Power deals in peril
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April 14, 2000: 8:27 a.m. ET
EU would block Viag-Veba tie; German probe threatens RWE-VEW deal
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LONDON (CNNfn) - Antitrust officials Friday threatened to block two huge mergers in the German power industry, citing concerns that the deals would create a duopoly controlling 80 percent of the country's electricity generating and distribution market.
The European Commission, the executive arm of the European Union, said it would block the planned 14.3 billion ($13.7 billion) combination of diversified utilities Viag and Veba unless they addressed its concerns about the impact on competition.
The announcement came just hours after the German antitrust office said it would block RWE's planned 3.7 billion ($3.5 billion) takeover of its smaller domestic rival VEW.
The two deals would create Europe's two largest listed power companies, reflecting the pressure for consolidation since the European Union opened up the region's electricity market to broader competition was in 1999, sending prices tumbling.
The Commission is not due to issue a final ruling on the Veba-Viag deal until June 18, but its warning contrasts sharply with recent comments by the merger partners in which they expressed confidence they would secure regulatory clearance.
Veba (FVEB) fell 1.1 percent to 53.40 at midday in Frankfurt while Viag (FVIA) was off 2.2 percent at 21.15.
RWE said it was in talks with the Bundeskartellamt, Germany's antitrust authority, and expected to reach agreement within weeks, though it declined to give any details on what concerns the cartel office had raised.
RWE (FRWE) shares were little changed at 36.70 after the announcement. VEW (FVEW) was unchanged at 196.
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