The Competition and Markets Authority (CMA) has given the green light to the planned asset swap deal between RWE and Eon.
The CMA launched a probe into the deal in February, after RWE filed details of the proposals for review.
According to the terms of the deal announced in March 2018, RWE will exchange its 76.8 per cent stake in Innogy for a 16.7 per cent stake in Eon, as well as Eon’s renewable portfolio and €1.5 billion in cash.
And Innogy’s renewable division will be returned to RWE.
Innogy owns the big six supplier Npower, which at the time was expected to be merged with the retail arm of SSE. However, the merger has since been cancelled, meaning the deal between RWE and Eon would leave the latter holding two of the big six – both its own namesake supplier and Npower.
In January this year, Eon confirmed that it did not expect “any material effect” on either the timing or delivery of the European major asset swap between itself and RWE after SSE and Npower decided against creating a new combined company.
“Post-merger, both entities will continue to be constrained by a sufficient number of credible competitors in both the wholesale supply of gas and electricity in GB,” the CMA report into the Eon/RWE deal states.
It also adds that RWE’s share in the wholesale supply of electricity and gas in GB will be “relatively small” after the deal goes through and it will have “limited” opportunities to exercise “unilateral market power in generation”.
“Accordingly, the CMA believes that the merger does not give rise to a realistic prospect of a substantial lessening of competition within a market or markets in the UK resulting from horizontal or vertical effects,” the report states.
“The merger will therefore not be referred under section 33(1) of the Enterprise Act 2002.”
The CMA has previously said it wants to better protect consumers through a series of proposals for new powers.
Proposals published by the CMA on 25 February included treating the interests of consumers as “paramount” and a new statutory requirement of the authority to conduct its investigations quickly.
A spokesman for Eon said: “We welcome the decision of the CMA. In addition, we are confident that we will receive the necessary approvals from the EU Commission for our planned acquisition of Innogy.”