Italy raises stakes in EU energy row

Italy should create its own national champion to effectively block foreign takeovers in the energy sector, former European commission president Romano Prodi has said.

Prodi, who is currently vying to replace Italian Prime Minister Silvio Berlusconi, said that he would back a merger of former state energy monopolies Eni and Enel, mirroring the deal between French energy giants Suez and Gaz de France agreed last week.

The rapidly agreed French merger was prompted by the threat of a hostile takeover bid for Suez by Enel, and has sparked fierce criticism in Italy.

But Italian finance minister Giulio Tremonti has ruled out a merger between Eni and Enel, and has distanced himself from calls for ‘tit-for-tat’ reprisal measures against French companies.

But Rome remains concerned about the legality of the French move, in particular with regards to EU rules on the free movement of capital.

Internal market chief Charlie McCreevy told Tremonti that he would continue to monitor the situation.

The Irish commissioner has warned of the threat from the “strong wind of protectionism” blowing across Europe, a sentiment echoed by Italian justice commissioner Franco Frattini, who weighed into the debate on Tuesday.

“What is currently happening in several European countries is a new act of protectionism and should therefore be rejected,” he told the Italian press.

McCreevy is already considering whether to take action against France over new rules introduce late last year protecting companies in certain “strategic sectors” from foreign takeovers.

The commission is concerned that the new law is not compatible with rules on the free movement of capital, and is expected to begin infringement proceedings against Paris.

But France is not the only country moving towards greater protectionism. Spain is attempting to block the takeover of energy group Endesa by Germany’s Eon, while Luxembourg is opposed to Mittal Steel’s bid for Arcelor.

McCreevy has also criticised Polish moves to block a merger in the banking sector that has already been approved by Brussels.

• Previous article
• Next article