Suez-GDF merger seen as challenge to EU[fr][de] 

The Gaz de France-Suez merger, announced on 3 September, will create an energy giant worth around €70 billion, to become Europe's biggest purchaser and supplier of natural gas as well as its largest natural-gas distributor. 

Supporters say that the new entity will help ease Europe's concerns about ensuring the security of its energy supplies, by reinforcing France's position as a major player on European and global energy markets and reducing the bloc’s dependence on Russian gas. 

"The new entity will boost the energy supply safety, notably in gas, of France and furthermore of Europe," the French finance ministry stated. 

But critics are calling the deal – originally conceived to fend off a hostile bid for Suez from Italy's Enel – protectionist, as it will in effect create a 'national champion' in which the French state will retain control thanks to a minority blockade. 

They add that the merger runs counter to the Commission's ambitions of further liberalising the EU's energy market, because it will seal the domination of Europe's natural gas market by a handful of players, at a time when the Commission is seeking to break up this concentration of power by large companies (EurActiv 11/01/07). 

"The Gaz de France and Suez deal shows that the Commission's plans to really open the internal market to competition in the energy sector is going nowhere," said Christian Egenhofer, energy analyst at the Center for European Policy Studies, according to the International Herald Tribune.

According to the deal, which was brokered by French President Nicolas Sarkozy himself, Suez must first spin off 65% of its water and waste division (Suez Environment) to shareholders before swapping 22 of its energy shares for 21 of Gaz de France's. 

This differs from the original accord, announced in February 2006 (EurActiv 27/02/06), which foresaw a merger of all operations of the two companies, but had been stalled by political and shareholder objections. 

The new terms make the merger easier to swallow for the smaller, state-controlled GDF, as it will allow the French state to retain control of the new entity's strategy, thanks to a 35.6% share. 

"With 40%, the state keeps the control,'' said French Prime Minister François Fillon. "What is important is to have control. We have the control, we control the strategy." But unions are nevertheless unhappy about the privatisation. 

The companies still need to decide whether the structure of the deal has changed enough to resubmit it for a new EU antitrust review. 

"Thus far we have not received a new notification, but I would expect them to do rather a lot of homework before deciding whether to re-notify or not," Commission spokesman Jonathan Todd said, adding: "It's up to the companies." 

In the event that a company fails to notify a deal, it could face fines of up to 10% of its global revenue.