Merger proposal Suez, GDF to study EU's anti-competition complaints

French energy groups Suez and Gaz de France reacted cautiously on Saturday to objections raised by the European Commission that their proposed merger could be anti-competitive.
"The documents are very long and complex and we need to examine them. It is still too early to give a reaction," a spokesman for Gaz de France (GDF) said.
Suez was also guarded in its response to the news.
"We are going to study the documents in good time and we will then reply to the commission," a Suez spokesman said, refusing to comment in any detail on the issues filed Friday by EU anti-trust experts.
In a statement released on Saturday, the European Commission said it had notified Suez and GDF of its objections to their proposed merger, notably the effect it could have on electricity and gas markets in Belgium and France.
The French government announced the fusion in February, shortly after rumours surfaced of a take-over bid for Suez by Italian group Enel.
In June, the government presented a plan to cut its 80-percent stake in state-owned GDF to 34 percent, effectively privatising the gas company and creating a world giant worth about 62 billion euros (79 billion dollars).
GDF would then be free to take over Suez, forming Europe's biggest gas group and the continent's fifth biggest electricity producer, according to proponents of the deal. But the European Commission warned that the new company would have a dominant position in France and Belgium, hurting competition.
In Belgium, the merger would bring together Electrabel, one of the biggest electricity providers in Benelux countries which is owned by Suez, and SPE, Belgium's second biggest electricity provider which is 25 percent owned by GDF. Together, they would control more than 90 percent of Belgium's electricity market.
Belgian authorities have not opposed the deal on the condition that they sell off large parts of their business activities.
In France, the proposed merger could adversely affect "gas markets (trade, supply to different categories of clients)" and the "heating network market", anti-trust analysts said after an in-depth inquiry that began in June.
As the state-owned gas supplier, Gaz de France has an almost virtual monopoly in France and taking over Suez, one of its two main rivals with 3.5 percent of the market, will just extend its domination.
Suez and GDF must propose solutions to resolve the anti-competition issues before the commission gives its formal ruling on the merger, due on October 25.