17 October 2002 – The EU Commission investigating laws introduced in both Italy and Spain to prevent state-owned Electricité de France (EdF) from obtaining a hold on domestic utility businesses have taken action against the countries, it was reported today.

The EU took legal steps against Italy and Spain over laws that prevent foreign firms from taking over privatised local utilities, an EU source said.

The European Union’s executive believes an Italian decree on EdF and a Spanish energy law breached EU treaty rules by restricting freedom of investment.

This is the first time that the Commission has launched action against member states after the European Court of Justice condemned in June “golden share”-type schemes that governments use to protect national champions from foreign takeovers.

The Commission has another half dozen similar cases in its sights.

Meanwhile EdF is itself the Commissions dock accused of accepting illegal state aid creating unfair competition. Mario Monti, Europe’s Competition Commissioner opened the enquiry yesterday.

For many years France has been accused of protecting its own market and has constatly opposed full liberalization of the energy sector within Europe. The probe may find it difficult to bring any action against EdF.

“They’ve never been able to prove it in the past and I’d be surprised if they could now,” said Trevor Morgan, an energy analyst at Menecon Consulting in Paris.

Germany has teamed up with France on a number of occasions to block attempts by the Commission to fully liberalize the EU’s energy market.

“European consumers are loosing out,” says Charles Naylor, a director of corporate affairs, at U.K. energy company Centrica PLC. “We believe consumers are paying €1bn a month more for their energy than they need to due to the lack of energy market opening.”