The European commission has indicated that it will carry out an enquiry into French state-owned power company EdF to see if it has benefited from illegal state support, according to a Brussels spokeswoman. The statement follows sustained criticism from Italy, Germany and Spain who feel that EdF is using its strength to take stakes in their own domestic industry, without reciprocal rights being available in France.
Competition spokeswoman, Amelia Torres, said it was looking at whether EdF benefited from tax breaks or financial guarantees that might be classified as aid, although as yet, the Commission has not written to EdF.
Predatory moves by EdF have prompted both the Spanish and Italian governments to pass special legislation to try to limit its acquisitions. The legality of these laws has itself been called into question by the Commission but Torres said, “It is more pertinent to look at EdF at this time to make sure all EU rules are respected,” – referring to competition, internal market and energy regulations.
The Commission will debate next Wednesday the restrictions imposed by Spain and Italy as well as the EU’s general policy on the free movement of capital. It will also discuss the problems in the EU energy market caused by some countries opening up their markets more rapidly than others and whether governments could insist on a level playing field.
Werner Muller, Germany’s economics minister, said earlier this week that Germany was amending its energy act to include curbs on electricity imports from countries whose own markets were not liberalised and was critical of EdF’s expansion.
Loyola de Palacio, the EU’s energy commissioner, has called for some transitional measures that will protect newly privatised companies from acquisition by their state-owned rivals until EU markets are fully open.
However, the EU’s founding treaty provides for the free movement of capital, irrespective of the ownership of a company. The Commission has used this to pursue national laws such as those in Italy and Spain that limit the voting rights of state-owned companies, as well as golden shares and legislation that restricts foreign takeovers, through the court.
Frits Bolkestein, EU single market commissioner, is expected to tell fellow commissioners that the state can behave like other majority shareholders while it still owns part of a company being privatised.
In this way it could block a takeover by another company until the privatisation was complete, but after that there is no legal basis for state intervention in the market. While this is the strict legal interpretation of the EU’s treaty, the Commission is under intense political pressure to act.
Mario Monti, the EU’s competition commissioner, is believed to have asked Ms de Palacio whether a state aid case can be made out against EdF over funding for nuclear power, which provides the bulk of EdF’s electricity. But nuclear power is subject to the rules of the Euratom treaty, which does not outlaw state aid.