Formation of a single liberalized energy market in the European Union

The paper analyses the functioning of a multi-level governance in the European Union at the example of the development of a single liberalized energy market. The study covers three stages of reforms (the First, Second and Third energy packages). The concept of multiple flows, adapted to the specifics of the EU institutional system, and the concept of principal-agent are used as a methodological basis. The purpose of the study is to identify: 1) factors determining the degree and limits of the autonomy of the European Commission and its ability to influence policy formation; 2) strategies used by the Commission to achieve its goals; and 3) changes in the Commission strategy at different stages of energy market liberalization.
Given the scale of the resistance to the reforms and the high political importance of the issue, the Commission has consistently followed a consensual approach to develop new rules in order to ensure their legitimacy and not give Member States clear reasons to sabotage implementation. The Commission's strategy was based on a combination of two tracks: legislative reforms and the use of competition policy instruments. The Commission relied on stakeholders and actively used information asymmetry. During the initial stages of the reform, the Commission was extremely prudent. While discussing the Third Package, the Commission acted much more actively and tougher due to the increasing divergence of the interests of the Member States and the opportunity to manoeuvre between them. In the long term, the Commission has consistently worked to form allies “within” the Member States – national energy regulators, seeking to expand their powers and strengthen their independence from national governments.

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