CELEX: 32016M7850
Language: en
Date: 2016-03-10 00:00:00
Title: Commission Decision of 10/03/2016 declaring a concentration to be compatible with the common market (Case No COMP/M.7850 - EDF / CGN / NNB GROUP OF COMPANIES) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 10.03.2016
C(2016) 1596 final

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|To the notifying parties:                                              |                                                                       |

Dear Sir/Madam,

Subject:    Case M.7850 - EDF / CGN / NNB Group of companies
Commission decision pursuant to Article 6(1)(b) of Council Regulation No 139/2004[1] and Article 57 of the Agreement  on  the  European  Economic
Area[2]

      On 4 February 2016, the European Commission received notification of  a  proposed  concentration  pursuant  to  Article  4  of  the  Merger
Regulation by which Electricité de France S.A. ("EDF", of France) and China General Nuclear Power Corporation  ("CGN",  of  China)  will  acquire
joint control over:

    • NNB Holding Company (HPC) Limited ("HPC Holding") and NNB Generation Company (HPC) Limited ("HPC GenCo", which together with "HPC Holding"
      is referred to as "NNB HPC") within the meaning of Article 3(1)(b) of the Merger Regulation, and;

    • NNB Holding Company (SZC) Limited ("SZC Holding") and NNB Generation Company (SZC) Limited ("SZC GenCo", which together with "SZC Holding"
      is referred to as "NNB SZC"), NNB Holding Company (BRB) Limited ("BRB Holding") and NNB Generation Company  (BRB)  Limited  ("BRB  GenCo",
      which together with "BRB Holding" is referred to as "NNB BRB") within the meaning of Article 3(4) of the Merger Regulation.[3]

      NNB HPC, NNB SZC and NNB BRB are designated hereinafter as "NNB Companies", and EDF and CGN as the "Parties".

THE PARTIES

      EDF is the parent company of the EDF group. The EDF group is mainly active on electricity markets in France, the United Kingdom ("UK")  and
elsewhere abroad, particularly in (i) generation and wholesale supply of electricity (including trading), (ii) transmission,  (iii)  distribution
and (iv) retail supply of electricity. In the UK, the EDF group is active in electricity generation and the supply of  electricity  and  gas,  as
well as in energy-related services and in energy trading. As part of its electricity generation activities, the EDF group operates eight  nuclear
power stations, three thermal power stations, a combined heat and power scheme and onshore and offshore renewable assets  in  Great  Britain.  It
also operates 19 nuclear plants in France.

      CGN is a Chinese company active in the development, construction and operation of nuclear power plants and renewable energy plants.  It  is
active primarily in China, but has some investments abroad (e.g. 80% share acquired from EDF in three wind farms in the UK, a plan to  invest  in
two new nuclear reactors in Romania and a recent investment of EUR 1 bn in a French SME active in solar energy[4]).  CGN  is  90%  owned  by  the
Central Chinese Assets Supervision and Administrative Commission ("Central SASAC")  and  10%  owned  by  the  People's  Government  of  Guangdong
Province ("Local Guangdong SASAC").

      NNB Companies consists of three holding companies (HPC Holding, SZC Holding and BRB Holding), incorporated for the  purposes  of  investing
into the three limited companies (HPC GenCo,  SZC  GenCo  and  BRB  GenCo)  responsible  for  the  design,  development,  construction,  testing,
commissioning, operation (including sale of electricity generated), maintenance and eventual decommissioning  of  a  newly  built  nuclear  power
plant respectively at Hinkley Point, Sizewell and Bradwell, subject to a final investment decision being taken. NNB HPC will be  responsible  for
Hinkley Point, NNB SZC for Sizewell and NNB BRB for Bradwell. The Hinkley and Sizewell sites will  use  Areva's  reactor  technology  (EPR).  The
Bradwell site will use CGN's Hualong reactor technology. That technology has been developed in China and needs approval in the  UK  ("UK  Hualong
reactor technology"). As part of the Transaction, EDF will support CGN in having the Hualong reactor technology approved by the UK regulators.

THE OPERATION

      EDF and CGN intend to enter into a strategic partnership in relation to the development  and,  assuming  a  final  investment  decision  is
taken, the construction and operation of three nuclear power plants at Hinkley Point, Sizewell and Bradwell. For this purpose, CGN  will  acquire
joint control over NNB Companies, currently solely owned by EDF (the "Transaction").

      EDF and CGN will also establish a joint venture ("GDA JVCo") which will be owned 33.5% by EDF and 66.5% by CGN. It will be responsible  for
the day-to-day management and coordination of the General Design Assessment ("GDA") process necessary for UK Hualong  reactor  technology  to  be
qualified for operation in the UK. [IP arrangements][5].

      One of the principal objectives for EDF to enter into the  Transaction  is  to  share  financial  investment  with  CGN  in  HPC,  SZC  and
BRB.[6],[7] EDF also submits that it intends to gain industrial cooperation and project experience.

      [CGN’s rationale for the transaction]. Through this transaction CGN wishes to obtain experience in the UK  nuclear  sector  and  to  obtain
approval of its Hualong reactor technology, [CGN’s rationale for the transaction].

THE CONCENTRATION

1 Joint control

      The legal entities constituting NNB HPC[8], NNB SZC[9] and NNB BRB[10] are currently owned by EDF. NNB HPC was originally established as  a
joint venture between wholly owned subsidiaries of EDF (80%) and Centrica plc ("Centrica", 20%). In February 2013, Centrica decided to  pull  out
of the joint venture. Through the Transaction, CGN will acquire shares in each of NNB HPC, NNB SZC and NNB BRB.

      NNB HPC will be owned by EDF (66.5%) and CGN (33.5%). EDF will keep the majority of shares and of voting rights in the  joint  venture  and
therefore have control over NNB HPC. CGN will have a veto right over [veto rights]. CGN's veto rights will  confer  it  decisive  influence  over
strategic decisions of NNB HPC. EDF and CGN will therefore have joint control over NNB HPC together with EDF.

NNB SZC will be owned by EDF (80%) and CGN (20%). EDF will own the majority of shares and of voting rights and therefore have  control  over  NNB
SZC. CGN will [veto rights]. EDF and CGN will therefore have joint control over NNB SZC.

NNB BRB will be owned by EDF (33.5%) and CGN (66.5%). CGN will own the majority of shares and of voting rights and therefore  have  control  over
NNB BRB. [veto rights]. EDF and CGN will therefore have joint control over NNB BRB.

2 A single concentration

According to Recital 20 of the Merger Regulation, it is appropriate to treat as a single concentration transactions that  are  closely  connected
in that they are linked by condition or take the form of a series of transactions in securities taking place within a reasonably short period  of
time.

Paragraphs 44 and 45 of the Jurisdictional Notice[11] provide that "several transactions can be treated as  a  single  concentration  [...]  only
[...] if the result is that control of  one  or  more  undertakings  is  acquired  by  the  same  person(s)  or  undertaking(s)"  and  "if  those
[transactions] are inter-conditional".

EDF and CGN will have joint control over each of NNB HPC, NNB SZC and NNB BRB. Moreover, there  is  inter-conditionality  between  the  different
phases of the Transaction as the Parties are concluding a number of overarching agreements that govern the Transaction as a whole.[12]

As regards the "simultaneous conclusion of the relevant agreements",[13] the Strategic Investment Agreement was signed on 21  October  2015,  and
the heads of terms for all the different phases of the Transaction were annexed to that agreement. Likewise, each of  the  SPAs  will  be  inter-
conditional and are expected to be signed at the same time.

While the Transaction will involve multiple agreements and multiple legal entities (for each of the power plants involved, as  well  as  the  GDA
process), the transactions leading to EDF and CGN having joint control over NNB HPC, NNB SZC and NNB BRB are unitary in nature.

In order to conclude on the unitary nature of several transactions, the Jurisdictional Notice provides that it is necessary to ascertain  whether
"those transactions are interdependent, in such a way that one transaction would not have been  carried  out  without  the  other  and  therefore
constitute a single concentration".[14] It also indicates that "[s]uch conditionality is normally demonstrated if the transactions are linked  de
jure, i.e. the agreements themselves are linked by mutual conditionality".[15]

The Strategic Investment Agreement signed by the  Parties  provides  that  "the  parties  now  wish  to  conclude  negotiations  for  creating  a
comprehensive strategic partnership for the development of a fully defined new  build  nuclear  programme  in  the  UK  comprising  […]  (a)  the
construction, commissioning, ownership, operation, maintenance and eventual decommissioning of the Hinkley Point C ("HPC")  nuclear  power  plant
using two EPR reactors […]; (b) the development phase of the Sizewell C ("SZC") nuclear power plant using [number of reactors] EPR reactors  […];
(c) the development phase of the Bradwell B ("BRB") nuclear power plant intended to use two UK-adapted Hualong reactors […]; (d) a joint  venture
[…] for the adaptation of the Hualong technology to meet UK regulatory requirements and achieve  successful  completion  of  the  generic  design
approval ("GDA") process and to [IP arrangements]; and (e) an industrial co-operation agreement ("ICA"), to be entered into between EDF  (or  its
nominated Affiliate(s)) and [GNI] (or its nominated Affiliate(s)) which provides a [procurement strategy]. The ICA sets up a  framework  for  the
co-operation of the parties across the projects in relation to areas such as [commercial strategy]".[16] The BRB  Land  Amendments  to  Framework
Agreement also indicates that "in addition to the development of EPRs at Hinkley Point C  and  Sizewell  C,  the  parties  acknowledge  a  common
priority of successful development in the UK of a UK Hualong Project [commercial strategy]".[17] The three transactions are therefore  linked  de
jure.

For the same reasons, the creation of the GDA JVCo is a transaction that must be considered as part of the same concentration as the  acquisition
of joint control over the NNB Companies. The Strategic Investment Agreement specifically mentions the GDA process as part  of  the  Parties'  new
build nuclear programme in the UK and underlines [commercial strategy].[18] The cooperation between EDF and CGN through GDA  JVCo  for  the  sole
purpose of completing the GDA approval process is therefore interdependent de jure with the transactions  leading  EDF  and  CGN  to  have  joint
control over NNB Companies and is part of the Transaction. For the sake of clarity, while the Parties indicate that the cooperation  in  relation
to the GDA process is an inherent part of Transaction,[19] the Commission considers that the creation of GDA  JVCo  and  related  agreements  are
part of the Transaction, since the overall cooperation in relation to the GDA process will be an ongoing process.

In addition, the Parties intend to enter into a number of exclusivity  and  cooperation  arrangements  that  are  analysed  in  Section  7  below
concerning anciliary restrictions.

For all these reasons the various transactions described above are so closely connected that they must be all considered as  forming  one  single
transaction.

3 Full functionality

NNB HPC can be considered as a business with a market presence within the meaning of paragraph 24 of the Jurisdictional Notice as it  is  already
active on the market through the implementation of the HPC project, such  as  the  construction  process,  HR,  compliance  with  nuclear  safety
protocols, and so on. However, this is not the case for NNB SZC and NNB BRB which are newly created full-function joint  ventures  to  which  the
parties contribute assets which they previously owned individually in line with paragraph 92 to the Jurisdictional Notice.

The acquisition of joint control over NNB HPC by CGN therefore constitutes an acquisition  of  an  undertaking  within  the  meaning  of  Article
3(1)(b) of the Merger Regulation. The creation of NNB SZC and NNB BRB constitutes the creation of joint ventures performing on  a  lasting  basis
all the functions of autonomous economic entities  (so called full-function joint ventures) within the meaning of  Article  3(4)  of  the  Merger
Regulation. The operational organisation of the three NNB Companies is similar. The full-functionality criteria analysed  below  therefore  apply
to each of them:

    • Sufficient resources to operate independently on a market (paragraph 94 of the Jurisdictional Notice): NNB Companies will be active in  the
      market for the generation and wholesale supply of electricity in Great Britain, have their own  employees,  management  team  dedicated  to
      their respective day-to-day operations and access to sufficient finances to undertake  the  development  phase  and,  subject  to  a  final
      investment decision to be made, to construct and operate the HPC, SZC and BRB nuclear power plants.

    • Activities beyond one specific function for the parents (paragraphs 95-96 of the Jurisdictional Notice): NNB Companies will  be  active  in
      the market for the generation and wholesale supply of electricity in Great Britain and therefore  will  be  engaged  in  activities  beyond
      providing one specific function for their parents.

    • Sale / purchase relations with the parents (paragraphs 98-102 of the Jurisdictional Notice):

         o In order to participate in the market for electricity generation and wholesale supply, NNB Companies will need to appoint  a  service
           provider to take the power from their nuclear plants to market. NNB HPC will enter into  an  agreement  with  EDF  Energy  Plc  ("EDF
           Energy") to provide this service on commercial terms, [procurement strategy].

           HPC GenCo will pay fees to EDF Energy for its services and retain full control of the  market  strategy  relating  to  the  wholesale
           trading of electricity generated at HPC. It will therefore retain the risk associated with  its  activities  in  the  generation  and
           wholesale supply of electricity in line with the Jurisdictional Notice.[20]

         o In relation to purchases, whilst some inputs involved in the development, design and construction of HPC, SZC and BRB may be  sourced
           from EDF and CGN, other inputs will be purchased from the large range of contractors  and  suppliers  that  have  been  and  will  be
           selected to provide equipment and construction / operational services.

    • Operation on a lasting basis (paragraphs 103-105 of the Jurisdictional Notice): NNB Companies will not only construct the HPC, SZC and  BRB
      nuclear power plants but will also be responsible for operating these plants for a period of up to 60 years or more.

It follows from the above that the NNB Companies will meet each of the four criteria considered above. Therefore, the joint  ventures  are  being
assessed by the Commission as a single concentration that meets the full-function criterion of Article 3(4) of the Merger Regulation.

On the other hand, GDA JVCo which will be established in order to complete the GDA approval process  for  the  UK  Hualong  technology  does  not
appear to be a full-function joint venture and the Parties do not claim that this is the case. This is because GDA JVCo is established  in  order
to complete the GDA approval process for the UK Hualong technology. In addition, once the GDA process will be completed,  [IP  arrangements].  As
such, GDA JVCo will not have activities beyond a single function for its parents and will not have  its  own  access  to,  or  presence  on,  the
market. In addition, it will only rely on secondees from its parents. GDA JVCo therefore does not fulfil the full-functionality criteria set  out
in the Jurisdictional Notice.[21]

In any case, for the reasons already explained above, even if the GDA JVCo is not  a  full-function  joint  venture,  this  transaction  will  be
assessed as being part of the same concentration as the acquisition of joint control over the NNB Companies.

EU DIMENSION

1 Calculation of turnover of State-owned enterprise

In order to assess whether the Transaction has an EU dimension, it is necessary to determine which turnover should be attributed  to  CGN,  given
that it is a State-owned enterprise and that the majority of its shares are held by Central SASAC  (the  commission  administering  Chinese  SOEs
that are supervised by the central Chinese government).

   Legal basis

According to Article 5(4) read in conjunction with Recital 22 of the  Merger  Regulation  and  the  Jurisdictional  Notice[22],  two  State-owned
enterprises ("SOE") will not be considered to be under the same controlling undertaking provided they have a power of decision  independent  from
each other and independent of the State concerned. The Commission's precedents provide for the relevant criteria in order to assess  whether  two
SOEs have an independent power of decision independent include:

      (i) the SOE's autonomy from the State in deciding strategy, business plan and budget;

      (ii) the possibility for the State to coordinate commercial conduct by imposing or facilitating coordination.[23]

When assessing the second criterion the Commission considered factors such as the degree  of  interlocking  directorships  or  the  existence  of
safeguards to prevent sharing of commercially sensitive information between SOEs.[24]

These principles have been applied to Chinese SOEs most recently in 2015 in Case COMP/M.7643 - CNRC/Pirelli   where  the  Commission  noted  that
"the first step consists of identifying whether or not the SOEs have independent decision-making power" and that "factors previously  taken  into
account included 'the degree of interlocking directorships  or  the  existence  of  adequate  safeguards  ensuring  that  commercially  sensitive
information is not shared between such undertakings'".[25]

   Parties' view

The Parties submit that CGN is independent from Central SASAC and that the Transaction is therefore not notifiable under  the  Merger  Regulation
as CGN has a turnover of EUR [turnover] in the EEA which is below the EUR 250 milion threshold.

First, Article 6 of the Law of the People's Republic of China on the State-Owned Assets of Enterprises of 2008  ("PRC  law  on  SOEs")  specifies
that the government shall perform the contributor's function "based on the  principles  of  separation  of  government  bodies  and  enterprises,
separation of the administrative functions of public affairs and the functions of the state-owned assets  contributor,  and  non-intervention  in
the legitimate and independent business operations of enterprises."

Second, Central SASAC [CGN’s ownership and management structure] would not determine  CGN's  strategic  commercial  behaviour  [CGN's  management
structure]. As regards appointment and removal of management, the Articles of Association of CGN  ("CGN  Articles")  only  provide  that  Central
SASAC can remove directors that it originally appointed to the shareholders' meeting (i.e. seven out  of  nine  directors)  if  a  director  acts
improperly or in violation of the laws and/or CGN Articles. [CGN's management of financing means].

Third, CGN would not have any interlocking directorships with Central SASAC. It would have an internal  confidentiality  policy  which  precludes
any exchange of confidential information with any other SOE, therefore there would be no coordination  with  other  Chinese  SOEs  controlled  by
Central SASAC.

   Commission's assessment

Article 6 of PRC law on SOEs, to which the Parties refer, provides a very broad wording of the general  principle  of  separation  of  government
bodies and enterprises and non-intervention in business operations. There are however a number of provisions in the  PRC  law  on  SOEs  and  the
Interim Measures for the Supervision and Administration of the Investments by Central Enterprises released in  May  2003  ("Interim  Measures  on
Supervision") which support the fact that Central SASAC has influence on CGN's major decision making and therefore CGN does  not  enjoy  autonomy
from the State in deciding major matters like strategy, business plan or budget.

According to the PRC law on SOEs:

          • Central SASAC "appoint[s] and remove[s] the president, vice-presidents, person in charge of finance and other  senior  managers  […]
            the chairman and vice-chairmen of the board of directors, directors, chairman of the board of  supervisors,  and  supervisors  of  a
            wholly state-owned company" and "propose[s] the director and supervisor candidates to the shareholders' meeting";[26]

          • Central SASAC conducts "annual and office term assessments of the enterprise managers appointed by it, and decides the  rewards  and
            punishments to the enterprise managers according to the assessment results";[27]

          • The functions performed by Central SASAC concern "large-sized state-invested enterprises that have bearings on the national economic
            lifeline and state security determined by the State  Council  and  the  state-invested  enterprises  in  such  fields  as  important
            infrastructures and natural resources".[28]

According to the Interim Measures on Supervision:

          • SOEs that report to Central SASAC should "submit their annual investment plan" to Central SASAC;[29]

          • Where an enterprise "superadds any project beyond the annual investment plans, it shall report the relevant information to the SASAC
            in time" and the Central SASAC shall "implement the administration" of the investment activity of that enterprise;[30]

          • Central SASAC shall "supervise and administrate the investment activities of these enterprises, and  guide  them  to  establish  and
            improve the procedures of investment decision-making and management systems".[31]

In addition, Article 12 of the PRC law on SOEs provides that "a body performing the contributor's functions  on  behalf  of  the  […]  government
[i.e. Central SASAC] shall enjoy the return on assets, participation in major decision making, selection  of  managers  and  other  contributors'
rights", which undermines, if not contradicts, the argument made by the parties  related  to  the  non-intervention  of  the  State  in  business
operations. Although strategic decisions are prepared by the management, Central SASAC has  an  influence  on  CGN's  major  decision  making  by
reviewing the business and appointing CGN's senior management.

Moreover, as stated in Case COMP/M.6113 - DSM/Sinochem/JV, the core legislation  itself  and  the  associated  information  outlined  on  Central
SASAC's website contain a number of provisions which can be read as suggesting that Central  SASAC  does  in  practice  have  certain  powers  to
involve itself in SOEs' commercial behaviour in a strategic manner, among others  the  right  to  approve  mergers  or  of  strategic  investment
decisions.[32]

In light of the above, Central SASAC participates in major decision making, in the selection and supervision of senior  management  of  SOEs  and
can interfere with strategic investment decisions. The Commission considers that the absence, according to the  Parties,  of  cross-directorships
between CGN on the one hand and Central SASAC or other Chinese SOEs on the other hand does  not  necessarily  imply  that  CGN  has  a  power  of
decision independent of Central SASAC. The absence of cross-directorships with other SOEs and the existence of confidentiality provisions do  not
preclude Central SASAC from influencing CGN's commercial strategy in light of the different powers mentioned above.

In addition, the particular case at hand concerns the energy sector and in particular the nuclear industry. PRC Law on SOEs  provides  that  "The
state shall take measures to promote the centralization of state-owned capital to the important industries and key fields that have  bearings  on
the national economic lifeline and state security, optimize the layout  and  structure  of  the  state-owned  economy,  promote  the  reform  and
development of state-owned enterprises, improve the overall quality of the state-owned economy, and strengthen the control  force  and  influence
of the state-owned economy".[33] CGN is active in the energy sector (both nuclear and renewable energies) which is  an  important  industry  that
has bearings on the national economic lifeline and state security.

A number of other elements show that the Chinese State via Central SASAC has the power to influence coordination between companies active in  the
energy industry and in the nuclear industry in particular. In January 2014, CGN, China National Nuclear Cooperation ("CNNC", another Chinese  SOE
controlled by Central SASAC), SNPTC (State Nuclear Power Technology Corporation) and a number of supporting entities  formed  the  China  Nuclear
Industry Alliance. According to the World Nuclear Association,[34] the creation of the China Nuclear  Industry  Alliance  was  "directed  by  the
[Chinese] government to achieve some synergy" and is "designed to eliminate detrimental or unseemly competition in export markets".[35]

Additional elements support the fact that Central SASAC can impose or facilitate  coordination  between  SOEs.  The  Term  Sheet  for  Industrial
Cooperation Agreement between EDF and CGN provides for example that:[36]

          • [procurement strategy];

          • [procurement strategy]

Although [procurement strategy] supply chains are also mentioned, such companies are [procurement strategy] and therefore the  possibilities  for
coordination as a single economic entity would be more limited.

CGN and CNNC also signed in 2015 an agreement to create a JV for the continued development and marketing of the Hualong One technology  in  China
and abroad that they developed  together.[37]  The  Board  Meeting  Minutes  of  HPC  dated  28  October  2015  also  provide  that  "[investment
strategy]".[38]

In light of the above, Central SASAC can impose or facilitate coordination between SOEs in the energy industry.

In view of the fact that Central SASAC can interfere with strategic investment decisions and can impose or facilitate coordination  between  SOEs
at least with regard to SOEs active in the energy industry, the Commission concludes in the case at hand that CGN and other Chinese SOEs in  that
industry should not be deemed to have an independent power of decision from Central SASAC. The turnover of all companies  controlled  by  Central
SASAC that are active in the energy industry should therefore be aggregated.

The question whether Local SASACs (such as Local Guangdong SASAC) shall be considered as forming a single entity with CGN can be  left  open,  as
the turnovers of Chinese SOEs controlled by Central SASAC meet the thresholds of the Merger Regulation irrespective of  the  assessment  of  this
point.

2 EU thresholds

The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[39] (EDF: EUR 72 874  million;  CGN:  EUR
[turnover] million[40]). On the basis of the assessment in section 4.1. above, each of them has an EU-wide turnover in excess of EUR 250  million
(EDF: EUR [turnover] million; CGN and Central SASAC's turnover through Chinese SOEs active in the energy sector:  more  than  EUR 250 million  on
the basis of the combined turnover of CGN and ChemChina[41]), but they do not achieve more than two-thirds of their  aggregate  EU-wide  turnover
within one and the same Member State, as EDF does not achieve two-thirds of its aggregate EU-wide turnover in  any  Member  State.  The  notified
operation therefore has an EU dimension.

Relevant Markets

Only three affected markets[42] arise from the Transaction: (i) the market for generation and wholesale supply of electricity  in  Great  Britain
(horizontal overlap), (ii) the market for sites considered suitable for building new nuclear power stations (vertical  relationship),  and  (iii)
the market for design and manufacture of nuclear islands when adopting a possible market definition: the  global  market  for  pressurised  water
reactors ("PWR") excluding countries subject  to  export  restrictions  and  countries  exclusively  supplied  by  national  suppliers  (vertical
relationship).

For the sake of completeness, the Commission will also mention the other relevant markets since the Transaction gives also rise to  a  number  of
vertical relationships:

    • Between the following upstream markets where Chinese SOEs[43] are active: markets for (i) design and manufacture of  conventional  islands,
      (ii) (a) supply of safety-related instrumentation and control systems ("I&C") and (b) supply of operational I&C systems, (iii) services and
      equipment to existing nuclear islands, (iv) construction services, (v) mining and supply of uranium, (vi) supply of enriched uranium, (vii)
      manufacture and supply of nuclear fuel assemblies for light water reactors; and the following downstream market: the market for  generation
      and wholesale supply of electricity in Great Britain where NNB Companies will be active;

    • Between the following upstream market: the market for generation and wholesale supply of electricity in Great Britain where  NNB  Companies
      will be active and the following downstream market: the market for retail supply of electricity in Great Britain where EDF is active.[44]

1 Market for generation and wholesale supply of electricity

The Commission has previously defined the market for generation and wholesale supply of electricity as "domestic  generation  of  electricity  at
power stations within a certain geographic market as well as the electricity  that  is  physically  imported  into  this  geographic  market  via
interconnectors to be sold on to retailers".[45] The Commission's previous decisions[46] also made no distinction between the  different  sources
of electric energy[47] within the wholesale electricity market.

From a geographical perspective, the Commission has consistently defined the relevant geographic market as at most national.[48] In  relation  to
the UK, the Commission has defined the geographic market as Great Britain.[49]

2 Market for the design and manufacture of nuclear islands

1 Product market definition

The two main components of a nuclear power plant are the nuclear island and the conventional  island.[50]  The  nuclear  island  generates  steam
using nuclear technology, while the conventional island contains equipment to change the heat in the steam taken across from the  nuclear  island
into electricity.[51] The Commission has previously identified a separate product market for nuclear  islands  which  may  be  affected  under  a
potential market segmentation.[52]

The Parties consider that the relevant product market is the market for the design and manufacture of nuclear  islands,  without  distinction  by
reactor type or other reactor characteristics.

In particular the Parties do not consider segmentation by reactor type to be relevant in defining the product market as the service  rendered  by
each reactor type is essentially the same (in terms of function, availability, etc). According to the Parties, this is particularly true  between
the two types of light water reactors ("LWR"): pressurised water reactors ("PWR") and boiling water reactors ("BWR"). This would be  demonstrated
by the fact that a number of operators have both PWRs and BWRs or plan to do so or that various tenders for the supply of nuclear  islands  allow
the submission of bids to supply either PWRs or BWRs. Moreover, since LWRs share an important part of  their  technology,  suppliers  of  nuclear
islands should not be limited to a single type of reactor.

The Parties do not therefore consider it relevant to segment the market for the design and manufacture of nuclear islands by reactor type  or  to
further segment LWRs into PWRs and BWRs.

The Commission has previously considered sub-dividing the  nuclear  island  market  by  reactor  type,  power  capacity,  age/generation  of  the
reactor[53] and according to the different reactor components (or subassemblies) used.[54] Nevertheless further segmentation of  the  market  for
design and manufacture of nuclear islands has ultimately been left open.[55]

In any event, the Commission considers that the precise product market definition concerning  the  market  for  the  design  and  manufacture  of
nuclear islands can be left open as the proposed transaction does not raise serious doubts as to  its  compatibility  with  the  internal  market
under any possible approach.

2 Geographic market definition

The Parties consider that the relevant geographic market is global in scope as there has been a relaxation  of  export  restrictions  on  nuclear
islands and a relaxation in relation to countries which were exclusively supplied by a national provider.

The Commission has previously left open the definition of the geographic scope of the market for the design and manufacture of  nuclear  islands,
envisaging the following possibilities: (i) worldwide; (ii) worldwide, excluding countries where export restrictions  apply;  and  (iii)  global,
excluding countries where export restrictions apply and countries which are currently exclusively supplied by a national supplier.[56]

The Commission considers that the precise geographic market definition concerning the market for the design and manufacture  of  nuclear  islands
can be left open as the proposed transaction does not raise serious doubts as to its compatibility with the internal market  under  any  possible
approach.[57]

3 Sites considered suitable for building new nuclear power stations

The Commission identified a separate product market akin to a real estate market for sites considered suitable for  building  new  nuclear  power
stations. This involved a limited number of suitable sites, mostly sites on or next to pre-existing or decommissioned nuclear power plants.[58]

The Commission concluded that, as nuclear power plants are built to supply electricity into electricity wholesale markets, the  geographic  scope
of the real estate market for the build of new nuclear power stations cannot be larger than national.[59]

4 Other relevant markets

For the sake of completeness, the Transaction also leads to vertical relationships with the market for the generation  and  wholesale  supply  of
electricity (where NNB Companies will be active) without giving rise to affected markets in relation to certain activities of  Chinese  SOEs.  In
the course of the market investigation, some players active in markets upstream to the market for generation and supply of electricity  expressed
concerns about the potential impact on competition of the Transaction due to the fact that Chinese SOEs in particular CGN and CNNC are active  in
several nuclear markets upstream to the market where NNB Companies will be active. The markets where  Chinese  SOEs  are  active  and  which  are
upstream to the market for generation and wholesale supply of electricity are the following:

       • (i) design and manufacture of conventional islands,[60]

       • (ii) (a) supply of safety-related instrumentation and control systems ("I&C"), and (b) supply of operational I&C systems,[61]

       • (iii) services and equipment to existing nuclear islands,[62]

       • (iv) construction services: (1) civil engineering for large projects which encompass (a) earthworks, (b) main civil engineering and  (c)
         marine works; (2) commercial building construction; (3) installation and electrical services for large projects  which  may  be  further
         segmented into (a) electrical services, (b) mechanical services and (c) heating, ventilation and air conditioning for  heavy  commercial
         and industrial use[63],[64]

       • (v) mining and supply of uranium,[65]

       • (vi) supply of enriched uranium,[66] and,

       • (vii) manufacture and supply of nuclear fuel assemblies for light water reactors.[67]

In addition, EDF is active on the market for retail supply of electricity in Great Britain which is downstream to the market for  generation  and
wholesale supply of electricity.[68]

The Commission considers that the precise market definition concerning those markets do not need to be analysed in further details  as  they  are
not affected markets and the proposed transaction does not raise serious doubts as to its  compatibility  with  the  internal  market  under  any
possible approach.

Competitive Assessment

1 Market for generation and wholesale supply of electricity

While NNB Companies will be active in the market for the generation and  wholesale  supply  of  electricity,  EDF  and  CGN  each  have  separate
activities in the same market that will remain independent from the joint venture. In 2014, EDF had a market share of [10-20]% based on share  of
generation capacity and [20-30]% based on generation output. In both bases, CGN's market share is less than 1% through three wind farms.

As a result, there is no risk of coordination between both Parties within the meaning of Article 2(4) of the Merger Regulation  and  Article  101
TFEU as a result of the Transaction.

2 Market for the design and manufacture of nuclear islands

The market for design and manufacture of nuclear islands where Chinese SOEs[69] are active may also  be  vertically  affected  according  to  one
possible market definition: the global market for pressurised water reactors ("PWR") excluding  countries  subject  to  export  restrictions  and
countries exclusively supplied by national suppliers.

The market shares of the Chinese SOEs are above 30%[70] only under this market definition and remain moderate (below 33.6%).  In  addition,  most
of the sales of Chinese SOEs are made in China (Chinese SOEs' market shares drop to 7%, if sales only made outside  of  the  Chinese  market  are
considered).

As the downstream market (market for generation and wholesale supply of electricity) where NNB Companies will be active  is  not  affected,  only
input foreclosure could arise as a consequence of the Transaction. Withholding the Hualong reactor technology would have no effect  on  plans  of
NNB Companies' competitors in the UK as these competitors are planning to build nuclear plants with other reactor technologies.[71] There  is  in
addition a wide range of other PWR reactor technologies available in the EEA which are supplied by other nuclear island suppliers (e.g.  Toshiba-
Westinghouse, Areva, Rosatom, Kepco and MHI). The Chinese SOEs are very unlikely to have the ability to engage in a foreclosure behaviour.

On the basis of the above, the Commission considers that the vertical relationship arising from the Transaction in relation  to  (i)  the  design
and manufacture of nuclear islands, irrespective of the segmentation of the market  definition  and  (ii)  generation  and  wholesale  supply  of
electricity will not raise competition concerns.

3 Sites considered suitable for building new nuclear power stations

EDF owns three of the six sites in the UK where development plans have been announced (subject to final investment decisions  to  be  made):  the
nominated area at these three sites is c.618ha, which is 49.5% of the total area. EDF also owns some land at two  additional  sites  where  plans
have not yet been announced. Neither CGN nor the Chinese State currently own a potential new nuclear site in the UK. EDF will sell shares of  NNB
Companies[72] to CGN (rather than title to the land itself).

Considering a potential vertical relationship between sites considered suitable for building new nuclear power stations and the  market  for  the
wholesale generation of electricity, only input foreclosure could arise as a consequence of the Transaction, as  the  downstream  market  (market
for generation and wholesale supply of electricity) is not affected. The Transaction will however have no  impact  on  EDF's  incentive  to  make
available for sale or not its two remaining sites in Great Britain, as EDF will control these two remaining  sites  both  before  and  after  the
Transaction and was already present on the downstream market for the  generation  and  supply  of  electricity.  In  addition,  there  are  other
competitors who own land suitable for the construction of nuclear plants which they can sell or use for  building  nuclear  plants.[73]  Both  of
them have announced plans to build plants on their sites, but none of them has taken a final  investment  decision.  These  sites  were  acquired
following an auction of sites by the UK Nuclear Decommissioning Authority ("NDA") in 2009: Horizon signed agreements in 2009 to purchase land  at
Wylfa from the NDA and EDF and land at Oldbury from the NDA, and NuGen signed a contract with the NDA to transfer land at the Sellafield site  in
2015 after having signed an option to purchase land in 2009.

On the basis of the above, the Commission considers that the vertical relationship  arising  from  the  Transaction  in  relation  to  (i)  sites
considered suitable for building new nuclear power stations and (ii) generation and wholesale supply of electricity will  not  raise  competition
concerns.

4 Other markets

In the course of the market investigation, some players active in markets upstream to the market for the generation  and  supply  of  electricity
(see paragraph 67 above) expressed concerns about the potential impact on  competition  of  the  Transaction.  Although  these  markets  are  not
affected by the Transaction irrespective of the market definition, these players were  concerned  that  the  Parties  could  engage  in  customer
foreclosure by limiting the access to NNB Companies and more generally to EDF or CGN post-Transaction. This  would  arise  as  a  consequence  of
CGN's and other Chinese SOEs' presence on markets upstream to the generation and wholesale supply of electricity.

As regards customer foreclosure in relation to NNB Companies, the Parties would not have the  ability  to  exclude  competitors  of  the  markets
concerned, as a consequence of the proposed Transaction. Almost all the markets concerned (except construction markets) are at least EEA-wide  in
scope, while the activities of NNB Companies only concern the UK market and will therefore be unsufficient to give EDF and  CGN  the  ability  to
exclude competitors of CGN and other Chinese State-owned enterprises active in these  areas.  As  regards  the  construction  markets  which  are
national or at most EEA-wide in scope, Chinese companies are currently not or to a limited extent active in the  UK  and  in  the  EEA.  Customer
foreclosure is therefore unlikely in the construction markets as well, as confirmed in the market investigation.

As regards customer foreclosure outside the UK, EDF which is not vertically integrated will not have the incentive to  foreclose  competitors  of
CGN and other Chinese State-owned enterprises.

Ancillary restrictions

According to Article 6(1)(b), second sub-paragraph, of the Merger Regulation[74], a  decision  declaring  a  concentration  compatible  with  the
internal market shall be deemed to cover restrictions directly related and necessary  to  the  implementation  of  the  concentration  (so-called
"ancillary" restrictions).

As part of their overall strategic partnership to  which  the  Transaction  forms  part,  the  Parties  intend  to  enter  into  (i)  exclusivity
arrangements in the UK for which the Parties submit that they should be cleared as  part  of  the  Commission's  present  decision  clearing  the
Transaction  and  (ii)  [geographic  scope]  cooperation  arrangements,  for  which  the  Parties  provide  a  specific  description   in   their
notification[75].

The Parties also intend to create GDA JVCo which is an inherent part of their partnership in relation to the development  of  nuclear  new  build
projects in the UK. For the sake of legal clarity, since the Parties expressly indicate that this cooperation shall be assessed as  part  of  the
Transaction and the related arrangements are defined in the same document[76] as other arrangements in relation to intellectual  property  rights
("IPR"), the Commission will clarify below which of these arrangements must be considered as being part or ancillary to the Transaction.

1 Exclusivity arrangements

The Parties submit that the exclusivity arrangements contained in the Exclusivity Principles Paper[77] and described below should be  cleared  as
part of the Commission's overall clearance decision.

According to the Exclusivity Principles Paper both Parties will be restricted in the UK from:

    • [commercial arrangements][78];

    • [commercial arrangements];

    • [commercial arrangements] or

    • [commercial arrangements].

These arrangements are subject to a further carve-out that [commercial arrangements].

The exclusivity arrangements described in the Exclusivity Principles Paper will remain in place until [duration].

  Parties' view

The Parties submit that the rationale behind these exclusivity arrangements is to protect the significant financial,  intellectual  property  and
know-how investments being made by the Parties in order to realise the Transaction  and  enable  efficiencies.  These  efficiencies  include  the
generation of low carbon electricity – therefore contribution to the reduction of the overall cost of decarbonisation – and the  introduction  of
the new UK Hualong Technology – which the Parties consider as a procompetitive factor.

  Assessment

According to paragraph 11 of the Notice on ancillary restrictions, the criteria of  direct  relation  and  necessity  are  objective  in  nature.
Restrictions are not directly related and necessary to the implementation of a concentration simply because the parties regard them as such.

In order for such arrangements to be necessary for the implementation of the main transaction, the  Notice  on  ancillary  restrictions  requires
that "[i]n the absence of those agreements, the concentration could not be implemented or could  only  be  implemented  under  considerably  more
uncertain conditions, at substantially higher cost, over an appreciably longer period or with considerably greater difficulty."[79] In  addition,
"[a]greements necessary to the implementation of a concentration are typically aimed at protecting the value transferred".[80]

The exclusivity arrangements relate to the activities of the JV (building new nuclear plants and developing or supporting nuclear  technology  to
go through the GDA process in the UK) and protect the intellectual property brought by the Parties. These  arrangements  are  therefore  directly
economically related to the main transaction as defined in the Notice on ancillary restrictions.[81]

As the development and life cycle in the nuclear industry is  particularly  long  and  the  investment  costs  required  to  build  a  new  plant
significant, the absence of exclusivity arrangements would lead to considerably more uncertain conditions and increase the  risk  of  free-riding
by the Parties. These agreements will therefore protect the value transferred.

Furthermore, the Notice on ancillary restrictions indicates that "[i]n determining whether a restriction is  necessary,  it  is  appropriate  not
only to take account of its nature, but also to ensure that its duration, subject matter and geographical field of application  does  not  exceed
what the implementation of the concentration reasonably requires".[82] In COMP/39736[83], the Commission  considered  that  the  eight  years  of
Areva Nuclear Power SAS ("Areva NP") lifetime had been sufficient for Areva NP to assimilate the know-how contributed  by  its  parents.  In  the
case at hand, the duration of the exclusivity agreements is maximum [duration] years and are not supposed to be renewable  which  is  appropriate
in view of the unusually long life cycles in the nuclear industry. The geographic scope  of  these  agreements  is  the  UK  and  the  activities
considered relate to fields where the JV will be active. The geographic field and subject matter of application are therefore appropriate.

In light of the above, the Commission considers that exclusivity arrangements into which the Parties intend to enter  are  directly  related  and
necessary to the implementation of the Transaction.

2 Global cooperation arrangements

  Description of the global cooperation arrangements

The Parties will enter into arrangements giving effect to [commercial arrangements].[84].[85]

The Industrial Cooperation Agreement between EDF and CGN also includes the provision that [procurement strategy].[86]

  Parties' view

The Parties submit that the purpose of the [commercial arrangements] is to encourage the Parties to deploy the UK Hualong  Technology,  which  is
the direct result of their collaboration, [commercial arrangements].  The  [commercial  arrangements].[87]  Moreover,  the  arrangements  do  not
restrict or limit [commercial arrangements]. Finally, the Parties consider that [commercial arrangements], each party would  be  incentivised  to
free-ride on the investments of the other Party and this prospect would prevent the Transaction from proceeding in the first place.

As regards the geographic scope of the [commercial arrangements], the Parties explain that the rationale of the Parties in seeking to attain  GDA
approval for the UK Hualong Technology is [commercial arrangements]. They refer in particular to the opening recital of the IPR Principles  Paper
which records the Parties' aim [commercial arrangements].[88]

As regards the duration, the Parties underline that the Notice on ancillary restrictions provides that it can be "for the lifetime of  the  joint
venture".[89]

The Parties consider that the second arrangement (in relation to sourcing of [procurement strategy]) is not a restriction as such, as  it  merely
concerns EDF's potential [procurement strategy]. Moreover, the obligation merely to "consider" would  be  very  weak.  They  therefore  expressly
indicate that this arrangement does not need to be assessed as an ancillary restriction.

  Assessment

The Notice on ancillary restrictions provides that for non-compete obligations to be considered ancillary they need to be  "limited  to  products
and services constituting the economic activity of the joint venture".[90] As regards the geographic scope, they need to be "limited to the  area
in which the parents offered the relevant products or  services  before  establishing  the  joint  venture"  although  it  "can  be  extended  to
territories which the parent companies were planning to enter at the time of  the  transaction,  provided  that  they  had  already  invested  in
preparing this move."[91] If the joint venture is set up to enter  a  new  market,  reference  will  be  made  to  "the  products,  services  and
territories in which it is to operate under the joint venture agreement or by-laws. However, the presumption is that  one  parent's  interest  in
the joint venture does not need to be protected against competition from the other parent in markets other than those in which the joint  venture
will be active from the outset."[92]

The [commercial arrangements] as envisaged by the Parties will be limited to [commercial arrangements].

However, the fact that the IPR Principles Paper provides that the Parties should [commercial strategy] is not sufficient to consider  [commercial
arrangements] cooperation between the Parties as necessary to the Transaction. The Court of First Instance considered that "It is not a  question
of analysing whether, in the light of the competitive situation on the relevant market,  the  restriction  is  indispensable  to  the  commercial
success of the main operation but of determining whether, in the specific context  of  the  main  operation,  the  restriction  is  necessary  to
implement that operation".[93] The Transaction foresees the creation of three full-function JVs, each of which  will  build  and  operate  a  new
nuclear plant in the UK. The main rationale for EDF entering into the Transaction is to obtain financial investment from CGN as developed in  the
Form CO.[94] CGN's objectives are to [CGN’s rationale for the transaction].[95] Even if the Parties had the  intention  to  build  other  nuclear
plants together in the future, there is no concrete step planned as part of the Transaction, as the NNB Companies will be solely  active  in  the
UK. In addition, design approvals are conducted nationally by independent nuclear safety authorities. [commercial arrangements] is therefore  not
necessary for the Transaction.

In light of the above, the Commission considers that [commercial arrangements] are not ancillary to the Transaction.

   3 Licence agreements

  Description of the licence agreements

As explained in paragraph 7, EDF and CGN will also establish a joint venture, GDA JVCo, which will be owned 33.5% by EDF and  66.5%  by  CGN.  It
will be responsible for the day-to-day management and coordination of the GDA process necessary for the  UK  Hualong  reactor  technology  to  be
qualified for operation in the UK. In addition, GDA JVCo will have the [IP arrangements].

The intellectual property rights attached to the GDA JVCo, in particular the [IP arrangements], could be deployed by either party in  the  future
in [IP arrangements]. The Parties also indicate that a [IP arrangements] may be necessary in other projects deploying the UK Hualong  Technology.
The Parties therefore propose a mechanism by which CGN would [IP arrangements][96].

  Parties' view

The Parties expressly indicate that they consider the creation of GDA JVCo as part of the Transaction. They  also  describe  the  above-mentioned
licencing mechanism between the parents in the Form CO.

  Assessment

The Notice on ancillary restrictions provides that a principle of self-assessment of ancillary restrictions applies and that the Commission  will
exercise a residual function with regard to specific novel or unresolved issues giving rise to genuine uncertainty.[97] In the case at  hand,  in
order to avoid uncertainty concerning provisions that are part  of  the  same  agreement  (IPR  Principles  Paper),  the  Commission  notes  that
"[l]icences granted by the joint venture to one of its parents, or cross-licence agreements, can be regarded as directly  related  and  necessary
to the implementation of the concentration under the same conditions as in the case of the acquisition of an undertaking." However, this  is  not
the case for licence agreements between the parents.[98]

As explained in Section 3.2, the Commission considers that the creation of GDA JVCo as an inherent part of the setting up  of  NNB  Companies  is
part of the Transaction. However, any other licence mechanism between the parents are not considered as ancillary agreements.

CONCLUSION

For the above reasons, the European Commission has decided not to oppose the notified operation and to declare it compatible  with  the  internal
market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger Regulation and Article 57 of the  EEA
Agreement.

For the Commission
(Signed)
Margrethe VESTAGER
Member of the Commission

                                                      -----------------------
[1]   OJ L 24, 29.1.2004, p. 1 ('the Merger Regulation'). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
('TFEU') has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  'common  market'  by  'internal  market'.  The
terminology of the TFEU will be used throughout this decision.
[2]   OJ L 1, 3.1.1994, p.3 ("the EEA Agreement").
[3]   Publication in the Official Journal of the European Union No C 58, 13.02.2016, p. 41.
[4]   http://fr.reuters.com/article/businessNews/idFRKBN0TS20W20151209 (Accessed on 4 March 2016).

[5]   The UK Hualong Technology will consist of [IP arrangements]. (Source: Parties' response to RFI #10, Question 4 and 5).
[6]   HPC means Hinkley Point C new nuclear power station, SZC means Sizewell C new nuclear power station and BRB means Bradwell  B  new  nuclear
power station.
[7]   The project costs for HPC are expected to be EUR [cost details] billion compared to EDF's market capitalisation which is  currently  around
EUR 33 billion, and the project costs for the other two plants are likely to be [cost details].
[8]   HPC Holdco and HPC GenCo were incorporated on 17 June 2009. At the end of November 2015 HPC GenCo had a headcount of [number of  employees]
employees, secondees and embedded contractors.
[9]   SZC Holdco and SZC GenCo were incorporated on 28 October 2014. As at November 2015 SZC GenCo had a  headcount  of  [number  of  employees],
which would be expected to increase significantly as the SZC project moves closer to a final investment decision.
[10]  The original BRB project companies, BRB Holdco and BRB GenCo were incorporated on 28 October 2014. On completion, these companies  will  be
replaced by Bradwell Power Generation Company Limited and Bradwell Power Holding Company Limited which were incorporated on 7 January  2016.  BRB
which is at an early stage [number of employees].
[11]  Commission Consolidated Jurisdictional Notice under  Council  Regulation  (EC)  No  139/2004  on  the  control  of  concentrations  between
undertakings (OJ C 95, 16.4.2008, p. 1).
[12]  (1) The Strategic Investment Agreement, which sets out the parameters of the strategic partnership and the other specific  agreements  that
the Parties will sign, and to which the heads of terms of the shareholders' agreements relating to each of NNB HPC,  NNB  SZC  and  NNB  BRB  are
annexed (Annexes 3 and 3(1) to 3(4) to the Form CO); (2) the Framework  Agreement,  governing  the  interdependence  of  the  projects,  as  well
[agreements between the parties] (the key substantive terms of the Framework Agreement are provided in Annex 3(6) to  the  Form  CO  "Exclusivity
Principles Paper" and Annex 3(9) to the Form CO BRB Land Amendments Agreement); and (3) the Industrial Cooperation Agreement (Annex 3(5)  to  the
Form CO), providing a framework for the cooperation of the Parties across the Transaction in relation to areas such as  [agreements  between  the
parties].
[13]  Jurisdictional Notice, paragraph 43.
[14]  Paragraph 38.
[15]  Paragraph 43.
[16]  Annex 3 to the Form CO, page 4, recital (E).
[17]  Annex 3(9) to the Form CO, page 2.
[18]  Annex 3 to the Form CO, page 4, recitals (E) and (F).
[19]  Form CO, paragraph 73.

[20]  Paragraph 95 of the Jurisdictional Notice explains in particular that "the fact that a joint venture makes use of the distribution  network
or outlet of one or more of its parent companies normally will not disqualify it as "full-function" as long as the parent  companies  are  acting
only as agents of the joint venture".
[21]  Paragraphs 94-106.
[22]  Paragraphs 52-53, 153 and 194 of the Jurisdictional Notice.
[23]  See for example Case COMP/M.5549 – EDF/Segebel, paragraph 92.
[24]  See for example Case COMP/M.7643 – CNRC/Pirelli,  paragraphs  8  et  seq;  Case  COMP/M.6113  –  DSM/SINOCHEM/JV,  paragraphs  10-13;  Case
COMP/M.5549 – EDF/Segebel, paragraph 93.
[25]  Paragraphs 8 et seq.
[26]  PRC law on SOEs, Article 22.
[27]  Ibid, Article 27.
[28]  Ibid, Article 4.
[29]  Interim Measures on Supervision, Article 8.
[30]  Ibid, Article 10.
[31]  Ibid, Article 4.
[32]  E.g. "SASAC guides and pushes forward the reform and restructuring  of  state-owned  enterprises,  advances  the  establishment  of  modern
enterprise system in SOEs, improves corporate governance, and propels the strategic adjustment of the layout and structure of the state  economy"
and "SASAC is responsible for the fundamental management of the state-owned assets of enterprises, works out draft laws and  regulations  on  the
management of the state-owned assets, establishes related rules and regulations and directs and supervises the management work  of  local  state-
owned assets according to law", both at http://en.sasac.gov.cn/n1408028/n1408521/index.html (Accessed on 9 March 2016).
[33]  PRC law on SOEs, Article 7.
[34]  The World Nuclear Association is the international organisation that promotes nuclear energy. It  counts  as  members  a  large  number  of
      nuclear players (including EDF, CGN's subsidiaries and CNNC).
[35]     http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Appendices/Nuclear-Power-in-China-Appendix-1--Government-Structure-and-
      Ownership/ (Accessed on 29 February 2016)
[36]  Annex 3(5) to the Form CO.
[37]  http://www.world-nuclear-news.org/C-Chinese-firms-join-forces-to-market-Hualong-One-abroad-31121502.html (Accessed on 29 February 2016)
[38]  Annex 10(10) to the Form CO, "NNB GenCo Board Meeting Minutes", dated 28 October 2015, page 2, point 4.
[39]  Turnover calculated in accordance with Article 5 of the Merger Regulation.
[40]  The worldwide threshold is met without the need to consider other SOEs than CGN.
[41]  Information on the turnover  of  a  company  like  China  National  Chemical  Corporation  ("ChemChina")  is  sufficient  to  determine  EU
jurisdiction. ChemChina is a Chinese SOE controlled by Central SASAC and active among others in the energy area through several  refineries  that
process crude oil. This company has more than EUR 250 million turnover in the EU.
[42]  See Section 6.3 of the Form CO for the definition of affected markets.
[43]  The question as to which companies shall be considered in the competitive assessment (i.e. CGN, Chinese SOEs controlled  by  Central  SASAC
and/or Chinese SOEs controlled by Local SASACs) can be left open, as the Transaction does not lead to competition concerns  irrespective  of  the
assessment of this point.
[44]  EDF is also active in the potential market for electricity trading  services  and  in  other  services  ancillary  to  the  generation  and
wholesale supply to electricity. However, none of these markets are affected as a result of the Transaction.
[45]  Case COMP/M.7137 – EDF/Dalkia en France, paragraph 34; Case COMP/M.6984 – EPH/Stredoslovenska Energetika, paragraph 15; Case COMP/M.5445  –
Mytilineos/Motor Oil/Corinthos Power, paragraph 12; Case COMP/M.5224 – EDF/British Energy, paragraph 11; Case COMP/M.4180 – Gaz  de  France/Suez,
paragraph 674; Case COMP/M.3883 – GDF/Centrica/SPE, paragraph 9.
[46]  Case COMP/M.4517 – Iberdrola/Scottish Power, paragraph 11; Case COMP/M.5224 – EDF/British Energy, paragraphs 15-19.
[47]  Gas fired, coal fired, nuclear, hydroelectric power stations, wind farms or others.
[48]  Case COMP/M.7137 – EDF/Dalkia en France, paragraph 39; Case COMP/M.6984 – EPH/Stredoslovenska Energetika, paragraph 15; Case COMP/M.5445  –
Mytilineos/Motor Oil/Corinthos Power, paragraph 23; Case  COMP/M.4180  –  Gaz  de  France/Suez,  paragraphs  696  et  seq.;  Case  COMP/M.3883  –
GDF/Centrica/SPE, paragraph 21.
[49]  Great Britain comprises England, Wales and Scotland but excludes Northern Ireland. See Case COMP/M.5224  –  EDF/British  Energy,  paragraph
20.
[50]  Case COMP/M.4839 – Areva NP/MHI/Atmea, paragraph 11.
[51]  Case COMP/M.4839 – Areva NP/MHI/Atmea, paragraph 12; Case COMP/M.1940 - Framatome/Siemens/Cogéma, paragraph 13.
[52]  Case COMP/M.4839 – Areva NP/MHI/Atmea, paragraph 13.
[53]  Case COMP/M.4153 – Toshiba/Westinghouse, paragraph 13.
[54]  Case COMP/M.4153 – Toshiba/Westinghouse, paragraphs 23-24.
[55]  Case COMP/M.4839 – Areva NP/MHI/Atmea, paragraphs 14-16.
[56]  Case COMP/M.4839 – Areva NP/MHI/Atmea, paragraphs 18-24.
[57]  The list of the corresponding excluded countries is based on the analysis made in Case COMP/M4839 – Areva  NP/MHI/Atmea  adopted  in  2007.
The Parties contest this market definition, considering that the competitive situation has evolved since 2007.
[58]  Case COMP/M.5224 – EDF/British Energy, paragraphs 104-105.

[59]  In Case COMP/M.5224 – EDF/British Energy, paragraph 106, the Commission left open the  question  whether  the  relevant  geographic  market
could be confined to England and Wales, given that the Scottish authorities had the legal right to prevent  the  construction  of  nuclear  power
plants in Scotland.

[60]  In Case COMP/M.1940 — Framatome / Siemens / Cogéma / JV, Case COMP/M.4153 - Toshiba / Westinghouse and Case COMP/M.4839 - Areva NP / MHI  /
Atmea, the Commission considered the market for conventional islands as a separate market. The question whether the market is EEA-wide or  global
was left open.

[61]  In Case COMP/M.1940 — Framatome / Siemens / Cogéma / JV and Case COMP/M.4153 - Toshiba / Westinghouse, the Comission  considered  that  the
supply of safety related I&C and the supply of operational I&C were separate markets and left open whether they should be considered as  EEA-wide
or worldwide in scope. In Case COMP/M.1940 — Framatome / Siemens / Cogéma / JV the Commission  left  open  whether  the  maintenance  for  safety
related I&C constitutes a separate market.

[62]  In Case COMP/M.4153 – Toshiba / Westinghouse, the Commission considered the market  for  supply  of  services  and  equipment  for  nuclear
islands. The Commission left open whether the markets are EEA-wide, global excluding Japan or global in scope.

[63]  In Case COMP/M.5445 - Mytilineos / Motor Oil / Corinthos Power, a distinction between  "building  construction",  "civil  engineering"  and
"mechanical and electrical services" was considered, as well as a distinction between civil engineering for small projects and civil  engineering
for large projects, and a potential separate market for construction of power plants. The markets were considered  as  national  or  EEA-wide  in
scope.

[64]  Should each of these potential markets be limited to services for nuclear power plants, Chinese SOEs have a share of supply  of  less  than
30% on each of these potential product markets in both the UK and the EEA, as  the  only  Chinese  SOE  active  in  the  EEA  is  Northern  Heavy
Industries through its subsidiary NFM Technologies.

[65]  In Case COMP/M.3099 – Areva / Urenco / ETC JV, the Commission considered the parties' activities in  mining  and  supply  of  uranium.  The
Commission has previously defined separate markets for different metals, including uranium, for mining and metal producing activities  (see,  for
example the decision in Case IV/M.660 – RTZ/CRA) and considered the markets as global in scope.

[66]  In Case COMP/M.3099 – Areva / Urenco / ETC JV, the Commission analysed the market  for  supply  of  enriched  uranium  and  considered  the
different types of low enriched uranium as interchangeable, left open the question whether enriched blended uranium was  a  separate  market  and
considered the market for MOX as a separate market. The Commission considered an EEA-market with a strong  competitive  constraint  exercised  by
Tenex but left the exact market definition open.

[67]  In Case COMP/M.5254 – EDF / British Energy, Case COMP/M.4153 - Toshiba / Westinghouse and Case COMP/M.1940 – Framatome / Siemens  /  Cogéma
/ JV, the Commission analysed the market for fuel assembly services for light  water  reactors  and  considered  that  the  market  for  PWR-fuel
assemblies and BWR-fuel assemblies. In Case COMP/M.1940 – Framatome / Siemens / Cogéma /  JV,  it  also  mentioned  Western  PWR-fuel  assemblies
(which have a square form as opposed to fuel assemblies with hexagonal form used for example in Russia). The question whether the market was  EEA
wide or larger was left open.

[68]  The Commission considered the market for retail supply of electricity in Case COMP/M.7137 EDF / Dalkia and in  Case  COMP/M.5224  -  EDF  /
British Energy. The Commission distinguished between (i) domestic customers; (ii) smaller industrial and commercial  customers  (SMEs)  which  do
not use "half hourly rates" (i.e. which do  not  have  their  electricity  consumption  automatically  measured  every  half  an  hour)  ("non-HH
customers"); and (iii) large industrial and commercial customers which do use half hourly rates ("HH customers"). In Case  COMP/M.5224  -  EDF  /
British Energy the Commission considered Great Britain as the relevant geographic market.

[69]  The following Chinese SOEs are active in this market: CGN (in China), CNNC (in Argentina,  China  and  Pakistan),  State  Power  Investment
Corporation (China and South Africa), as well as Chinergy (a joint venture of Tsinghua and China Nuclear Engineering Group  Corporation  (CNEC)),
Dongfang Electric Corporation, Harbin Power Electric Group China, First Heavy Industries China and Erzhong Heavy Industry (all active in China).

[70]  Market shares are calculated considering 1) reactors planned and under construction as known on 31 December 2014 and 2)  reactors  planned,
under construction and connected to the grid between 2005 and 2014.

[71]   NuGen  (JV  between  Toshiba  and  ENGIE)  plans  to  use  AP1000  nuclear  reactor  technology  of  Westinghouse,   see   for   instance:
http://www.nugeneration.com/ (Accessed on 4 March 2016); Horizon (owned by Hitachi) plans to use the UK Advanced Boiling Water  reactor  provided
by Hitachi-GE, see for instance: http://www.horizonnuclearpower.com/about-us.
[72]  EDF owns land or holds land interests at the three sites. NNB Companies will enter into a series of land arrangements to ensure  that  they
comply with their nuclear site licence conditions imposed by the Office of Nuclear Regulation ("ONR").  The  ONR  requires  that  land  which  is
licenced for use as a nuclear power station is controlled by the licencee through freehold or long term lease arrangements.
[73]      See     for     example     Nugen's     website:     http://www.nugeneration.com/about_nugen.html      and      Horizon's      website:
http://www.horizonnuclearpower.com/about-us

[74]  Commission Notice on restrictions directly related and necessary  to  concentrations  ("Notice  on  ancillary  restrictions")  (OJ  C  325,
22.12.2005, p. 7), paragraph 1.
[75]  Form CO, paragraphs 87-89.
[76]  Annex 3(7) to the Form CO, IPR Principles Paper.
[77]  Annex 3(6) to the Form CO.
[78]  As explained in footnote 5, the UK Hualong Technology will consist of [IP arrangements]. (Source: Parties' response to RFI #10, Question  4
      and 5).
[79]  Notice on ancillary restrictions, paragraph 13.
[80]  Ibid.
[81]  Paragraph 12.
[82]  Ibid.
[83]  Case COMP/39736 – Siemens/Areva, paragraph 57.
[84]  Annex 3(7) to the Form CO, IPR Principles Paper , paragraphs 37-44.
[85]  Parties' response to RFI #8, Question 2 (page 4).
[86]  Annex 3(5) to the Form CO, page 7.
[87]  Subject to the licencing of background IPR by CGN to EDF.
[88]  Annex 3(7) to the Form CO.
[89]  Ibid, paragraph 36.
[90]  Ibid, paragraph 38.
[91]  Ibid, paragraph 37.
[92]  Ibid, paragraph 39.
[93]  Case T-112/99 (Métropole Télévision – M6), [2001] ECR II-2459, paragraph 109.
[94]  Form CO, paragraph 106. The first sentence of the paragraph also indicates that EDF intends to obtain industrial  cooperation  and  project
experience, but the rest of the paragraph primarily develops the cost of the HPC, SZC and BRB projects, and  merely  indicates  that  [commercial
strategy].
[95]  Form CO, paragraph 107.
[96]  [IP arrangements].
[97]  Paragraph 2.
[98]  Notice on ancillary restrictions, paragraph 43.

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 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

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