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EU approves acquisition of 50Hertz by Elia and Industry Funds Management

10 May 2010, 20:22 CET

The European Commission has authorised under the EU Merger Regulation the proposed acquisition of joint control over the German transmission system operator 50Hertz Transmission GmbH by Elia System Operator SA/NV of Belgium and Industry Funds Management Pty Ltd (IFM) of Australia.

The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

50Hertz is one of the four German electricity transmission system operators, controlled by Vattenfall AB of Sweden. Elia is the official Belgian electricity transmission system operator and one of the electricity transmission system operators in Luxembourg. Elia is ultimately controlled, through Electrabel, by GDF Suez of France and Publi-T SCRL, a Belgian cooperative company representing a number of municipalities. IFM is a global infrastructure investment manager.

The Commission examined in particular the vertical links between the activity of GDF Suez and the activity 50Hertz on the German market, namely: (i) the generation and wholesale supply of electricity (upstream) and the transmission of electricity (downstream); (ii) balancing power and ancillary services (upstream) and the transmission of electricity (downstream) and (iii) the transmission of electricity (upstream) and the distribution of electricity (downstream). The Commission also assessed the two related vertical links that already existed prior to the transaction within the GDF Suez group, that is:

(i) the generation and wholesale of electricity (upstream) and the retail supply of electricity (downstream) and (ii) the distribution of electricity (upstream) and the retail supply of electricity to end-users (downstream).

The Commission's investigation confirmed that the proposed merger would not close off the market to competition, due to the low market shares in the related upstream markets for the generation and wholesale supply of electricity and balancing power and ancillary services. In these markets a sufficient number of competitors would remain after the transaction. In addition, the regulatory framework in which the transmission network is operated ensures that access to the grids is granted on a non-discriminatory basis and at regulated tariffs. Therefore, the Commission found that the proposed concentration would not cause any competition problems.

The proposed transaction was notified to the Commission for regulatory clearance in the EEA on 6 April 2010.

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