Commission clears joint venture between Canal de Isabel II and Hidroelectrica del Cantabrico


Brussels, Belgium, June 19, 2002 — The European Commission has granted regulatory clearance to a proposed joint venture between the Spanish companies Canal de Isabel II and Hidroelectrica del Cantabrico.

Through the newly created company, Canal de Isabel II, active in the supply and sanitation of water in the region of Madrid, and Hidroelectrica del Cantabrico, active in the electricity sector, will develop the activities of generation, distribution and supply of electricity in the region of Madrid.

The Commission’s market analysis has shown that the operation will not lead to any significant overlap of the companies’ activities neither in the wholesale nor in the retail market of electricity (i.e. the market for sales to eligible customers). With regard to the activity of distribution, the new company will be an alternative in the areas of new urban development, a market usually considered as a “natural monopoly”.

The Commission has also analyzed the competitive impact of possible supply of multi-utilities (supply of electricity, gas, water and telecommunication services) by the newly created company, but due to the small market shares of Hidrocantabrico in the supply of gas and electricity and taking into account that competitors will be able to offer similar products (although excluding the water), a creation or strengthening of a dominant position can be excluded.

Canal de Isabel II (CYII) is a public company which belongs to region of Madrid. It is active in the supply and sanitation of water in this region and is also present in the water sector in some Latin-American countries. CYII is also active through its subsidiaries in the supply of telecommunication services and in the electricity sector through Hidraulica de Santillana, both activities developed also in the region of Madrid.

Hidroelectrica del Cantabrico is controlled by Electricidade de Portugal, S.A., EnBW and Caja de Ahorros de Asturias. It is based in Asturias (Spain) and its core activities are the generation, distribution and supply of electricity. It is also active through its subsidiaries in the distribution and supply of natural gas in Asturias and in the supply of telecommunication services in the regions of Asturias and Castilla y Leon.

CYII and Hidrocantabrico will acquire joint control of a newly created company, which will develop its activities in the energy sector, in particular in the generation, distribution and supply of electricity to both tariff consumers (non-liberalised market) and eligible customers in the region of Madrid.


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