RWE Bids to Settle Anti-trust Case

RWE, Germany's second biggest utility, is considering selling its huge gas-pipeline network to settle an EU anti-trust case and avoid a hefty fine.

The German group and the European Commission have confirmed they are in talks about "possible measures" to end an investigation that began in May last year. It concerns the suspected exclusion of potential rivals from the market in RWE's home state of North Rhine-Westphalia.

The measures could include the sale of the utility's 7,000 km gas distribution network, or handing it over to an independent operator that would run it and control investments.

RWE's planned move follows a similar decision by its bigger German rival, Eon, to settle another anti-trust case with the commission. Eon confirmed this month it would sell off its 10,000 km power grid and 4,800MW of generating capacity.

The moves by Germany's two biggest energy groups are seen as undermining the fierce opposition of Angela Merkel's government to EU plans to break up large, integrated groups and free up markets for new rivals. The plans, which are designed to lower prices, are strongly supported by Britain and UK energy companies.

Last year, following raids in 2006, the commission said it suspected RWE of abusing its dominant position by raising rivals' costs and blocking new entrants from gaining access to capacity on its gas-transmission network.

Industry sources say the group could have faced fines running into several hundreds of millions of euros, as EU competition laws allow companies to be charged up to 10% of their relevant turnover if they are found to be in breach.

It could also have faced punitive damages claims from customers related to suspected overcharging over a number of years.