The Bundeskartellamt has prohibited RWE Energy AG from acquiring 76.88% of the shares in SaarFerngas AG. According to the Bundeskartellamt’s assessment 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 provides electricity, natural gas, water and associated services throughout Germany. SaarFerngas is a regional gas transmission company that provides municipal utilities and regional suppliers in Saarland and Rhineland Palatinate with natural gas. 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.

According to the Bundeskartellamt’s findings the concentration would lead to significant market foreclosure effects. These would in particular result from the merging of the companies’ participations in distributors which would further secure electricity and gas sales. The concentration would in particular strengthen the dominant position of SaarFerngas in the gas sector, because its gas sales would be secured by RWE’s participations in distributors. The merger would also fulfil the prohibition criteria in several local markets for the supply of end consumers. In the electricity sector the acquisition of shares in distributors would strengthen the dominant positions held by RWE together with E.ON on the national electricity markets. In addition, the concentration would worsen competitive conditions in a number of local markets for household customers.

In December 2006, the Bundeskartellamt issued a warning letter about the project. The companies subsequently offered several commitments to remedy the negative impact on competition in the gas and electricity markets. According to the Bundeskartellamt’s estimation, however, these commitments did not suffice.

The President of the Bundeskartellamt, Dr Böge, stated: “In view of the steps that have been taken to liberalise its gas sector, we must ensure that Germany does not lose gained ground in this area. For this reason, the companies’ commitments would have had to result in improvements that would have clearly outweighed the negative impact on competitive structures in the markets affected.”

The decision is not yet final. The parties involved can appeal against it at the Düsseldorf Higher Regional Court. The decision will be available on the Internet at www.bundeskartellamt.de as of 16 March 2007.