EU
energy liberalisation sparks merger frenzy
AFP
BRUSSELS
Petroleumworld.com
02 24 06
The opening of Europe's energy markets to competition has triggered
a wave of consolidation in a sector already considered too concentrated
by EU regulators, analysts said Thursday.
"With the opening of the markets, big electricity companies
will lose market share in their countries and will look to get
more elsewhere," said energy analyst Colette Lewineur at
consultancy Capgemini.
As the liberalisation of European energy markets reachs its culmination,
the head of German energy group E.ON Wulf Bernotat on Monday predicted
a flurry of consolidation that would leave his company, Italian
group Enel and EDF of France standing dominant.
As if to prove his point, E.ON launched on Tuesday a surprise
29.1-billion-euro (34.6-billion-dollar) takeover offer for leading
Spanish electricity group Endesa, which was already the target
its smaller Spanish rival Gas Natural.
Enel waded into the takeover battle for Endesa on Wednesday, offering
to support Spanish group Gas Natural's rival bid for the bigger
Spanish company.
By Thursday the plot thickened when it emerged that Enel was considering
a bid for French utility group Suez, which last year bought out
the minority shareholders of its Belgian energy subsidiary Electrabel.
Enel's interest in Suez was serious enough that Italian Prime
Minister Silvio Berlusconi had even brought it up with his counterpart,
Dominique de Villepin, although a source close to the case said
that the French government was "completely opposed"
to potential bid.
Choosing to stand on the sidelines, the chief executive of German
group RWE, Harry Roels, said there were too many companies flush
with cash chasing too few takeover targets.
"There is too much testosterone in the market," said
Roels.
Shortly before E.ON fired the opening shot, a Capgemini survey
of utility executives found that nearly half expect liberalisation
of energy markets and the need for new market share to fuel a
wave of consolidation this year.
The EU began opening markets to competition for the business of
big industrial customers in the late 1990s and the process is
supposed to be completed on July 1 2007 when the markets for individual
private consumers will be thrown open.
However, the European Commission, which led the cause for energy
liberalisation, is disappointed with the results so far.
It estimates that EU energy market remains in the hands of three
fourths of bloc's companies, way too much for its liking.
Therefore, it will be keeping a close eye on the current flurry
of bidding activity, which comes less than a week since Europe's
top regulator said that the market in most EU countries was too
concentrated.
Competition commissioner Neelie Kroes said market power remains
in the hands of only a few companies and had changed little since
the age of national and regional monopolies.
"Persistent concentration is a core problem in the markets,"
she said.
"So there can be no alternative to meticulous scrutiny of
future merger operations," she added.
After uncovering "serious malfunctions" in the European
Union's gas and electricity markets, the EU's executive arm warned
it was preparing probes into suspected anti-competitive practices
by some suppliers.
AFP
02 23 06
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