Areva to face inquiry if it wins UK nuclear contract

Areva (Euronext: CEI) faces the threat of a competition investigation by the European commission if it wins a prized contract to build UK reactors.

The Guardian reports that detailed legal documents drafted by a competitor state that Areva will secure a market monopoly which should trigger a sector inquiry if the company wins the contest to build a reactor at the Wylfa site on Anglesey.

Horizon, the British nuclear joint venture owned by the German power groups E.ON and RWE, is also planning a reactor for Oldbury in Gloucestershire.

Horizon will decide the winner of the competition for Wylfa, in which Westinghouse, owned by Toshiba of Japan, is bidding against Areva. The document argues that awarding the contract to the world's largest reactor builder will have a detrimental effect on UK jobs.

"It will have a permanent and significantly negative impact on the UK nuclear industry, jobs, manufacturing skills, supply chains and SMEs. Westinghouse have pledged to 'buy where they build' and source 70 per cent UK content, Areva have existing supply chains in France and their UK commitment would be significantly less."

The document also warns that an Areva win would tie up the British nuclear market because France's state-owned EdF, a minority shareholder in Areva, is the dominant player in the UK nuclear sector. When EdF took over British Energy in 2008, it was ordered to divest the Wylfa and Oldbury sites that could house Areva reactors if they are built.

"If … Horizon select an Areva reactor for the Wylfa power station, then Areva would have complete dominance in the UK nuclear reactor market. Given EDF and Areva's common ownership, EDF would have the same control of UK nuclear sites as [when] it was made to divest the sites at Wylfa and Oldbury in 2008."

Adding that Areva is already the reactor choice for EDF, the document states: "If Areva are the reactor choice for Horizon this would foreclose the market to competition."

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