HOUSTON, Feb. 9, 2001—The European Commission approved the acquisition of Energie Baden-W�rttemberg AG (EnBW), Germany’s fourth largest power company, by Electricit�e France (EDF) and Zweckverband Oberschw�sche Elektrizit�werke (OEW), an association of nine southwest German districts.

To win approval of the transaction, EDF made a number of concessions. Mario Monti, commissioner for competition policy, said EDF’s commitments open the way for the development of a competitive electricity market in France and offset the anticompetitive effects of the merger.

To eliminate concern the acquisition would strengthen EDF’s already dominant position in France, the French government-owned utility agreed to make 6,000 MW—or 30% of the eligible market—available to competitors for 5 years. Access to capacity will be granted via auctions by EDF under the supervision of a trustee.

EDF also agreed to forego exercising its voting rights in French electricity generator Company Nationale du Rh�ne (CNR) and to withdraw its representative from the CNR board of directors.

Finally, the parties agreed to sell EnBW’s 24% shareholding in Swiss electricity company WATT AG. The commission said these commitments remedy its competition concerns and cleared the way for the acquisition to go forward.

Through its subsidiary EDF International (EDFI) EDF has holdings in electricity companies throughout Europe. OEW holds shares in companies active in European markets. EDF reported on Aug. 30, 2000, it would acquire 34% of EnBW gaining joint control with OEW.

The commission said the acquisition’s biggest impact would be on French industrial customers that consume more than 16 Gw-hr/year and are free to choose an electricity supplier under French and German law. Based in a area with a long common border with France, the commission said EnBW is one of the most likely potential competitors in the French market and would be one of the best placed companies to enter the market. Two of the four French-German interconnectors are in the EnBW supply area.

EDF could have used its Germany presence to deter actual competitors such as RWE, E.ON, and HEW from pursuing eligible Frnech customers, the commission said. Since those competitors do not have similar potential in France, they would be further discouraged from aggressively challenging EDF’s position in France, it said.

The commission also found that through EnBW, EDF would have strengthened its foothold in Switzerland and potentially eliminated WATT as a competitor in France.