The European Commission has cleared under the EC Merger Regulation the proposed acquisition of Netherlands-based Essent, by Germany-based RWE. The Commission found that the transaction, as notified, would give rise to competition concerns on the German wholesale electricity and gas markets. In order to resolve these concerns and to avoid a Phase II investigation, RWE has agreed to divest Essent’s controlling shareholding in Stadtweke Bremen AG. The Commission was satisfied, following market investigation, that this commitment would ensure effective competition in the German wholesale electricity and gas markets.
The impact of energy reform, in particular in relation to Dutch legislation imposing the requirement of unbundling of energy generation activities from transmission activities, means it has become increasingly difficult for Essent to compete effectively on the European markets. Mergers of this kind are expected to become more frequent as energy companies seek to diversify their businesses in light of the ongoing liberalisation of the EU energy markets.