EU antitrust regulators investigate E.ON, Innogy deal

FILE PHOTO: Innogy logo before the company's annual news conference in Essen, Germany March 12, 2018. REUTERS/Wolfgang Rattay

BRUSSELS (Reuters) - German utility E.ON’s acquisition of Innogy’s assets may reduce competition and lead to price hikes in Germany and other EU states, EU antitrust regulators warned on Thursday as they opened a probe into the deal.

E.ON is buying Innogy’s assets as part of an asset swap with Innogy’s owner RWE which recently won EU approval to purchase E.ON’s renewables and nuclear electricity generation units.

The European Commission cited deep concerns about the deal’s impact on competition in Germany, the Czech Republic, Slovakia and Hungary. It has opened an in-depth investigation, after E.ON and Innogy decided not to offer commitments during Brussels’ initial probe of the takeover.

A spokesman for E.ON said the deepened review was expected given the size and complexity of the deal, adding the group was still confident of completion in the second half of 2019.

“European households and business customers should be able to buy electricity and gas at competitive prices,” EU competition commissioner Margrethe Vestager said in a statement.

“Our in-depth investigation aims to ensure that the acquisition of Innogy by E.ON leaves sufficient competition in the market to allow for this and does not lead to price increases,” she added.

E.ON is expected to offer concessions to address the concerns. The EU competition enforcer will decide by July 23 whether to clear or block the deal.

Smaller rivals including LichtBlick, Lekker Energie and EWE say the deal would allow E.ON to control competition and prices in the regional power market while in gas sales, it would also be the dominant provider.

Last month, competitors and customers were given a chance to comment on the case.

Reporting by Foo Yun Chee; Additional reporting by Tom Kaeckenhoff in Duesseldorf, editing by Francesco Guarascio and Alexandra Hudson