French energy merger upsets Italians

"With this merger, we have the ambition to create one of the top energy groups in the world, in particular in the gas sector," French prime minister Dominique de Villepin said, according to the BBC.

The French government owns a majority of shares in Gaz de France.

The battle over future ownership to strategic energy suppliers is widely seen as "economic patriotism", a phrase which French prime minister Dominique de Villepin used already last summer when fighting a hostile takeover of the leading French food group Danone by US soft drink giant Pepsico.

Italian industry minister Claudio Scajola reacted furiously to the planned French energy merger and said "neo-protectionism" threatens the European Union.

"If neo-protectionism prevails, then political and economic destiny of the European Union will be compromised," Mr Scajola was quoted saying by AFP.

The Italian minister also cancelled a planned meeting today (27 February) in Paris with his French counterpart Francois Loos.

And Italian welfare minister Roberto Maroni said Italy should impose import tariffs and quotas on its own "strategic" textile industry in response to France, ANSA says.

European energy giants are still partly controlled by national governments.

If the French energy merger goes ahead, the French state would own 34 percent of the combined business, while the Italy's Enel, Europe's third largest energy group, is also 30 percent state-owned.

The French-Italian row over energy take-overs follows a battle over the Spanish energy firm Endesa, which is facing a €29 billion buy out by Germany's E.On.

Last week it emerged that France, Germany and the Benelux countries are in talks to set up a single electricity market in a first step toward a new common EU energy policy.

The electricity talks are taking place at minister level in the group of five EU founders, in what is being called a "forum for western-European energy cooperation," according to French diplomatic sources.

The commission plans to put forward a major green paper on energy policy on 8 March, but leaks of the draft document suggest Brussels will be held in check by lack of solidarity among member states.