EC Objects To Planned Suez-Gaz De France Merger

by Ulrika Lomas, for LawAndTax-News.com, Brussels

24 August 2006

The European Commission announced recently that it has adopted a Statement of Objections regarding the merger project between Suez and Gaz de France.

The document, which presents the preliminary results of the in-depth investigation carried out by the Commission, identifies competition problems with regard to the following markets:

• Gas markets in Belgium;
• Electricity markets in Belgium;
• Gas markets in France; and
• The market for district heating in France.

The Commission will take a definitive position only once the parties have given their views on the Statement of Objections and, if relevant, on any remedies proposed.

Earlier this year, however, it seemed unlikely that the Commission would act in the matter.

The proposed alliance greatly angered the Italian government, which viewed it as an attempt to prevent Italian energy provider Enel from gaining a stronger foothold in France by absorbing Suez.

Italy's Finance Minister, Giulio Tremonti in March met with EC Competition Commissioner Neelie Kroes at the Commission’s Brussels headquarters to discuss the matter.

Speaking on French radio at the time, Europe's Justice Commissioner, Franco Frattini appeared to dampen the hopes of the Italian authorities for immediate EC intervention, observing that although the move represented "a blow against the spirit of the European common market", it did not appear to be illegal under European law.

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