EU merger veto to be appealed on Iberian market devlopment

Portuguese electricity giant EdP has appealed to the European Court of Justice against a European Commission ruling that vetoed a proposed merger between it and the country’s domestic gas giant GdP.

EdP had been blocked by the EC from buying a 51% stake in GdP, but its appeal puts it on a path to conflict with its majority stake holder, the government, now in the hands of the recently returned Socialist parliamentary majority. Jose Socrates, the Socialist leader who will shortly take office as prime minister, has consistently expressed his opposition to the previous government’s plans for EdP to diversify into gas.

The merger, proposed as the centrepiece of the restructuring of Portugal’s state-controlled energy sector, would have seen holding company Galp Energia selling a majority stake of GdP to EdP and the rest to Italy’s Eni. However, a key part of the EC ruling concerned EdP’s contention that it be judged in the context of an Iberian rather than a Portuguese market. The EC did not concur, saying the market does not exist yet and without it the merged group would simply dominate Portugal.