Endesa (NYSE:ELE)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more Endesa Charts. Click Here for more Endesa Charts.](/p.php?pid=staticchart&s=NY%5EELE&p=8&t=15)
The following is a note from ENDESA:
ENDESA (NYSE: ELE) requested that the European Commission comment
on its own authority in the event of the concentration that would
arise from the hostile bid by Gas Natural in the conviction that,
under European law governing concentrations, the requirements of
necessary assumptions and right to determine the community dimension
of the operation had been met. The authorities have acknowledged on a
number of occasions the complex nature of the decision.
ENDESA also took this initiative with the aim, in defence of the
interests of its shareholders, of removing any uncertainty about the
regulatory authority that must review the operation and the conditions
under which it could, or could not, go ahead.
This measure was becoming particularly necessary in this case
given that Gas Natural had apparently not consulted the European
Commission about this point previously, as recommended in the best
practice guidelines published by the European Competition
Directorate-General.
ENDESA wishes to state that it has constantly shown a high degree
of transparency throughout this process, as can be witnessed by its
willingness to make available to the participating parties all of the
documentation submitted to the European Commission. This is in stark
contrast to the other procedures in which, claiming confidentiality,
ENDESA has not had access to a large amount of information submitted
by Gas Natural.
ENDESA will scrutinise the decision taken today by the European
Commission and consider making full use of the legal instruments
provided by European law. In any case, after a preliminary analysis of
the decision it is surprising that the Spanish anti-trust authority
has made various allegations throughout the procedure which are in
line with Gas Natural's declarations, of which ENDESA, as an
interested party in both the EU and the Spanish procedure, had not
been notified. Likewise, from a material standpoint, ENDESA's legal
counsel is studying the compatibility of this decision with EU Law.
In any event, ENDESA is firmly convinced that, regardless of the
authority that ultimately has jurisdiction over the matter, the
criteria, principles and rules to be applied in the examination of the
operation are clearly established both in European and national
legislation and in the precedents established by the numerous
decisions already adopted previously in similar cases by the various
European and Spanish anti-trust bodies.
In any event, ENDESA considers that the hostile takeover bid
launched by Gas Natural results in a concentration that seriously
threatens competition and that it faces major obstacles that make it
difficult for the anti-trust bodies to authorise under the proposed
conditions.
The concentration operation in itself and the agreement signed
with Iberdrola raise the following questions in terms of competition
law:
1.- It removes ENDESA from the natural gas supply and trading
markets, which, combined with ENDESA's CCGTs give it an 11-12% market
share, similar to (for instance) that of Spain's third largest
utility. It also strengthens the position of the main operator, which
boasts shares above 40% in all the natural gas markets (supply and
trading).
2.- It removes a major competitor in the power generation and
supply markets, with market shares of nearly 5% and major growth
projects and prospects.
3.- In all the electricity and natural gas markets involved, it
removes the most commercially aggressive competitors (ENDESA in gas
and Gas Natural in electricity) and those with the highest penetration
and growth.
4.- In the wholesale electricity generation market, it creates a
major duopoly between Iberdrola and Gas Natural, spawning a strong
mutual incentive for tacit collusion and abuse of market power.
5.- In the electricity and gas supply markets, the operation leads
to increased concentration in all segments. Specifically, its would
create regional gas and electricity distribution monopolies protected
by the control of the two networks and advantages in supply in Spanish
regions such as Catalonia, Madrid, Valencia, Murcia and Andalusia.
These account for 60% of Spanish gas demand and 55% of electricity
demand and are larger in size than Belgium, the Netherlands and
Austria combined.
For all these reasons, the operation would represent a serious
backward step of more than three years in the deregulation process of
the Spanish energy market, with negative implications for other
European Union countries and especially in the MIBEL. It will also
have major implications for consumers, with foreseeable rises in
energy prices that could not be offset by the scant synergies
generated from the operation or the commitments made by Gas Natural.
Moreover, the design of operation would dismantle the significant
position already attained by ENDESA in Europe, as well as destroy
value, to the extent that Gas Natural has plans to sell core assets in
this area without being subject to concurrent prices, which would
considerably hurt competition in Italy, Portugal and France and result
in the disappearance of one of the few major operators in the process
to create a single energy market in Europe.
* This document may contain certain forward-looking statements
regarding anticipated financial and operating results and statistics
that are subject to risks and uncertainties as well as to material
risks, changes and other factors which may be difficult to predict,
including, without limitation, those factors described in the
Documento de Registro de Acciones of Endesa filed within the Comision
Nacional del Mercado de Valores and in the Form 20-F of Endesa filed
within the Securities and Exchange Commission, both for the fiscal
year ended December 31, 2004. For all of these forward-looking
statements, we claim the protection of the safe harbour for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.