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Ofgem said that its decision demonstrated its commitment to taking action where there was evidence that a company had acted in a way that restricted competition and harmed customers.

Ofgem’s chairman, Sir John Mogg, said that Ofgem had imposed a substantial fine on National Grid for a serious breach of competition law. He added that National Grid had abused its dominance in the domestic gas metering market, restricting competition and harming consumers.

“The abuse has prevented suppliers from contracting with other companies for cheaper metering deals and could discourage suppliers from installing smart meters,” Sir John concluded.

When the metering market was opened to competition, National Grid struck long-term contracts with five of the six major energy suppliers to supply and maintain gas meters.

These contracts include financial penalties that apply if suppliers replaced more than the small number of meters allowed under the contract by National Grid.

Ofgem said that they severely restricted the rate at which suppliers can replace even National Grid’s older meters with cheaper or more advanced meters from rival meter operators.

The regulator added that National Grid had deprived gas suppliers and customers of access to lower prices and improved service by restricting competition.

Ofgem also accused National Grid of curbing innovation in the provision and maintenance of domestic–sized metering.

The energy regulator decided that National Grid had breached the Chapter II prohibition of the Competition Act 1998 and Article 82 of the EC Treaty.

Chapter II of the Competition Act 1998 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 and the Office of Fair Trading have the power to investigate and take enforcement action in relation to suspected infringements of UK and EC competition law.

Under the Competition Act 1998 the amount of the penalty imposed for an infringement of competition law may be up to 10 per cent of the company’s worldwide turnover.

Any decision that a company has infringed the Competition Act can be appealed to the Competition Appeal Tribunal.

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Related links

• Ofgem
• National Grid