Main focus of Monday, February 27, 2006

The EU splits over energy

France this weekend announced the merger of Gaz de France and Suez, a tie-up that will spawn a French and European energy leviathan. This decision comes just a few days after Italian group Enel launched an initial public offering (IPO) for Suez, provoking the anger of the Italian authorities. They want to refer the matter to the EU on the grounds that it violates free-market rules. An affair that underscores the diffculties European states have in reconciling common policies with their particular interests.

La Stampa - Italy

"Economic journalist Mario Deaglio worries about the consequences for Europe of Italian energy company Enel's failed bid for the French group, Suez. "There is a new flu stalking Europe whose main source is in France. Unlike bird flu, there is no danger of this one claiming human victims, but it is just as dangerous in so far as it is capable of braking the vitality of economic growth. ... This virus manifests itself in different forms, but the result is always the same: it reduces competition. No vaccination exists and nobody feels like trying to to find one. The most recent victim is Enel, whose attempt to enter the French market has been blocked by a government that calls itself pro-free market and which has already torpedoed the buyout of a large French food group (Danone) by an American suitor." (27/02/2006)

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La Libre Belgique - Belgium

"The fact that it is Dominque de Villepin, the French prime minister, who announced the merger between Suez and GDF on Saturday is highly symbolic. This alliance between two listed French companies is more than simply a business transaction; it also sends a political message," argues Ariane van Caloen. "The interventionism of French politicians is in marked contrast to the Belgians' passivity. Through the various stages that led to the French buyout of Electrabel, we saw no reaction. Or very little. Who is right? Is there too much protectionism in France, or not enough in Belgium? If one believes in the virtues of the market economy, France clearly does not go about things in an optimal way for encouraging the creation of defenders of national interests. But one can accuse Belgium, for its part, of lacking any ambition and firmness." (27/02/2006)

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Le Monde - France

"While Europe is required to completely liberalise its electricity and gas markets by July 1, 2007, a question begs to be asked: is the emergence of giants refocused on their core activity and on the Old continent compatible with the creation of a large competitive market? The end of monopolies in several EU countries has cleared the way for the gradual establishment of an oligopoly dominated by a handful of players. Consolidation is continuing apace, with vertically integrated groups (from production to distribution) that are going to divvy up a maturing market of 450 million residents," explains the journalist Jean-Michel Bézat, who focus his analysis on the political dimension of these mergers. "Many governments - at times those of a liberal mindset - stress 'economic patriotism' and concerns over the security of supplies, even if this may be to the detriment of competition." (27/02/2006)

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Die Presse - Austria

This is the year 2006, and the European energy market knows no bounds. But is it really boundless? asks commentator Hannah Kordik. "The brazenness with which 'fusionitis' is now being combated truly knows no bounds. In Spain and France the issue of the impending takeovers has been referred to the bosses – and the true 'bosses' of the power supply companies are still sitting in the respective national governments. Europe's power companies remain securely in the hands of the governments of the individual states. And they're very creative when it comes to protecting 'national interests', for example by urging the individual power companies in their country to merge to form monopolies. And what about competition laws? Well, who cares? The main thing is that 'we reaffirm our global industrial commitment', as French Prime Minister Dominique de Villepin so nicely put it." (27/02/2006)

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