Mergers: EC approves RWE's acquisition of E.ON electricity generation assets
The European Commission has approved under the EU Merger Regulation the acquisition by RWE of E.ON's renewable and nuclear electricity generation assets. The Commission concluded that the transaction would raise no competition concerns in the European Economic Area.
RWE and E.ON are both energy companies based in Germany and are active across the whole electricity supply chain, from generation and wholesale to distribution and retail of electricity. The two companies are engaged in a complex asset swap. Following this asset swap, RWE will be primarily active in upstream electricity generation and wholesale markets, whereas E.ON will focus on the distribution and retail of electricity and gas.
As part of the asset swap, RWE would acquire (i) the majority of E.ON's renewable and nuclear generation assets and (ii) a 16.67% minority interest in E.ON as part payment for the assets it is selling to E.ON in the context of the asset swap .
E.ON's acquisition of RWE's distribution and retail business is being assessed separately by the Commission and is still under review (case M.8870).
The Commission's investigation
The Commission assessed the impact of the transaction on the generation and wholesale supply of electricity. Its assessment focused onGermany, the main country where the activities of RWE and E.ON's electricity generation assets overlap.
During its investigation, the Commission received feedback from a large number of competitors and customers of RWE and E.ON, as well as regulators, municipalities, grid operators and energy exchanges.
The Commission's investigation found that the transaction is:
- Unlikely to hinder effective competition in the generation and wholesale supply of electricity. RWE has a market share slightly above 20% (and approximately 30% in conventional power generation only), but the increment created by the transaction is very small (less than 1% overall and also less than 1% based on conventional power generation only). In addition, part of the increment would only be temporary in nature since the nuclear capacity transferred to RWE will have to be decommissioned by end of 2022, at the latest.
- Unlikely to affect RWE's ability and incentives to influence market prices through withholding electricity supply, as the increment is too small to materially enhance RWE's incentives do so.
The Commission therefore concluded that the transaction would raise no competition concerns as RWE would continue facing effective competition after the transaction on the markets for generation and wholesale supply of electricity, and cleared the case unconditionally.
During its investigation, the Commission also cooperated closely with the Bundeskartellamt, the German competition authority, and the Competition and Markets Authority, the UK competition authority, as RWE's acquisition of the 16.67% minority stake in E.ON is notifiable to these authorities under national law.
Companies and products
RWE, based in Germany, is an energy company currently active across the whole electricity supply chain. Following the completion of the asset swap with E.ON, RWE will be primarily active in the generation and wholesale supply of electricity.
E.ON, based in Germany, is an energy company also currently active across the whole electricity supply chain. Following the completion of the asset swap with RWE, E.ON will focus on the distribution and retail of electricity and gas.
Merger control rules and procedures
The transaction was notified to the Commission on 22 January 2019.
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
Latest News from
Stronger EU borders with a new standing corps of 10,000 border guards18/04/2019 15:25:00
TheEuropean Parliament hasadopted the ECs proposal to reinforce the European Border and Coast Guard Agency with a standing corps of 10,000 border guards by 2027.
European Parliament's vote on new rules to improve fairness & transparency of online platforms18/04/2019 13:37:00
The European Parliament has approved the new Regulation on platform-to-business trading practices that is aimed at establishing a fair, trusted and innovation-driven environment for businesses and traders when using online platforms.
WTO Boeing dispute: EU issues preliminary list of U.S. products considered for countermeasures18/04/2019 12:25:00
The EC has launched a public consultation on a preliminary list of products from the USA on which the EU may take countermeasures in the context of the ongoing Boeing dispute at the World Trade Organisation (WTO).
Registered substances mapped for regulatory action18/04/2019 09:25:00
The first report of the Integrated Regulatory Strategy presents a mapping of the universe of registered substances that are on the EU market. This information helps authorities to identify, plan and monitor the progress on identifying and regulating substances of concern.
The United States is Europe's main soya beans supplier with imports up by 121%17/04/2019 16:25:00
New figures released by the EC, show that imports of U.S. soya beans by the EU increased by 121% over the current market year (July 2018 to mid-April 2019), compared to the same period in the previous year.
EC updates the EU Air Safety List to maintain highest level of protection for passengers17/04/2019 15:37:00
The EC has updated the EU Air Safety List, the list of airlines that do not meet international safety standards, and are therefore subject to an operating ban or operational restrictions within the EU.
EC launches debate on more efficient decision-making in EU social policy17/04/2019 13:25:00
In his 2018 State of the Union speech, President Juncker announced a comprehensive review of all passerelle clauses provided for by the EU Treaties. As a result, three Communications have already been adopted: on common foreign and security policy (September 2018), on taxation (January 2019) and on energy and climate (April 2019). The Communication on the passerelle clauses in social policy is the fourth one.
EC welcomes adoption of new measures denying terrorists & criminals the means and space to act17/04/2019 12:37:00
The European Parliament has adopted 2 important Security Union legislative initiatives proposed by the EC on interoperability and explosive precursors.
ESMA publishes translations for Guidelines on CCP APC Margin Measures17/04/2019 09:25:00
The European Securities and Markets Authority (ESMA) recently (15 April 2019) issued the official translations of its Guidelines on EMIR Anti-Procyclicality Margin Measures for Central Counterparties.