The Bundeskartellamt has informed RWE Energy AG that its plan to acquire 76.88% of the shares in SaarFerngas AG raises competition concerns. According to the Bundeskartellamt’s current estimation the concentration would lead to a strengthening of dominant positions in the electricity and natural gas sales markets.
RWE Energy is the distribution company of the RWE group and offers electricity, natural gas, water and associated services throughout Germany. SaarFerngas is a regional gas transmission company that supplies municipal utilities and regional suppliers in the federal states of Saarland and Rhineland Palatinate. RWE and SaarFerngas hold stakes in municipal utilities and regional suppliers in the areas affected by the concentration, and in other gas transmission companies. In addition, 20% of SaarFerngas is held indirectly by the E.ON group.
The Bundeskartellamt has come to the preliminary conclusion that despite the steps that have been taken to open up markets, the respective gas markets are still fiercely sealed off against competition from third suppliers. The concentration would in particular strengthen the dominant position of SaarFerngas, because its gas sales would be secured by RWE’s participations in distributors. The merger would also fulfil the prohibition criteria in several markets for the supply of end consumers. According to the Bundeskartellamt’s preliminary assessment the merger would also result in a strengthening of the dominant position held jointly by RWE and E.ON in the electricity sector.
The President of the Bundeskartellamt, Dr Böge, stated: “The Bundeskartellamt has repeatedly warned that in order to maintain competitive structures in this sector any further market foreclosure effects have to be prevented. According to our current assessment such market effects are to be feared if the proposed merger went ahead. Unless the companies are able to dispel this fear the planned merger will have to be prohibited.”
The parties to the merger have until 18 December 2006 to comment on this warning.
