Commission Decision of 12/08/2005 declaring a concentration to be compatible with the common market (Case No COMP/M.3729 - EDF / AEM / EDISON) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)
| Published date | 12 August 2005 |
| Subject Matter | Concentrations between undertakings,Competition |
Commission Decision of 12/08/2005 declaring a concentration to be compatible with the common market (Case No IV/M.3729 - EDF / AEM / EDISON) according to Council Regulation (EEC) No 4064/89 (Only the English text is authentic)
| |Brussels, 12.08.2005
SG-Greffe(2005)D/204452/53
To the notifying parties
Dear Sir/Madam,
Subject : Case No COMP/M.3729 – EDF/AEM/EDISON.
Notification of 07.07.2005 pursuant to Article 4 of Council Regulation No 139/2004[1].
1. On 07/07/2005, the Commission received a notification of a proposed concentration by which the undertakings Electricité de France S.A. (“EDF”, France) and AEM S.p.A. (“AEM”, Italy) acquire joint control of Edison S.p.A. (“Edison”, Italy) by way of purchase of shares.
I. THE PARTIES
2. EDF is the French electricity incumbent, wholly owned by the French State. According to the information provided by the parties, the French Government has advanced plans to list EDF on the stock exchange by the end of 2005. EDF is active in the generation, transmission (through its subsidiary RTE, acting as French Transmission System Operator, “TSO”), distribution, supply, and trade of electricity and related services, mainly in France but with a large presence also across the EEA.
3. In Italy, EDF has very limited power generation capacity through its subsidiaries Fenice S.p.A (“Fenice”) and EDEV Italia S.p.A. (“EDEV Italia”) and is mainly active via imports from the Northern borders.
4. It is also worth noting that Electricité de France International SA (“EDFI”, a wholly-owned subsidiary of EDF) has an indirect, non controlling participation in the Swiss company Aare Tessin AG für Elektrizität (“Atel”), which has some activities in the Italian electricity sector. Atel is exclusively controlled by the Swiss company Motor Columbus AG (“Motor Columbus”), which owns 58.5% of Atel’s share capital[2]. As recently clarified by the Commission[3], Motor Columbus is in turn exclusively controlled by the Swiss company UBS AG (“UBS”), which owns 55.6% of its share capital[4]. This participation allows UBS to control Motor Columbus’s general assembly and gives power to determine the strategic decisions of the company through its board[5].
5. AEM is an Italian energy company solely controlled by the municipality of Milan. AEM is active in the utility services sector and, in particular, in the generation, transmission, distribution, trading and sale of electricity and in the distribution and sale of gas and heat, mainly in Italy.
6. AEM has some power generation capacity in the North of Italy and contractual rights to manage part of the generation capacity of Edipower S.p.A. (“Edipower”). Edipower is a company controlled by Edison, which acquired one of the three generation companies that the former monopolist Enel S.p.A. (“Enel”) had to dispose of according to Italian law[6]. Under a tolling agreement and a power purchase agreement concluded in 2003 between Edipower and some of its shareholders, 50% of Edipower’s generation capacity is managed by Edison, 20% by AEM, 20% by Atel and 10% by SIET Spa of the AEM Torino group (“AEM Torino”; altogether, the “tollers”)[7]. Within their quota, the tollers can decide Edipower’s production and independently sell the corresponding electricity, with the exception that they are not allowed to present offers in the ancillary services market (see below), where only Edipower can participate[8].
7. Edison is an Italian energy company controlled by Italenergia Bis S.p.A. (“IEB”), an unlisted holding company, owning approximately 63% of Edison’s share capital. EDF currently holds a non-controlling 18% shareholding in IEB with a legislative limitation to the exercise of its voting rights to 2%[9]. The legislative limitation of EDF’s voting rights should in principle be lifted following the adoption of a Law Decree modifying the previous legislation[10].
8. Edison is active in the generation, transmission, and supply of electricity and the production, transportation, distribution and supply of natural gas, mainly in Italy. Moreover, as indicated above, it controls Edipower and manages 50% of its generation capacity under the tolling agreement and the power purchase agreement mentioned above.
II. THE NOTIFIED TRANSACTION
9. In 2001 the special vehicle company Italenergia SpA (“Italenergia”), controlled by the FIAT group, acquired control of the Italian company Montedison SpA (“Montedison”) and, through the latter, of Montedison’s subsidiary Edison. EDF took part to this operation, acquiring a non-controlling 18% shareholding in Italenergia with a legislative limitation to the exercise of its voting rights to 2%[11]. In 2002, the shareholders of Italenergia reached an agreement for restructuring and re-financing the holding company, to be renamed hence Italenergia Bis (IEB). This agreement did not give rise to a new concentration within the meaning of Article 3 of Council Regulation 4064/89.
10. Earlier this year, the other IEB’s shareholders exerted a number of options for the sale of their participation in IEB to EDF. In this context, and after the modification of the Italian legislation limiting EDF’s voting rights in IEB, EDF and AEM agreed to realise the notified transaction in order to acquire joint control over Edison. This will be achieved by means of a special-purpose vehicle named Transalpina di Energia S.p.A. (“TdE”), in which EDF, through its wholly-owned subsidiary WGRM Holding 4 S.p.A. (“WGRM”), and Delmi S.p.A. (“Delmi”), a company solely controlled by AEM, will have equal holdings and equal representation. Through their joint control over TdE, EDF and AEM will therefore acquire joint control over Edison.
11. In particular, it is agreed that, first EDF will acquire control over IEB[12], and second that EDF shall procure (or, prior to such event, shall use its best efforts to procure) that IEB sells to TdE Edison’s ordinary shares and warrants (convertible into Edison’s ordinary shares until December 31, 2007), held by IEB at the date of the transfer. As a result of the transfer, TdE (and thus, indirectly, EDF and AEM) will acquire control of Edison. Within 30 days, TdE will then launch a mandatory tender offer over the remaining Edison’s shares, in accordance with the Italian stock-exchange law, as well as a voluntary tender offer on the remaining warrants in circulation.
12. Following these offers, it is agreed that (i) TdE will hold, together with the shares and warrants acquired from IEB, at least 51%, but no more than 60%, of Edison’s fully diluted share capital; and (ii) EDF will hold a direct participation in Edison[13] which, added to half of Edison’s securities held by TdE (and assuming conversion of all Edison’s warrants), will allow it to reach an aggregate economic interest of 50% of Edison’s voting capital. Any remaining shares and warrants tendered in the Tender Offers will be allocated to Delmi[14].
III. CONCENTRATION WITH COMMUNITY DIMENSION
13. As indicated, with the notified transaction EDF and AEM will acquire joint control over Edison. This transaction therefore constitutes a concentration within the meaning of Article 3(1)(b) of Council Regulation 139/2004.
14. EDF, AEM and Edison have a combined aggregate world-wide turnover of more than EUR 5 billion. Each of them has 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 pursuant to Article 1(2) of Regulation 139/2004.
IV. RELEVANT MARKETS
15. EDF, AEM and Edison mainly focus in the electricity sector. While AEM and Edison have also some activities in the gas sector, there are no markets affected by the notified concentration in the latter sector[15]. The analysis of the notified concentration will therefore be carried out with regard to the relevant electricity markets.
16. In previous decisions[16], the Commission has considered the following markets in the electricity sector: wholesale supply of electricity, ancillary services, transmission, distribution, and retail supply (with a possible distinction between large and small customers). Given the activities of the parties, in the present decision the Commission will consider wholesale electricity (in Italy and France), ancillary services (in Italy) and retail electricity (in Italy)[17].
1. Relevant product markets
Wholesale electricity in Italy
17. The wholesale supply of electricity, as defined in recent decisions of the Commission[18], encompasses the production of electricity at power stations and the import of electricity through interconnectors for purpose of resale to retailers or to a lesser extent directly to large industrial end-users.
18. More in detail, in Italy, operators on the supply side in the wholesale market include a large number of generators, importers and traders. On the demand side, operators include the Single Buyer (procuring electricity for non-eligible customers), retailers (procuring electricity for eligible customers), traders and some large eligible users. There are virtually no exports on the demand side[19], given the large price differential between Italy and neighbouring countries which has always been above 20€/MWh[20]. Moreover, the market test conducted by the Commission showed that there is consensus among the operators that a significant price difference will remain even taking into account the large build-out of new generation[21].
19. On the supply side, generators have to nominate the day before operation their injections in the network to the Italian TSO Gestore della Rete di Trasmissione Nazionale SpA (“GRTN”). This can result from two ways of deciding to produce electricity: generators either have concluded a bilateral contract (within their group or with a third party) to sell...
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