ENEL-FRANCE TELECOM/NEW WIND
PRESS RELEASE
PRESS RELEASE
The reasons for the competition authorities’ decision on the Enel-Infostrada case
At its meeting on 28 February 2001 the Competition Authority authorized Enel to acquire Infostrada subject to a number of specific terms and conditions deemed to be strictly necessary to prevent the acquisition from restricting competition on the Italian market for the supply of electric power to actual and potential 'eligible' customers.
By acquiring Infostrada, the Enel group intends to implement a diversification strategy to provide a combined offering of utilities to a vast public. The Authority is not opposed to the development of a multi-utility offering in itself, because of the benefits to consumers. But it intends to ensure that the company does not strengthen a dominant position for the supply of even one of these utilities in such a way that would permanently alter the conditions of competition.
Enel occupies a dominant position on the electric power supply market to eligible customers, and it will retain its dominant position on the electric power generation market in Italy even after the disposal of the three Gencos, leaving it with a market share of less than 60% of the aggregate gross generating capacity. This means that Enel's ability to fix the wholesale prices for electric power will remain unchanged, even after the start-up of the 'Electric Power Exchange' (Borsa Elettrica).
Thanks to economies of scope and scale, following the acquisition of Infostrada the Enel group will be able to strengthen its dominant position on the market for the supply of electric power to eligible customers. In particular, the acquisition of Infostrada could enable the Enel group to capture the loyalty of the electric power customers who are about to become 'eligible' thanks to its combined offering of telecommunications and electricity services.
This could enable Enel to strengthen its dominant position on the relevant market of its implements commercial policies that its competitors on the electricity market cannot replicate because of the competitive advantages enjoyed by the Enel group, thanks to its wholesale prices leadership in the electric power market.
For these reasons, the Authority has resolved to authorize the acquisition on the conditions published on 28 February, and in particular the obligation to dispose of at least 5,500 MW of its generating capacity within three months from the date of the disposal of the 15,000 MW required by Legislative Decree 79/1999. This deadline is tied to a new phase in the liberalization process under which the number of 'eligible' customers will rise from 40% to 60% of the total.
Rome, 9 March 2001