The European Parliament in the 1st reading extended the obligation to publish inside information on parent undertakings and related undertakings.
Position of the European Parliament adopted at first reading on 14 September 2011 with a view to the adoption of Regulation (EU) No .../2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (P7_TC1-COD(2010)0363) provided with certain important changes to the text originally proposed by the Commission.
Those interested in the detailed review of changes made should refer to the full legislative text. In this post I would like, however, to draw attention to the modified provision on obligation to publish inside information (Article 4 in the version adopted by the European Parliament).
Article 3(4) first subparagraph of the text previously proposed by the Commission had the following wording:
‘Market participants shall publicly disclose inside information in respect of business or facilities which the participant concerned owns or controls or for which the participant is responsible for operational matters, either in whole or in part. Such information shall include information relevant to the capacity of facilities for production, storage, consumption or transmission of electricity or natural gas.’
In the European Parliament position adopted on 14 September 2011 the provision in question was replaced in the following manner:
‘Article 4
Obligation to publish inside information
1. Market participants shall publicly disclose in an effective and timely manner inside information which they possess in respect of business or facilities which the market participant concerned, or its parent undertaking or related undertaking, owns or controls or for whose operational matters that market participant or undertaking is responsible, either in whole or in part. Such disclosure shall include information relevant to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas or related to the capacity and use of LNG facilities, including planned or unplanned unavailability of these facilities.’
Although in paragraph 1 of the said Article there are several changes worth considering (marked with text in bold) the qualitative and fundamental one is the extension of the operation of the obligation at issue upon parent undertakings and related undertakings.
The definitions of the "parent undertaking" (meaning a parent undertaking within the meaning of Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts) and "related undertaking" (meaning, in turn, either a subsidiary or other undertaking in which a participation is held, or an undertaking linked with another undertaking by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC) were consequently added to the legal definitions contained in Article 2.
As follows, the issue of companies affiliations wasn’t expressly identified in the previous wording of the rule introducing of the obligation to publish inside information. At this stage of the procedure it suffices to observe that the implementation of this rule in its current meaning at the level of market participants will, with reasonable degree of probability, require much organisational effort. In vertically integrated undertakings consisting of affiliated companies responsible for different business links of the supply chain sophisticated procedures and arrangements will be required to structure information flows in an appropriate manner, among others to establish so-called ‘Chinese walls’. They were already required in groups having companies responsible for carrying out the functions of the transmission or distribution system operators, and now the generation of electricity will become the ‘sensitive’ activity (the said problem isn’t, however, new, due to self-regulation requirements already introduced by exchanges and regulated markets).