The European Commission said Monday it has approved EDF’s proposed takeover of New NP, the Areva Group’s nuclear reactors business, under the EU Merger Regulation. The Commission has concluded that the transaction would not raise competition concerns.
EDF plans to acquire between 51 % and 75 % of the capital of ‘New NP’ which houses the Areva Group’s nuclear reactors business. The two companies operate in the energy sector. EDF is the largest nuclear power plant operator in the EU, while New NP focuses on the design and supply of nuclear reactors and equipment, fuel assemblies, control systems and services to nuclear power plants. Although their activities do not overlap, the two companies are major players in the nuclear industry, the one as a supplier and the other a customer.
Considering the vertical relationships between the two companies, the Commission said it has concluded that the proposed takeover is unlikely to cause competition issues. In particular, the Commission assessed the probable effects of the transaction on the ability and incentives of the merged entity to engage in foreclosure strategies by restricting access to products, equipment and services designed or supplied by New NP and to EDF, as a customer.
As regards the market for the design and construction of new reactors, the Commission has concluded that EDF and New NP would not be in a position to push out their competitors because of the different market characteristics and the number of suppliers and also the number of nuclear plants not operated by EDF.
In the case of the markets for services to existing plants and for instrumentation and control systems, the Commission’s investigation has shown that New NP has every interest in proposing high-quality products and services to as many potential customers as possible. Furthermore, in view of the various provisions governing public procurement, EDF would not be in a position to foreclose New NP’s competitors and would have every interest in continuing to source its supplies from a diversified group of suppliers in order to ensure that its plants operate competitively.
As regards the fuel assemblies market, the Commission said it considers that EDF would not have sufficient incentive to source its fuel assemblies solely from New NP. The Commission has therefore concluded that the foreclosure of competitors seems unlikely in the medium term.
Lastly, the Commission has ruled out the possibility of EDF restricting the supply of fuel assemblies and related services to other operators of nuclear power plants in the European Economic Area, which would be in breach of existing contracts.
The Commission has accordingly concluded that the proposed transaction was unlikely to raise competition concerns.
Please Donate Today
Did you enjoy this article? Then please consider donating today to ensure that Eurasia Review can continue to be able to provide similar content.