The European Commission on Thursday opened an in-depth investigation into German utility E.on's (ETR:EOAN) takeover of certain assets from domestic Innogy (ETR:IGY), saying the transaction may lead to higher prices for consumers.
The EC believes that the proposed takeover could reduce competition in retail markets for electricity and gas in some EU member states.
The investigation will be aimed at ensuring that the takeover will leave sufficient competition in the market to allow for fair pricing and will not lead to price increases, competition commissioner Margrethe Vestager, said in a statement.
E.on is acquiring Innogy's distribution and consumer solutions business and certain electricity generation assets under a broad asset swap deal it agreed with RWE AG in March 2018. Under the terms of that agreement, RWE will get the renewable energy businesses of both Innogy and E.on, as well as E.on’s minority interests in the Emsland and Gundremmingen nuclear power stations operated by RWE. It will also get a 16.7% equity interest in E.on.
Subsequently, E.on will retain Innogy's lucrative power network business and electricity distribution while RWE will bundle the renewable and power generation businesses of both companies under its umbrella.
At the end of February, the EC unconditionally approved RWE's acquisition of E.on's renewable and nuclear energy assets.
The EC is expected to make a final decision on E.on's acquisition of the Innogy operations by July 23.
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