Regulatory Risk in the European Energy Sector: Antitrust Enforcement and Its Impact on Oil Majors

The European energy sector is undergoing a seismic shift as antitrust enforcement intensifies, reshaping market dynamics and profitability for oil majors. Recent actions by Italian and EU regulators highlight a broader trend: regulators are prioritizing competition, sustainability, and consumer protection, often at the expense of corporate margins. For investors, understanding these regulatory risks is critical to navigating the evolving landscape.

The Italian Antitrust Crackdown: A Case Study in Enforcement

Italy's antitrust authority has emerged as a formidable force in 2025, targeting Eni and other oil firms for anti-competitive practices. In September 2025, the regulator fined Eni and five peers €32 million for restricting fair competition in the energy sector, citing practices that stifled market access and innovation Italy's antitrust fines Eni and other oil firms for unfair competition^[1]. This followed a separate €32 million penalty against Eni and its plastics unit, Novamont, for exclusionary behavior in the bioplastics market, where exclusive supply agreements with retailers and converters were deemed to suppress competition Italy Fines Novamont and Eni €32 Million for Bioplastics Market Abuse^[2].

The fines are not isolated incidents. In 2023, Eni faced a €5 million penalty for unilaterally altering energy tariffs for four million consumers, a practice the regulator labeled abusive Record fine for Enel and Eni for Abusive Commercial Practices^[3]. These actions reflect a broader Italian strategy to enforce transparency and fairness in energy markets, particularly as the country transitions to renewable energy under the European Green Deal.

EU-Wide Trends: Antitrust and the Green Transition

The Italian cases are emblematic of a larger EU-wide push to modernize antitrust enforcement. The European Commission, under Competition Commissioner Teresa Ribera, has prioritized aligning competition policy with sustainability goals. For instance, the EC's 2025 draft guidelines on exclusionary abuses of dominance aim to clarify how sustainability agreements between competitors can avoid violating Article 101 TFEU Client Alert: All is Not Quiet on the EU Competition Law Front^[4]. However, this flexibility is conditional: collaborations must not restrict price, quality, or innovation.

The EC has also intensified scrutiny of mergers and labor practices in the energy sector. In 2025, it launched a public consultation to revise merger guidelines, emphasizing the need to address market concentration in renewable energy and digital technologies Q2 2025 EU and UK M&A News^[5]. This signals a dual focus: ensuring fair competition while supporting the green transition. For oil majors, this means navigating a regulatory environment where even well-intentioned sustainability initiatives could trigger antitrust investigations.

Financial Implications for Eni and the Sector

Eni's financial performance underscores the tangible costs of regulatory scrutiny. In Q2 2025, the company reported a 25% decline in adjusted net profit to €1.13 billion, attributed to lower oil prices and currency headwinds ENI’s Profit Drops 25% in Q2 2025 Amid Lower Oil Prices^[6]. While strategic divestments and cost efficiencies helped maintain a proforma leverage ratio of 10%—a historic low—antitrust fines and compliance costs have added pressure. The €32 million penalty for bioplastics market abuse, combined with prior fines, represents a significant drag on profitability, particularly for a company already grappling with macroeconomic headwinds Eni: Results for the Second Quarter and Half Year 2025^[7].

The sector-wide impact is equally pronounced. In 2024, global antitrust penalties reached $6.7 billion, with abuse of dominance cases accounting for $4.3 billion A&O Shearman Report Reveals Global Antitrust Penalties Doubled Year-on-Year in 2024^[8]. European oil majors, including Shell and TotalEnergies, face similar risks as regulators probe pricing strategies, supply chain practices, and greenwashing claims. For investors, this raises concerns about margin compression and capital allocation challenges, especially as companies divert resources to compliance and legal defense.

Structural Changes in the EU Energy Market

Regulatory actions are not only penalizing misbehavior but also reshaping market structures. The EU's 2024 electricity market reforms, for example, decoupled prices from gas volatility and promoted long-term contracts like power purchase agreements (PPAs) and contracts for difference (CFDs) Electricity Market Reform: EU Solutions Against Price Volatility^[9]. These measures aim to stabilize energy markets while accelerating renewable adoption. For oil majors like Eni, the shift necessitates a pivot toward integrated energy solutions, including LNG and hydrogen projects, to remain competitive.

However, structural changes come with risks. The EU's emphasis on industrial policy—such as the Draghi Report's call for streamlined permitting for clean energy projects—could lead to state-backed consolidation, favoring national champions over foreign players One Year on from Draghi, Where Does EU Energy Policy Stand?^[10]. This may trigger further antitrust scrutiny if mergers are perceived as anti-competitive, even if they align with green objectives.

Investment Implications

For investors, the key takeaway is clear: regulatory risk in the European energy sector is no longer peripheral. Antitrust enforcement, coupled with sustainability mandates, is driving a paradigm shift that prioritizes market fairness and environmental accountability over short-term profits. Oil majors must adapt by:
1. Diversifying into renewables to align with EU climate goals while mitigating antitrust exposure.
2. Enhancing compliance frameworks to avoid costly penalties, particularly in markets with aggressive regulators like Italy.
3. Engaging proactively with policymakers to shape regulations that balance competition and sustainability.

Eni's recent investments in green energy, such as its Argentina LNG project and joint ventures in Southeast Asia, illustrate this adaptive strategy Eni Reports Strong Q1 Financial Performance but Reduces 2025 Capital Expenditure Forecast^[11]. Yet, the company's struggles with profitability and regulatory fines highlight the challenges of balancing compliance with growth.

Conclusion

The European energy sector stands at a crossroads, where antitrust enforcement and sustainability imperatives are converging to redefine market rules. For oil majors, the path forward requires navigating a complex regulatory landscape while maintaining profitability. Investors must weigh these risks carefully, recognizing that companies that fail to adapt to this new paradigm may face not only fines but also existential threats to their market relevance.