Suez deal faces twin attack

The French government is gearing up to do battle in Paris and in Brussels as the debate on the further privatisation of Gaz de France, a pre-condition for a merger with utilities giant Suez, gets under way in the opening session of its parliament today (7 September).

Not only is the ruling UMP party facing mounting objections from left-wing MPs over the reduction of the government’s stake in the utility company (from a minimum of 70% to 34%), it also risks incurring the wrath of the European Commission over plans for the conversion of its smaller stake into a golden share.

The golden share would give the national administration the power to oppose any decision made by the company or any of its subsidiaries involving a change of control that might work against national interests. A government document on the subject alludes to a 2004 European Court of Justice judgement approving the golden share held by the Belgian government in Suez subsidiaries Distrigas and Fluxys. "The [golden share] does not go beyond what is necessary," said a government source.

Suez appears happy with the idea. "Golden shares are not always a problem. They are not illegal," said spokesperson Guy Dellicour. But the Commission is unlikely to smile on the protectionist measure. Charlie McCreevy, the internal market commissioner, has stepped up action against countries such as Spain and Portugal for their special voting rights in companies located in key economic sectors.

Jean-Francois Cirelli and Gerard Méstrallet, chairmen of Gaz de France and Suez respectively, met Neelie Kroes on Monday (4 September) to explain point-by-point their response to the statement of objections from the Commission competition department.

According to Dellicour, they have until the end of the month to submit possible remedies that would render a deal possible.

Andris Piebalgs, the energy commissioner, indicated at the weekend (2 September) that the Commission had set out demands that the two companies would have to comply with before a merger would go ahead. "It’s up to the companies to address our concerns," said Jonathan Todd, EU competition spokesperson. "As to how, that’s a matter under discussion. It’s the subject of confidential discussions between ourselves and the companies."

The French government is gearing up to do battle in Paris and in Brussels as the debate on the further privatisation of Gaz de France, a pre-condition for a merger with utilities giant Suez, gets under way in the opening session of its parliament today (7 September).