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Electric utilities

Justice Department Blocks Exelon-Constellation Merger Over Competitive Concerns

Strategic Insights

— 1 min read

The U.S. Department of Justice announced that it will block the $7.9 billion merger between Exelon Corporation and Constellation Energy Group Inc. unless the companies divest three electricity generating plants in Maryland. The department's Antitrust Division filed a civil lawsuit to block the proposed transaction, citing concerns that the merger would substantially lessen competition for wholesale electricity in the mid-Atlantic region, leading to higher prices for millions of consumers.

Key Takeaways:

  • The proposed merger between Exelon Corporation and Constellation Energy Group Inc. would have created one of the largest electricity companies in the United States with total assets of $72 billion and annual revenues of $33 billion.
  • The merged firm would have owned between 22 and 28 percent of the generating capacity in the densely populated mid-Atlantic area, giving it significant market power to raise wholesale electricity prices and reduce output.
  • Under the terms of the proposed settlement, the merged firm must divest three electricity plants: Brandon Shores and H.A. Wagner in Anne Arundel County, Md., and C.P. Crane in Baltimore County, Md., which provide more than 2,600 megawatts of generating capacity.
  • Exelon Corporation was incorporated in Pennsylvania and had $18.6 billion of revenues in 2010, while Constellation Energy Group Inc. was incorporated in Maryland and had $14.3 billion of revenues in 2010.

Statistics:

  • The proposed merger would have created a company with total assets of $72 billion.
  • The merged firm would have accounted for between 22 and 28 percent of the generating capacity in the mid-Atlantic region.
  • The three electricity plants to be divested provide more than 2,600 megawatts of generating capacity.
  • The combined annual revenues of the two companies would have been $33 billion.

Sources:

  • "Department of Justice Requires Divestitures In Connection With Exelon Corporation's Acquisition of Constellation Energy Group, Inc.," U.S. Department of Justice (January 2011)
  • "Competition in Wholesale Electricity Markets is Vital to the Economic Well-being of Consumers and Businesses," Statement of Sharis A. Pozen, Acting Assistant Attorney General for the Antitrust Division, U.S. Department of Justice (January 2011)

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