Federal Cartel Office Clears 24% RWE Stake in Stadtwerke Unna

RWE AG (RWE) has been granted clearance for its 24% stake in the municipal utility Stadtwerke Unna GmbH (SWU) by the Bundeskartellamt (German Federal Cartel Office), following a detailed examination pursuant to the merger control regulations of the German Act against Restraints on Competition (GWB). Bundeskartellamt held that the merger did not reinforce RWE’s position in the electricity markets.

The Federal Cartel Office prohibits mergers if they lead to or reinforce a dominant position. Shareholdings of major utilities in municipal utilities are viewed as problematic if the major utilities through them secure their position as a supplier and foreclose the market.

In the RWE/SWU case, a 12-year fixed-term shareholding of RWE (respectively its predecessor VEW) in SWU has existed since the late 1990s. The now approved shareholding its unlimited in time.

Despite the former and the renewed minority shareholding of RWE, SWU acted as an independent player on the electricity and gas markets, the German Cartel Office states. The past was characterised by “full supply contracts” (Vollversorgungsverträge) for electricity and gas between municipial utilities and their suppliers, who in general also operated the grids. This was also the case for SWU. Meanwhile the unbundling of grid operators and supply companies has mainly been effected in the wake of the liberalisation of the electricity markets. This has resulted in an expansion of the product portfolio and completely changed the procurement of municipal utilities as in the case of SWU, the Cartel Office points out. SWU has long since terminated the full supply contracts for electricity as well as for gas with RWE and shown an independent market-oriented procurement management despite the RWE stake (of the past), the Cartel Office states, saying it did not believe this to change under the (renewed) RWE shareholding.

In 30 April 2010 the Cartel Office already granted clearance (on certain conditions) to an unlimited extension of an indirect shareholding of RWE AG in the municipal utilities of the towns of Lingen and Radevormwald.

Source: German Cartel Office

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