France and Italy to discuss Suez

Italy has urged France to open up to foreign deals

France and Italy are to hold talks to try to resolve a row over the future of French energy firm Suez.

Italian PM Romano Prodi called for France's President Jacques Chirac to open French borders, saying many French firms had recently moved into Italy.

Mr Prodi said French and Italian ministers would discuss the issue soon.

Italian firm Enel had hoped to snap up Suez but its ambitions were thwarted when it emerged Suez had agreed to merge with Gaz de France.

Italy complained the move aimed to block a possible takeover and urged the European Union to intervene.

'Open borders'

"There are rules of symmetry for the openness of the markets... a symmetry that we expect to see respected," Mr Prodi said following a meeting with Mr Chirac and French Prime Minister Dominique de Villepin.

The Italian leader also pointed out that many French companies had a large presence in Italy - including power group Electricite de France, which holds a 20% share of the Italian market.

"I underlined the need for having the same openness in France," Mr Prodi said.

Critics have attacked the French government's policy of "economic patriotism", which expects companies to act in the national interest, claiming that it is merely a means to protect French businesses.

The French government has denied that this policy restricts free market competition and is against the spirit of European integration.

The French government currently owns an 80% stake in Gaz de France and critics said the proposal was an attempt to keep Suez in French hands.

Gaz de France is France's leading gas distributor while Suez supplies gas, electricity and water across Europe.

Deal resisted

The comments came on the eve of a key French parliamentary debate about the planned 70bn euro ($88.06bn) merger.

Ahead of the talks, resistance to the proposal has picked up within France itself, as it emerged the majority of the ruling UMP party was opposed to the plans.

"The reality is that our group is split on the advisability, in both an industrial and political sense, of the idea of a merger between GDF and Suez but the debate continues," UMP parliamentary chief whip Bernard Accoyer said.

The companies need the party's support to push the merger through.

Meanwhile, European Commission regulators are examining the merger proposal and a ruling is expected on 19 June.