The proposed merger of Gaz de France and Suez, the energy groups, would undermine competition in electricity and gas markets in France and Belgium, according to the preliminary findings of market regulators.
The European Commission confirmed over the weekend that it had sent a confidential statement of objections to the two French groups, detailing its concerns.
Brussels said it had told the groups that their tie-up would harm healthy competition in at least four markets, focusing on the areas where the two have overlapping businesses: gas markets in Belgium, especially "trading and the supply to different customers"; electricity markets in Belgium, especially electricity "production and wholesale, trading and the supply of different customers"; gas markets in France, especially "trading and the supply of different customers"; and the French market for local heating networks, or "réseaux de chaleur".
The commission stressed that its findings would not prejudice the final outcome of its inquiry, which is due to end on October 25th.
EU rules overseen by the competition commissioner Neelie Kroes hold that it is now up to the parties to either change the regulator's mind or to propose ways of addressing the commission's concerns, for example by means of asset disposals.
A spokesman for Suez said the group would not, at this stage, propose remedies to the concerns raised by the commission, but would be in discussions with the regulators.
"We have put forward a project with real industrial logic, a project that is essentially pro-European and pro-competition, not nationalist," he said.
Suez also argues that the project will help the European energy market tackle concerns over energy supply.
A Gaz de France spokesman was not available for comment yesterday, but said on Saturday that it was too soon to give a reaction. He added: "We're still confident the merger will succeed; it's a good project both for French people and for Europe."
Members of the French parliament are being called back early to debate a new law, needed for the state to cut its stake in GdF below 70 per cent, in a special session on September 7th.
- (Financial Times service)
