Mergers in Regulated Industries: Electricity
Dennis W. Carlton, EAG 07-16, December 2007
Mergers in any industry can raise complicated questions about the elimination of
competition and the achievement of efficiencies. Mergers in regulated industries such as
electricity raise even more complicated issues as the analyst needs to grapple with the
constraining effects of regulation, multiple levels of regulation, the ability to evade
regulation, and the desire for efficiency. This paper discusses the electricity industry in
general and one particular electricity merger that the U.S. Department of Justice (DOJ)
recently analyzed, in order to draw several lessons about the promotion of competition
through electricity mergers in the United States. The purpose is to stimulate discussion
with European counterparts to see what, if anything, Europe can learn from the U.S.
experience with electricity mergers and regulations.