The European Commission approved on May 16, 2012 a merger control through a takeover by three powerful gas companies of an Angolan company, become a joint-venture, in the area of liquefied natural gas in Angola, because the access of the third-party to the system of regasification is preserved.

Context and Summary

© thejournalofregulation

 Complete reference: IP/12/487

BP (United Kingdom), Chevron (USA), ENI (Italy) and Total (France) companies formed the project to take shares of an Angolan company, to develop liquefied natural gas in Angola. Angola is rich in raw oil and natural gas which is a by-product.Natural gas is then cooled at-162 ° to become liquid, making it transportable and storable. Customers can go buy it in stocks or can it be delivered in liquid form in the world. Customers can receive the gas in a liquid form.

Gas can also come to regasification terminals where customers can take delivery as a gaseous form. It is therefore a complex activity, on a scarce resource, and involving many infrastructures: transportation, storage, regasification terminals. It is indeed not only to develop gas, but still carry the liquefied form, and then the re-gasifying for delivery, which involves infrastructure specialist. It is the only way to ensure that the industrial activity of the company can be anywhere in the world. If competitors are deprived of one of the segments of the value chain, it can make a full competition.

The joint venture, Sonangol, resulting from this takeover, is a merger control of companies, which means to submit the transaction authorization to the European Commission, because of its size.

The Commission first examines the market of gas liquefied himself and finds that the company will have only small market shares and will be face "credible competitors". In addition, and above all, it mentioned the maintain by the joint venture of the access to competitors of the regasification of gas. Accordingly, the Commission allows the joint venture in the area of natural gas liquefied in Angola between BP, Chevron, Eni, Sonangol and Total. 

It is here direct interference between competition law and regulation law, even outside of the fact that the law of merger control, being an ex-ante exercise, is more regulation and competition. Indeed, in a more specific manner, the Commission has indicated in its approval decision that: "Although three of the parent companies (Total, ENI and BP) hold capacity rights in the European economic area (EEA) regasification terminals, they will not be able to prohibit access to third parties, as the EU law ensures the access of third parties to the gas import infrastructure", including to regasification terminals.

"Thus, the creation of the joint venture does not change the capacity of the competitor’s access to this type of infrastructure. This is so because the European gas regulation sector law prohibits companies, so powerful they are, to use their market power, to reserve the use of gas, including terminals regasification import infrastructure, that by backlash, the concentration becomes possible. Thus, the regulation justified the decline of competition, as vigilance is already made ex ante.

Brief commentary

By a decision of 16 may 2012, the European Commission admits that Total, Eni and Chevron companies take over an Angolan gas operating company. This joint venture project passes the obstacle of the control of merger not only because the shares held on the market will be relatively low and competition will be thus preserved but also and especially, because of the gas sector regulatory, competitors have access rights to infrastructure companies' gas imports that companies are owners, including regasification terminals.