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German utilities: RWE continues to spar with regulator

29 March 2007 – Germany’s Federal Cartel Office (FCO) has approved RWE’s purchase of online supplier, Eprimo, just days after rejecting its planned takeover of Saar Ferngas.

The FCO rulings are in line with its drive to improve network access, while promoting genuine German retail competition. RWE is not on the ropes just yet though, according to a report by Datamonitor.

RWE continues to hit regulatory hurdles as Germany’s leading power supplier targets small to medium sized acquisitions in its heartland, said Datamonitor. The FCO decision to approve its purchase of Eprimo, will have been tempered by the regulator’s denial of a controlling stake in regional gas company, Saar Ferngas.

For its part, the FCO is simply attempting to promote competition throughout the German energy supply chain. While Germany’s downstream energy markets remain highly fragmented by regional Stadwerke, the intensity of competition between these largely municipal companies is questionable. The FCO views the Eprimo takeover as a fillip to create further competition with other leading incumbents in their core markets.

Meanwhile, the acquisition of an online energy supplier that is not restricted by geographical boundaries does, however, represent a change of tack for the Essen-based monolith. With chief rival, E.ON, recently launching its ‘guaranteed to undercut suppliers’ label, ‘E Wie Einfach’, RWE will see Eprimo as a cost effective route to competing in a broadening German retail market.