KEHL AM RHEIN, Germany, March 3 (UPI) -- Several takeover wars are being waged in Europe, with governments scrambling to keep their domestic energy companies in national hands.
Italian energy company Enel has accused France of engaging in market abuse and discrimination against Enel that sabotaged its plans to acquire multinational competitor Suez. The allegations are laid out in a memorandum sent to Charlie McCreevy, the European Union's Competition commissioner. They all deal with a complex three-way web allegedly going on in the energy sector:
French water company Veolia recently pulled out of a merger with Enel; together, Enel says, they had wanted to take over Suez. However, Veolia claims it wasn't involved in the plan.
Soon afterward, state-owned Gaz de France announced it would merge with Suez in a $70 billion deal to create one of the world's largest energy companies.
The Italians say Veolia's withdrawal was only announced after several French politicians, including President Jacques Chirac, protested after the takeover plans became public.
Enel is tirelessly looking for foreign investments as it cannot expand at home for antitrust reasons. The Italians say EU competition rules were broken after Paris favored the domestic merger.
McCreevy's spokesman, Oliver Drewes, on Friday said the commissioner sent a letter to French authorities after it received the memo. He said the commissioner "wants to be assured that all information that could influence the market has been managed adequately and in the full respect of the principles of the internal market."
The letter was in no way accusatory, he said, it only intended to "establish some factual information about the sequence of events surrounding this merger."
Drewes said France had to answer by March 17.
The European Union roughly a decade ago opened its energy market -- national monopolies are unwelcome, despite the ongoing trend to join forces domestically and internationally.
German energy giant E.ON last week announced it wants to buy Spanish competitor Endesa.
The Düsseldorf-based company offered as much as 29.1 billion euros ($34.7 billion) in cash to take over Endesa, Spain's largest electricity company. Taking into account all of Endesa's existing liabilities, the total transaction volume amounts to roughly $66 billion.
The combination would create the world's leading power and gas company, serving over 50 million customers in more than 30 countries.
But Spain has been wary of E.ON's plans, with Madrid considering blocking the merger. The EU immediately warned Madrid not to violate EU laws.
The Spanish government would rather see domestic Gas Natural acquire Endesa, but such a move could only happen with substantial support from other companies.
This is where Enel came in and may have made a big mistake:
Fulvio Conti, Enel's chief executive officer, last week said he might step into the German-Spanish takeover battle, by backing the Gas Natural bid.
He then announced his desire to take over at Electrabel and, perhaps, the entire multinational Suez group.
Stephan Wulf, energy analyst at German private bank Sal Oppenheim, on Friday told United Press International via telephone Conti may have made a tactical mistake there.
"Gaz de France and Suez have thought about merging for a while," Wulf said. "Of course Conti's statement sounded the alarm bells in France and may have sped up the process."
He added France favors creating large companies to better position them in international competition.
"They want to create national champions who are able to meet companies like (Russian state-controlled energy giant) Gazprom on equal terms."
The EU has become increasingly frustrated over tendencies to protect the national market from foreign investments. Observers say the energy protectionism leads to higher energy prices.
In Germany, where four companies dominate the market, prices are among the highest in Europe.
Speaking to reporters on Wednesday, European Commission President Jose Manuel Barroso said: "We are not going to be able to meet ... the challenges that we currently face if we take a nationalist approach," he said. "... It is being united that gives us strength, not divided."
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(Energy to [email protected])
