future of competition in the gas market hangs in the balance, with concerns that the amendment could reinstate previous monopolistic practices, ultimately affecting consumers’ wallets.