The EU antitrust regulator gave its go ahead to E.ON’s €29.1 billion bid for Endesa, upping the pressure on Spanish authorities not to block the German utility’s bid.
“After examining the operation, the Commission concluded that the proposed transaction would not significantly impede effective competition” in European energy markets and has “therefore approved the concentration,” the EU executive said in a statement on Tuesday (25 April).
It said the decision was taken upon confirmation that the two companies had only “limited overlapping activities” on electricity markets in France, Italy, Germany and Poland and no overlapping at all in their respective national markets for natural gas.
The EU green light comes as a blow to Spain who recently passed a new law giving its national regulator more powers to block takeovers from foreign companies. The Commission already said it reserved its right to declare the new law illegal as it has the last word over competition matters.
Brussels also hit out at moves by some EU governments to protect national energy “champions” from takeover bids by European rivals as was illustrated recently with the GdF-Suez merger in France. The protectionist claims were rejected by French authorities who said utilities need to be large enough to put together the necessary investment in electricity or gas infrastructure called for by Brussels (EURACTIV 1 March 2006).
The Commission is currently keeping EU energy markets under close scrutiny. Early findings of a competition enquiry confirmed that gas and electricity markets are still secluded “due to varying degrees of liberalisation, regulatory barriers and lack of interconnection capacity” between countries (EURACTIV 17 Feb. 2006). It recently launched infringement proceedings against Germany, Spain and other countries for dragging their feet in implementing European legislation on energy market liberalisation (EURACTIV 5 April 2006).