Merger deals a blow to European deregulation


Jean-François Cirelli,
Chief Executive,
Gaz de France
Paris, France — (METERING.COM) — September 4, 2007 – The merger of two major French utility businesses – Gaz de France and Suez – has dealt a blow to the European Union’s plans to deregulate the energy industry in the region. The EU has been attempting to break up the near monopoly power of the big energy utilities in many member countries for some years now, in an effort to increase a competitive supply and allow consumers free choice of energy supplier.

The new company, which will be known as GDF Suez, will be the fourth largest energy company in the world; Russia’s Gazprom is the largest, followed by Electricité de France and Germany’s E.ON. The French government will retain a 40 per cent stake in GDF Suez.

The EU is able to impose fines on utilities that are abusing their monopoly power by refusing smaller companies access to their distribution networks, but the strong support for this merger by the French government is not likely to make the Commission’s task easier. Some analysts believe, however, that the new natural gas giant created by the merger will lessen the hold that Gazprom has in the region. Gazprom currently supplies a quarter of the natural gas consumed in Europe, and its dominance is a cause of concern to many.

Suez’s water and environment business does not form part of the merger; it will become a separate company.

Jean-François Cirelli, Gaz de France’s chief executive, said at a press conference held by Suez and GDF on Monday: "Energy is a strategic sector for all states. Nowhere are governments completely absent from the energy sector."