HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"EN
25.5.2011 Official
Journal
of
the
European
Union L
137/55
DECISIONS
COMMISSION IMPLEMENTING DECISION
of 20 May 2011
establishing that Article 30(1) of Directive 2004/17/EC of the European Parliament and of the
Council coordinating the procurement procedures of entities operating in the water, energy,
transport and postal services sectors is not applicable to the bituminous coal mining in the
Czech Republic
(notified under document C(2011) 3406)
(Only the Czech text is authentic)
(Text with EEA relevance)
(2011/306/EU)
THE EUROPEAN COMMISSION,
(3) The
only
entity
engaged
in
bituminous
coal
mining
in
the Czech Republic is the company OKD a.s., which is a
private company owned 100 % by a private Dutch
Holding – New World Resources (NWR).
Having regard to the Treaty on the Functioning of the European
Union,
II. LEGAL FRAMEWORK
Having regard to Directive 2004/17/EC of the European
Parliament and of the Council of 31 March 2004 coordinating
(4) Article
30
of
Directive
2004/17/EC
provides
that
the procurement procedures of entities operating in the water,
contracts intended to enable the performance of one of
energy, transport and postal services sectors (
the activities to which the Directive applies shall not be

1 ), and in particular
Article 30(4) and (6) thereof,
subject to the Directive if, in the Member State in which
it is carried out, the activity is directly exposed to
competition on markets to which access is not restricted.
Direct exposure to competition is assessed on the basis
Whereas:
of objective criteria, taking account of the specific char
acteristics of the sector concerned. Access is deemed to
be unrestricted if the Member State has implemented and
applied the relevant EU legislation opening a given sector
I. FACTS
or a part of it. This legislation is listed in Annex XI to
(1) On
22
November
2010,
the
Commission
received
by
e-
Directive 2004/17/EC. However for the exploration for
mail a Czech request pursuant to Article 30(4) of
and extraction of coal and other solid fuels, Annex XI
Directive 2004/17/EC, asking for exemption of the
does not list any relevant legislation liberalising this
bituminous coal mining in the Czech Republic from
sector. Consequently free access to the market cannot
the application of the provisions of Directive
be presumed, and it has to be demonstrated de facto
2004/17/EC. The Commission requested additional
and de jure.
information by e-mail of 21 January 2011. The reply
to the request for information was transmitted by the
Czech authorities by e-mail of 9 February 2011.
(5) An
examination
of
the
legal
provisions
applicable
to
issuing licenses for mining, in the Czech Republic,
shows that it is currently granted on non-discriminatory
(2) The
request
was
accompanied
by
a
letter
from
an
inde
basis, based on the assessment of the professional qualifi
pendent national authority, (ad pro ochranu hospo
cation of the applicant, and the technical and financial
dáské soutěe, the Czech Office for the Protection of
capacity to carry out the works. For the purposes of this
Competition) in the form of a preliminary opinion,
decision, the possibility to obtain mining licence could be
dated 7 November 2008. The Czech Office for the
considered, de jure, free.
Protection of Competition analysed the conditions of
access to the relevant market and found it to be unre
stricted. However, the opinion does not state that the
other conditions relating to the direct exposure to
(6)
Direct exposure to competition should be evaluated on
competition were met in respect of bituminous coal
the basis of various indicators, none of which are
mining in the Czech Republic.
necessarily, per se, decisive. In respect of the markets
concerned by this decision, the aggregated market
( 1 ) OJ L 134, 30.4.2004, p. 1.
shares of the three main players on a given market

---

L 137/56
EN
Official Journal of the European Union
25.5.2011
constitutes one criterion which should be taken into
(12) SC
is
the
coal
which
cannot
be
qualified
as
coking
coal.
account ( 2 ). Another criterion is the degree of concen
The SC is used in power plants as fuel for production of
tration on those markets. Given the characteristics of
electricity, heat and technological steam, as part of the
the markets concerned, further criteria should also be
production process of industrial plants such as sugar
taken into account such as the degree of customer
refineries, brick plants, cement factories and limekilns,
switching.
paper mills, etc. SC may be substituted by CSFC, but
doing so would not be economically viable.
(7)
This Decision is without prejudice to the application of
the rules on competition.
(13) CSFC
may be divided further into a few categories
according to its quality. CSFC referred to as hard
coking coal is of the best quality, followed by CSFC
III. ASSESSMENT
referred to as semihard coking coal and semisoft
coking coal. However, the market for the individual
(8) The
request
submitted
by
the
Czech
Republic
concerns
bituminous coal mining in the Czech Republic.
types of CSFC is not separated and no such distinction
will be made for the purposes of the assessment for the
present decision.
Market definition
Product market
(14) In view of the above, and in line with the application, for
(9) The
Czech
request
covers
what
is
called
‘the
primary
the purposes of evaluating the conditions laid down in
market for bituminous coal’, which includes the
Article 30(1) of Directive 2004/17/EC, CSFC and SC are
production of bituminous coal and the wholesale
considered to constitute separate product markets and
distribution of coal ( 3 ). When considering competition
they should therefore be examined separately.
in the market for production of bituminous coal,
regard must be had to the links between production
and first sale/wholesale distribution of the bituminous
coal extracted. This definition is also in line with
previous Commission decisions ( 4 ) referring to the exploi
Geographical market
tation of other types of fuels.
(15) The Czech request considers that the relevant
geographical market would be a market larger than the
national territory, incorporating the territories of the
(10) The
bituminous
coal
extracted
has
different
chemical
Czech Republic, Slovakia, Austria, Poland and Hungary
compositions and quality depending on geological
for CSFC. In the case of SC, the applicant considers that
conditions of individual mined seams. The bituminous
the geographical market should be defined as comprising
coal can be divided into the coal suitable for coking
the Czech Republic, Slovakia, Austria, Poland, Hungary
(CSFC) and steam coal (SC). Although the two types of
and Germany. It is argued that the main reason for this
bituminous coal are mined in the same way, using the
market definition is the important mutual cross-border
same technologies, they have however completely
supply, the customer switching and the non-existence of
different end-use and different customer base. The
administrative obstacles (customs barriers, quotas, etc.).
prices are different and the products are not inter
changeable.
(16) According
to
the
application
( 5 ) the Czech Republic is a
(11) CSFC is defined as bituminous coal with the quality
net exporter of both CSFC and SC. In 2009, the Czech
enabling production of coke in blast furnaces and it is
Republic exported 3 581 thousands tonnes CSFC and
not used for direct heating or energy production. CSFC is
2 389 thousands tonnes SC ( 6 ) which accounts for
purchased solely by companies producing coke. CSFC is
around 61 % and 47 % of the respective internal
the only raw material for coke production and has no
production. In the same year, the imports into the
other application actually. The CSFC cannot be
Czech Republic accounted for 771 thousands tonnes
substituted by steam coal.
CSFC and 954 thousands tonnes SC representing 13 %
and 19 % respectively of the internal production ( 7 ) and
( 2 ) In line with the Commission’s constant practice (e.g.: Commission
the source of this imports was mainly Poland. In fact
Decision 2009/47/EC (OJ L 19, 23.1.2009, p. 57), Commission
imports from Poland amounted to around 90 % for
Decision 2010/192/EU (OJ L 84, 31.3.2010, p. 52), etc.).
CSFC and 80 % for SC of total imports.
( 3 ) See page 21 of the application: ‘[…] there is no market of the
bituminous coal mining, the market can be conceptually defined
only in the next phase when the producers sell the coal mined’.
( 5 ) See table 2 on page 39 of the application.
( 4 ) See, inter alia, Commission Decision of 29 September 1999
( 6 ) European Commission General Directorate for Energy and
declaring a concentration to be compatible with the common
Transport, Coal and Oil Market Observatory – Supplies and
market and the EEA Agreement (Case IV/M.1532 BP Amoco/Arco),
requirements of solid fuels in 2009 in the Czech Republic.
point 14.
( 7 ) Idem 5.

---

EN
25.5.2011 Official
Journal
of
the
European
Union L
137/57
(17) Although the applicant states that the coal produced by
(23) The
customers
of
bituminous
coal
in
the
Czech
Republic
OKD in the Czech Republic – whether CSFC or SC – is
are buying coal from OKD or, in limited quantities, from
competitive for a radius of 500 km, it is noted that the
Polish companies. The imports from other countries,
customers of OKD are located on a radius of
although increasing, are not very significant to date ( 13 ).
approximately 350 km from the place of production of
the coal, in Ostrava.
(24) In view
of the above factors, for the purposes of
(18) In respect
of CSFC sales, OKD has one important
evaluating the conditions laid down in Article 30(1) of
customer in Slovakia, which purchased around 26 % in
Directive 2004/17/EC, the geographical market is
2007 and 30 % in 2009 of OKD production and another
considered to be confined to the Czech Republic and
important customer in Austria, which purchased 13 % in
Poland, both in respect of SC and CSFC. Due to the
2007 and 19 % in 2009 of the OKD production. The
abovementioned differences between those regions
applicant lists also among its main customers outside the
which can be easily supplied by sea borne coal and
Czech Republic one company in Poland but its purchases
those which might be too far away from any coast, the
account for only around 8 % of OKD production.
market could even be smaller comprising only the Czech
Republic and the south of Poland. The question can,
however, be left open, since the larger market definition
is the one more favourable to the applicant. Under both
(19) In
respect
of
SC
sales,
apart
from
Czech
customers,
OKD
market definitions, the analysis does not lead to a
lists one important customer in Austria, which accounted
different outcome.
for around 12 % in 2007 and 21 % in 2009 of OKD
sales and one customer in Germany with around 5 % in
2007 and 3 % in 2009 of SC sales.
Market analysis
(20) According to the application, ‘the three biggest
(25) It
is considered that, in respect of bituminous coal
competitors are heavily concentrated’ (
mining, one indicator for the degree of competition on

8 ), and indeed
this can be observed in all the national markets taken
national markets is the total market share of the biggest
separately, both in respect of SC and CSFC. The applicant
three producers.
also acknowledges that ‘the overwhelming majority of
extracted coal is consumed on the local market’ ( 9 ), and
this is confirmed in all countries in the geographic area
considered by the application which are producing
CSFC Market
bituminous coal (the Czech Republic, Poland, Germany).
(26) OKD
and
two
Polish
suppliers
of
CSFC
are
by
far
the
most important suppliers in the relevant geographic
market. OKD is the largest supplier of CSFC in the
(21) According to the Commission Notice on the definition of
Czech Republic (75,5 % market share in the Czech
the relevant market ( 10 ) the relevant geographic market
Republic in 2008). The two Polish suppliers of CSFC
comprises the area in which the conditions of
are the largest suppliers in Poland (60,2 % and 19,3 %
competition are sufficiently homogeneous and which
market share in Poland in 2008). In the geographical
can be distinguished from neighbouring areas because
market encompassing the Czech Republic and Poland,
the conditions of competition are appreciably different
the aggregated market share of the three biggest
there. It is therefore worth noting that the coastal
producers in 2008 was around 93 %. It is also worth
regions of Central Europe (in particular northern
noting that the biggest competitor of OKD has on its
Germany and northern Poland) are exposed to imports
own a market share of around 49 % of the market.
of sea borne coal and given, inter alia, that sea freight
rates are considerably lower than the cost for land
transport, conditions of competition may therefore be
different in those areas ( 11 ).
(27) Even
considering
a
larger
market,
comprising
the
Czech
Republic, Slovakia, Austria, Poland and Hungary, as
claimed by the applicant, the aggregated market shares
(22) The
application
mentions
that
an
important
factor
in
of the three biggest competitors would still be very high
determining the price of the coal is the stability and
(91,3 % in 2005, 87,7 % in 2006, 85 % in 2007 and
the security of supply, and the duration of the
86,6 % in 2008 ( 14 )) and cannot constitute indication of
contract ( 12 ), and that generally the contracts for supply
sufficient exposure to competition of the CSFC market.
of coal, whether SC or CSFC, are long-term contracts.
( 13 ) In 2009, CSFC imports from USA represented around 1 % of the
( 8 ) See application, page 23, paragraph 6.
consumption and the imports of SC from Russia represented
( 9 ) See application, page 23, paragraph 6.
around 6 % of the consumption. In 2010, according to still provi
( 10 ) See Commission Notice on the definition of relevant market for the
sional data in the letter of the applicant of 9.2.2011, the share of
purposes of Community competition law (OJ C 372, 9.12.1997,
imports of CSFC from USA rose to 3 % of the consumption and
p. 5).
the share of imports of SC from Russia rose to 12 % of the internal
( 11 ) See application, page 14, paragraph 4.
consumption.
( 12 ) See application, page 8, paragraph 3.
( 14 ) See table on page 58 of the application.

---

L 137/58
EN
Official Journal of the European Union
25.5.2011
(28) As recalled in recital 22 the security and the stability of
relationships. The information provided by the applicant
supply play an important role in the contractual rela
on the customer switching shows that a number of OKD
tionships. The information provided by the applicant
customers of SC are interrupting their supplies from
on the customer switching for CSFC shows that there
OKD, in certain years, or that some 1-year contracts or
is virtually no switching for this product. The contracts
on-the-spot contracts were never renewed. However,
for CSFC supply are long-term contracts and no evidence
given the fact that the applicant did not, as requested,
has been provided to show that any of OKD customers
provide information on the volumes of supplies
changed from OKD to other suppliers. It can
concerned or of their proportion of the OKD production,
consequently not be assumed that a CSFC customer
it would be difficult to conclude that a customer of OKD
would be willing or indeed able to easily switch in the
would easily switch, following a small but significant
event of a small but significant increase of price by OKD.
increase of price by OKD.
SC market
IV. CONCLUSIONS
(29) OKD
and
two
Polish
suppliers
of
SC
are
the
by
far
most
important producers of SC in the relevant geographic
(33) In
respect
of bituminous
coal
mining in the
Czech
market. OKD is the largest supplier of SC in the Czech
Republic, the situation can thus be summarised as
Republic (61,6 % market share in the Czech Republic in
follows: in respect of both SC and CSFC, the aggregate
2008). Two Polish suppliers of SC are the largest
market shares of the three biggest competitors on the
suppliers in Poland (52,5 % and 17,7 % market share
geographical market as defined for the purposes of this
in Poland in 2008). In the geographical market
decision are high, and more importantly, the biggest
encompassing the Czech Republic and Poland, the
producer on its own represents a market share of
aggregated market share of the three biggest producers
almost 50 %, the markets should therefore be considered
was around 72 % in 2008. It is also worth noting that
as being heavily concentrated and as recalled in recital
the biggest competitor of OKD had on its own a market
20, the overwhelming majority of extracted coal is
share of around 50 % of the geographical market,
consumed on the local market. The information on the
encompassing the Czech Republic and Poland.
degree of switching does not support the conclusion that
a bituminous coal customer would have the will or possi
bility to easily switch supplier in the event of a small but
significant price increase.
(30) Moreover,
on all three geographical
markets for SC
mentioned in recital 29 (the Czech Republic alone,
Poland alone and a geographical market encompassing
both) there is an economic operator which on his own
has a market share of around 50 % or more. A constant
(34) The applicant also acknowledged that, since the
jurisprudence should consequently be recalled in this
bituminous coal mining is not profitable in other
context (
places than those already exploited (notably those

15 ), according to which ‘very large market
shares are in themselves, save in exceptional circum
exploited by OKD), ‘access of another entity to the
stances, evidence of the existence of a dominant
Czech market is not realistic and has not taken place
position. That is the situation when there is a market
during the last five years’ ( 17 ). The same holds in
share of 50 %’.
respect of coal supplies, where the applicant states that

he is not aware of any significant access to the Czech
market, and most of the significant wholesale customers
concluded long-term contracts ( 18 ).
(31) Even considering a larger market than national,
comprising the Czech Republic, Slovakia, Austria,
Poland, Hungary and Germany, as claimed by the
applicant, the aggregated market shares of the three
(35) In
view
of
the
factors
examined
in
recitals
8
to
34,
it
biggest competitors would still be rather high (62,7 %
should be concluded that the market for mining
in 2005, 60,2 % in 2006, 56,9 % in 2007 and 57,3 %
bituminous coal, both CSFC and SC, is currently not
in 2008 ( 16 )).
directly exposed to competition in the Czech Republic.
Therefore Article 30(1) of Directive 2004/17/EC is not
applicable to contracts intended to enable the pursuit of
those activities in the Czech Republic. Consequently,
Directive 2004/17/EC continues to apply when
(32) As is the case for CSFC, the security and stability of
supply of SC play an important role in the contractual
contracting entities award contracts intended to enable
bituminous coal mining to be carried out in the Czech
Republic or when they organise design contests for the
( 15 ) See point 328 of the judgment of the Court of First Instance (Third
pursuit of such activities in the Czech Republic.
Chamber) of 28 February 2002. Atlantic Container Line AB and
Others v Commission of the European Communities. Case T-395/94.
European Court reports 2002 Page II-00875.
( 17 ) See paragraph 5, on page 62, of the application.
( 16 ) See table on page 59 of the application.
( 18 ) See paragraph 6, on page 62 of the application.

---

EN
25.5.2011 Official
Journal
of
the
European
Union L
137/59
(36) This Decision is based on the legal and factual situation
Directive 2004/17/EC shall continue to apply to contracts
as of November 2010 to March 2011 as it appears from
awarded by contracting entities and intended to enable them
the information submitted by the Czech Republic. It may
to carry out such activities in the Czech Republic.
be revised, should significant changes in the legal or
factual situation mean that the conditions for the appli
cability of Article 30(1) of Directive 2004/17/EC are met.
Article 2
This Decision is addressed to the Czech Republic.
(37) The
measures provided for in this Decision are in
accordance with the opinion of the Advisory
Committee for Public Contracts,
Done at Brussels, 20 May 2011.
HAS ADOPTED THIS DECISION:
Article 1
For the Commission
Article 30(1) of Directive 2004/17/EC is not applicable to
Michel BARNIER
bituminous coal mining in the Czech Republic. Consequently,
Member of the Commission

---