In a bid to boost European consumer choice in the energy market, the European Commission is seeking increased powers over mergers, limiting member states' capacity to create "national champions."
In a report presented on 15 November, energy commissioner Andris Piebalgs and competition commissioner Neelie Kroes detected "serious malfunctions" in the functioning of the EU's energy market.
European consumer choice remains limited to national energy suppliers, Brussels found in its report.
Energy prices between member states differ substantially, and cross-border trade in energy is underdeveloped.
Commissioner Piebalgs put most of the blame on member states, attacking them for not sufficiently implementing key EU legislation in opening up energy markets by, for example, reserving infrastructure for energy imports.
Mr Piebalgs stated: "Member States need to quickly and fully implement the gas and electricity directives not only in letter but also in spirit."
He added: "The commission will continue to put pressure on member states to implement measures that are key to achieving a higher level of growth and competitiveness in Europe. If this does not happen, stronger action will be needed."
The commission in June 2005 took six recalcitrant member states to the European Court of Justice for disregarding its implementation deadlines.
Kroes seeks more powers
Meanwhile, competition commissioner Kroes attacked the abuse of dominant positions by national energy firms fencing off their markets for foreign competition.
"I am determined to use competition law to protect European industry and consumers," the commissioner stated.
Brussels is considering a revision of EU merger rules, in a move that would increase the commission's powers to rule over mergers at the expense of national competition authorities.
The commissioner mentioned the case of German energy firms E-On and Ruhrgas as a bad example of the creation of a "national champion" in the energy market, according to FT Deutschland.
The German government gave the green light for the merger in spite of advice to the contrary from German competition authorities.
Currently, Brussels can do nothing to prevent mergers if the companies receive more than two thirds of their turnover in one member state.
The commission will now consider a revision of this rule, the significance of which would go beyond competition in energy markets.
FT Deutschland notes that the move would mean a direct challenge to the general idea of "national champions," large firms fostered and protected from global competition by national governments.
The idea of "national champions" has recently gained ground particularly in France and Germany.
France's government recently intervened to prevent a buy-out of dairy firm Danone by the American company Pepsi.
By: N. Peter Kramer
