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The Impact of M&As on the Competitive Positioning of European Energy Firms and Market Power Concentration on EU National Energy Markets

Author

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  • Natalia Wasilewska

    (Department of Economics and Finance, Jan Kochanowski University of Kielce, 25-369 Kielce, Poland)

  • Mirosław Wasilewski

    (Department of Finance, Warsaw University of Life Sciences-SGGW, 02-787 Warsaw, Poland)

  • Serhiy Zabolotnyy

    (Department of Finance, Warsaw University of Life Sciences-SGGW, 02-787 Warsaw, Poland)

  • Dmytro Osiichuk

    (Department of Finance, Kozminski University, 03-301 Warsaw, Poland)

Abstract

By studying M&A deals completed by European energy and power companies between 2002 and 2021, the paper inquires into the impact of corporate consolidation on the competitive positioning of individual energy firms and the concentration of market power on the national energy markets in the EU countries. Our evidence suggests that the European energy market may be moving towards a greater concentration of market power as market leaders are shown to primarily acquire their peers from national markets, while outsiders are more likely to diversify into non-energy sectors, which may further endanger their competitive positioning in the future. We also find that M&As allow energy and power companies to substantially increase their market share within national markets. The said impact is stronger in case of cross-border deals, including those within and outside of the EU. At the same time, only cross-border deals are associated with sufficiently strong revenue growth to advance firms’ relative positioning within national markets. The relative positioning of firms in the EU market remains unaffected by M&A activities, which may be indicative of extreme rigidity and segmentation of the EU market. While at the country level, M&As are found to contribute to a reduction in market concentration measured by a number of indicators, this negative link is documented to be entirely driven by non-core acquisitions involving targets from non-energy industries.

Suggested Citation

  • Natalia Wasilewska & Mirosław Wasilewski & Serhiy Zabolotnyy & Dmytro Osiichuk, 2022. "The Impact of M&As on the Competitive Positioning of European Energy Firms and Market Power Concentration on EU National Energy Markets," Energies, MDPI, vol. 15(23), pages 1-19, November.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:23:p:8798-:d:980455
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