September 4, 2007
How the EU drove GDF and Suez together
One interesting aspect of the Gaz de France / Suez deal, on which our Paris bureau chief Peggy Hollinger has been leading the world, is its effect on competition in European energy markets. For Electricite de France, in a French residential energy market newly opened up to competition, the deal creates a potentially threatening "dual fuel" competitor, with 10m GDF customers who could be sold Suez’s electricity.
The merger also points to a way forward for companies worried about the drive towards energy market liberalisation coming from the European Commission. GDF makes about two thirds of its profits from its transmission and distribution networks. If it loses control of the transmission business as a result of the EU’s drive for "unbundling" those networks, it will urgently need new sources of revenue. Other national champions, similarly threatened, may find GDF’s solution attractive.
As is so often the case, one deal seems likely to spur others.
