The Bundeskartellamt has prohibited the acquisition by E.ON AG, Düsseldorf, (E.ON) of a majority stake in Gelsenberg AG, Essen. The merger would have strengthened dominant positions both in the gas and electricity sales markets. The President of the Bundeskartellamt, Ulf Böge, stated: “The combination of E.ON and Ruhrgas in a time of emerging liberalisation in the gas markets would cement Ruhrgas’ dominant position. This would considerably diminish the likelihood of any effective competition from other grid gas companies. There was also the danger of E.ON’s market position in the electricity sector being further strengthened to the detriment of small competitors and consequently consumers.”

Ruhrgas is the largest German grid gas company. Its domestic gas sales account for nearly 60 per cent of the total domestic natural gas output. At the grid gas level Ruhrgas’ market share in the supply of gas distributors, i.e. excluding the direct supply of bulk buyers, is at least 88 per cent in the company’s distribution area and at least 58 per cent in the whole of Germany.  Moreover, Ruhrgas is the only grid gas company with paramount access to all gas production sources relevant for supplying the German market (Norway, Russia, the Netherlands, Great Britain, domestic sources). It has the largest grid gas network which gives it paramount access to both suppliers and buyers. Additionally, the company has the largest storage capacities in absolute numbers which are significant for balancing fluctuations in sales.

At the grid gas level, the combination of Ruhrgas and E.ON would structurally secure Ruhrgas’ sales to E.ON affiliates and holdings and thus strengthen its dominant position. It is likely that Ruhrgas would be able to further expand this share after the merger through preferential treatment in the awarding of gas supply contracts on account of joint interests. E.ON affiliates located in Ruhrgas’ transmission area (e.g. Avacon AG, Helmstedt, Schleswag AG, Rendsberg, Heingas Hamburger Gaswerke GmbH, Hamburg, and Gelsenwasser AG, Gelsenkirchen with its fully-owned subsidiary Niederrheinische Gas- und Wasserwerke GmbH, Duisburg) would be able to strengthen their dominant positions in supplying large gas end customers and local gas distributors (municipal utilities) since after the merger they would no longer have to expect potential competition from Ruhrgas.

The merger would also strengthen dominant positions in the electricity sector. Natural gas is the most promising primary energy source for generating electricity. A major influence on the primary energy supplier Ruhrgas would strengthen the dominant positions of E.ON and RWE (with its subsidiary Thyssengas) in the national markets for supplying industrial/commercial electricity customers and distributors, i.e. regional electricity suppliers and municipal utilities.  

Böge stated: “The concessions the companies offered were of little significance in competition terms and thus not appropriate to prevent the strengthening of the dominant positions in the gas and electricity markets.”