Enel memo on merger may prompt EU action

The European Commission has said a memorandum from Italian utility Enel on a planned merger between two French energy giants …

The European Commission has said a memorandum from Italian utility Enel on a planned merger between two French energy giants could prompt action by Europe's top market regulator.

Italy accuses France of engineering a domestic utility merger between Gaz de France and Suez in a protectionist move to thwart a potential rival bid from Enel.

"We have received yesterday evening a memo from the Italian company Enel with things which they want to bring to our attention," Oliver Drewes, spokesman for EU Internal Market Commissioner Charlie McCreevy, told a news briefing.

He said the document "could of course lead to further elements" but that the EU executive wanted to study it thoroughly before commenting on the contents and on any further steps it might take.

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Italy contends that the French government flouted EU law on the free movement of capital to create a "national champion" and hopes the document will persuade Brussels to intervene.

The memorandum includes a breakdown of manoeuvres around Suez from November 2005, when Enel first met France's Veolia over a proposed joint bid for Suez, an Italian source said.

The source said the memorandum detailed developments to February, adding that the bid, proposed at Veolia's initiative, would "not have been hostile to the French system" and had been due to go ahead before the end of March.

Italian Economy Minister Giulio Tremonti wants an explanation of what or who prompted Veolia to withdraw abruptly just days before the Franco-French merger was announced with the Paris government as midwife.