On March 8, 2022, the Competition and Markets Authority (CMA) published its decision to accept commitments offered by Gridserve (the owner of The Electric Company Limited) and three motorway service area (MSA) operators: Roadchef, MOTO and Extra. This article considers the background and implications of the CMA’s enforcement action against the parties.
In December 2020, the UK government published its Energy White Paper, setting out how the UK intends to transform its energy systems to achieve net-zero emission (Net Zero) by 2050. In respect of EV charging points, the White Paper notes that it is expected that around 6,000 high-powered chargepoints will be built across England’s motorways and major A roads by 2035.
At around the same time in December 2020, the CMA launched a market study into the EV charging sector to consider how to develop a competitive sector while also attracting private investment to help the sector grow and how to ensure people using EV chargepoints have confidence that they can get the best out of the service.
In July 2021, the CMA published its findings of the market study, noting that while some parts of the sector are developing relatively well (such as rapid charging at destinations such as shopping centres and at home or work), other parts are lagging behind. In particular, the CMA found that competition at service stations along the motorways is very limited, where Gridserve through its subsidiary has long-term exclusive arrangements with the three MSAs, with the result that they cover approximately two-thirds of all MSAs sites, leaving very little choice of EV chargepoints for drivers.
Given the competition concerns (especially of market foreclosure), the CMA then launched an investigation into the four companies.
The Scope of the Long-Term Exclusive Arrangements
During its investigation, the CMA found that under the long-term exclusive arrangements, Gridserve has the exclusive right to supply, install, operate and maintain EV chargepoints at the three MSAs’ sites that are covered by the said arrangements and that, subject to certain limited exceptions, the three MSAs may not, and may not permit any third party to, supply, install, operate or maintain EV chargepoints at the three MSAs’ sites without The Electric Highway’s consent.
This means that the existing long-term exclusive arrangements could be preventing competitor chargepoint operators from being able to operate at motorway service areas and that this foreclosure could potentially impede the introduction and roll-out of competing for rapid chargepoints, including higher performance chargepoints.
The Commitments Accepted by the CMA
Following discussions with the CMA, the companies proposed commitments to address the competition concerns, which the CMA accepted in its decision.
Under the commitments, Gridserve will not:
- Renew or enforce the exclusivity provisions in the long-term exclusive arrangements with the three MSAs after 2026;
- Enforce the exclusivity provisions in the long-term exclusive arrangements against the three MSAs or against chargepoint operators at MSA sites which are covered by the long-term exclusive arrangements; and
- Enforce the exclusivity provisions in the long-term exclusive arrangements to prevent in any way or cause any impediment to the three MSAs from engaging with any chargepoint operators to enable them to begin operating EV chargepoints.
All the companies including Gridserve also committed that they will:
- not in any way circumvent, or otherwise frustrate the operation of, any of the commitments; and
- provide the CMA with all information and documents reasonably required to allow it to monitor and review the operation of the commitments, annual compliance reports and prompt notification of any breach of the commitments.
In accepting the commitments, the CMA also published an open letter to MSA operators and EV chargepoint operators, noting that it takes any suspected contravention of competition law seriously and is prepared to take further action in this sector if appropriate. The letter further encourages all MSA operators and chargepoint operators to ensure that their arrangements comply with competition law and to make any necessary changes to existing arrangements to ensure compliance.
EV Chargepoints and Net Zero by 2050
Transport, in particular cars, is the largest source of emissions. As such, EVs play a critical role in achieving Net Zero by 2050 and the provision of EV chargepoints not only at home or work but also ‘enroute’ such as at MSAs is crucial for the anticipated shift to EVs. For people to consider purchasing and driving EVs, they must have confidence that there is a comprehensive and competitive EV charging network in place.
This decision demonstrates that the CMA is willing to take action against any suspected infringement of competition law in order to help to achieve the Net Zero goal. It further shows that competition law facilitates businesses and consumers to act sustainably. We anticipate seeing further enforcement action such as this in the context of Net Zero and sustainability going forward.