July 19 (SeeNews) - Bulgaria's competition authority said on Thursday it has banned the sale of the local assets of Czech energy group CEZ to Sofia-based Inercom.
Inercom Bulgaria can appeal the ban before the Supreme Administrative Court in the next 14 days, the Commission for Protection of Competition (CPC) said in its decision.
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According to the regulator's analysis, the deal will lead to the establishing of a dominant position, affecting competition.
The deal is of a strategic importance for the country and its potential effects would have direct implications for national security, due to the the wide range of activities of the companies being acquired and their importance to the Bulgarian electricity system, the regulator added.
The competition authority said last month it received a request from Inercom to approve the purchase of seven local companies owned by CEZ Group.
CEZ assets in Bulgaria includes seven companies - power distributor CEZ Razpredelenie [BUL:3CZ], power supplier CEZ Electro Bulgaria [BUL:1CZ], licensed electricity trader CEZ Trade Bulgaria, IT services company CEZ ICT Bulgaria, solar park Free Energy Project Oreshetz, biomass-fired power plant Bara Group and CEZ Bulgaria, which manages and coordinates the operations of the group's Bulgarian units.
The price of the transaction was 326 million euro ($378.3 million), according to CEZ Group's annual financial statement published in March.
The contract between CEZ Group and Inercom was signed on February 23. The deal raised concerns about Inercom's ability to finance the acquisition, which resulted in the establishment of a parliamentary ad hoc committee with the purpose of looking into the deal.
Inercom Bulgaria was incorporated for the purpose of the deal with CEZ. It is a wholly-owned subsidiary of Sofia-based Inercom Investments, according to data from the Bulgarian commercial register. The company has a registered capital of 50,000 levs. Inercom manages six solar parks in southern Bulgaria with a total capacity of 23 MW and is also developing a project for a 80 MW solar park.
($ =0.8618 euro)