Brussels attacks protectionist tendencies in France and Italy

Known for not mincing her words, Mrs Kroes was unusually strong in both naming France and the content of her speech.

Arguing that globalisation represents ''no threat to our societies'', the competition commissioner added: "When sheltered from competition you may gain the illusion that you are in a more comfortable position, in particular if you can pass on the 'bill' to consumers. It is also nice to receive public subsidies to cushion the consequences of lacking competitive edge".

''Moreover, member states are sometimes tempted to seek to protect their industrial or financial crown jewels from takeovers by companies from other countries. We have seen such signals from France just recently".

"All such measures, be they 'economic patriotism', illegal state subsidies to keep companies artificially afloat or placing companies off-limits to foreign takeovers risk taking Europe into a 1930s-style downward spiral of tit-for-tat protectionism", said Mrs Kroes.

Her words are in response to a provisional list drawn up recently by Paris to protect ten strategic sectors, the list includes defence companies and drug firms.

They also follow an announcement by the French government that it is looking to protect French food company Danone from a possible takeover by US company PepsiCo.

For his part, Mr McCreevy made an implicit reference to France, referring to it in his speech as a "major member state".

"I can envisage difficulties with another major member state which seems to want to protect certain segments of its industry from takeover. I won't pass judgement until I see the details. But I will vigorously pursue any such measures that are contrary to EU law".

The internal market commissioner also warned Italy after a major spat occurred when rival banks from Spain and the Netherlands tried to take over two Italian banks.

"Recent events in the financial services sector demonstrate the limitations of defending national interests. I am under no illusions but that the protection of national interests takes place in other member states. The recent cases in Italy just highlight what can occur", said Mr McCreevy.

The commissioners' words are likely to rile both countries, particularly France which has been on a collision course with this commission since it came into office last year due to its much publicised adherence to a free market agenda.

Under EU rules, member states may protect industries that take part in public security or the defence of public health but Brussels fears the interpretation of these rules may be stretched in these countries as they look to prevent foreign takeovers.