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European Commission approves renewables asset swap

Wed 27 Feb 2019 by David Foxwell

European Commission approves renewables asset swap
The European Commission has unconditionally approved an asset swap between RWE and Eon

The European Commission has approved the acquisition by RWE of Eonís renewable and nuclear electricity generation assets, having concluded that the transaction does not raise competition concerns in the European Economic Area.

RWE and Eon are both active across the whole electricity supply chain, from generation and wholesale to distribution and retail of electricity, but recently agreed a complex asset swap.

Following the asset swap, RWE will be primarily active in upstream electricity generation and wholesale markets, whereas Eon will focus on the distribution and retail of electricity and gas.

As part of the asset swap, RWE will acquire the majority of Eonís renewable and nuclear generation assets and a 16.67% minority interest in Eon as part payment for the assets it is selling to Eon in the context of the asset swap.

Eonís acquisition of RWE's distribution and retail business is being assessed separately by the Commission and is still under review.

The Commission assessed the impact of the transaction on the generation and wholesale supply of electricity. Its assessment focused on Germany, the main country where the activities of RWE and Eon's electricity generation assets overlap.

During its investigation, the Commission received feedback from a large number of competitors and customers of RWE and Eon, 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. It also found that it was 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 RWEís incentives do so.

The Commission therefore concluded that the transaction would raise no competition concerns as RWE would continue to face effective competition after the transaction on the markets for generation and wholesale supply of electricity and cleared the case unconditionally.

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