Local utilities file fresh market distortion lawsuit against E.ON-RWE deal

A group of local utilities in Germany will double down on legal action against the landmark deal between energy companies E.ON and RWE, which they say amounts to market distortion. Local utilities Mainova, Naturstrom and nine others jointly announced that they would seek an action for nullification of the deal with the EU General Court, arguing they would not accept "the factual abdication of competition between Germany's two largest energy companies," which they argue would damage competitors and consumers in the country. While a first and still pending lawsuit filed by the utilities targeted RWE's bundling of renewable power generation, legal action this time seeks to thwart E.ON's plans for retailing, grids and customer services. The plaintiffs argue that the joint action taken by RWE and E.ON can influence the marketing of electricity from renewable sources and exclude other retailers from fair participation. "The RWE-E.ON deal creates an inorganically grown oligopoly of national champions with a high degree of market dominance. E.ON alone will benefit hugely thanks to a high number of customers, enormous grid infrastructure at its disposal and strong purchasing power," said Mainova head Constantin Alsheimer. "Creating artificially intertwined corporations undermines fair competition and the energy market's liberalisation," Alsheimer argued.  

The European Commission had greenlighted the two companies' asset swap, which transferred E.ON's power generation capacity entirely to RWE, while E.ON received RWE's retailing and grid assets. The two companies say their partial merger is not distorting competition as there are still many other companies customers can choose from and regulation is capping profits in grid and retailing business anyway. The German government has pledged to support the deal vis-à-vis European regulators.