European Energy Sector Caught In Heat Of Competition

European energy distribution companies are giants in world terms with strong European shareholder bases but are embroiled in bitter arguments over defense of national interests and EU policy for cross-border competition. Of the 10 biggest energy distribution groups in the world, eight are in Europe.

Among the factors driving takeover turmoil and a storm of controversy over competition policy is a long-established policy at EU level in favor of deregulation and cross-border competition. Many measures to open up the EU energy market are in place and further steps are to be made within 18 months. Some analysts have noted that this could be a factor behind current takeovers.

The EU wants to break down dominant national market players, the successors in many cases of former state-owned monopolies, to raise the dynamics of competition with the emergence of so-called European champions. It also wants increased transparency in the way energy markets work. Another goal is to strengthen the functioning of cross-frontier infrastructure such as electricity grids.

But as competition has penetrated across borders in many fields, from banking to steel, some governments have balked at the prospect of foreign European companies, and their international shareholders, gaining control of what had long been seen as pillars of national industry and pride. In some cases they prefer the option of "national champions" capable of benefiting from, and developing on, markets in the EU and farther a field.

Copyright Agence France-Presse, 2006

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