European Commission Investigating GE-LM Wind Power Deal

The European Commission (EC) is reviewing the acquisition of LM Wind Power by GE to determine whether GE filed misleading information regarding its offshore wind technology plans during the review of the acquisition. 

The EC approved unconditionally approved the deal only two months ago, concluding that the deal would not result in a significant reduction in competition in the EU’s Single Market.

However, the commission is now examining information given by GE during the review that implied the company did not have plans for rolling out next-generation offshore wind turbines with a capacity of up to 12MW, while the EC subsequently found out the company did have such plans, according to Bloomberg.

The investigation could result, among other sanctions, in GE paying a penalty of up to 1% of its annual sales.

GE produces onshore and offshore wind turbines, while LM Wind Power designs and manufactures blades that are sold to GE and its competitors as a component for the wind turbines.

During the review prior to the approval of the acquisition, the commission’s investigation focused on the effect of the transaction both on the upstream market for the manufacture and supply of wind turbine blades, as well on the downstream markets for the manufacture and supply of onshore and offshore wind turbines.

GE has a relatively small market share in both onshore and offshore wind turbines, the commission said. Although LM Wind Power has a significant market share, the commission found that its market position has been decreasing in the past few years and in-house blade production also has to be taken into account.

Based on the results of its market investigation, the commission concluded that competitive concerns would be unlikely to arise after the transaction because GE would not be in a position to significantly affect the upstream market. In particular since competing blade manufacturers would continue to have access to wind turbine manufacturers other than GE.

In relation to the downstream markets, GE would continue to face significant competition from other major turbine manufacturers, such as Siemens, (MHI) Vestas, Nordex and Senvion, who either manufacture their blades in-house and/or are not dependent on LM Wind Power for supplies, the commission said in March.