On 26 November 2008, the European Commission ended its investigation into the German electricity market by accepting commitments from E.ON, a German electricity company. The investigation was initiated in 2006 as a follow up to its competition inquiry into the energy sector.

The Commission’s investigation, which focused on E.ON’s alleged abuse of its dominant position, resulted in two allegations. First, the Commission argued that E.ON had deliberately not offered for sale power production where it would have been economically rational to do so. Second, E.ON was said to favour its own electricity production affiliate in relation to its operation of the electricity balancing market. The Commission considered both forms of behaviour to have the effect of artificially increasing prices.

Consequently, E.ON has committed to divest approximately 5,000 MW of generation capacity and its transmission system business. The Commission, after consulting interested parties, is satisfied that these commitments are sufficient to allay its competition concerns. The purchasers of these assets are subject to the approval of the Commission.

The significance of the assets E.ON will divest has been hailed as unprecedented by the Commission. 20 per cent of German generation capacity will become available to competitors, with the expectation that consumers will benefit directly from increased choice and a more competitive market.