Gaz de France sees higher profits

Gaz de France has been eyeing a merger with Suez

State-run Gaz de France saw its annual profits rise 29% because of higher gas prices and larger volumes in 2005.

The 1.74bn euro (£1.2bn) profits come amid controversial talks to merge Gaz de France with utility company Suez.

The French government backed plans to combine the two companies after Italian utility Enel made a bid for Suez.

The European Commission has written to the French government to express concern at Paris' alleged role in the planned merger.

Enel aims to meet with EU competition officials to discuss the matter.

There is a possibility that the Italian company could renew its bid, but nothing is confirmed.

Protectionist policies

European Commission President Jose Manuel Barroso recently voiced strong criticism of protectionist policies in the European Parliament after several cross-border mergers were stymied by national governments.

Mr Barroso said the European executive would take action against those who abused their dominant market position.

Gaz de France is also considering expansion in the Netherlands. "We see the Benelux as a growth market and we are interested in what will happen in the Netherlands after the market liberalisation," said company president Jean-Francois Pirelli.

Gaz de France plans to increase its dividend to more than 1 euro from 2006 and expects income in 2006 to beat 2bn euros.