EDF / GE (nuclear steam power business) merger inquiry
| Date | 27 March 2023 |
| Decision Date | 27 March 2023 |
| Subject Matter | Mergers |
| Court | Competition and Markets Authority (EW) |
Anticipated acquisition by
Électricité de France SA of
the Nuclear Steam Power
Business owned by the General
Electric Company
Decision on relevant merger situation and substantial
lessening of competition
ME/7024/22
The CMA’s decision on reference under section 33(1) of the Enterprise Act 2002 given on
25 May 2023. Full text of the decision published on 26 June 2023.
Please note that [] indicates figures or text which have been deleted or replaced in
ranges at the request of the parties or third parties for reasons of commercial
confidentiality.
SUMMARY
1. Électricité de France SA (EDF) has agreed to acquire the nuclear steam power
business (GE Steam) owned by the General Electric Company (GE) (the Merger).
EDF, GE and GE Steam are together referred to as the Parties, and for statements
relating to the future, EDF and GE Steam are referred to as the Merged Entity.
2. The Parties are active in the nuclear energy sector, although they undertake
different activities within it. EDF develops and operates nuclear power plants in the
UK and globally, including the design and construction of nuclear reactors and
islands. Nuclear power plants have what is known as nuclear islands (where the
process of nuclear fission occurs) and conventional islands (where the steam
generated by nuclear fission is converted to electricity via turbines). GE Steam
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develops and manufactures the components of conventional islands for nuclear
power plants (in particular, steam turbine and generator packages or TGPs), and
provides servicing for these.
3. The Competition and Markets Authority (CMA) has assessed three principal
theories of harm:
(a) Input foreclosure in the supply of TGPs to nuclear reactor suppliers;
(b) Customer foreclosure in the supply of TGPs to nuclear reactor providers; and
(c) Customer foreclosure of steam turbine and generator servicing suppliers.
4. In relation to the TGP input foreclosure theory of harm, the CMA considered
whether the Merged Entity would have the ability to harm nuclear reactor developers
from entering the UK and competing against EDF by charging a higher price or
reducing the quality of TGPs, or refusing to supply TGPs, for (a) high-power
reactors (above 500MW) and (b) small modular reactors (less than 500MW) (SMR),
leading to a substantial lessening of competition (SLC) in the market for the global
design and construction of nuclear islands.
5. The CMA found that the Merged Entity would not be able to restrict the supply of
TGPs to EDF’s rivals since sufficient competition in the supply of TGPs would
remain after the Merger. For high-power reactors, rivals would have access to TGPs
from Doosan-Skoda, Mitsubishi Heavy Industries (MHI), Toshiba and Siemens. For
SMRs, rivals would have access to TGPs from those same suppliers as well as a
range of smaller suppliers such as Ansaldo and others. Therefore, the CMA found
that the Merged Entity would not have the ability to harm the overall competitiveness
of its rivals in the design and construction of nuclear islands. Therefore, there is no
realistic prospect of the Merger giving rise to an SLC on this basis.
6. In relation to the TGP customer foreclosure theory of harm, the CMA assessed the
extent to which the Merged Entity could harm GE Steam’s rival TGP suppliers by
restricting their access to EDF as a customer on a worldwide basis. The CMA found
that EDF is not a sufficiently important customer to TGP suppliers given EDF has a
small share in the design and construction of nuclear power plants worldwide (its
worldwide share is [0-5]%) and, in any case, EDF currently mainly uses GE Steam
as its supplier. Therefore, there is no realistic prospect of the Merger giving rise to
an SLC on this basis.
7. In relation to the servicing customer foreclosure theory of harm, the CMA
considered whether the Merged Entity would have the ability to foreclose rival steam
turbine and generator servicing providers by restricting access to EDF as a
customer, leading to a SLC in the markets for the supply of servicing for (a) steam
turbines and (b) generators in the conventional island in nuclear power plants in
Europe.
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