EU closes antitrust case against Germany’s E.On

27 November 2008 – The European Commission closed an antitrust case against E.ON when it formally accepted the German energy group’s commitment to sell a fifth of its power generation capacity along with its extra-high voltage distribution network.

EU antitrust chief Neelie Kroes said the probe, begun in 2006, produced an “unprecedented set of remedies” leading to more competition and more consumer choice in the German electricity market that is worth an estimated €50bn ($65bn) a year.

In February, the natural gas and electricity giant offered to sell off 5000 MW of generation capacity along with its extra-high voltage network to an operator not involved in generating or supplying power.

By giving E.ON’s plan the green light, the company’s promises became legally binding enabling the EU to drop the antitrust case.
EU spokesman Jonathan Todd said the European Commission was relieved that the E.ON case did not end up in court. Had that happened, he told reporters, “it would have risked a long, drawn-out litigation.”

By agreeing to work with the EU, Todd added, E.ON’s private and business customers should soon see lower electricity rates. “The effects will be felt very quickly,” he said.

The European Commission has long argued separating energy giants from their distribution networks is key to its goal of ensuring that energy prices are kept down.

In its antitrust case, it alleged E.ON artificially raised prices by withholding generation capacity and barring competitors from using its distribution network to fill the shortfall.

“More than 20 per cent of (E.ON’s) generation capacity will be available for competitors and newcomers and should” force electricity prices down, Kroes said in a statement.

She added that by casting off its distribution network, E.ON will no longer be able “to favor its own production affiliate over its competitors.”