Case T-53/21: Action brought on 29 January 2021 — EVH v Commission
Date: 2021-01-29
Institutions: General Court
Subjects: EU competition policy, Germany, economic concentration, electrical energy, energy distribution, energy production, energy supply, gas supply, merger control, restriction on competition








C_2021138EN.01003501.xml










19.4.2021   


EN


Official Journal of the European Union


C 138/35






Action brought on 29 January 2021 — EVH v Commission
(Case T-53/21)
(2021/C 138/47)
Language of the case: German

Parties


Applicant: EVH GmbH (Halle (Saale), Germany) (represented by: I. Zenke and T. Heymann, lawyers)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:






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Annul the defendant’s decision of 17 September 2019 declaring the E.ON/innogy concentration to be compatible with the internal market (Case M.8870) (OJ 2020 C 379, p. 16);










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order the defendant to produce the M.8870 and M.8871 files concerning (i) the discussions between the defendant and the merging parties before and during the merger proceedings, (ii) the separate notification of the individual parts of the transaction, and (iii) its change of opinion during the proceedings;










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order the defendant to pay the costs of the proceedings, including the applicant’s lawyers’ and travel costs incurred as a result of the proceedings.





Pleas in law and main arguments

In support of the action, the applicant relies on the following pleas in law.






1.


First plea in law: The approval decision is flawed as to its form:






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Merger M.8870, approved by the defendant and hereby contested, was erroneously separated from the overall merger of E.ON SE (E.ON) and RWE AG (RWE), which demarcated the value added stages of the energy sector. The overall operation is closely intertwined and involves, in addition to the transfer of the RWE subsidiary innogy SE (innogy) to E.ON, also the acquisition of E.ON production assets by RWE, which was separately approved by the defendant (Case M.8871), and the acquisition of a 16,67 % share in E.ON by RWE, which was approved by the German Federal Cartel Office. Furthermore, the defendant did not give the applicant a proper hearing and gave insufficient and late reasons for the decision.














2.


Second plea in law: The defendant insufficiently assessed the facts






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In determining the relevant product market, the defendant failed to investigate, with regard to the retail supply of electricity and gas to German households and small business customers (HSBs), from the customer’s perspective, the impact on the product market definition of the homogeneity of the products, the uniformity of their intended use and other important factors for the retail supply to HSBs. It therefore incorrectly took the view that there were separate markets for basic supply and supply under special contracts.










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The defendant failed to clarify in connection with the geographic market definition how the supply side and demand side is configured for the local retail supply to HSBs and accordingly misunderstood the actual local structure, which was differentiated by postcode.










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As regards conditions on the local HSB markets, E.ON and innogy’s pooling of customer portfolios in their established supply areas, the dominant presence of E.ON on the central distribution channels Google, Verivox and Check24 and the ability to exclude third party providers were not (correctly) assessed.










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The assessment of the network business was also insufficient. That was the case in relation to both (i) E.ON’s high market penetration in sourcing of network equipment, network services and network IT and its own network-related services offering to third parties in relation to the operation of distribution networks and (ii) competition for distribution networks themselves (so-called competition for concessions). In particular, there was a failure to forecast, or to forecast correctly, the future consequences of innogy being eliminated as a competitor to E.ON in competition for concessions.










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There was only a selective analysis of the innovative business at the interface between the distribution business and network business dominated by E.ON, including with reference to the significance of metering as a gateway to innovative product solutions and E.ON’s role therein. Only the operation of charging points on motorways was considered in relation to E-mobility, which is undergoing rapid growth, but the operation of such charging points forms only one part of the market. The important forward-looking topics of Big Data and innovative (bundle) products received only a cursory assessment.










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As a whole, the assessment was incorrectly based on considerations concerning the past. Effects over the coming years (e.g. through increasing shortages of skills in network deployment, increasing importance of data) were not examined.














3.


Third plea in law: The defendant made a manifest error of assessment in finding that the merger was compatible with competition, partly as a result of shortcomings in its investigation.






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The defendant manifestly defined incorrectly the product market of distribution to HSBs as it did not define the supply of energy to HSBs on the basis of basic supply and special contract customers as a single market.










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The defendant’s assessment of E.ON’s market power in retail supply to HSBs was systematically incorrect because the defendant, having already incorrectly limited it to supply under special contracts, erroneously assumed the market to be national rather than comprising a number of local markets. It therefore overlooked the fact that E.ON’s (growing) local market share was 70 % or more in many cases.










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The defendant also incorrectly characterised the significant presence and superior position of E.ON in competition for network contracts as of no concern and in so doing, in particular, made an incorrect finding regarding the negative effects on competition of innogy being eliminated as a competitor.










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E.ON’s market power was not acknowledged due to a distinction incorrectly being made between various product markets in metering, which led to the harm to competition for innovative business being underestimated. The same occurred as regards the E-Mobility sector where only selected negative consequences for the operation of motorway charging points were acknowledged.










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The defendant apparently erroneously also failed to take into consideration the anticompetitive effects which would result from E.ON’s improved access to even more data.










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The defendant failed to recognise that the division of the value added stages of the energy sector between E.ON and RWE, which was agreed in connection with the overall merger, constituted a restriction of competition which was incompatible with Article 101 TFEU.










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Finally, the defendant’s minimum requirements, limited for the German market to the niche segments of heating electricity and motorway charging points, were not capable of removing the existing competition concerns. They did not concern the markets adversely affected by the merger and were of no relevance for ensuring competition.