Efforts by European governments to form national energy champions are “isolated incidents” that prove that EU efforts to knock down national barriers are starting to pay off, AP QUOTED EU Competition Commissioner Neelie Kroes as saying. But more still needs to be done, she said, repeating a warning that “a fully competitive single European energy market” is not yet a reality, and raising the prospect of new rules for the sector next year. “Energy is a prime example of what would have been a ‘no-go' area even as recently as a couple of years ago,” she said, welcoming a trend toward more cross-border mergers. However, the European Commission would act where it believed EU law had been broken, she promised. EU antitrust officials last month threatened Spain with court action for attaching conditions to German energy giant E.On AG's bid for Spanish utility Endesa SA. The Spanish government favors a rival offer for Endesa from Spain's Gas Natural SA, saying the country needs a home-based global energy player. “Our preliminary conclusion is that the compatibility of most of these conditions with EC law is doubtful,” Kroes told a conference in Cernobbia, Italy. Her office distributed her prepared remarks to reporters in Brussels. “We will remain vigilant in this case as in others, and we will continue to take a firm stance and speak out clearly in any case where member states do not play by the rules.” The E.On/Endesa takeover was the exception to the rule, she said, claiming the energy sector is finally opening up to competition. EU officials have already had ten cross-border energy mergers to rule on in the first six months of 2006, she said, three more than the whole of last year. But these have not been without controversy. The EU has identified possible antitrust problems with another mega-merger - the tie-up between French gas and electricity suppliers Suez SA and Gaz de France SA - and the two must respond to the charges before the EU can demand they sell off part of their businesses. Problems with the way Europe's energy market works are larger than these cases, Kroes said. “Competitive forces are still not functioning at their optimum level. That is a real source of concern. It is business and commerce that create growth and jobs, not politicians. But it is equally true that there is a clear duty on policymakers to put in place the best possible conditions to let business flourish,” she said. Antitrust regulators in February identified a host of issues with energy markets, saying wholesale markets were still largely controlled by former monopolies who had the power to raise prices. New suppliers faced many difficulties - particularly ex-monopolies' control over infrastructure and supply functions - that made it hard to enter the business. They also highlighted poor cross-border connections for gas and electricity. “This is quite a damning list of problems,” said Kroes. She said the inquiry had helped officials develop new standards for dealing with competition concerns with large mergers. The final report on the energy probe would be published alongside the EU's review of energy liberalization that may suggest new regulation for the sector, she said.
