Constellation Energy Resolves Antitrust Concerns Ahead of Acquisition

The recent settlement between Constellation Energy, the US Department of Justice, and the state of Texas addresses antitrust concerns arising from Constellation’s $26.6 billion acquisition of Calpine (United States, State of Texas v. Constellation Energy Inc., et al.).

By agreeing to divest certain power plants and a minority interest in another, Constellation removes the competitive constraints that regulators identified, writes Ethan Howland in Utility Dive. The agreement allows the transaction to proceed while maintaining market oversight.

The settlement’s context is regulatory review of the energy sector. Large-scale mergers reduce competition and influence electricity prices, and Constellation’s acquisition of Calpine, as originally construed, would create the largest U.S. wholesale power provider. That prompted the DOJ and Texas to raise concerns that Constellation could withhold power supply to inflate market prices.

The Federal Energy Regulatory Commission previously required the divestiture of four power plants in PJM’s Interconnection, totaling nearly 3,550 MW of generating capacity. The settlement builds on this framework, ensuring that facilities are sold or otherwise divested to address both federal and state regulatory concerns.

Under the agreement, Constellation Energy must sell six power plants and a minority stake in a seventh power plant within 240 days of the Calpine acquisition. The proposed settlement and the DOJ’s competitive impact statement will be published in the Federal Register, triggering a 60-day public comment period.

Once the divestitures are completed and the court approves the stipulation, Constellation will hold approximately 55 GW of diverse generating capacity, including nuclear, natural gas, geothermal, hydro, wind, solar, cogeneration, and battery storage. Calpine contributes roughly 27 GW.

For lawyers advising energy sector clients, the case highlights the need for careful pre-merger antitrust risk assessment and planning. It signals ongoing federal and state scrutiny of transactions that could affect competition in the electricity market.