News & Analysis

Bulgaria’s anti-monopoly commission vetoes Inercom’s purchase of ČEZ

Bulgaria’s anti-monopoly commission has vetoed the purchase of ČEZ Bulgaria – and all of its subsidiary enterprises in the country – by the previously unheard of solar energy company Inercom.

The commission’s investigation concluded that such a deal would threaten market competition. It found that there was a horizontal overlap between the activities of the participants in the concentration on the market for the production and wholesale supply of electricity from photovoltaic power plants. In addition, the deal would have produced vertical effects on downstream markets, namely electricity distribution, supply, trade and trade-related balancing co-ordination services.

Intercom would have had a natural monopoly position in the market to carry out electricity distribution and supply. In parallel, ČEZ Electro Bulgaria AD and ČEZ Trade Bulgaria EAD form a substantial market share based on traded volumes of electricity in the free market.

Bulgaria’s ruling party, GERB, which was thought to have been behind the deal in the first place, were quick to point out that the decision was made by an independent state authority. Energy Minister Temenuzhka Petkova, a member of GERB, emphasised that Bulgaria is a country governed by the rule of law and that the competent organ in this case was the Commission on Protection of Competition.

The Sofia News Agency stated that: “In view of the wide range of activities of the acquired companies and their importance to the country’s electricity system, there is reason to assume that the current concentration is of strategic importance for the country and its potential effects would have a direct impact on national security.”

ČEZ Group approved of the decision to sell its Bulgarian enterprise and subsidiaries to Inercom on February 22, and the scandal forced energy minister Petkova to resign, as she personally knew the owner of Inercom, Ginka Varbakova. The resignation, however, was not accepted by Prime Minister Boyko Borissov and Petkova remained energy minister.

Inercom may appeal the decision to the Supreme Administrative Court within 14 days.