The European Commission has approved the purchase of Eon generation by RWE 2019.
(Photo: dpa)
Dusseldorf An important decision has been made regarding lawsuits by several energy suppliers against a historic deal between the two DAX companies RWE and Eon. The lawsuits are inadmissible. The judgment of the court of the European Union (EuG) on Wednesday morning.
Specifically, the judgment is about the takeover of power generation capacities: RWE received power plants from Eon in the course of a barter transaction in 2019. The European Commission cleared this acquisition. Ten municipal suppliers and the energy supplier Naturstrom had sued against this release.
An Eon spokesman said on Wednesday: “We welcome the decisions of the European Court. The judgments confirm the legality of the European Commission’s merger control clearance.”
Naturstrom board member Kirsten Nölke said: “If you compete as Naturstrom against the European Commission and also indirectly against RWE and Eon, which are supported by the federal government, then the starting position is extremely difficult.” Naturstrom still has a better judgment in mind of competition, energy customers and the energy transition.
The green electricity provider now wants to evaluate the verdict in detail and decide whether to appeal against the decision.
Increase in market power at RWE
The background to the legal dispute is a major agreement that Eon and RWE sealed in autumn 2019. At that time, the companies exchanged several business areas: RWE took over power plants from Eon, and Eon received electricity and gas networks from RWE. In addition, RWE became the largest single shareholder with 16.67 percent of the shares in Eon.
The accusation of the plaintiffs: RWE and Eon have divided the energy market among themselves in such a way that they hardly compete with each other anymore. Both would have gained alarmingly in market power.
After the deal, the Federal Cartel Office actually observed an increase in market power at RWE and recorded it in a “market power report”. It determines the influence of RWE using a “Residual Supply Index” (RSI).
The RSI measures how important an individual company is to cover the electricity demand in Germany. It’s not just about the number or capacity of the power plants that a generator owns in total. Because a company with many wind turbines may cover a large part of the electricity requirement on a windy day, but almost none on a windless day.
The decisive factor is therefore how many quarter hours of the year the electricity generation of a company is indispensable. According to this measurement, RWE now has a dominant market position according to the Federal Cartel Office.
A second verdict is still pending
Nevertheless, the European Commission approved the purchase of Eon generation by RWE 2019.
The law firm Becker Büttner Held (BBH), which represents some of the suing energy suppliers, criticizes the fact that the European Commission checked and confirmed the purchase individually. Because the Eon-RWE deal was split into three parts in the examination by the authorities:
Part one is about the generation purchase, about which the EU court has now passed judgments. Part two describes the takeover of the RWE subsidiary Innogy, which included end customer and network business, by Eon. And part three describes RWE’s entry as a shareholder in Eon.
From the perspective of the law firm, however, the entire deal would have to be viewed as a whole. It is about a major merger with a weight of 40 billion euros – the largest merger in Europe. This will fundamentally reorganize the energy market. The danger of the overall deal is not recognized by the individual examination.
A decision on the second lawsuit against the deal – i.e. on the takeover of the end customer and network business – is still pending. The oral hearings on this only took place last April, and it may be months before a verdict is reached.
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