The European Commission has decided to impose a fine of 20 million euros on Electrabel, an electricity producer and retailer belonging to the Suez Group for acquiring control of Compagnie Nationale du Rhône (CNR), another electricity producer, without having received prior approval under the EU Merger Regulation.

The Commission concluded that the infringement lasted for a significant period and that Electrabel should have been aware of its obligation to receive Commission approval before proceeding with the acquisition. The EU Merger Regulation requires concentrations of a European dimension to be notified to the Commission before their implementation so that the Commission can examine whether a concentration would significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. This is known as the 'standstill obligation'.

Electrabel is a large company with more than 15.000 employees and experience in EU merger procedures and should have known that the 2003 transaction resulted in an acquisition of control requiring notification to the Commission under the EU Merger Regulation.

The acquisition of CNR by Electrabel was cleared by the Commission on 29 April 2008 under the EC Merger Regulation, following a notification by Electrabel on 26 March 2008.

However, the Commission had left open the precise date at which Electrabel had acquired control of the CNR within the meaning of the Merger Regulation, as this was not a factor in the substantive assessment of the concentration. The Commission has now completed its investigation on this issue and concluded that Electrabel already acquired de facto sole control of CNR in December 2003 which means more than four years before the notification.

In particular, by acquiring in December 2003 the shares of CNR held by EDF, the leading electricity producer in France, Electrabel became by far CNR's largest shareholder holding close to 50% of CNR's shares. The Commission's investigation found that due to the wide dispersion of the remaining shares and past attendance rates at CNR's shareholders' meetings, Electrabel enjoyed a stable majority at such meetings.

However in its assessment, the Commission has taken into account the fact that the transaction has not given rise to any competition concerns and that Electrabel subsequently voluntarily informed the Commission of the acquisition of control.