AEM in Clearance of €8 Billion Deal to Control Italy's Second Largest Energy Company

Cleary Gottlieb represented AEM S.p.A., the Italian energy and gas utility, in its joint acquisition, together with state-owned French electricity company Electricité de France S.A. (EdF), of a controlling stake in Edison S.p.A., a company mainly active in the Italian electricity and natural gas industries. The transaction, valued at approximately €8 billion, fell within the exclusive jurisdiction of the European Commission. The Commission conferred the joint venture a Phase I unconditional clearance, which was initially unexpected.

The transaction was part of a broader set of arrangements reached at the political level and aimed at lifting the regulatory bans imposed by Italian legislative framework on the possibility for EdF to acquire control over an Italian electricity company. Particularly, under a Memorandum of Understanding signed by EdF and the Italian state-owned and former Italian electricity monopolist Enel S.p.A., Enel was finally allowed to “enter” the French electricity market by, among other activities, participating in the construction of an innovative nuclear plant in Normandy.

The Commission’s analysis involved complex substantial issues, including a possible market definition as well as the creation of a collective dominance in the Italian wholesale electricity market between Enel and the entity resulting from the transaction. AEM convinced the Commission that the cumulative conditions set forth in the Airtours case for a finding of collective dominance were not present in this case.