Electricit�e France’s (EdF) part in the takeover of Montedison will come under the Brussels spotlight it emerged Monday, despite the European acceptance that Fiat is the controlling member of the successful Italenergia consortium.
Italenergia increased its bid for Montedison, the Italian agro-energy group to €5.6 bn in order to overcome resistance from the Mediobanca controlled board and to satisfy Italian Stock Exchange rules. EdF has an 18 per cent interest in Italenergia but has voluntarily restricted its voting rights to two per cent in order to pacify those opposed to the French state-owned utility using its monopolistic position to enter foreign markets.
Brussels accepts that the takeover of Montedison is controlled by Fiat but will investigate EdF’s role as part of its ongoing review of the European energy market.
“At the moment the most interesting area of investigation is the energy market,” said a Commission spokesman. He said that to establish Brussels’ jurisdiction “it was not necessary to explore the precise influence of EdF. However this will become a matter of greater relevance as we go on.”
If the takeover had only involved Montedison and Italenergia, which has no revenues, it would have fallen short of Brussels’ criteria. These state that for the Commission to have oversight over a merger the two companies involved must have joint turnover of more than €5 bn ($4.35 bn), with each enjoying revenues of more than €250 million within the EU.
The focus on EdF is likely to look at the legitimacy of its continued expansion into domestic European energy markets as they liberalize while enjoying the protection of a restricted market at home. The lack of reciprocal investment opportunity has angered many people both within the power industry and at a political level.
EdF has established itself in the German and Spanish markets and is interested in buying Seeboard, a regional UK electricity supplier. Spain has reacted by passing an “anti-EdF’ law which restricts the voting rights of foreign owners in domestic energy companies. The European Competition Commission is scrutinizing the law itself.
France, along with Germany, has so far blocked attempts by the European Commission to agree a deadline date for full liberalization of the energy sector across the community.