First of the EnBW/EWE/VNG merger projects cleared following commitment to divest

Today the Bundeskartellamt has cleared plans by Energie Baden Württemberg AG (EnBW) to acquire a 26% share of EWE Aktiengesellschaft (EWE) subject to the condition that the parties to the concentration divest significant company holdings. Alternatively, the decision offers the possibility of a divesture of the respective problematic associated companies of the parties to the merger in the gas sector. Following a statement of objections by the Bundeskartellamt (cf. press info of 22 December 2008) EWE and EnBW had undertaken to either sell the EWE associated company Verbundnetz Gas AG (VNG) or the EnBW associated company GESO Beteiligungs- und Beratungs AG (GESO) to a third party. GESO holds shares in, among others, ENSO Energie Sachsen Ost AG (ENSO) and DREWAG Stadtwerke Dresden GmbH (DREWAG).

Additionally, the Bundeskartellamt has until 15 September 2009 to decide on a further notification according to which EnBW plans to directly acquire EWE's shares in VNG which amount to 47.9%.

The first-mentioned concentration, which was cleared by the Bundeskartellamt, concerns the electricity and gas sectors. With regard to the electricity market, there was no evidence which would indicate that EnBW is a member of a dominant oligopoly in the domestic markets for the first-time sale of electricity and its supply to industrial customers. EnBW does not satisfy the relevant criteria recently confirmed by the Federal Court of Justice in its “Stadtwerke Eschwege” decision. In the gas market, on the other hand, the concentration would have led to a strengthening of dominant positions held by associated companies of EnBW and EWE in eastern Germany. In particular, it was likely that the sales of the dominant grid gas company VNG would have been further secured in that the management boards of ENSO and DREWAG would have taken account of VNG’s interests in their gas procurement strategies. In addition, without the obligation to divest ENSO’s and DREWAG’s dominant positions in their regional or local gas markets for the supply of distributors and household and industrial customers would have been strengthened, since they would no longer have had to fear any competition from VNG in these markets.
In order to prevent a prohibition of the concentration, EWE and EnBW had agreed in the course of the proceedings to alternatively divest EWE’s participation in VNG or EnBW’s associated company GESO within a certain period of time. Both alternatives, each taken on their own, dispel the competitive concerns raised by the planned concentration. The companies now have to inform the Bundeskartellamt of their choice by a certain date.

EnBW is the parent company of a group of companies mainly active in the electricity and gas sectors, and in the energy and environmental services sectors. In the electricity sector EnBW is active via associated companies on all levels of the value-added chain, i.e. production, trade, transport, distribution and sales. In the gas sector EnBW is active mainly in Baden-Württemberg via the gas supply company Gasversorgung Süddeutschland GmbH, which it jointly controls with ENI SpA. In the new Länder EnBW holds interests in ENSO and DREWAG. ENSO is a regional company active in the supply of electricity, natural gas, heating and water in eastern Saxony. DREWAG supplies electricity, gas, district heating and water in and around Dresden.

EWE is a regional supplier of electricity, gas and water. It also supplies electricity and gas in the Ems/Weser/Elbe region. In eastern Brandenburg and Rügen it is exclusively active as a supplier of gas. In addition, EWE has a 47.9% stake in VNG. VNG is a grid gas company supplying the entire territory of the new Länder; its main activities being in the import, trade, transport and storage of natural gas and services related to these activities. ENSO and DREWAG procure their gas almost entirely from VNG.