MLex Comment: EDF could sell Belgian power plant site to appease EC concerns with SPE purchase

Author: Dafydd Nelson
4 Nov 09 | 16:55 GMT+1

IN BRIEF
Remedies submitted by French power company EDF to the European Commission in connection with its purchase of Belgian rival SPE probably target competition concerns on the Belgian electricity generation and wholesale market. Given SPE’s status as the second largest electricity producer in Belgium, EDF is likely to have offered to sell off one of its power-plant sites.

Remedies submitted by French power company EDF to the European Commission in connection with its purchase of Belgian rival SPE probably target competition concerns on the Belgian electricity generation and wholesale market.

Given SPE’s status as the second largest electricity producer in Belgium, EDF is likely to have offered to sell off one of its power-plant sites.

Although EDF’s only listed electricity-generation interest in Belgium is a 50 percent share in the Tihange 1 nuclear power plant along with Electrabel, it is understood that it also owns sites for future development.

It is likely to be one of these sites that is subject to divestment, as it is highly doubtful EDF would consider disposing of, or find it necessary to sell, its interest in Tihange 1.

The locations of EDF’s future development sites are not a matter of public record, and the company declined to name them. One possibility could be the Marcinelle Combined Cycle Gas Turbine (CCGT) project near Charleroi, following reports of an EDF/Enel asset swap that would see the French company take control of that site. But the parties have declined to confirm whether such a deal is in the pipeline.  

EDF currently produces only about three percent of Belgium’s electricity needs, while SPE produces roughly 10-15 percent.

The commitments were offered by EDF, after the Belgian competition authority requested that the commission refer the review of the deal to it.

By lodging remedies, EDF has signalled that it would rather see a final decision on the deal taken by the commission, than by the national authority.

The commission must decide by next Thursday, 12 November, whether to rule on the transaction itself, or transfer the review to the Belgian competition authority for a final decision (see here).

A "downwards referral" would drag out the closing of the deal as the parties must notify afresh with the national regulator. A first Phase decision in Belgium can take up to 55 working days where remedies are offered.

But it is not out of the question that the Belgian authority could withdraw its referral request, if it is satisfied with the remedies submitted to the commission.

But Belgium’s concerns over the deal could be tinged by political motivation, given the heavy involvement in Belgium of French energy companies.

In May, Belgium's economy minister Vincent Van Quickenborne said he could ask the commission to investigate the impact on the Belgian market of the French government's stakes in EDF and GDF-Suez, which, following EDF’s SPE deal, would become the country's two leading electricity producers (see here).

But the companies are run individually and considered to be separate economic units despite state shareholdings in both, meaning that for the purposes of merger control law they are not considered to be managed by the same entity (see here).