French clash over Suez-GDF merger

http://news.bbc.co.uk/go/rss/-/1/hi/business/5323122.stm

Version 0 of 1.

France's left-wing opposition has vowed to delay a bill that would approve the privatisation of Gaz de France (GDF).

If approved, the bill would make way for a controversial merger between GDF and rival French utility group Suez.

Socialists have filed a record 137,449 amendments to the bill amid claims a merger would drive up energy prices.

The European Commission (EC) has voiced objections to the merger since its main aim is to stave off a takeover of Suez by Italian rival utility Enel.

The Commission says the defensive move, which would create a French national energy champion, would stifle competition.

The French Parliament is set to discuss plans to cut the government's 80.2% stake in GDF to 34%.

"This law must not be passed and I think that it will not be between now and the presidential election," said Segolene Royal, the front-runner to be socialist candidate in next year's presidential election.

Hurdles

Experts claim that if all amendments tabled by opposition parties are discussed it could take more than eight years to pass the bill.

Left-wing lawmakers are hoping to delay the bill until at least January, close to the country's next election, thereby making it harder for the planned merger to go ahead.

However, Centre-right Prime Minister Dominique de Villepin could resort to rarely used governmental powers to push the matter through without a vote.

Suez, an industrial giant with interests in electricity and gas as well as water, was seen as a bid target for Italian utility Enel.

An all-French merger between Suez and Gaz de France, a key player in Europe's gas markets, would remove that threat.

'Protectionism'

Enel called on the Commission to launch a formal investigation into the merger plans and accused Paris of blatant protectionism.

The Commission has already raised objections to the planned merger, in particular voicing concerns about the effect it could have on electricity and gas markets in Belgium and France.

The companies have until 20 September to suggest potential remedies to the concerns ahead of an official European Commission ruling on the matter in October.

The planned deal is also under fire from Suez shareholders who are demanding better terms, claiming that the current merger offer of one GDF share per Suez share is too low.

Such complaints prompted finance minister Thierry Breton to warn that the tie-up would not go ahead if investors in the private sector group are "too greedy".