EC opens in-depth investigation into E.ON's proposed acquisition of Innogy

The European Commission has opened an in-depth investigation to assess the proposed acquisition of Innogy by E.ON under the EU Merger Regulation. The Commission has concerns that the proposed acquisition may reduce competition in retail markets for electricity and gas in several Member States.

E.ON and RWE, which controls Innogy, are both energy companies based in Germany. They are active across the energy supply chain, from generation and wholesale to distribution and retail supply of electricity and gas. The two companies are engaged in a complex asset swap. Following this asset swap, E.ON will focus on the distribution and retail supply of electricity and gas, whereas RWE will be primarily active in upstream electricity generation and wholesale markets.

As part of the asset swap, E.ON would acquire the distribution and consumer solutions business and certain electricity generation assets of RWE's subsidiary, Innogy.

The Commission's initial investigation has shown that the parties have a strong combined market position in several retail markets on a national or sub-national level in Germany, Czechia, Slovakia and Hungary. The proposed acquisition will remove a significant competitor in the retail supply of energy in these four Member States.

At this stage, the Commission is concerned that the remaining competition would be insufficient to constrain the market power of the combined entity and avoid price increases for consumers.

The transaction was notified to the Commission on 31 January 2019. E.ON and Innogy have decided not to submit commitments during the initial investigation to address the Commission's preliminary concerns. The Commission now has 90 working days, until 23 July 2019, to take a decision. The opening of an in-depth inquiry does not prejudge the final result of the investigation.