Authority Rejects Acquisition
Minister Reverses
Conditions of Acquisition
Waterfall Concessions
On September 26 2001 Statkraft Holding AS entered into an agreement to acquire more than 45% of the shares of Agder Energi AS. Statkraft Holding is a holding company wholly owned by Statkraft SF, which is a state owned company subordinated to the Ministry of Trade and Industry in Norway. Annually producing about 30% of Norway's total capacity, Statkraft is Norway's largest electricity producer. Statkraft Holding also operates in all of the Nordic countries except for Iceland, and in several European countries.
In a decision of March 21 2002 the Norwegian Competition Authority found that Statkraft's acquisition of Agder shares would significantly restrict competition in the electric power market, in contravention of the Norwegian Competition Act. The authority believed that the efficiency gained through the acquisition was not great enough to outweigh the economic losses resulting from the restriction of competition.
The decision was appealed to the Ministry of Labour and Government Administration. On October 14 the minister stated that he would not uphold the decision made by the Norwegian Competition Authority, thus implying that Statkraft may acquire the shares of Agder.
In order not to restrict competition in the power market of South Norway, the minister's decision was limited by certain conditions.
Conditions of Acquisition
The minister's approval was conditional on Statkraft selling its shares in E-CO Vannkraft AS (20%) and Hedmark Energi AS (49%) to a third party. According to the minister, the motivation is to create new market participants in the power market in South Norway. By forcing Statkraft to sell its shares, the competitiveness of these companies will be boosted and competition on the market will thus increase.
Further, Statkraft must sell part of its production capacity and adopt a greater degree of transparency in its behaviour in the power market.
This decision must be seen in connection with the development of Norwegian legislation on the acquisition of waterfalls for energy production. Under the Concession Act 1917 the acquisition of waterfalls by foreign investors is subject to concession.
Today, Norwegian legislation on waterfall concessions applies differently to municipalities, counties, state owned undertakings and private and foreign investors.
This change has allowed Norwegian public entities, especially Statkraft Holding, to establish a dominant position in the Norwegian power market.
However, the government has suggested changing the legislation on waterfall concessions (for further details please see "Waterfall Concessions are Found Restrictive"). This implies that private and foreign investors will be given the same opportunity to achieve ownership in the Norwegian energy sector as Norwegian public owned entities.
For further information on this topic please contact Charlotte Aspehaug or Kristin Bjella at Haavind Vislie by telephone (+47 22 40 21 00) or by fax (+47 22 40 21 013) or by email ([email protected] or [email protected]).