Electricity generator Energias de Portugal and Italian energy company ENI have failed in their attempt to jointly acquire Gás de Portugal, the country’s leading gas group. A ruling by the European Commission has prohibited the deal on the grounds that it would impede competition.

The EC says that after an in-depth investigation it found that the deal would have strengthened EDP’s and GDP’s dominant positions in their respective electricity and gas wholesale and retail markets in Portugal. This, concluded the EU, would have reduced the effects of liberalisation and increased prices for domestic and industrial customers.

EU Competition Commissioner Neelie Kroes detailed his reasons for rejecting proposals by EDP and ENI to reduce the anti-competitive impact of the planned acquisition. He said the companies “were not in a position to offer appropriate remedies to meet the Commission’s concerns that the most credible potential entrants in the markets concerned would be excluded and that the merged company would enjoy a quasi-monopoly in the Portuguese energy market”.

The EC says it analysis of the proposed merger concluded that the transaction would remove GDP’s potential to compete in the electricity markets and, with gas an attractive fuel in electricity generation, it would have power producers in Portugal dependent on their main competitor, EDP.

The Portuguese electricity market is open to competition. The gas market is due to be progressively opened, beginning with the opening up of supply of natural gas to power generators.