Nuon/Reliant and Nuon v. NMa (Merger analysis)

The Situation

Nuon, a leading Dutch energy utility with a large share of the local electricity and gas retail markets, wished to acquire rival Reliant Energy Europe, one of the major electricity generators in the Netherlands. On 2 April 2003, Nuon notified the Dutch competition authority, Nederlands Mededingingsautoriteit (NMa), of its acquisition of Reliant. The NMa concluded that the combination of the two companies' generation assets would create or strengthen a dominant position in electricity whole-saling. Nuon appealed the NMa's merger decision at the Court of Rotterdam.

NERA's Role

A NERA team led by Director Graham Shuttleworth provided several expert reports to Nuon, both during the merger investigation by the NMa and as part of the appeal. Much of the argument in the case surrounded the question of whether the NMa had applied the theory of non-coordinated effects, while the Dutch legal framework was still based on the dominance test. Unable to view the model that was built by the NMa's external consultants, NERA built a "shadow model" based on the model used by the NMa, and then investigated the properties of this shadow model. NERA concluded that the results of the model commissioned by the NMa were unreliable and that the NMa's interpretation of the results was ultimately arbitrary and ad hoc.

The Result

The Court of Rotterdam decided that the NMa had not provided sufficient evidence to support its case and annulled the NMa's decision. The NMa is appealing the judgement.