The Liberalization of Natural Gas Markets: Regulatory Reform and Competition Failures in Italy

The European Union (EU) began a liberalization process during the past decade, in order to create an internal market for gas by breaking up vertically integrated national companies, allowing entry on the supply side and consumer switching on the demand side. The final aim of this process – to create a single market for gas – is still far from being achieved and the degree of competition is considered to be unsatisfactory within Member States (Commission of the European Communities, 2007). Although liberalization was expected to induce the most prominent gas producers to compete all over Europe for gas sales (Golombek, Gjelsvick and Rosendahl, 1998), national gas markets still remain separated and dominated by the former integrated gas utilities. Granting access to international pipelines devoted to gas transit proved to be a formidable task for regulators and interconnection capacity for gas imports appears to be insufficient to meet the requirements of new entrants in gas markets.

By: Alberto Cavaliere

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