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Last Updated: Monday, 30 July 2007, 14:02 GMT 15:02 UK
EU watchdogs probe energy firms
Gas pressure-gauge
Two-fifths of Europe's gas supplies come from Russia
European watchdogs have launched a formal investigation of German energy firm E.On and Gaz de France (GDF) over claims of anti-competitive practices.

The European Commission is studying whether the two agreed not to sell gas in each other's home markets.

E.On and GDF said they were cooperating with the probe. They could be fined if they have broken European laws.

Europe has warned it will act against any anti-competitive practices in the sector, saying prices are too high.

The latest probe into E.On and Gaz De France centres on claims the pair may have broken anti-trust rules by agreeing to share gas piped through the Megal pipeline that they jointly own, the European Union executive said.

The Megal pipeline is the only source of Russian gas piped into France and a major source of Germany's gas supplies.

The case is based on information uncovered during raids carried out at the firm's offices in France and Germany last year.

Monopoly fears

Watchdogs said the probe would "focus on a possible agreement or concerted practice between E.On and Gaz de France to keep out of each other's home market, even after the liberalisation of the European gas markets".

The move follows similar anti-trust action launched against Electricite de France and Suez's Belgian unit Electrabel by the Commission last week.

Regulators began monopoly investigations against the two over suspicions they may have abused their market power in France and Belgium.

European Competition Commissioner Neelie Kroes has criticised former monopolies in the energy sector for being too entrenched in their home markets.

In an effort to open up the market Ms Kroes has said she wants to "unbundle" large companies so that the businesses that generated power and supplied gas were not the same ones that controlled the network of pipelines.

Energy bills have soared since 2006, with companies blaming a lack of supply and problems with delivery from Europe for driving wholesale gas costs higher.

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