EU Competition Policy Lies In Tatters

EU Competition Policy Lies In Tatters

If the U.K. is expected to abide by E.C. Competition rules then why can other member states get away with bending the rules to meet their own national interests?

The U.K. has long been following EU Competition rules to the letter allowing fully open opportunities for foreign ownership of its utilities. So much so that there are only two major British owned gas and electricity suppliers left, namely Centrica and Scottish and Southern Energy both of which have not escaped recent rumours of foreign takeover.

However, it would appear that when Europe talks about fully open and integrated markets it really means open for some but closed for others. Neelie Kroes, the European Competition Commissioner, made it clear that she would not tolerate the lack of cross-border competition in mainland Europe yet when she proposed that the only real solution to this problem was a break-up of the giant European utilities she was forced to accept a watered down version under severe pressure from the German and French governments.

Others, such as the Spanish, have not been quite so keen as the British to take the competition rules literally. So it was perfectly O.K. for Spanish company Iberdrola to take over Scottish Power but when the German giant Eon began to make moves for Endesa the protectionist tendancy of the Spanish government began to rear its ugly head. Despite the Spanish government being found guilty by the European Commission of imposing totally unfair conditions on Eon’s takeover bid Spanish company Acciona along with Italy’s Enel were able to conjure up a deal that would send Eon off with its tail between its legs. But if Italy’s Enel thought that it would be able to take control of Endesa through the back door it must think again as Spain is busy putting together further nationalistic obstacles which will restrict its future business options.

Graham Paul of independent and British owned electricity4business Ltd, the specialist supplier of business electricity to small and mid-sized businesses, finds it difficult to comprehend why German, French and Spanish governments who could all be classed at least one notch above the U.K. on the Europhile scale still insist on protectionism whenever their national energy suppliers are threatened with foreign takeover or a foreign energy company is seeking to gain entry into their markets.

“All that we ask is for a level playing field.” says Graham “If European legislation prohibits protectionist policies then all member states should abide by the same rules. The additional benefits to be gained by full European co-operation massively outweigh any sacrifice at national level. By fully opening European energy markets, for example, the status quo of having the price of gas pegged to the price of oil, for decades an added burden on European industry, could be altered in an instance enabling Europeans to compete far more favourably in global economies.”

And Spain has been active in other sectors too with recent takeovers of Abbey National and BAA in the U.K.. Part of the reason for such acquisitive behaviour lies in the tax breaks that are available to Spanish companies who buy abroad but are unavailable to other E.C. companies.

The downside of all this concentration fever in mainland Europe is that those who lose out must look elsewhere to fulfil their expansionist plans and there’s no easier location than the U.K., even when only two major indigenous gas and electricity companies remain. It’s not surprising then, that some analysts are suggesting that after its failed attempts to take over Scottish Power and then Endesa Eon may now turn its attention to Scottish and Southern Energy – and then there was one?