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| 10.11.2020 | EN | Official Journal of the European Union | C 379/16 |

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Summary of Commission Decision

of 17 September 2019

declaring a concentration compatible with the internal market and the functioning of the EEA Agreement

(Case M.8870 – E.ON/Innogy)

(notified under document C(2019) 6530)

(Only the English text is authentic)

(2020/C 379/07)

On 17 September 2019
the Commission adopted a Decision in a merger case under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings [(1)](#ntr1-C_2020379EN.01001601-E0001)
, and in particular Article 8(2) of that Regulation. A non‐confidential version of the full Decision can be found in the authentic language of the case on the website of the Directorate‐General for Competition, at the following address: http://ec.europa.eu/competition/index\_en.html

I.   THE PARTIES

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| | (1) | On 31 January 2019, the European Commission received notification of a proposed concentration (‘the Concentration’), pursuant to Article 4 of the Merger Regulation, by which E.ON SE (‘E.ON’, Germany) will acquire, within the meaning of Article 3(1)(b) of the Merger Regulation, sole control over the distribution and consumer solutions business and certain electricity generation assets of Innogy SE (‘Innogy’, Germany) [(2)](#ntr2-C_2020379EN.01001601-E0002). |

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| | (2) | E.ON is an energy company active across the supply chain, including generation, wholesale supply, transmission, distribution, retail supply and energy-related activities (such as metering, e-mobility, etc.). E.ON is active in several Member States, including Sweden, Romania, Italy, Poland, Denmark, Czechia, Germany, Hungary, Slovakia and the UK. |

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| | (3) | Innogy, a wholly owned subsidiary of RWE, is an energy company active across the supply chain, including distribution, retail supply and energy-related activities (such as metering, e-mobility, etc.). Innogy is active in several Member States, including Belgium, Spain, the Netherlands, Poland, France, Italy, Portugal, Romania, Croatia, Slovenia, Czechia, Germany, Hungary, Slovakia and the UK. |

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| | (4) | E.ON is hereinafter referred to as ‘The Notifying Party’ and together with Innogy as ‘the Parties’. |

II.   THE OPERATION

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| | (5) | The Concentration consists in the acquisition of sole control of Innogy by E.ON. The Concentration is to be accomplished by way of a purchase of shares. The Concentration is part of an extensive asset swap between E.ON and RWE as the result of which E.ON will be primarily active in the operation of electricity and gas distribution networks as well as retail supply in various European countries. RWE will focus on the generation and wholesale activities. |

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| | (6) | E.ON would acquire the energy distribution network and customer solutions operations of RWE’s subsidiary, Innogy, as well as certain minor electricity generation assets, mainly combined heat and power (CHP) plants held by Innogy (‘the Reverse Carve-Out Assets’). RWE would acquire most of E.ON’s electricity generation business from renewable energy sources and minority stakes in two already RWE-operated nuclear power plants. In addition, RWE would retain (a) Innogy’s renewable generation assets (with the exception the Reverse Carve-Out Assets), (b) Innogy’s 49 % stake in Kärntner Energieholding Beteiligungs GmbH and (c) eleven gas storage facilities operated by Innogy in Germany and Czechia (all these assets together make up the Re-Transfer-Assets). RWE would also acquire a pure financial minority shareholding in E.ON. The acquisition of the E.ON Assets by RWE was cleared by the Commission by decision of 26 February 2019, COMP/M.8871 – RWE/E.ON Transfer Assets. |

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| | (7) | The two parts of the asset swap give rise two separate concentrations. This Decision concerns the concentration that would arise from E.ON’s acquisition of control of Innogy. |

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| | (8) | The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million. Each of them has an EU-wide turnover in excess of EUR 250 million, but they do not achieve more than two-thirds of their aggregate EU-wide turnover within one and the same Member State. The notified operation therefore has an EU dimension. |

III.   THE PROCEDURE

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| | (9) | The Commission raised serious doubts as to the compatibility of the Concentration with the internal market and adopted a Decision to initiate proceedings pursuant to Article 6(1)(c) of the Merger Regulation on 7 March 2019. E.ON submitted its written comments to the Article 6(1)(c) Decision on 20 March 2019, supplemented on 8 May 2019 and 20 May 2019. |

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| | (10) | The time limit for adopting a final decision in this case was suspended twice, on 22 March 2019 (until 11 April 2019) and 29 April 2019 (until 8 May 2019) in accordance with Article 11(3) of the Merger Regulation. |

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| | (11) | At the request of the Parties, on 7 June 2019, the time limit for adopting a final decision in this case was extended by a further 20 working days in accordance with Article 10(3) of the Merger Regulation. |

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| | (12) | To address the preliminary competition concerns identified by the Commission and following detailed discussions, the Parties submitted to the Commission draft commitments on 20 June 2019 (‘Phase II commitments’). |

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| | (13) | On 21 June 2019 the Commission launched a market test to assess whether the Phase II commitments would be suitable to address the competition concerns expressed by the Commission. |

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| | (14) | On 4 July 2019 the Parties submitted final commitments (‘Final Commitments’). |

IV.   SUMMARY OF ASSESSMENT

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| | (15) | The Parties’ activities overlap in several countries, but the main overlaps take place in Germany, Czechia, Hungary, Slovakia and the UK [(3)](#ntr3-C_2020379EN.01001601-E0003). Within each of these countries, significant horizontal overlaps take place in some of the activities of the Parties. These are summarised in the following. |

1.   Germany

1.1.   Market definitions

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| | (16) | Retail supply of electricity: The Commission typically defines the markets for the retail supply of electricity to end-customers as national in scope, but for Germany it has also considered a narrower definition (at the distribution network level (DSO)) in the past. For the purposes of this Decision, the Commission maintains the national scope for large customers and concludes, based on its market investigation and in line with the market definition adopted by the German Federal Cartel Office, that (i) the geographic market for the retail supply of regular electricity to households and small commercial customers under basic supply is local, restricted to the relevant basic supply area; and (ii) the geographic market for the retail supply of regular electricity to households and small commercial customers under special contracts is national. |

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| | (17) | Retail supply of heating electricity: The Commission’s investigation found that several elements support a national market definition as well as elements pointing to local competitive dynamics. Therefore, for the purposes of this Decision, the geographic scope of the market for retail supply of heating electricity to households and SMEs in Germany is left open as to whether it is national with strong elements of regional competition at network area level or local. |

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| | (18) | Retail supply of gas: The Commission found, based on its assessment, that the structure and functioning of the market for the retail supply of gas is very similar to the market for the retail supply of electricity. Therefore, the Commission considers the same geographic market definition for the retail supply of gas as for electricity. |

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| | (19) | E-mobility: For the purpose of this Decision, the Commission considers (i) the wholesale supply of Electric Vehicle (EV) Charging Stations (CS), to be national or EEA wide in scope (left open), (ii) the retail supply of private EV Charging Stations to be national in scope, (iii) the market for installation and operation of public EV Charging Stations on-motorways to be local or national with local elements (left open) (iv) the market for installation and operation of public EV Charging Stations off-motorways local or national with local elements (left open), (v) the market for subscription services for public EV Charging Stations to be national in scope and (vi) white-label services for public EV Charging Stations to be national in scope. |

1.2.   Competitive assessment

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| | (20) | The Commission assessed the affected markets as described above. The Commission has reached the conclusion that the Concentration will lead to a significant impediment to effective competition in the following markets. |

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| | (a) | In the market for the retail supply of heating electricity in Germany: The Commission came to its conclusion, because the market for heating electricity is a highly concentrated market (the merger combining the two largest suppliers nationally), the Parties exert significant competitive pressure on each other, there are limited credible alternative to the parties and barriers to entry are high. |

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| | (b) | In the market for the installation and operation of public EV CS on-motorways in Germany the Commission came to its conclusion as it identified CS belonging to the Parties located close to each other where there were no competing EV CS. |

2.   Czechia

2.1.   Market definition

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| | (21) | Retail supply of electricity: In its decisional practice the Commission has left open whether the geographic scope of the market for the retail supply of electricity is national or narrower in scope in Czechia. For the purposes of this decision the geographic market for the retail supply of electricity to (i) high-voltage customers and (ii) low voltage customers is defined as national in scope, although for the retail supply of electricity to low-voltage customers there are local elements of competition. |

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| | (22) | Retail supply of gas: In its decisional practice the Commission has left open whether the geographic scope of the market for the retail supply of gas is national or narrower in scope in Czechia. For the purposes of this decision the geographic market for the retail supply of gas to (i) large customers and (ii) small customers is defined as national in scope, although for the retail supply of gas to small customers there are local elements of competition. |

2.2.   Competitive assessment

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| | (23) | The Commission assessed the affected markets as described above. The Commission has reached the conclusion that the Concentration will lead to a significant impediment to effective competition in the following markets. | | | | --- | --- | | (a) | In the market for the retail supply of electricity to low voltage customers in Czechia the Commission came to its conclusion, because of the Parties’ historical incumbency position and the fact that the Parties are close competitors. | | | | | --- | --- | | (b) | In the market for the retail supply of gas to small customers in Czechia the Commission came to its conclusion, because of the high market share, the complementarity of the Parties’ historical incumbency position and the fact that the Parties are close competitors. | | | | | --- | --- | | (c) | In the market for the retail supply of gas to large customers in Czechia the Commission came to its conclusion, because of the high market share in a dispersed market where the Parties are close competitors. | |

3.   Hungary

3.1.   Market definition

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| | (24) | Retail supply of electricity: The Commission has previously defined the market for the retail supply of electricity to businesses in Hungary as national while the retail supply to residential customers has been considered as sub-national in scope (each DSO area). Based on the Commission’s assessment, for the purposes of this Decision, the geographic scope for the retail supply of electricity to residential customers and SME customers serviced by USP offerings is considered as sub-national in scope (DSO area). The geographic scope for the retail supply of electricity to SME customers serviced by competitive offerings and large commercial and industrial customers is considered national. |

3.2.   Competitive assessment

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| | (25) | The Commission assessed the affected markets as described above. The Commission has reached the conclusion that the Concentration will lead to a significant impediment to effective competition in the following markets. | | | | --- | --- | | (a) | In the market for the retail supply of electricity to competitive SME customers in Hungary the Commission came to its conclusion as the merger would eliminate an important competitive constraint in an already highly concentrated market. | | | | | --- | --- | | (b) | In the market for the retail supply of electricity to large industrial customers in Hungary the Commission came to its conclusion as the Parties are close competitors and the merger would significantly reduce the number of effective competitors in the market. | |

4.   Slovakia

4.1.   Market definition

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| | (26) | Retail supply of electricity: For the purposes of this decision, the Commission considers that the geographic market for the retail supply of electricity is national in scope, although there are strong regional elements. |

4.2.   Competitive assessment

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| | (27) | The Commission has reached the conclusion that the Concentration will not lead to a significant impediment to effective competition in Slovakia. |

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| | (28) | In the three affected market segments for the retail supply of electricity to (i) regulated customers, (ii) small unregulated customers and (iii) large industrial customers in Slovakia, the Commission came to the conclusion that there was no significant impediment to effective competition as the Parties are not close competitors and other suppliers exert a stronger constraint on the Parties than the Parties exert on each other. The Commission also considered whether the Concentration, although not having a significant impact on the current level of competition, may affect competition in the future by leading to a loss of potential competition but the evidence collected during the investigation did not support this conclusion. |

5.   UK

5.1.   Market definition

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| | (29) | Retail supply of electricity to households and large industrial customers: in line with previous decisions, the Commission considers the geographic scope for the retail supply of electricity is Great Britain. |

5.2.   Competitive assessment

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| | (30) | The Commission has reached the conclusion that the Concentration will not lead to a significant impediment to effective competition in the UK. |

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| | (31) | In the affected market segments for the retail supply of electricity to (i) households and (ii) to large industrial customers in Great Britain, the Commission came to the conclusion that there was no significant impediment to effective competition because of the moderate combined market share of the Parties and the fact that they are not close competitors and that there are several alternative credible competitors active in the markets. |

V.   REMEDIES

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| | (32) | In order to address the competition concerns identified, the Parties have submitted ‘Final Commitments’, which included modifications to take account of the results of the market test. The Final Commitments are the following: |

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| | (33) | For heating electricity in Germany: the remedies consist of the divestiture of materially all of EDG’s (main subsidiary of E.ON) special contract customers supplied with electricity for heating purposes. The Final Commitments also include, for customers supplied under separate meters, all corresponding household electricity special contracts relating to the customers supplied with electricity for heating purposes. The divestment will be split in two separate portfolios of customers, to be acquired jointly by one purchaser or separately by two different purchasers. |

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| | (34) | For the installation and operation of public EV CS on Motorways in Germany: the divestiture consists of E.ON’s obligation to fully terminate the operation of the Discontinued Charging Stations (i.e. the CS in the areas where horizontal overlaps occurred) and not to operate the Discontinued Charging Stations for a predefined period of time. Further, E.ON commits not to operate the Further Discontinued Charging Stations (further charging stations operated by a third party for which E.ON was considering entering an operation agreement) for a predefined period of time. |

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| | (35) | For the retail supply of gas to both small and large customers as well as the retail supply of electricity to low voltage customers in Czechia: The divestment of the entire electricity and gas retail business of Innogy and its affiliated undertakings in Czechia, combined with most of Innogy’s other activities in Czechia [(4)](#ntr4-C_2020379EN.01001601-E0004). |

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| | (36) | For the retail supply of electricity to both competitive SME customers and large industrial customers in Hungary: E.ON would divest the entirety of its retail electricity business to competitive SME customers and large industrial customers in Hungary. |

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| | (37) | In the Commission’s view the Final Commitments address the identified competition concerns adequately: | | | | --- | --- | | (a) | For heating electricity in Germany: the removal of most of the relevant competitive overlap between the Parties on a national and at local DSO-level and the creation of one or two large supra-regional competitors able to grow and compete effectively with the merged entity. | | | | | --- | --- | | (b) | For the installation and operation of public EV CS on Motorways in Germany: the divestiture would remove any relevant competitive overlaps between the Parties. | | | | | --- | --- | | (c) | For the retail supply of gas to both small and large customers as well as the retail supply of electricity to low voltage customers in Czechia: the divestiture would remove any relevant competitive overlaps between the Parties. | | | | | --- | --- | | (d) | For the retail supply of electricity to both competitive SME customers and large industrial customers in Hungary: the divestiture would remove any relevant competitive overlaps between the Parties. | |

VI.   CONCLUSION

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| | (38) | For the reasons mentioned above, the Commission concludes that the proposed concentration as modified by the Commitments and subject to specific conditions, including the Commission's acceptance of suitable purchasers for the divestment businesses, will not significantly impede effective competition in the Internal Market or in a substantial part of it. |

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| | (39) | Consequently the concentration is declared compatible with the Internal Market and the functioning of the EEA Agreement subject to conditions and obligations, in accordance with Article 2(2) and Article 8(2) of the Merger Regulation and Article 57 of the EEA Agreement. |

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[(1)](#ntc1-C_2020379EN.01001601-E0001)  [OJ L 24, 29.1.2004, p. 1](http://publications.europa.eu/resource/oj/JOL_2004_024_R_TOC).

[(2)](#ntc2-C_2020379EN.01001601-E0002)  In a first step, E.ON will acquire the whole of Innogy. In a second step, E.ON will carve-out the majority of Innogy’s renewable electricity generation business, gas storage business and participation in Kärntner Energieholding Beteiligungs GmbH and will transfer these assets back to RWE.

[(3)](#ntc3-C_2020379EN.01001601-E0003)  There are also minor overlaps in Denmark, Sweden, Poland, Romania, Austria, Italy, Belgium, the Netherlands and France.

[(4)](#ntc4-C_2020379EN.01001601-E0004)  The gas distribution activities of Innogy in Czechia are envisaged to be transferred to Macquarie and RWE will retain the gas storage activities in Czechia.

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