Merger RWE/Transgas authorised

The Office for the Protection of Competition in its decision of 2 May 2002 conditionally approved the concentration of RWE Gas AG with the company Transgas and eight gas distribution companies.

“The Office in the three-months administrative proceeding assessed especially the impacts of the concentration on competition and final consumers”, commented the Chairman of the Office for the Protection of Competition, Josef Bednář.

“On the basis of individual analyses we have reached the conclusion, that it is necessary to determine conditions on the grounds of which the concentration will be approved,” commented Bednář. Two of the three conditions relate to business activities of Moravské naftové doly. “Company RWE must not acquire control over this company and block its decisions on the intentions, which are of evident competitive character against company RWE”, commented Bednář.

The third condition relates to the assessment of interchangeability of individual media especially on regional markets. “Company RWE must not acquire control shares in distribution companies in the area of electric power and heat until the privatisation is over”, commented Bednář.

During the assessment of the case the Office examined the positions of the third parties on the concentration, i.e. comments of the competing companies. The Office received overall 9 serious objections against the concentration (+ one natural person). The Office also regarded the position of the Energy regulation office and the National property fund. The Office also considered the decision making practice of the European Court of Justice and the European Commission and in this context it used 83 decisions issued by these authorities and competition offices of the EU member states. It was for example the concentration of the year 2000 VEBY/VIAG assessed by the European Commission and also the decision of the Spanish competition tribunal in case of non-approval of the concentration of companies Endesa and Gas Natural.

“The Competition Office by determination of the conditions established grounds for effective competition especially pro futuro in relation to expected liberalisation of the market. The Office was naturally concerned with not exposing consumers to the pressure of monopoly prices, and setting the prices for gas on the basis of competition”, commented Bednář.

The case of concentration of RWE and Transgas was from the view of the extent of the transaction the biggest that the Office has so far dealt with in its ten years history.

Conditions for preservation of effective competition

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• Company RWE Gas AG, must not directly or indirectly raise the actual joint per cent share of the company Jihomoravská plynárenksa, a.s. in the basic capital of the company Moravské naftové doly, a.s., without approval of the Office for the Protection of Competition, and it must not, in case of preserving the current joint per cent share of companies Jihomoravská plynárenská, a.s. and Transgas, a.s. in the basic capital, acquire in any way direct or indirect control over the company Moravské naftové doly, a.s.
• Company RWE Gas AG, must not block the decisions of company Moravské naftové doly, a.s. concerning the intentions, which shall have evident competition character against the company RWE Gas AG, with the exemption of the cases, which would under objective assessment lead to prejudice of company Moravské naftové doly, a.s. or its shareholders.
• Company RWE Gas AG, must not, without approval of the Office for the Protection of Competition, directly or through its subsidiaries on any level acquire shares in the electric power distribution and heat distribution companies or build new electric power distribution and heat distribution companies in the Czech Republic until the privatisation is over, however during five years at most.

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During the administrative proceeding the Office received comments from following companies:

• Metalimex
• Západoč- eská energetika
• Pražská plynárenská
• IFNE
• ESPO Týniště nad Orlicí
• Moravské naftové doly
• SPP Bohemia
• Jihočeská plynárenská
• Free Trade Energy Agency
• <dir> <dir> </dir></dir>+ one natural person

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Press Department of the Office