The Federal government has given official approval for E.On to take over the country’s largest gas import and transport company Ruhrgas at a price of r6 billion. The takeover would make E.On the largest German energy group. Granting the permit meant overruling the decision of the German cartel office in Berlin, and was counter to the recommendation of the monopolies commission. The permit was issued by the under-secretary of the Federal ministry for economics because the minister, Dr Werner Müller, was once employed by Veba, now part of E.On, and was therefore effectively disqualified.
The decision gives Ruhrgas the necessary clout to stand up to international competition in the German natural gas market. and is probably why the Federal government issued the permit against the recommendations of the regulating authorities. The government decided, however, that E.On and Ruhrgas have to sell their 42.1 per cent ownership of the gas supply company VNG and the electricity and gas distributor EWE and open up further its gas distribution and storage network. This will open up the market to active players Shell, Exxon Mobil, Gaz de France and Vattenfall.
Consumer groups said the merger would have disastrous consequences, making competition impossible and lead to enormous price increases.
