Triggers for investigations by E-Control

E-Control can in general take action and initiate further investigations for a number of reasons:

E-Control data analysis

Monitoring the energy wholesale market includes analysing data reported by the market participants pursuant to the stipulations of Article 8 REMIT and the Austrian Energiegroßhandelsdatenverordnung (Ordinance on Energy Wholesale Data Collection) with adequate software and checking for irregularities. Suspicious trading patterns that seem to constitute insider trading according to Article 3 REMIT or market manipulation according to Article 5 REMIT are examined by the competent experts of the regulatory authority in order to distinguish accepted market practices from cases where it can reasonably be suspected that acts in breach of REMIT pursuant to Article 16(2) have occurred.

Reporting by persons professionally arranging transactions pursuant to Article 15 REMIT or section 25a(3) Energie-Control Gesetz (E-Control Act)

Article 15 REMIT defines two obligations for persons professionally arranging transactions in wholesale energy products:

• if they reasonably suspect that a transaction might breach Article 3 or 5 REMIT, they must notify the national regulatory authority without further delay, and
• they must establish and maintain effective arrangements and procedures to identify breaches of Article 3 or 5 REMIT.

In this way Article 15 REMIT, which is modelled on similar provisions of financial markets law, seeks to support regulatory authorities in monitoring markets. In financial markets law, the similar notion of a “person professionally arranging or executing transactions” is found in Article 16(2) of the Market Abuse Regulation  596/2014.

Neither REMIT itself nor its Implementing Regulation further defines the term of “persons professionally arranging transactions”. REMIT only provides indications regarding the scope of the term, being an umbrella term that encompasses both organised markets and trade matching systems.

ACER, on the other hand, has explored a definition in Guidance Note 1/2015, “The concept of PPATs (Persons professionally arranging transactions)”. It states that the term “PPATs” covers not only organised markets and trade matching systems, but also includes another open and wider category: natural and legal persons, whose qualification as PPAT must be evaluated on a case-by-case basis based on whether they constitute a “person”, act “professionally” and “arrange transactions”. Energy exchanges and brokers fall within the scope of Article 15 REMIT in any case. For further details and examples, see the ACER Guidance Note 1/2015.

In addition to the stipulations of Article 15 REMIT, section 25a(3) E-Control Act lays down for the federal level that exchanges and any other persons who professionally arrange transactions for the Austrian market must provide to E-Control all information it requires to fulfil its responsibilities and must support E-Control in executing investigations. E-Control is authorised to order the exchange and any other persons who professionally arrange transactions for the Austrian market to cease to carry out investigations or any other measures if they complicate or obstruct the investigation of a case pursuant to Article 3 or 5 REMIT.

Investigations by ACER based on suspected breaches pursuant to Article 16 REMIT

Article 1(1) REMIT provides for the monitoring of wholesale energy markets by ACER in close collaboration with national regulatory authorities. The national regulatory authorities thus cooperate with ACER in monitoring as outlined in Article 7 REMIT. This cooperation of ACER and the national regulatory authorities is further defined in Article 16 REMIT.

In particular, Article 16(4) REMIT states that ACER has the power to take a number of measures if it suspects that there has been a breach of the stipulations of REMIT. In such cases ACER is authorised

• to request one or more national regulatory authorities to supply any information related to the suspected breach;
• to request one or more national regulatory authorities to initiate an investigation of the suspected breach, and to take appropriate action to remedy any breach found. Any decision as regards the appropriate action to be taken to remedy any breach found is the responsibility of the national regulatory authority concerned;
• where it considers that the possible breach has, or has had, a cross-border impact, to establish and coordinate an investigatory group consisting of representatives of concerned national regulatory authorities to investigate whether REMIT has been breached and in which member state the breach took place. Where appropriate, ACER may also request the participation of representatives of the competent financial authority or other relevant authority of one or more member states in the investigatory group.

Reporting by other authorities pursuant to section 25a(4) E-Control Act

Article 7(2) REMIT stipulates that national regulatory authorities must cooperate at regional level in carrying out the monitoring of wholesale energy markets. REMIT further stipulates that ACER must grant access to relevant information for this purpose, subject to the condition that the national regulatory authority can ensure operational reliability. Mechanisms to share information are established by ACER pursuant to Article 10(1) REMIT.

According to Article 16(3) REMIT, particularly financial authorities on national and European level as well as national regulatory authorities and competition authorities are also obliged to cooperate, requiring these authorities to mutually exchange information if any one of them observes a breach on the financial markets according to the Market Abuse Regulation 596/2014, or breaches on the energy wholesale markets as defined in REMIT.

On the level of federal law, section 25a(4) E-Control Act obliges E-Control, the Financial Market Authority, the Federal Competition Authority and the Exchange Commissioners to inform each other about observations and findings that are necessary for fulfilling the responsibilities as defined in REMIT.