PRESS RELEASE

ENERGY: ANTITRUST BLOCKS CVA - COMPAGNIA VALDOSTANA DELLE ACQUE ACQUISITION OF ENEL'S 51% CAPITAL IN DEVAL AND VALLENERGIE. DECISION MAY BE RECONSIDERED IF VALLE D’AOSTA REGION SIMPLIFIES ITS USER DISCOUNT MECHANISM

The operation would have created a near-monopoly in the market for low-voltage retail energy sales to domestic and non-domestic clients. Advisory communicated to the Region: the fee reduction system for domestic clients constitutes an entry barrier for competitors.

Red light from Antitrust for Compagnia Valdostana delle Acque-CVA acquisition of Enel's 51% capital share in Deval and Vallenergie.

According to the Authority, the Vallenergie acquisition would have given CVA a substantial monopoly in the market for low-voltage retail energy sales to domestic and non-domestic clients in the Valle d'Aosta Region.  The firm would indeed have achieved a nearly 100% share in terms of the number of points served in the domestic market and a 90 % share in the non-domestic market for low-voltage connections.

The Authority also assessed these already-critical market shares in light of regional regulations that provide for, with respect to the rates for the most protected service, a 30% discount on the charges for the energy component (PED component) defined by the Electricity and Gas Authority. The users were granted this discount by the electricity providers and were then reimbursed by the Region on the basis of a specific Agreement. Only CVA and Vallenergie, however, have actually signed on to this Agreement, and the discount procedures for national operators entail an additional set of administrative fees that are disproportionally high relative to the actual market weight of the Valdostana clientele. For this reason the Authority sent an advisory to the Valle d'Aosta Region (whose financer Finaosta holds 100% of CVA capital and 49% of Vallenergie and Deval) requesting a modification of the discount mechanism. In order to reduce the competition-distorting effects, according to the Antitrust Authority, the Region would need to provide alternative subsidy-granting procedures, such as the stipulation of agreements with banking institutions (or directly with the financing agency - Finaosta S.p.A.) to permit for direct disbursement of the subsidy to consumers upon presentation of their bill. If the entry barriers for competitors were to be eliminated so as to present a different legal framework, the Authority would be able to reconsider its assessment of the acquisition.

During the course of the inquiry, CVA committed to freezing prices in the free market at particularly affordable levels for two years, with a possible extension to four. This measure, however, was deemed insufficient to achieve the longer-term elimination of the competitive issues underlying the operation, especially with respect to the Valdostana market's scarce contendibility and the legal barrier represented by the Agreement, as suggested above.

Rome - 8 August 2011