On 16 October 2015, the Chamber of Slovenian Competition Protection Agency (hereinafter: AVK) issued a decision authorizing the merger of GEN-I and Elektro energija, a subsidiary of Elektro Ljubljana. The decision of AVK means that AVK does not oppose the notified concentration of the above mentioned companies and that it is compatible with the competition rules, taking into account the corrective measures - the commitments set out in the decision. This decision is the final step of a ten-month procedure assessing the conformity of the merger with the competition rules. The procedure started immediately after the Letter of Intent regarding the merger of GEN-I and Elektro energija was signed.
Therefore, the favourable decision by AVK gives a green light to start the proceedings of a lengthy merger process which will take place in several phases: first, GEN-I shall thoroughly review and then assess Elektro energija operations. First steps towards the merger are planned in the spring of 2016 when GEN-I shall become a 50 percent owner of Elektro energija through capital increase.
During assessment a number of GEN-I and Elektro energija commitments emerged which were adopted by the decision:
- Limitation of price rises for residential and small business customers for a period of 5 years from the date of the decision (at least 3 years unconditionally);
- Setting up a firewall to prevent any coordination of pricing policies, marketing and sales strategies and thereby to prevent the flow of commercially sensitive information to companies in Petrol Group;
- Establishing a continuous recording of selected market indicators of business with a view to ensuring AVK the possibility of ongoing monitoring of the retail market situation and the pricing policies of the merged company for a period of 5 years from the date of the decision.
GEN-I and Elektro energija are considered to be the largest players in the retail electricity market in Slovenia, but united they are expected to achieve approximately 41 percent market share with total annual sales of 5 TWh of electricity. Both companies shall supply a total of more than 350,000 Slovenian electricity customers.
Andrej Ribič, Chairman of the Management Board, Elektro Ljubljana: »We have been aware of the need to find a strategic partner for a long time, as the risks in the energy market faced by electricity suppliers have increased significantly. To preserve a strong local company, to retain its vision, knowledge and profit at home and to strengthen the company breakthrough to international markets, we had to merge with a complementary company. We believe that GEN-I is our best possible strategic partner.«
Dr. Robert Golob, PhD, Chairman of the Management Board, GEN-I, commented the AVK decision: »The merger of the two largest Slovenian suppliers shall activate the potential for further growth, particularly in international markets. By our joint teams of experts we will facilitate the development of innovative products for large volume customers in the wider international region, since both Elektro Ljubljana and Elektro energija have a lot of experienced personnel in ancillary services market. In addition, both companies support sustainable development and together we can make progress faster even in projects that we have already started.«
Mag. Bojan Kumer, Manager at Elektro energija, pointed out: »Our loyal customers are our priority. The merger will enable us to offer them higher quality services, affordable electricity and to expand the offer of natural gas. The merger and our synergies with GEN-I will help us reach competitive sources and enable significantly faster update of support systems which are the key to providing the best services.«