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5 January 2007 - Europe's largest energy groups could be forced to break up after a European Union (EU) anti-trust inquiry found evidence of collusion and other market failings.
The inquiry accuses Europe's dominant energy groups of hindering market integration by colluding and calls for the break-up of integrated energy companies as "the most effective way forward." In a summary of a 16-month investigation, EU competition commissioner Neelie Kroes said that she would make "full and combined use" of her powers over mergers, government subsidies and antitrust abuses to tackle the lack of competition in the sector.
Many of Europe's largest energy companies, including Germany's Eon and RWE, GdF in France and Italy's ENI have been the subject of European Commission anti-trust investigations, and have had their offices raided by Brussels officials. The report states that they and other energy groups are likely to face pressure from the Brussels regulator in the coming months, for example to cede control over gas pipelines and the power grid, or to terminate some of their long-term contracts with customers and energy suppliers.
Ms Kroes said: "Market concentration has been identified as a major concern for the success of the liberalisation process. The market power of pre-liberalisation monopolies has not yet been eroded."
The report also warns Europe's energy groups that the Commission will impose tough conditions on any future mergers in the sector "to ensure that the competitive structure...does not further deteriorate". It points out that approval to future deals would likely hinge on commitments to release gas and electricity onto the open market, but warns that Brussels may impose "structural" remedies such as asset disposals.
The final results of the inquiry are to be published on 10 January, when the Commission will reveal measures designed to tackle the current failings. A broader review of the EU's energy policy that will look at cutting greenhouse gas emissions will also be unveiled.
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