The Authority for Protecting Economic Competition (APEC) has approved the interconnection between CEZ and distribution companies

Today, CEZ Power Company received a favourable verdict from the Authority for Protecting Economic Competition, concerning the planned merger between CEZ and the distribution companies, which had already been approved by the Czech government. The positive verdict was accompanied by several conditions. CEZ had not been previously acquainted with the text of the approving decision.

Conditions for carrying out the transaction

CEZ shall transfer the remaining 34% shares of CEPS that it will be still holding after the transaction, within one year.

Through this transaction, CEZ shall acquire a minority 34% share in JCE (South Bohemian Power Company), JME (South Moravian Power Company) and PRE (Prague Power Company), within one year

Within one year, CEZ shall transfer its entire newly acquired majority share in one of the following five distribution companies: SCE (North Bohemian Power Company), ZCE (West Bohemian Power Company), STE (Central Bohemian Power Company), VCE (East Bohemian Power Company) or SME (South Moravian Power Company)

By setting these conditions, APEC refuted the governmental plan concerning Czech power industry, devised in the original scheme of the merger between CEZ and the distributors. Moreover, the short period of time, within which the respective shares need to be transferred, will in reality only result in depreciating the equity held by the current CEZ shareholders, in favour of the foreign acquirers.

One might find it surprising that the decision of APEC is contradicting its own previous decision in the matter of interconnecting Transgas with all eight distributors. In this case, the authority approved the establishment of a monopoly in the areas of supply, transmission, distribution and sales, in the entire Czech Republic.

It is difficult to grasp the difference between gas and electricity, as perceived by the APEC.

The formulated conditions cannot really surprise anyone, because they were announced in advance by one of the foreign investors in the Czech power industry.

The verdict does not reflect the current development in EU countries, e.g. in Austria, which is based directly on the pertinent EU directive.

Now we are going to thoroughly analyse individual parts of the decision, after which we will take a stand and decide about our next steps.

We assume that in order to comply with the conditions for postponement, we still have to wait for another verdict of the authority, related to this transaction.

Ladislav Kriz, CEZ Press Officer

11. 12. 2002