President of the UOKiK decided that PGE and Energa merger will lead to significant competetion restriction. UOKiK issued a decision prohibiting the takeover of Energa by Polska Grupa Energetyczna

PGE formal notification was delivered to UOKiK on the 20th of October 2010, asking for approval to the merger with Energa responsible for production, distribution and sale of the electricity. PGE is the biggest electric energy producer in Poland. Ministry of Treasury owns most of shares of both PGE and Energa, and the notification of the merger resulted of privatisation plan runned by the Ministry. On September 2010 PGE and the Ministry of Treasury signed a deal to buy 84,19 percent stake in Energa – the completion of the deal depended on the President’s of the UOKiK approval.

Every merger proceeding is examined very deeply. UOKiK always takes into consideration the structure of the market that entities operate on. During the PGE/Energa market research UOKiK asked the entrepreneurs operating on the electricity market about their opinion on the merger. Moreover, electricity business and receivers associations took part in the research. President of the UOKiK also took into consideration opinions of the President of Energy Regulatory Office. PGE itself on UOKiK’s request completed the notification several times giving the required information. 

While analyzing the merger the President of the UOKiK decided that planned transaction would lead to a significant competition restriction. If PGE took over Energa, the new company would be able to act independently of competitors and contracting parties, imposing sales conditions and determining prices of the electric energy – said Małgorzata Krasnodębska-Tomkiel

After analyzing the final results of UOKiK’s electricity market research and opinions of all entities operating on the market, I decided to prohibit the takeover of Energa by PGE – said Małgorzata Krasnodębska-Tomkiel President of the UOKiK. While analyzing the merger the President of the UOKiK decided that planned transaction would lead to a significant competition restriction. If PGE took over Energa, the new company would be able to act independently of competitors and contracting parties, imposing sales conditions and determining prices of the electric energy – said Małgorzata Krasnodębska-Tomkiel.

It is worth emphasizing that defining the electricity market as the national is commonly used by the European Union, both by the member states and the European Commission. It is not possible to use the wider definition of this market because of the technical barriers resulting from lack of the cross-border connection. This affects on the small percentage of the imported and exported electric energy.  

The decision is not final. PGE may appeal to the Court of Competition and Consumer Protection.

Since 2004 it is the fifth UOKiK’s decision prohibiting the merger. President of the UOKiK very rarely makes use of this possibility – only when the merger may lead to significant restriction of competition. In 2010 President of the UOKiK made 150 decisions concerning mergers – none of it was negative.

Contact for the press:
Małgorzata Cieloch, Spokeperson of the UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warszawa
Tel. 48 603 124 154, 48 22 827 28 92, 48 55 60 106, 48 55 60 430
faks 22 826 11 86
E-mail: malgorzata.cieloch@uokik.gov.pl