AS346 - APPROACH TO DIVESTMENT OF ENEL'S SHAREHOLDINGS IN EUROGEN, ELETTROGEN AND INTERPOWER
PRESS RELEASE
PRESS RELEASE
ANTITRUST REPORTS EDF-AEM EXCEED 30% LIMIT IN EX-GENCO, PUTTING COMPETITION AT RISK IN ENERGY SECTOR
Violation must be halted and rules changed to ensure development of market. Report sent to Speakers of House and Senate, to the Prime Minister and to the Ministries of Finance and Economic Development
The Italian Competition Authority, at its meeting on 5 July 2006, in a report to the Government and Parliament, made a number of comments on distortions which may be caused to competition and the correct functioning of the market by the present wording of the Prime Ministerial Decree of 8 November 2000 (method for divesting ENEL's shareholdings in Eurogen, Elettrogen and Interpower). That decree limited to 30% the shareholding in these businesses which could be held by public entities or companies, whether Italian or foreign, for a period of at least five years.
In the Authority's view, that limit was exceeded in the acquisition whereby Electricité de France (wholly owned by the French state) and AEM (controlled by the Municipality of Milan) each bought 50% of Edison. Edison in its turn purchased Eurogen (now Edipower).
The Authority requests that immediate steps be taken to put a stop to this violation of the rule and to restore such market conditions as will allow proper competition amongst operators in the sector.
In the Authority's view, the current situation may be prejudicial to the undistorted development of a free market. The whole point of limiting the shareholdings of public companies and entities in so-called Gencos to 30% was to allow market liberalization and privatisations to proceed in parallel: the opening up of the electricity market to competition was an important opportunity for allowing the entry into the market of new private enterprises. The aim was to foster entrepreneurial initiative and increase competition in a market traditionally dominated by publicly-owned firms, with substantial benefits both for energy-consuming companies and for the private end-user. This non-compliance with the 30% limit is very serious and would seem to be a betrayal of the spirit and principles which underpinned the process of liberalization in the energy sector, besides producing market distortions. Publicly-held companies which have abided by the limit have had to follow expansion policies based exclusively on internal growth while those which have ignored it have been able to grow by acquisition, a much faster and less onerous process.
Finally, it is the Authority's view that the wording of the decree has been a factor in bringing about this situation: applicable penalties are not defined for violation of the provision's limit or timeframe, nor is the entity responsible for applying the penalties identified. Also, the duration of the threshold is expressed as ‘at least five years’: this is a minimum and indefinite term and does not require a check on whether the conditions still subsist which the decree was intended to regulate.
Rome, 8 July 2006