The Department of Justice filed a civil antitrust complaint on December 5, 2025, in the U.S. District Court for the District of Columbia, alleging that Constellation Energy Corporation's planned acquisition of Calpine Corporation violates Section 7 of the Clayton Act. Joined by the State of Texas, the complaint claims the $26.6 billion deal would substantially lessen competition in wholesale electricity markets, potentially raising prices for millions of consumers in Texas and parts of the mid-Atlantic. The acquisition, announced on January 10, 2025, would combine two major electricity generators, creating the largest wholesale power producer in the United States. A proposed Final Judgment, filed simultaneously, mandates divestiture of specific Calpine facilities to restore competition. This development underscores ongoing federal scrutiny of consolidation in energy markets amid rising electricity demand from data centers and population growth.
Background and Key Players
The complaint centers on Constellation, a Baltimore-based firm with over 25,000 megawatts of generation capacity nationwide, and Calpine, a Houston-headquartered company specializing in natural gas and geothermal power. Constellation controls about 5,000 megawatts in the Electric Reliability Council of Texas (ERCOT) and over 20,000 in PJM Interconnection. Calpine adds roughly 9,000 megawatts in ERCOT and 5,000 in PJM. The deal involves CPN CS Holdco Corp., a Calpine subsidiary created for the transaction.
Electricity markets in ERCOT and PJM operate through day-ahead and real-time auctions, where generators submit offers and grid operators dispatch units from lowest to highest price to meet demand. The highest accepted offer sets the market-clearing price for all units. As the complaint notes, 'the combination of those assets would risk affording Constellation the opportunity to profitably raise the price of electricity for millions of citizens and businesses.' This reflects concerns over withholding strategies, where a firm might limit output from one unit to elevate prices benefiting its others.
Key players include the DOJ's Antitrust Division, led by figures like Acting Chief Patricia Corcoran, and Texas Attorney General Ken Paxton. ERCOT and PJM, as grid operators, are central to the markets affected.
Relevant Legal Precedents and Political Forces
Section 7 of the Clayton Act prohibits acquisitions that may substantially lessen competition. The complaint draws on precedents like United States v. Philadelphia National Bank (1963), which established presumptions of illegality for mergers creating high market shares. Here, post-acquisition, Constellation would control over 12 percent of ERCOT's capacity and more than 20 percent of its natural gas generation, often price-setting.
Politically, the case aligns with Biden administration priorities on antitrust enforcement in critical infrastructure, as seen in actions against mergers in tech and agriculture. Rising energy demands from AI and data centers, projected to increase ERCOT peak load by 72 percent from 2024 to 2030, heighten stakes. Texas's involvement as co-plaintiff emphasizes state interests in affordable energy, amid debates over grid reliability post-2021 winter storms. Perspectives vary: consumer advocates support the challenge to prevent price hikes, while industry groups argue consolidation aids efficiency and renewable integration. The DOJ avoids endorsing views but highlights potential annual consumer harms exceeding $100 million.
Market Dynamics and Anticompetitive Risks
In ERCOT, covering 90 percent of Texas's electricity, the acquisition would nearly triple Constellation's capacity to 14,000 megawatts, enhancing its ability to withhold output from gas plants, which set prices most of the time. The complaint states, 'the Acquisition would give Constellation a broader portfolio of assets that can be turned on and shut off more readily and quickly would enable it to more frequently and more strategically withhold electricity.' This could force higher-cost units to set prices, benefiting Constellation's lower-cost assets like nuclear and wind.
In PJM's Coastal Mid-Atlantic, constrained by the Nottingham transmission line, the deal adds mid-merit and peaking units, increasing withholding incentives. Constellation's nuclear plants would gain from elevated prices, as 'additional revenues received by Constellation's lower-cost generation units . . . would more than compensate for the lost profits from the generating unit(s) withheld.' Entry barriers, including long interconnection queues and supply chain issues, limit new competition, per the complaint's analysis.
Proposed Remedies and Implications
The proposed Final Judgment requires divestiture of Calpine's Jack A. Fusco and Gregory interests in ERCOT, and Bethlehem, Edge Moor, Hay Road, and York facilities in PJM. These must go to acquirers capable of effective competition, with a 240-day timeline post-acquisition. A divestiture trustee may be appointed if needed. Short-term implications include stabilized prices during transition, while long-term effects could foster market diversity but risk delays from regulatory approvals.
Different perspectives emerge: supporters see it preserving competition, critics worry about fragmented ownership complicating grid management. Without the remedy, prices might rise by over $100 million annually in Texas alone.
Key takeaways include the DOJ's focus on withholding risks in auction-based markets and the need for robust entry to counter consolidation. Potential next steps involve a 60-day public comment period under the Antitrust Procedures and Penalties Act, followed by court approval. Challenges may arise from regulatory hurdles or appeals, fueling debates on balancing competition with energy security amid growing demand. Ongoing monitoring by the DOJ and states will be crucial to ensure compliance and adapt to evolving market conditions.
