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OFT clears Centrica acquisition of British Energy stake unconditionally

The Office of Fair Trading has unconditionally cleared Centrica's acquisition of a 20% stake in British Energy - the UK's largest electricity generator with eight nuclear power stations. The transaction raised a number of potential competition issues. Complaints from industry participants focused in particular on concerns about the potential for effects on market liquidity and coordination between Centrica and EDF (which retains the other 80% of BE). However, these concerns were rejected by the OFT, which concluded that the transaction would not result in any anti-competitive effect.

CRA provided economic analysis on a number of issues raised by the transaction - in particular including detailed modelling of the potential for unilateral effects in the generation market, and the possible impact of the transaction on market liquidity. These analyses drew on CRA's extensive experience in electricity market modelling as well as our expertise in the empirical assessment of horizontal and vertical merger effects.

A team from CRA International's London and Boston offices advised Centrica throughout the pre-notification and OFT stages. The team, led by Diana Jackson and Giulio Federico, drew on CRA's experience in both competition and energy matters, and included Ugur Akgün, Rosalind Hunter and Clara Ruiz Prada in London, and Aleksandr Rudkevich and John Goldis in Boston.

The OFT's press release is available here and the full text of the OFT's decision is available here.

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