E.ON and RWE, which controls Innogy, are major energy companies based in Germany. They are active across the energy supply chain, from generation and wholesale to distribution and retail supply of electricity and gas. The two companies are engaged in a complex asset swap. Following this asset swap, E.ON will focus on the distribution and retail supply of electricity and gas, whereas RWE will be primarily active in upstream electricity generation and wholesale markets.

As part of the asset swap, E.ON would acquire the distribution and consumer solutions business and certain electricity generation assets of RWE's subsidiary, Innogy.

The EC approved February 26 another part of the asset swap, allowing RWE to buy E.ON's renewable and nuclear power-generation assets.

The EC's initial investigation has shown that the parties have a strong combined market position in several retail markets on a national or sub-national level in Germany, the Czech and Slovak republics and Hungary. The deal would "remove a significant competitor in the retail supply of energy in these four member states," it said. 

As a result, competition might be insufficient to constrain the enlarged company's market power. 

The EC was informed about the deal in January and E.ON and Innogy decided not to submit commitments during the initial investigation to address the EC's concerns.