Justice Department Requires Additional Divestitures to Resolve Competitive Concerns Regarding Exelon-PSEG Merger

Introduction

Almost a year after the Federal Energy Regulatory Commission (FERC) approved the $16 billion merger between Exelon Corp. (Exelon) and Public Service Enterprise Group, Inc. (PSEG), the U.S. Department of Justice (DOJ) announced that it will require the merging parties to divest six fossil-fuel fired electricity generating plants with a total capacity of approximately 5,600 megawatts (MW) to resolve concerns that the merger would likely cause higher prices for electricity in the mid-Atlantic region.  The enforcement action is significant for several reasons:

• First, based on the theory of competitive harm sketched out in DOJ’s Complaint, this enforcement action appears to be the first case brought by DOJ against an electric utility merger to prevent potential anticompetitive conduct that may arise from so-called “fuel-curve effects.”