Sõnajalg brothers to appeal merger decision of first tier Tallinn court

Enefit wind turbine. Photo is illustrative. Source: Eesti Energia

Companies connected with brothers Andres and Oleg Sõnajalg intend to file an appeal against the judgment of the first tier Tallinn Administrative Court which upheld the Competition Authority's permission for a merger between Enefit Green and Nelja Energia to take place.

Andres Sõnajalg told BNS on Wednesday that where earlier there was an oil shale monopoly in Estonia that determined the price of electricity, now it just has been replaced by a renewable energy monopoly. 

"The energy monopoly misled the Competition Authority, and in the same way it misled the judge of the administrative court, who is lacking in erudition in the field of energy at least. While Estonia does have two energy interconnections with Finland via inverters, this is not a synchronized energy market that would function as a single price area," Sõnajalg said.

The Tallinn Administrative Court has left in force a decision of the Competition Authority which permitted a merger to be concluded between the Eesti Energia renewable energy subsidiary Enefit Green and Nelja Energia, a company acquired by Eesti Energia.  

Enefit Green AS and Nelja Energia AS, whose merger required regulatory approval, notified the Competition Authority of the merger in June 2018. 

The endorsement of the merger by the Competition Authority on November 6, 2018 was contested by the companies Eleon AS, AS Eesti Elekter, Eurowind OÜ, Vaivara Tuulepark OÜ, Roheline Elekter AS, Aidu Tuulepark OÜ, Audru Tuulepark OÜ and OÜ Estwind Energy.

The appellants wanted the decision of the Competition Authority to be cancelled and for the Competition Authority to eliminate the impacts of the concentration. 

The main contested matter was the definition of the relevant goods market that the merged Enefit Green AS and Nelja Energia AS are operating on. The Competition Authority found that the goods market for the production and wholesale of electric energy that the participants in the concentration are active on embraces geographically at least Estonia and Finland, for the reason that the wholesale of electric energy in Scandinavia and the Baltic countries take places mainly via the electricity exchange Nord Pool.

Considering also the interconnection capacities between Estonia and Finland, this means that in the generation and wholesale of electric energy business operators having generating assets in both Estonia and Finland are competing between themselves. The Competition Authority found that the merger of Enefit Green and Nelja Energia does not affect the goods market embracing Estonia and Finland in such way that there would be grounds for prohibiting the consolidation to protect competition.

The appellants meanwhile found that the Competition Authority has not taken into consideration all substantive circumstances when deeming Estonia and Finland a single geographical market.

The Tallinn Administrative Court on July 17 upheld the stance of the Competition Authority, dismissed the application of the appellants and left the decision of the Competition Authority unchanged. 

The court found that there are grounds to deem the situation that is true for the predominant amount of time as the real competition situation. For the predominant amount of time, electricity prices in Finland and Estonia are the same and electricity generated in Estonia can be freely obtained in Finland and vice versa. 

The uniform price also demonstrates that there are sufficient transmission capacities between Estonia and Finland. Therefore, it is justified to deem production and wholesale of electric energy in Estonia and Finland, which the merger of Enefit Green and Nelja Energia does not impact substantially, as the relevant goods market. 

The judgment of the first tier court can be appealed until August. 17. 


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Editor: Helen Wright

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