Bulgaria's anti-trust body reopens in-depth probe of Eurohold's buy of CEZ assets

Bulgaria's anti-trust body reopens in-depth probe of Eurohold's buy of CEZ assets

Bulgaria's competition authority said on Monday that it is reopeneing its in-depth probe into financial and insurance group Eurohold Bulgaria's deal for the acquisition of the local assets of Czech energy group CEZ.

In the reopened in-depth probe, the Commission for Protection of Competition (CPC) will follow certain mandatory guidelines set by Sofia Region Administrative Court, it said in a statement.

Interested parties have until September 29 to file statements regarding the effect of the deal on the respective markets, the anti-trust regulator said.

Last month, the Sofia Region Administrative Court said it cancelled a decision by the CPC to ban the sale of the local assets of CEZ to Eurohold Bulgaria. The court returned the case to the anti-trust body and requested it to conduct a new probe into the proposed deal in line with the court-prescribed guidelines.

The regulator published its decision on the deal just 14 days after announcing that it will carry out an in-depth probe of the deal, even though interested parties are allowed by law to file statements regarding the effect of the deal on the competition on the respective markets within a 30-day period, the court noted in its ruling at the time. It also noted that even though interested parties eventually did file such statements, they were subsequently dismissed without an analysis.

In October 2019, CPC decided to bar the acquisition of the local assets of CEZ by Eurohold Bulgaria, saying that combining the experience, the economic resources and market positions of the two groups in the electricity and insurance sector creates prerequisites for the notified deal to lead to the establishment or strengthening of dominant position.

"The funding for the deal has been secured by two global investment banks. Considering the target investment in the acquisition of CEZ Group’s companies, including the price of the deal, the purchase of the minority shares, the repayment of the debt of the acquired companies and the investment strategy for their development, a total amount of around 500 million euro ($596.9 million) would have been allocated in Bulgaria according to the holding’s estimates," Eurohold Bulgaria said in a statement following the CPC's decision at the time.

Eurohold Bulgaria also said it has submitted documents providing evidence that it and its units do not have a leading position in terms of suretyship insurance on the domestic market and do not offer suretyship insurance to electricity traders in Bulgaria.

In June 2019, Eurohold signed an agreement to acquire the assets of CEZ in Bulgaria for 335 million euro. The assets comprise power utility CEZ Distribution Bulgaria, power supplier CEZ Electro Bulgaria, licensed electricity trader CEZ Trade Bulgaria, IT services company CEZ ICT Bulgaria, solar park Free Energy Project Oreshetz, biomass-fired power plant Bara Group and CEZ Bulgaria.

As at 14:45 CET on Monday, Eurohold Bulgaria's shares traded 1.38% higher at 1.47 levs on the Bulgarian Stock Exchange.

By the same hour, CEZ Distribution Bulgaria shares traded unchanged at 220 levs. Shares of the other Sofia-listed CEZ unit, CEZ Electro Bulgaria, also traded flat - at 20,400 levs.

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