Overview
Introduction
The European Commission’s decision in September 2025 to award a €645.2 million grant for the Bornholm Energy Island (BEI) — a hybrid offshore interconnector linking Denmark and Germany — signals a major shift in how interconnectors are perceived. No longer just technical infrastructure, they are increasingly recognized as strategic enablers of Europe’s energy transition, climate goals, and the development of a green economy. While this article focuses on electricity interconnectors, it also considers the broader cross-border infrastructure landscape — including gas pipelines, telecom and fiber-optic networks — all crucial for strengthening Europe’s connectivity, resilience, and market integration. Electricity interconnectors, in particular, are vital to achieving the EU’s threefold energy goals: security of supply, competitiveness, and environmental sustainability. By easing cross-border congestion, enabling renewable integration, and supporting price convergence, they reinforce grid stability while delivering economic and geopolitical benefits.
1. What Is an Interconnector?
But first, it is important to clarify what interconnectors are. Within the EU context, an interconnector is defined as “a transmission line that crosses or spans a border between member states and connects their national transmission systems” (Art. 2 (1) Regulation 2019/943). When linking different markets or countries — though not necessarily when connecting distinct pricing areas within a single market — a defining characteristic of an interconnector is that its development and operation require coordination and agreement between at least two parties. Consequently, such projects typically extend beyond the authority of any single transmission system operator (TSO) and involve cross-border collaboration.
2. Ownership Models for Electricity Interconnectors: Regulated vs. Merchant
Electricity interconnectors can follow different ownership models, with the regulated model being most common. In this model, TSOs build and operate interconnectors as part of their public infrastructure, recovering costs through regulated network tariffs. These projects typically require cross-border TSO cooperation and must follow rules on third-party access, ownership unbundling, and revenue use — as reinforced by EU law under the Clean Energy for All Europeans package. The regulated model offers transparency and stable returns, helping lower investment risk. In contrast, the merchant model is used when market uncertainty makes regulation unviable. Here, private developers take on full market risk, aiming to profit from price differences between markets. While still needing regulatory approval, merchant projects may qualify for rule exemptions. In Great Britain, regulation long excluded interconnectors from TSO asset bases, making the merchant model — as seen, for example, in BritNed (UK–Netherlands) and ElecLink (UK - France) — the default until recent policy changes.
Interconnectors help smooth the inherent challenges involved in energy transition: renewable energy is inherently intermittent and is unpredictable. Interconnectors can help reduce the need for curtailment and increase balancing. Also, cross-border trading can help energy flows from lower-price regions (e.g., with excess supply) to areas of higher demand or higher prices. For example, offering electricity from sunny Greece or Italy to windless Germany in the North. This can result in more competition and lower consumer bills and provide greater market integration.
Currently, Europe has more than 400 interconnectors; but policy advisors suggest that there is a need to more than double this in the next 10-15 years in order to meet Europe’s energy targets and climate neutrality goals.
3. Competition Related Matters
- Third Party Access – Non-Discrimination (Art. 6 and Art. 9 Directive 944/2019)
At the EU level, Member States must ensure third-party access to energy transmission and distribution systems. TSOs and LNG/storage operators are required to provide non-discriminatory access to their infrastructure, offering identical services under equal terms and published, transparent tariffs. These tariffs — or their calculation methods — must be approved before taking effect (per Article 59). The Sabatauskas case (C-239/07) confirms that TSOs must guarantee open, transparent, and equal access to interconnector capacity, in line with EU internal energy market rules.
This regulatory regime reflects and reinforces the principles of the essential facilities doctrine under Articles 102 and 106 TFEU, which prohibits dominant undertakings from unjustifiably denying access to infrastructure that is indispensable for effective competition in downstream markets. The Bronner test (C‑7/97) established strict conditions under which a refusal to grant access may constitute an abuse of dominance (that the infrastructure must be indispensable, the refusal must be likely to eliminate all competition, and there must be no objective justification). However, EU sectoral legislation in the energy market imposes a regulatory duty to grant access irrespective of whether all Bronner criteria are met. In this way, the internal energy market framework both codifies and goes beyond the Bronner test by ensuring mandatory access obligations for essential infrastructure, even in the absence of a finding of abuse under general competition law.
- Exemptions from Third Party Access
Access to energy infrastructure may be refused in justified cases, such as lack of capacity, provided the refusal is based on objective, technical, and economic criteria (as outlined in Article 9 of Directive 2019/944). Additionally, major new infrastructure — like cross-border pipelines or LNG terminals — may be exempt from third-party access rules if the investment is particularly risky and wouldn't proceed under standard regulations. To qualify, the project must:
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- Improve supply security and promote competition
- Be owned independently from the TSO it connects to
- Ensure paid access for users
- Not harm the internal EU market or the linked transmission system
- Be financed independently from regulated TSO revenues
- Forms of Discriminatory Practices / Refusal to Access
a) Refuse Access as Form of Abuse of Dominance Position
Refuse access to infrastructure can lead to an abuse of dominance position, which can take different forms, such as restricting access to infrastructure for certain users, discriminatory pricing, and imposing stricter technical standards. There is a series of examples about alleged infringements of Article 102 TFEU. Most notably, in DE/DK Interconnector Case (AT.40461/2018), TenneT, the TSO in northern Germany was found to have limited capacity systematically over many hours, potentially abusing dominance by underutilizing capacity. This shows how a TSO controlling capacity on an interconnector might violate non‑discrimination and effective use obligations under EU competition law. In Transgaz case (AT 40335/2020), Transgaz was restricting natural gas exports to neighboring Member States by means of including underinvestment or delaying infrastructure, setting interconnection tariffs that made exports unviable.
Another important decision in the context of access to essential facilities — and refusals to deal in the telecoms sector — is Slovak Telekom / Deutsche Telekom (joint cases C‑152/19 P & C‑165/19 P). The Slovak Telekom saga ended after almost 12 years with the CJEU’s final judgment in 2021, which upheld the European Commission’s finding of abuse. Slovak Telekom, part of the Deutsche Telekom group had abused its dominant position in the market for unbundled access to the local loop (copper/fibre). The abuse involved restricting access through unfair contractual terms, reducing the scope of its obligations, and implementing a margin squeeze that hindered equally efficient competitors. Crucially, the Court clarified that even where access is formally granted, the imposition of unfair or discriminatory conditions can constitute an abuse under Article 102 TFEU, without the need to satisfy the stricter Bronner test applicable to outright refusals of access.
In the UK, the Court of Appeal’s judgment in TalkTalk v Ofcom ([2013] EWCA Civ 1318) is a landmark case in telecoms regulation. TalkTalk challenged a decision by Ofcom, the UK’s telecoms regulator, which found that BT, the dominant provider of wholesale broadband infrastructure including the local loop, held Significant Market Power (SMP) in certain areas. To tackle concerns over excessive pricing and limited competition, Ofcom imposed price controls and non-discrimination obligations on BT. TalkTalk argued that Ofcom had miscalculated BT’s costs and failed to promote fair competition. The Court of Appeal dismissed the appeal, confirming Ofcom’s broad discretion in market regulation. The judgment reinforces the regulator’s role in ensuring access to essential infrastructure and preventing abuses of dominance where competition is constrained.
b) Cartel Pricing and Interconnector Risk: The BritNed Precedent
A discriminatory practice was also addressed in a key UK case on interconnectors in BritNed vs ABB (Claim No. HC-2015-000268), concerning cartel damages. BritNed, a merchant electricity interconnector between Great Britain and the Netherlands (jointly owned by National Grid and TenneT), contracted ABB to supply its submarine cable. In 2014, the European Commission found ABB guilty of participating in a high-voltage power cables cartel (AT.39610). Based on this, BritNed filed a follow-on damages claim in the UK, citing overcharges, lost profits, and extra financing costs. The High Court awarded around €13 million, mainly for inefficiencies due to lack of competition, but rejected claims for lost profits and compound interest. It included €5.5 million for “cartel savings,” later overturned by the Court of Appeal, which held such savings must show actual harm — which was not proven. This case confirms that merchant interconnectors, relying on market revenues rather than regulated returns, can claim damages from upstream cartel conduct like HVDC (High Voltage DC) cable supply.
c) Congestion Revenues
Discrimination can also arise in relation to the use of congestion revenues, a key issue in the regulation of interconnectors under EU energy law. According to Article 19 of Regulation (EU) 2019/943, such revenues which are generated from the allocation of limited interconnector capacity, must be used to ensure capacity availability, invest in infrastructure, or, if not feasible, be taken into account in regulated tariffs. In the Baltic Cable AB v Energimarknadsinspektionen case (C‑454/18), the CJEU confirmed that standalone interconnector operators (those owning and operating cross-border connections between national grids without being part of a national transmission system), like Baltic Cable, qualify as Transmission System Operators (TSOs) under EU law. The case concerned the Swedish regulator’s decision to impose stricter limits on how Baltic Cable could use its congestion revenues compared to national TSOs, which Baltic Cable claimed was discriminatory. The Court agreed, holding that such unequal treatment was unlawful and undermined the operator’s ability to function sustainably. The importance of this judgment lies in its affirmation of the principle of non-discrimination and the need to ensure fair and competitive access to essential energy infrastructure within the internal market.
d) Maintenance & Repair, Seabed Licensing
Foreshore landings — where subsea cables or pipelines come ashore, typically between the high- and low-tide marks — are critical points in cross-border infrastructure projects. These areas often involve public or state-owned coastal land and require careful navigation of permitting, environmental approvals, and marine spatial planning. Notable examples include Google’s Grace Hopper cable landing in Cornwall (2021), which expanded transatlantic data capacity, and the Crete–Attica electricity interconnector, Greece’s largest energy project, connecting Crete to the mainland via high-voltage DC cables.
In this context, non-discrimination obligations apply not only to access and pricing but also to maintenance, repair activities, foreshore landings, and seabed licensing. System operators must not impose disproportionate terms, technical constraints, or regulatory burdens that could unfairly disadvantage certain market participants. All users must be granted equal treatment in the scheduling and execution of maintenance or repair works, ensuring no party is unjustly deprived of access, priority, or operational continuity — especially at critical landing points or offshore infrastructure.
e) Gas Pricing at the Flange
Bundled gas pricing can enable forms of discrimination, particularly when vertically integrated suppliers obscure infrastructure charges within the overall commodity price — disadvantaging competitors through hidden transport mark-ups. To address this, gas pricing at the flange has emerged as a key principle in wholesale markets. It refers to pricing gas at the point of physical delivery, excluding downstream infrastructure and transport costs. This approach separates the commodity value from infrastructure charges, ensuring that transmission and distribution costs are unbundled and transparently set by TSOs and Distribution System Operators (DSOs). By doing so, flange pricing enhances market transparency and competition and limits the ability of suppliers to offer preferential or discriminatory pricing under the guise of bundled services. Since transport pricing is set independently by the TSO, the supplier has no control over access costs, supporting a level playing field in the market.
f) Mandated Collocation State Owned and Private Pipeline
Discriminatory risks may also arise in cases of mandatory infrastructure co-location, where a state-owned pipeline (e.g., operated by a TSO) and a privately owned one are required to share corridors or facilities such as landing points, access roads, or compression stations, or undergo joint permitting and licensing. If the state operator controls these processes, it may indirectly discriminate — for instance, by prioritizing its own maintenance, imposing stricter standards, or delaying access for the private operator. Where shared infrastructure is publicly funded, regulators must ensure compliance with EU state aid rules (Arts. 107–109 TFEU), as preferential treatment for a state operator competing with a private one may constitute unlawful aid (see. Essent Belgium, C-492/14 case). Differences in tariff regimes — regulated for the state pipeline and negotiated for the private — further complicate matters. If shared costs (e.g., for seabed use or maintenance) are not allocated fairly, the private party may face disproportionate charges or access restrictions. This risk is heightened where the state operator also holds regulatory or administrative authority, creating a conflict of interest that could distort competition.
Conclusion
As cross-border electricity flows become more essential to Europe’s green and secure energy future, interconnectors are no longer just technical infrastructure — they raise important legal and commercial considerations. Whether you're developing, operating, or investing in interconnectors, navigating ownership models, third-party access rules, and non-discrimination obligations are key to ensuring compliance and minimizing legal risk.
Going forward, integrating battery storage alongside interconnectors will be critical to managing congestion and improving system efficiency. With regulatory and competition scrutiny on the rise, staying ahead of legal developments — especially around pricing, access, and infrastructure sharing — will be essential for market participants looking to compete and grow in an increasingly interconnected energy landscape.
Please turn to the authors, Charles Whiddington and Domniki Mari, or to other members of Steptoe's antitrust team if you wish to discuss any of these developments and their potential impact on your business.
