Bundeskartellamt clears sale of E.ON's gas transport network to investors - possible cooperation to be examined in separate proceedings

In merger control proceedings the Bundeskartellamt has today cleared the sale of E.ON's subsidiary Open Grid Europe (OGE) to an investment consortium consisting of the Australian Macquarie Bank, the Abu Dhabi Investment Authority, British Columbia Investment Management Corporation and MEAG MUNICH ERGO AssetManagement. Macquarie and MEAG have pooled their shares in MacCo which has acquired more than 40% of OGE. This made the project subject to German merger control.

OGE operates the largest gas transport network in Germany; with its east-west and north-south pipelines it is considered to be the most important gas hub in Europe. Due to ownership unbundling requirements under European law, E.ON hived off its network to OGE in autumn 2010.

Before this, Macquarie had already acquired Thyssengas' gas transport network, which had previously belonged to RWE. Thyssengas operates a gas transmission network mainly in North Rhine-Westphalia and Lower Saxony, which also includes gas pipelines operated jointly or in parallel with OGE.

Andreas Mundt, President of the Bundeskartellamt, stated: "Our examination focused on the question of whether a competitive relationship can at all be assumed to exist as gas transport is regulated in many areas. We will, however, conduct separate proceedings to establish whether a possible cooperation between OGE and Thyssengas in the future would restrict competition."

The Bundeskartellamt's investigations have shown some indication that within the regulatory framework there is factual competition between OGE and Thyssengas on some gas transmission networks. Nevertheless the project could be cleared under merger control. In the Bundeskartellamt's view the dominant position of OGE and Thyssengas has not been strengthened because, due to legal provisions, the calculation and setting of their network fees will continue to be the sole responsibility of the management of the two companies without any involvement of their shareholders. Under the German Energy Industry Act, OGE and Thyssengas are defined as independent transmission network operators (Unabhängige Transportnetzbetreiber, UTB). The UTB model ensures that independent transmission network operators are in a position to decide independently on all issues concerning network operation.

In separate proceedings the Bundeskartellamt will deal with the issue of whether a possible cooperation between the two companies in the calculation of capacities and network fees would restrict competition. The two companies have joint gas entry points for which different levels of network fees were charged from 2010 - 2012. Some transport customers have therefore switched to the cheaper transmission pipelines. Were the companies to standardize their network fees in future, transmission competition could be restricted. However, this could also result in advantages in capacity calculation and utilization.