The complex transaction, which took place over several stages, could not be assessed as a "single merger", the Luxembourg judges ruled. Therefore, the plaintiffs would have to pay close attention to which facts were examined and approved by the EU Commission and where the competence of the Bundeskartellamt as the national competition authority arose.

Marcus Jung

Editor in business.

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In its reasoning, the CJEU clearly pointed out that the competition watchdogs in Brussels had sufficiently examined the extent to which RWE's market position in electricity generation continues to grow.

The deal between RWE and Eon was in the region of 40 billion euros. Initially, RWE acquired Eon's power plants, but later the Düsseldorf-based company took over some of its competitors' business areas, including its subsidiary Innogy SE. In addition, RWE acquired a 16.67 percent stake in the Eon Group.

The aim of the actions was to have the Commission's releases annulled. As competitors, the applicants relied on Article 263 of the Treaty on the Functioning of the European Union (TFEU). This was to ensure that the competition authorities had acted correctly. If successful, Brussels would have had to reconsider the release and approve it subject to further conditions. A veto and thus a reversal, more than four years after the transactions, would have been the last consequence.

Concerns about market power

At the heart of the dispute is the reorganization of the German electricity supplier market by the two heavyweights from Essen and Düsseldorf from 2018. The predominantly municipal utilities saw this multi-stage reorganization of the business units as an inadmissible restriction of competition. Utilities were also concerned that RWE and Eon could use their market power to push through significant price increases. But after the rulings from Luxembourg, it is clear that the approval of the transaction by the EU competition authorities was legal.

In total, the CJEU had to deal with eleven nullity actions, including those of the electricity supplier EVH from Halle, municipal utilities from Leipzig and Frankfurt and Mainova. In the summer of 2020, the plaintiffs decided to bring an action for annulment against the EU Commission's decision because they believe that the acquisition of Eon assets by RWE and mergers will significantly restrict the already fragile competition in production.

The first wave of lawsuits, which has now been decided, was directed against the bundling of all products at RWE. Subsequent lawsuits, filed in February 2021, were aimed at awarding the value chains of sales, network and innovative business to Eon.

Appeal is possible

Municipal utilities and municipal utilities now have the option of appealing to the European Court of Justice. Naturstrom, one of the unsuccessful plaintiffs, wants to examine the verdict intensively beforehand. "If you compete as a natural electricity against the European Commission and additionally indirectly against RWE and Eon, which are supported by the German government, then the starting position is very difficult," explains Kirsten Nölke, CEO of the energy supplier from Düsseldorf. Nevertheless, they fought for a better judgement in terms of competition, energy customers and also the energy transition. "From the outset, it was foreseeable that RWE's market power in power generation would increase. In the meantime, the Bundeskartellamt has also certified this crystal clearly."