Frattini says French energy merger not illegal

The controversial planned merger between two French energy firms is "not illegal," but it harms the EU's common market, the EU's justice commissioner Franco Frattini has said amid mounting Italian anger over the French move.

Mr Frattini made his comments on French Europe 1 radio on Tuesday (28 February), following a weekend announcement by French prime minister Dominique de Villepin of a €70 billion deal merger between Suez and Gaz de France.

The move is widely seen as orchestrated by Paris to thwart the takeover of Suez by Italian energy firm Enel and has sparked calls by Italy for an intervention by Brussels.

But Mr Frattini signalled that the European Commission may not be able to intervene.

"In form, the operation is not illegal," Mr Frattini said according to AFP.

"But it is a blow against the spirit of the European common market," he added.

The move should be addressed at the political level, the commissioner indicated.

"I think we have to talk about the substance (of the deal), the risk of rising protectionism in Europe," Mr Frattini said according to Reuters.

"I don't think that something that is bad for Europe is good for Paris. We have to relaunch the spirit of the single market that we are in danger of losing."

Rome considers reprisals

The remarks of Mr Frattini, who served under prime minister Silvio Berlusconi as foreign minister, appear to dash the hopes of the Italian government that Brussels could legally act against Paris.

But Rome is strongly lobbying Brussels with economy minister Giulio Tremonti scheduled to meet internal market commissioner Charlie McCreevy on Wednesday (1 March), after having met EU competition chief Neelie Kroes on Tuesday.

Meanwhile, press reports indicate that Italy is also considering a series of measures in response to Paris' protectionism.

According to German daily FT Deutschland, social minister Roberto Maroni announced that he will on Friday introduce measures for the "defence of strategic sectors" in the economy.

Italy could also create its own "national champion" in the energy sector, by merging power giants Enel and Eni.

Rome is even considering direct measures against Paris such as cutting off energy supplies from Italy to the French island of Corsica, or by renationalising the stake of France's EDF in Edison, a large Italian energy firm.

Italy should \"not cry wolf\"

But former European competition commissioner Mario Monti, an Italian, called on Rome not to "cry wolf" over the French energy merger, AFP reports.

The move "has launched a debate that is richer in emotion than in lucidity", Mr Monti said.

"From the perspective of Enel or the Italian state, lucidity would have suggested not to announce in advance Enel's intention to launch a hostile takeover bid. And this same lucidity suggests, today, that one should not cry wolf."