NMa consults market parties on mergers energy sector
The Netherlands Competition Authority (NMa) invites the energy sector to respond to its consultation document on mergers in the energy sector. Energy markets are in a state of flux, both nationally and internationally.
Therefore, the NMa considers it important to reassess these markets with a view to its merger control policy. In the consultation document, the NMa explores which conditions should govern national and cross-border concentrations at the present stage of development. Reactions to the consultation document will be processed in an NMa vision document, which is due for publication later this year.
In its consultation document the regulator distinguishes three electricity markets: the market for electricity production and wholesale trade in electricity, the market for electricity transport and distribution and the retail (consumer) market for electricity.
Though a number of developments seem to point in the direction of an emerging North-West European market, the NMa has found that during peak hours no such market exists as yet. Prices in the Netherlands, Germany and Belgium differ considerably. At present, the effectively available import capacity is not yet sufficiently substantial to allow large and small-scale consumers to profit from lower price levels abroad. This outcome is of consequence to future assessments of mergers and acquisitions. The effectively available import capacity should increase by approximately 3000 MW in order to speak of a North-West European market during peak hours. In its consultation document, the NMa indicates which activities and players may contribute to enlarging the effectively available import capacity.
In order to provide the energy sector with a clear insight into the actual importance of the analyses to merger control policy, the NMa has investigated three conceivable merger scenarios, including a merger of two large Dutch players and a Dutch/ German combination. The effects on market operations have been measured for each case. Results indicate that an unconditional merger of two large Dutch energy companies may lead to higher prices for large and small-scale consumers. With a view to possible restrictions to competition, the NMa has indicated for each scenario which conditions may be attached to a merger in order to safeguard competition in the Dutch market. In this respect, the NMa takes into account that further steps towards the establishment of a North-West European market will be taken shortly. This development allows the NMa to opt for a dynamic approach in setting out conditions for intended mergers. This may involve temporary conditions or conditions that vary in the course of time depending on the market situation. Parties concerned are invited to join the consultation round and suggest ways of setting conditions which may do justice to the present situation and the possible temporary nature of competition concerns.
Under the authorisation of the NMa, The Brattle Group has drawn up a research report. This document is available on the NMa website: www.acm.nl. Allowing for a consultation period of eight weeks, parties should submit their response by email or in writing before the closing date of 4 August.