October 10, 2019 / 2:45 PM / 12 days ago

Competition watchdog to look into Eurohold's deal for CEZ's Bulgarian assets

SOFIA (Reuters) - Bulgaria’s competition watchdog will carry out an in-depth inquiry into Eurohold’s 4EH.BB planned 335 million euro ($369 million) deal to acquire the local assets of Czech utility CEZ (CEZP.PR), it said on Thursday.

Bulgarian holding company Eurohold, active in insurance and asset management, agreed the deal in June to acquire assets which include a power distributor that provides electricity to more than 2 million Bulgarians.

The Commission for Protection of Competition said Eurohold has a significant share of the market of insurance guarantees, while some of CEZ’s Bulgarian companies are active in energy trade, which requires bank and insurance guarantees.

The cost of such guarantees is significant and an economic barrier to entering the electricity market, while the new group will have a fast and financially beneficial access to such guarantees, which can provide it with a serious competitive advantage, the watchdog said in a statement.

“The deal, which involves particularly sensitive markets such as electricity trade markets, raises concerns about efficient competition,” the Commission for Protection of Competition said.

The watchdog has four months to evaluate the impact of the deal on the electricity market and decide whether or not to approve it.

Eurohold declined an immediate comment.

On Wednesday, Eurohold said it did not see any concentration issues and expressed hope that the acquisition can be sealed by the end of the year.

Last week, CEZ said that if the deal with Eurohold fails to get the necessary approvals it would not make another attempt to sell its Bulgarian assets.

In 2018, CEZ signed a deal to offload its Bulgarian assets to local energy company Inercom but the competition watchdog blocked it five months later.

Reporting by Tsvetelia Tsolova, editing by Deepa Babington and Elaine Hardcastle

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