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REGULATION (EEC) No 4064/89 MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION Date: 23/11/2001

Also available in the CELEX database Document No 301M2443

Office for Official Publications of the European Communities L-2985 Luxembourg

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 23/11/2001 * 292320

SG (2001) D/293220

PUBLIC VERSION

MERGER PROCEDURE ARTICLE 6(1)(b) DECISION

To the notifying parties:

Dear Sir/Madam,

Subject: Case No COMP/M.2443 - E.ON/POWERGEN Notification of 19 October 2001 pursuant to Article 4 of Council 1Regulation No 4064/89

1.On 19.10.2001, the Commission received a notification of a proposed concentration by which the German undertaking E.ON AG (ìE.ONî) acquires within the meaning of Article 3(1)(b) of the Council Regulation control of the whole of the British undertaking Powergen PLC (ìPowergenî).

2.The Commission has concluded that the notified operation falls within the scope of the Merger Regulation and does not raise serious doubts as to its compatibility with the common market.

II. THE PARTIES AND THE OPERATION

3.E.ON, which results from the merger between VEBA AG and VIAG , is a vertically integrated energy company, mainly active in Germany and also present, through the

1OJ L 395, 30.12.1989 p. 1; corrigendum OJ L 257 of 21.9.1990, p. 13; Regulation as last amended by Regulation (EC) No 1310/97 (OJ L 180, 9. 7. 1997, p. 1, corrigendum OJ L 40, 13.2.1998, p. 17).

2Cases COMP/M.1673 ñ VEBA/VIAG and COMP/ECSC.1321 ñ VEBA/VIAG.

Rue de la Loi 200, B-1049 Bruxelles/Wetstraat 200, B-1049 Brussel - Belgium Telephone: exchange 299.11.11 Telex: COMEU B 21877. Telegraphic address: COMEUR Brussels.

4.recent acquisition of Sydkraft AB, in Sweden. E.ON is primarily active in the generation, distribution and supply of electricity, as well as in the supply of gas, water, chemical products, and oil; as well in the provision of telecommunications services and real estate management.

5.Powergen is an integrated electricity and gas company, primarily active in the UK and the USA. Its main activities in the UK are the generation, distribution and supply of electricity and supply of gas, as well as the provision of telecommunications services to both domestic and business customers.

6.The operation consists of the acquisition by E.ON of full ownership and sole control over the whole of Powergen, through the acquisition (by means of a recommended cash offer) of all the issued and to be issued share capital of the target company.

III. COMMUNITY DIMENSION

7.The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 billion . Each of E.ON and Powergen have a Community-wide turnover in excess of EUR 250 million, but they do not achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State. The notified operation therefore has a Community dimension.

IV. COMPETITIVE ASSESSMENT

Markets involved in the concentration

8.According to the information provided by the notifying party, following definitions retained by previous Commissionís decisions, the supply of electricity, as well as energy trade (electricity/gas) and supply of gas would constitute the relevant product markets concerned by the proposed transaction.

3Case no. COMP/M.2349 - E.ON/Sydkraft.

4Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Notice on the calculation of turnover (OJ C66, 2.3.1998, p25). To the extent that figures include turnover for the period before 1.1.1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis.

5Cases COMP/M.1673 ñ VEBA/VIAG; IV/M.2349 ñ E.ON/Sydkraft; IV/M.1169 ñ EDFI/Graninge; IV/M.1231 ñ IVO/Stockholm Energi; IV/M.1346 ñ EdD/London Electricity; COMP/M.1659 - Preussen Elektra/EZH; IV/M.1606 ñ EdF/South Western Electricity; COMP/JV.36 ñ TXU Europe/EdF; COMP/M.2209 ñ EdF/Cottam Power Station; COMP/M.1803 ñ EdF/Louis Dreyfus; COMP/M.1803 ñ Electrabel/EPON.

9.It must be noted in this respect that for the purposes of the present transaction, given that the proposed operation does not raise serious doubts irrespective of market definition chosen, the question on how to exactly define the relevant product markets can be left open.

Compatibility with the common market

10.It can be concluded from the information submitted by the notifying parties that their activities do not overlap in any of the EEA countries where E.ON and Powergen are present, with the exception of electricity trading in the Nordic markets and the Netherlands.

11.Both E.ON and Powergen are present in the Nordic (Denmark, Finland, Norway and Sweden) electricity trading market, where their combined market share accounts for 9.1% (E.ON, 7.56%; Powergen, 0.4%). Furthermore, E.ON is active in the Dutch electricity trading market, with a 22.5% market share, having Powergen entered the market this year through two small trades accounting for less than 0.01%.

12.As to the Nordic electricity trading market is concerned, both parties are present in it. However, their combined market share (9.1%) would not lead to a horizontally affected market in the meaning of section 6 of Form CO. Furthermore the increase in E.ONís current market share to be contributed by Powergen would be minimal (0.4%), with the operation not substantially modifying E.ONís pre-merger position.

13.With regard to the Dutch electricity trading market, it is true that the proposed transaction would give raise to an affected market, with a combined share going beyond the 15% threshold legally provided for. However, Powergenís contribution to this position would be negligible (less than 0.01%), thus representing no significant change in E.ONís existing position; furthermore, the market volume appears to significantly increase by up to 50% in 2001, according to the notifying partyís estimates.

V. CONCLUSION

22.For the above reasons, the Commission has decided not to oppose the notified operation and to declare it compatible with the common market and with the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of Council Regulation (EEC) No 4064/89.

For the Commission (Signed) Mario MONTI Member of the Commission

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