The Economic Analysis of Energy Mergers in Europe and in Spain

This article surveys, from an economic perspective, the recent application of merger control in the European energy sector. It considers ten significant transactions in the energy sector: the eight largest energy transactions assessed by the European Commission since 2004, as well as two major gas-electricity mergers in Spain over roughly the same period. Merger decisions in the energy sector have been characterized by a significant concern for potential horizontal unilateral effects, even in situations where the merging parties accounted for a limited combined share of the market, or where one of the parties was only a small competitor. A variety of non-horizontal concerns have also been considered by the competition authorities, including effects flowing from the increasing use of gas for electricity generation or from limited ownership unbundling of network assets. Remedy packages have typically included extensive structural divestments to remove competition concerns. Given the nature of competition in energy markets, particularly effective remedies are those that involve the sale of price-setting generation plants, network assets, and controlling stakes in merging parties' competitors