German Cartel Office Still Cautious with Market Definition in Gas Market, But Clears Merger of Regional Gas Supplier ESW Gas

A decision (ref. no. B8 124/11) taken by the German Cartel Office in March, clearing the merger of  ESW GasVertrieb GmbH (ESW Gas) with Energie Südwest AG (ESW AG), is now available online. The decision was taken following a review by the Cartel Office, as the majority shareholder of ESW AG is Enovos Deutschland AG (Enovos), the established transnational gas supplier in the German state of Saarland, southern Rhineland-Palatinate and Luxembourg, which was formed by a merger of Saar Ferngas and two electricity and gas companies from Luxembourg.

The German Cartel Office investigated the merger interviewing numerous municipal utilities with respect to their procurement habits to in order to review its present market assessment in view of the increasing competition in the gas industry. Concerning the supply of municipal utilities by transnational gas suppliers and concerning the supply of end-consumers the German Cartel Office said for the time being it wanted to stick to its present market definition of markets that are locally limited to the respective grid area as opposed to a national market.

Despite the fact that Enovos has a dominant position in supplying gas distributors in the state of Saarland and in southern Rhineland-Palatinate, the Cartel Office cleared the merger. The Office justified its decision by saying it expected competition to intensify over the next years, therefore the merger did not enhance the market position of Enovos to the detriment of competitors.

Source: German Cartel Office (press release), German Cartel Office (decision ref. no. B8 124/11)

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