Antitrust Concerns Loom Over Vistra And Energy Harbor's Multi-Billion Dollar Deal

Vistra Corp. VST is under the scanner of the U.S. Justice Department, where the federal body has asked regulatory watchdogs to take a closer look at the company's planned $6.3 billion acquisition of Energy Harbor Corp. (announced in March).

The deal, which is likely to significantly boost Vistra's nuclear capacity, is considered a threat to fair competition, the justice department's Antitrust Division said in a filing.

"It is possible that the combination of Vistra's and Energy Harbor's nuclear and fossil-fuel plants in Ohio and Pennsylvania may substantially lessen competition and increase wholesale electricity prices," the filing read. 

In the recently reported Q2 results, Jim Burke, president and CEO of Vistra had said: "We also continue to progress towards a fourth quarter closing of the acquisition of Energy Harbor Corp. that we announced earlier this year, which will increase our nuclear generation to more than 6,400 MW."

Vistra and Energy Harbor currently compete in auctions run by PJM Interconnection, a regional transmission organization that manages the electricity grid for more than 65 million consumers. In PJM's auctions, market prices are determined by the prices offered by competing generators, including Vistra and Energy Harbor.

The proposed acquisition would combine different generating units with varying cost structures under the control of Vistra, enabling it to profitably withhold electricity from some of its generating units to raise market prices, the DoJ's Antitrust Division said.

"The Department has considerable expertise in examining competition in wholesale electricity markets, including bringing enforcement actions focused on stopping anticompetitive mergers..," the filing added.

However, the Department has not concluded whether the proposed transaction violates the antitrust laws. 

Price Action: VST shares are trading higher by 0.68% to $30.22 on the last check Friday.