On February 26, 2019, the FCO approved RWE AG’s (“RWE”) acquisition of a minority stake of 16.67% in E.ON SE (“E.ON”).[1] The acquisition is part of a complex share and asset swap deal between the two energy companies. Following the share and asset swap, E.ON will focus on the distribution and retail of electricity and gas, whereas RWE will be primarily active in upstream electricity generation and wholesale markets.


As part of the overall share and asset swap, RWE will acquire (i) the major part of, and control over, E.ON’s renewable and nuclear power assets and (ii) a 16.67% minority stake in E.ON as part of the payment for its assets to be sold to E.ON. In exchange, E.ON will acquire (iii) RWE’s majority stake of 76.69% in, and control over, Innogy SE (“Innogy”), and thus take over RWE’s retail and distribution business.

RWE’s acquisition of E.ON’s renewable energies business, and E.ON’s acquisition of RWE’s majority stake in Innogy, had to be notified to the European Commission. By contrast, RWE’s acquisition of a minority stake in E.ON did not fall under the European Commission’s jurisdiction[2] and was thus subject to review by national competition authorities, namely the FCO and the UK Competition and Markets Authority (“CMA”), which cleared the transaction on April 8, 2019.[3]


The FCO found that RWE’s acquisition of 16.67% of the shares in E.ON constitutes a notifiable concentration under German merger control because RWE will acquire a “competitively significant influence” over E.ON: First, the minority shareholding combined with RWE’s right to propose a member of E.ON’s supervisory board gives RWE influence over E.ON. Further, this influence is competitively relevant because both companies will be active across almost all stages of the value chain of the electricity and gas markets. Finally, RWE’s influence over E.ON is significant because RWE will de facto hold more than 25% of the voting rights and thus enjoy a veto over company decisions that require a qualified majority. In addition, RWE will become E.ON’s largest single shareholder and the envisaged minority shareholding needs to be seen in the context of the overall transaction which is aimed at a vertical specialization of each of RWE’s and E.ON’s areas of activity.

However, the FCO found that this part of the overall transaction would not significantly impede effective competition on the market for the generation and sale of electricity to wholesalers, distributors or large industrial customers,[4] as its actual effect on RWE’s market position would be minimal. In particular, the FCO did not consider the acquisition of a minority shareholding to provide RWE with a way to control the power production capacities remaining with E.ON.

The FCO emphasized that it did not conduct an isolated review of this part of the overall transaction, but took into account also the effects of the overall transaction and cooperated closely with the European Commission to achieve a more streamlined procedure. In particular, given that all parts of the overall transaction essentially concerned the same relevant markets, the authorities joined forces with regard to the collection of market data to avoid burdening recipients with duplicate surveys.


On the day of the FCO’s decision (February 26, 2019), the European Commission approved RWE’s acquisition of E.ON’s renewable and nuclear electricity generation assets.[5] In contrast, on March 7, 2019, the European Commission opened a still ongoing in-depth investigation into E.ON’s proposed acquisition of Innogy, having initially determined that the parties have a strong combined market position in several retail markets on a national or subnational level in four Member States, including Germany.[6] While the parties did not offer remedies during Phase 1, E.ON has recently offered to divest businesses in three of the four Member States concerned to gain the European Commission’s approval also for E.ON’s acquisition of Innogy.[7]

[1]              Case B8-28/19. FCO Press Release, February 26, 2019, available in English here; FCO Case Summary May 31, 2019, only available in German here; and FCO Background Paper, February 26, 2019, only available in German here.

[2]              Under the European Merger Control Regulation (Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation)) (“EUMR”), a concentration is defined as a merger of two or more previously independent undertakings (or parts of undertakings) or the acquisition of direct or indirect control of the whole or parts of another undertaking, which brings about a durable change in the structure of the undertakings concerned. The EUMR applies to concentrations that have a ‘Union dimension’ (i.e., meet certain turnover thresholds).

[3]              CMA decision of April 8, 2019, ME/6800/19, available in English here; CMA Notice, available in English here.

[4]              This part of the overall transaction did not concern the distribution of electricity to final consumers.

[5]              European Commission Press Release (M.8871), February 26, 2019, available in English here.

[6]              European Commission Press Release (M.8870), March 7, 2019, available in English here.

[7]              Global Competition Review article, June 27, 2019, available in English here; see also the European Commission’s case page with further details on the overall timeline for this case here.