A blocked takeover in the Polish power sector: A model-based analysis

As the President of the Office of Competition and Consumer Protection refused to approve a government initiated takeover in the Polish power sector and the Court of Competition and Consumer Protection did not make a ruling on that case, the takeover was finally prohibited. In this context, the main aim of this paper is to carry out a quantitative analysis of the impact of the takeover in question on electricity prices and quantities, consumer and producer surpluses, dead weight loss and emissions. The scope of the study covers the Polish power generation sector and the analysis was carried out for 2009. A game theory-based electricity market equilibrium model developed for Poland was applied. The model includes several country-specific conditions, such as a coal-based power generation fuel-mix, a large share of biomass co-combustion, etc. For the sake of clarity, only four scenarios are assumed. The paper concludes that the declared synergy savings did not compensate for the increase in dead weight loss and the transfer of surplus from consumers to producers caused by increased market power. - Highlights: • A takeover blocked by the President of the Office of Competition and Consumer Protection was analysed. • A game theory-based model of the Polish wholesale electricity market was applied. • The impact of the takeover on electricity prices and generation levels, surplus transfers and dead weight loss was estimated. • The results were compared with the declared synergy savings