New German energy company hopes to break dominance of E.ON and RWE
New regional energy company in the eastern German state of Saxony Sachsen Energie has set out to counter the dominance of utilities E.ON and RWE, Jürgen Flauger reports in business daily Handelsblatt. The company, established in a merger between two local utilities in Dresden, will become "the largest municipal utility in eastern Germany," catering to some one million customers, when it begins operation next year, Frank Brinkmann, who will head the new company, told the newspaper. According to Handelsblatt, eastern Germany is currently almost entirely served by energy company E.ON, which, after a merger of parts of its business with former rival RWE, has already faced criticism for its dominant market position that could distort competition in German and European energy markets. "The transaction of E.ON and RWE has imposed a whole new market power upon us, which prompted us to act," Brinkmann said.
Competitors of E.ON and RWE had sued against the merger, which was greenlighted by the European Commission, at the European General Court (EGC), arguing that the deal between the two companies would give them an unfair edge over other energy companies. The German government sided with the European Commission and defended the decision to allow the complex asset swap that saw E.ON absorb RWE's spin-off Innogy, making the former a dominant retailer of the energy produced by the latter’s assets.