EU probing if EDF, Areva deal will hit competition, innovation: source

FILE PHOTO: An EDF worker is seen on the construction site of the third-generation European Pressurised Water nuclear reactor (EPR) in Flamanville, France, November 16, 2016. REUTERS/Benoit Tessier

BRUSSELS (Reuters) - EU antitrust regulators are investigating whether French utility EDF's EDF.PA bid for a majority stake in Areva's nuclear arm would hit competition and innovation in the nuclear services market, a person familiar with the matter said on Wednesday.

The European Commission is currently examining a deal that would see state-controlled EDF acquire 51 to 75 percent of Areva NP, which designs, makes and services nuclear reactors. The sale is part of loss-making Areva’s rescue plan.

The EU competition enforcer will rule by May 29 whether to clear the deal with or without conditions, or whether to open a full-scale, four-month investigation.

The Commission has asked rivals and customers how the deal will affect prices, innovation and quality, the source said, speaking on condition of anonymity due to the sensitivity of the matter.

Innovation has become a key focus for regulators seeking to ensure the pipeline of key products and technologies will continue to flow after companies are snapped up by rivals.

Regulators also want to know if other suppliers would be able to step in in the event New Areva NP decides only to provide services to EDF once the deal is completed, the source said.

They are also looking at whether other suppliers would have enough customers in the EU should EDF decide to use only New Areva NP for nuclear services for nuclear steam supply systems.

The regulators, which see Areva competing with Toshiba Corp's 6502.T Westinghouse, Italy's Ansaldo Energia, Spain's Equipos Nucleares SA (ENSA), South Korea's Doosan and Russia's Rosatom, want to know too whether there would be enough suppliers to meet demand in Europe after the merger.

The Commission has told respondents to provide feedback early this week.

Reporting by Foo Yun Chee; Editing by Jan Strupczewski and Mark Potter