International Antitrust Law & Policy: Fordham Corporate Law 2001 - Hardcover
International Antitrust Law & Policy: Fordham Corporate Law 2001 - PDF
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Chapter 18
MARKET POWER IN ELECTRICITY
MARKETS: REGULATION, DEREGULATION
AND COMPETITION – LESSONS FROM
THE ITALIAN EXPERIENCE AND OTHER
EUROPEAN AND U.S. CASE STUDIES
Giuseppe Tesauro†
I. INTRODUCTION
The purpose of this paper is threefold:
• to describe the Italian reform in electricity markets, comparing the
models of liberalisation and privatisation followed by the Italian
legislator with the British and French experiences;
• to analyse the structure of the Italian electricity industry resulting
from the reform and to study its effects in terms of increased
competition from the vertical separation of the former monopolist. For
this reason the traditional definition of market power will be revised.
New indicators of the existence of a dominant position will be
described. Studying the peculiarities of this industry, it will be proved
that market power depends on the firm capacity to modify the shortrun
marginal costs and to withold some of its generation capacity; and
• to analyse how this notion of market power is subject to continuous
changes to take into account the evolution of the electricity industry
towards a multi-utility structure in a multinational geographic context.
Italian and EC merger cases will be analyzed to understand the importance
of this ‘‘new’’ definition of market power. Moreover, since the degree of
competition depends on the ability to limit market power, this definition will
be also relevant to assess the effect of the electricity reform. Solutions to
enhance competition in the industry also will be explored.
Autorita` Garante della Concorrenza e del Mercato, Rome.
