E.On Seeks Help on a Higher Level | Business| Economy and finance news from a German perspective | DW | 19.02.2002
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E.On Seeks Help on a Higher Level

After its planned merger with natural gas giant Ruhrgas was denied by Germany's anti-trust office, the utility concern has officially asked Germany's economic minister to overturn the decision.


The merger target

Germany’s utility concern E.On did on Tuesday what it had been promising all along and officially applied for ministerial approval in overturning a decision by Germany’s anti-trust office.

At issue is the acquisition of a 25.5 percent stake in Ruhrgas AG from British Petroleum. E.On and BP agreed on the transaction last June but met resistance in the German Anti-Trust Office.

The office, which most recently turned away American cable mogul John Malone, said a E.on-Ruhrgas merger would damage competition in the German energy market.

E.On is already dominant in Germany’s gas and electricity market, the office ruled. Merging with Ruhrgas, and its 60 percent share of Germany’s natural gas market, would only strengthen its position.

The Düsseldorf-based company maintains the advantages of a merger would reduce the potential reduced competition in Germany. Ruhrgas is Europe’s largest trader of natural gas.

A stake in Ruhrgas would ensure a strong German presence on the European energy market.

Decision-maker in favor of E.On

Experts have said the decision will be a political one, and interesting observation considering Germany’s Economics Minister Wener Müller is the cabinet’s only independent minister. What may have more sway is Müller’s connection to E.On. The economics minister worked for the company for 18 years and is on its payroll.

He has come out in favor of the E.On purchase, mainly because it would create a German presence in a energy market currently dominated by French and Italian firms. The merger would also allow E.On access to Ruhrgas technology and international markets, such as the United States.

The company made sure to note all of this in its application for ministerial permission.

The application is the 16th since the process was introduced in 1973. Of those, six have been approved, most recently the 1989 Daimler-Benz merger with the software and electronics firm MBB.

Companies have one month to apply for ministerial approval after the anti-trust office ruling. The economics minister then has four months to decide.

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