European Union governments have voted to open electricity and gas markets to full competition by 2007.
Foreign ministers meeting in Luxembourg today passed the measure without discussion despite a last-minute threat form Italy to stymie the move.
Although Italy had no veto power over the law, which the other EU states could have voted through, Rome could have forced energy ministers to reconvene the vote until a later date.
Italy was concerned that rules on pricing cross-border sales of electricity would have pushed up power prices for its consumers.
The final version of the law was negotiated between the Greek EU presidency and the European Parliament which approved it earlier this month.
Instead of blocking the law, Italy made a formal declaration in which it said it would try to avoid price rises.
The energy bill will complete the liberalisation of the EU's energy market, which has been gradually happening since the 1990s.
By July next year full deregulation in the commercial market will be complete.
By 2007 full deregulation will be extended to all customers, breaking monopolies utilities still enjoy in some countries.