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Last Updated: Tuesday, 14 November 2006, 15:15 GMT
EU says Suez can merge with GDF
Protest against GdF privatisation and merger with Suez
GdF's privatisation and its merger with Suez has met resistance
EU regulators have cleared a merger between French energy firms Suez and Gaz de France (GDF), on condition that they sell certain Belgian units.

Neelie Kroes, the EU Competition Commissioner, said disposing of the units was essential to guarantee competition in Europe's gas markets.

A merger will create a company with a market capitalisation of about 80bn euros ($102.bn; 54bn).

The controversial merger has met with stiff opposition within France.

Liberalised market

The country's left wing opposition party has opposed the merger on the grounds that it would limit choice and result in higher energy prices.

As a prerequisite to the merger, France's state-owned GDF must be privatised and the government's stake reduced from 70% to a third.

Just last week France's parliament passed a law allowing the government to reduce its stake, thereby clearing a crucial hurdle ahead of the merger.

Ms Kroes said: "Our intervention in this case is part of our action to ensure that there is effective competition in the newly-liberalised energy markets to the benefit of consumers and business."

The Commission had feared that if France created a national energy firm, it would stifle competition.

As part of the EU conditions, GDF will have to sell off Distrigas and SPE, while Suez will also have to sell its control of Belgium's Fluxys.

The chairman and chief executive of the new merged firm will be Gerard Mestrallet, currently the head of Suez.

Jean-Francois Cirelli, GdF's chief executive and, will become vice chairman and president.

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