The European Commission said Wednesday it has decided to impose a fine of €20 million ($28 million) on Electrabel for acquiring control of Compagnie Nationale du Rhone (CNR) without prior commission approval.

Belgian energy company Electrabel, an electricity producer and retailer belonging to the Suez Group (now GDP Suez)has breached the EU Merger Regulation for acquiring CNR, another electricity producer, the Commission said.

Implementing a transaction which has not received the clearance foreseen in EU law constitutes a serious breach of the merger regulation, EU Competition Commissioner Neelie Kroes said in a statement.

Today's decision sends a clear signal that the Commission will not tolerate breaches of this fundamental rule of the EU merger control system, Kroes said.

The EU Merger Regulation requires acquisition of a European dimension to be notified to the Commission before their implementation so that the Commission can examine whether an acquisition would impede effective competition in the European Economic Area.

The acquisition of CNR by Electrabel was cleared by the Commission on 29 April 2008 under the EC Merger Regulation but the Commission found that Electrabel already acquired de facto sole control of CNR in December 2003,more than four years before the notification.

The Commission therefore concluded that Electrabel has breached its obligation not to implement its acquisition of control before obtaining the Commission's authorization, and that the infringement lasted for a significant period of time.

According to the Merger Regulation, the Commission can impose a fine of up to 10% of the aggregated turnover of the companies concerned for this type of infringement.

Electrabel is a large company with experience in EU merger procedures and it should have known that the 2003 transaction resulted in an acquisition of control requiring notification to the Commission under the EU Merger Regulation, the Commission said.