UOKiK addressed objections towards concentration consisting in PGE taking control over EDF Poland and rates that the transaction may be a threat to competition and one of its negative influences might be sales reduction at POLPX. PGE hopes for an agreement though – informs UOKiK in Friday’s news release.
The application for approval of the takeover of control over EDF by PGE was received by the UOKiK in June 2017. Both participants of the contemplated transaction operate, among others, in the electricity generation, retailing and distribution sector.
In July, the Competition Authority decided to commence the second phase of the proceedings. Market testing has proved necessary to reach the relevant conclusions. The market testing process applied to all major electric power sector companies. The UOKiK has also requested the Energy Regulatory Office and the Polish Power Exchange (Towarowa Giełda Energii) to present their opinion on the matter.
The analysis of the evidence gathered in the present case has demonstrated that the transaction may result in a restriction of competition. One of the dangers involved is the increase of PGE’s position on the electricity generation and distribution market.
PGE is counting on a comprimise with UOKiK and quick takeover of EDF’s assets
An increase in PGE’s market share may also result in a lower turnover of the Polish Power Exchange (Towarowa Giełda Energii), which may in turn have a detrimental impact on the retail market – says Michał Holeksa, vice-president of the UOKiK.
Electricity retailing via the Polish Power Exchange allows the market position of the major entities to be mitigated, for example, by allowing smaller companies to purchase electricity at wholesale prices. However, the volume of electricity offered by large companies through the energy exchange keeps decreasing. The acquisition of EDF Polska by PGE will result in a further decline of the volume of electricity offered.As a result, PGE will be able to sell the vast majority of electricity within the framework of its own capital group, making it difficult for its competitors to make any purchases thereof.
In the cases where there are reasonable grounds to believe that the concentration will result in a restriction of competition, the President of the UOKiK shall submit reservations regarding the contemplated transaction to the undertaking(s) participating in the concentration scheme. The reservations are provided along with a statement of reasons and are in no way determinative of the final outcome of the proceedings.
In accordance with the provisions of applicable laws, the undertakings involved have 14 days to respond to the reservations. This period may be extended by a further two weeks at the request of the undertakings involved.
The company is making itself acquainted with UOKiK chairman’s statement and will respond to it as soon as possible. We are convinced that this dialogue will bring a compromise solution that will enable a succesful finalization of Polish EDF assets purchase.