EU merger wars heat up

European commissioners are lining up to condemn Europe’s protectionist tendencies two weeks before EU leaders meet for a spring economic summit.

Economic liberalisation lies at the heart of the EU’s strategy to become a top class global economic player by 2010.

But a recent rash of intra-EU merger rows involving France, Italy, Spain, Germany and Poland have raised the spectre of a return to 1930s style protectionism.

Of particular concern to the European commission have a been a spate of energy merger battles pitting Germany against Spain and Italy against France.

Open energy markets are the key component to an EU energy policy tabled for the March 23 summit and Brussels is signalling a willingness to take on national capitals in the EU courts.

European competition commissioner Neelie Kroes warned that Brussels may break up energy companies that control both supply and distribution of energy.

“Bundling of generation, supply, pipelines, grids and distribution seems to be at the heart of the current market failure.”

“Personally, I find full structural unbundling quite tempting,” she told a Brussels conference.

Under existing EU directives energy companies are supposed to allow competition to rivals and to separate supply and distribution networks.

The barely veiled warning from Kroes is pointed at the controversial French driven merger of energy companies Gaz de France and Suez.

That merger is also under fire for the French government’s high-profile backing of the GDF tie-up and possible sabotage of Italian Enel’s bid for Suez.

Internal market commissioner Charlie McCreevy declared that Brussels would not stand “idly by” while government’s protected companies from takeovers by foreign competitors.

“Does anybody really think that I am going to turn a blind eye to the cosy old-boy networks between politicians and managers of companies?”

“If they do, they are living in a fool’s paradise,” he told a London meeting

Spanish economic affairs commissioner Joaquin Almunia argued the French economy is outdated.

But he claimed that the situation in France and Spain, which are both block foreign energy takeovers is different due to the "modernisation and privatisation" of Spanish firms 

Italian justice commissioner Franco Frattini told Le Parisien that EU states to focus on creating "European champions" to compete with China.

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