De Palacio’s liberalisation stance sparks policy query

Date: 24/05/01

By Peter Chapman

A LEADING MEP is demanding a statement from the European Commission after its energy and transport chief expressed views apparently contradicting its stated policy on liberalisation.

Loyola de Palacio said she feels that governments should be able to have a "safeguard" to stop the effective renationalisation of privatised utilities by state-owned foreign rivals.

The remarks, made in a recent interview with European Voice, highlighted the differences between her views and those of competition chief Mario Monti and single market commissioner Frits Bolkestein - both of whom are against such restrictions.

Wim van Velsen, vice president of the European Parliament's Christian Democrats and a member of the industry committee, says de Palacio's comments could at best confuse governments and, at worst, tempt them into defensive actions which could halt the EU's march towards opening-up energy markets.

"I like to see as much privatisation as possible. But liberalisation is not the same thing as privatisation. You can't stop cross border mergers and alliances," he said, adding: "When we are told to block [foreign take-overs] by dubious means then we are running the risk that no-one knows what to do."

Van Velsen fired off an urgent written question asking the Commission exactly what its policy is. The question was addressed to Monti, Bolkestein and de Palacio.

"If they don't answer in a satisfactory way the next step is to get Monti to come and talk about it in the industry committee," van Velsen said.

De Palacio's comments come ahead of a debate with fellow Commissioners on the issue, due before the summer break.

She was frustrated by a Commission decision last year to take Spain to court over its use of a domestic law that allows restrictions on shares held by foreign state-owned companies.

This has been used to stop units of French-state owned Electricité de France (EdF) from swallowing up a regional power company. It also effectively foiled a link-up between Telefonica and Dutch telecoms operator KPN.

De Palacio claims that governments are put in a political fix when foreign state-owned predators such as EdF, immune from take-overs, eye newly-privatised companies.

She believes effective safeguards will keep the liberalisation process on track, even if they lead to fewer mergers and acquisitions.

Tempers frayed even more on the issue late last week when it emerged EdF was casting its net even further.

The company bought a 3.9% share in Italian energy holding company Montedison, prompting strong concerns in Rome.

Meanwhile, Madrid has asked the Commission for jurisdiction over a €1.8-billion bid by Germany's Energie Baden Würtemberg - 34.5% owned by EdF - for 60% of regional energy company Hidroélectrica del Cantábrico.

A leading MEP is demanding a statement from the European Commission after its energy and transport chief expressed views apparently contradicting its stated policy on liberalisation.