October 24, 2019 / 2:26 PM / 22 days ago

Regulator blocks Eurohold's buy of CEZ's Bulgarian assets

SOFIA (Reuters) - Bulgaria’s competition regulator on Thursday blocked insurance and financial group Eurohold’s 4EH.BB acquisition of the Bulgarian assets of Czech utility CEZ (CEZP.PR), saying the 335 million euro deal could hinder competition.

The regulator, which launched in-depth inquiry into the deal earlier this month, said the acquisition would give the new group a serious competitive advantage both on the energy and the insurance markets in the Balkan country.

“The economic strength and the market positions of the merging companies create preconditions for an establishment or an increase of a dominant market position of the new group as well as to significant hindering of the efficient competition on the relevant markets,” the regulator said in a statement.

The regulator argued Eurohold has a significant share of the market in insurance guarantees, while some of CEZ’s Bulgarian companies are active in energy trades, which require bank and insurance guarantees.

The decision can be appealed at court and Eurohold said in a statement its supervisory board would decide whether to do that.

This is the second time the anti-trust regulator has blocked CEZ’s attempts to exit Bulgaria, where it controls a power distributor providing electricity to over 2 million people, along other energy assets.

CEZ said Bulgaria was putting “obstacles” to the sale despite Eurohold being a respected company that has so far not done business in the energy sector.

“Finalizing the sale of Bulgarian assets in so unpredictable environment is a great challenge,” CEZ said in a statement.

Eurohold had earlier defended the deal, pointing out it does not have a leading market position in the insurance market of such guarantees and that deals between related companies were restricted and at times even banned by law.

Last year, CEZ signed a deal with a small Bulgarian energy company to offset its Bulgarian assets, but this was also blocked by the regulator.

Reporting by Tsvetelia Tsolova, additional reporting by Jan Lopatka in Prague, editing by Deepa Babington and David Evans

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