Brussels, 12 th November 2009
Mergers: Commission approves proposed acquisition of Segebel by Electricité de France (EDF), subject to conditions
The European Commission has cleared under the EU Merger Regulation the proposed acquisition by EDF (France) of exclusive control of Segebel (Belgium), a holding company whose only asset is a 51% stake in SPE S.A., the second largest electricity operator in Belgium. Both companies are active in the energy sector. To remedy competition concerns the Commission had in relation to the reduced incentives of EDF to continue its plans to build additional electricity generation capacity in Belgium after the proposed acquisition, EDF has committed to immediately divest the assets of one of its companies in charge of the development of one of EDF's planned power station projects. In addition, in case EDF were not to invest in a second planned power station that it has been planning by a set date, or no decision to invest has been taken by then, EDF has committed to divest the assets of the company in charge of the development of that project at that time. In view of the proposed remedies, the Commission concluded that the operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. As a result, the Commission has decided that there is no need for the matter to be examined by the Belgian competition authority (Conseil de la Concurrence), which had asked for a partial referral of the case.
Competition Commissioner Neelie Kroes said: "The remedies will ensure that additional electricity generation is put on the market in the future which should lead to greater competition to the benefit of consumers".
EDF and its subsidiaries are active in the generation and wholesale trading of electricity and in the transmission, distribution and retail supply of electricity, as well as in the provision of other electricity-related services, in France and other countries. EDF is also active, to a lesser extent, in the natural gas retail and wholesale markets. Its presence in Belgium has so far been relatively limited, although it is currently the third largest operator.
Segebel is a holding company whose only asset is a 51% equity interest in SPE S.A. SPE is a Belgian company active in the production of electricity and in the trading and supply of electricity and gas in Belgium. SPE produces electricity through a portfolio of power plants in Flanders and Wallonia. It is the second largest electricity operator in Belgium, after the incumbent operator GDF SUEZ (Electrabel). It is present in the market under the Luminus brand.
The Commission's investigation revealed that the proposed transaction would not significantly affect competition on most relevant markets due to limited or non-existent horizontal overlaps between the parties' activities.
Nevertheless, the Commission did identify certain competition concerns in various Belgian electricity markets, in particular with regard to the Belgian wholesale electricity market. These arose from the fact that the proposed transaction removed EDF as a potential significant entrant in these markets because the incentives for the merged entity to develop new generation capacity in Belgium were likely to have been significantly reduced in comparison to the incentives that EDF had before the takeover. EDF has been developing two sites. The total new generation capacity that EDF was planning to develop constitutes about 10% of overall Belgian capacity. This capacity could allow EDF to further develop its business in the downstream markets for supplies to end consumers.
In order to remove the Commission's concerns, EDF has proposed the immediate divestment of the assets of one of the two abovementioned companies in charge of carrying out the projects and the divestment of the assets of the remaining project if, by a later date, EDF has not taken a final investment decision or has taken a decision not to invest with regard to the remaining site. These commitments will provide another operator with sufficient incentives to develop the sites, equivalent to EDF's incentives to do so before the takeover.
The Commission therefore concluded that the remedy package removed, in an appropriate and proportional manner, the concerns that it had identified. Through the restoration of the incentives to develop EDF's sites to the same level as before the takeover, Belgian consumers and businesses will benefit.
More information on the case is available at: