Clearance of Iberdrola/Scottish Power, with a sting in the tail

European Commission notice that Iberdrola's proposed acquisition of ScottishPower has been cleared under the EC Merger Regulation, on the grounds of the limited overlap between the parties' businesses and the strength of their competitors.

The merger clearance is without prejudice to the possibility that the deductibility for Spanish corporation tax purposes of goodwill amortisation and other items in relation to cross-border investments may be an illegal State aid.

The Commission values the overall tax benefit to Iberdrola at up to £800 million (10 per cent of ScottishPower's turnover), but does not disclose the split of that amount between existing aid schemes (which were in place before Spain's accession to the EC in 1986 and cannot be subject to recovery) and schemes which might have been introduced since 1986. Only the latter would, if in breach of Article 87, lead to a recovery of aid from Iberdrola. See the bottom of this SNP press notice for a summary of the Commission's position.

For further information or advice please contact Franck Latrémolière.

Filed under DG Competition, Electricity, Merger control, State aid.

Reckon LLP is an economics consultancy with expertise in data analysis, economic regulation and competition law.

About Reckon