EU set to scrutinise Suez merger

Russia is interested in entering Belgium's gas market

The European Commission is likely to investigate the planned merger between France's Suez and Gaz de France, Belgium's government has said.

After talks with European Competition Commissioner Neelie Kroes, Belgian Energy Minister Marc Verwilghen said an in-depth investigation was probable.

Ms Kroes's spokesman, however, said the Commission was still considering the question.

The merger has sparked controversy over suggestions of economic nationalism.

The 70bn euro (£48.5bn) tie-up was announced hard on the heels of the news that Italian utility Enel planned to bid for Suez.

It has sparked widespread concerns not only about the push by several European countries to block cross-border mergers, but specifically about its effects on competition in Europe's energy markets.

Competition concerns

Mr Verwilghen expressed worries about the fact that both privately owned Suez and state-owned Gaz de France already operate in Belgium.

It is the most opportune moment to liberalize the market Marc Verwilghen, Belgian Energy Minister

Suez's Electrabel arm is the leading company in Belgium's electricity industry and Suez's Distrigas is also a dominant player in the gas market.

In addition, Gaz de France owns 25% of in the country's second power producer SPE.

But Mr Verwilghen added that if competition authorities forced carefully-chosen divestments on the two companies - such as SPE - the merger could end up improving competition.

"It is the most opportune moment to liberalize the market," he said.

Russian interest

The EU investigation comes as Russia's Gazprom has shown an interest in investing in Belgium, a move which has been well received.

Gazprom, Russia's biggest natural gas company, is looking at joint ventures with Distrigas and Fluxys, a gas pipeline company.

Belgium's Zeebrugge port and the acccess it provides, is attractive to Gazprom, Mr Verwilghen said.