Does anyone here think that the issue of whether there should be a European energy regulator is being substantially complicated by the ongoing frictions regarding transnational energy company mergers?  This was mentioned briefly in the original post, but I think it may be far more central to this conflict than it might otherwise appear.  Most recently, this raised its head with regard to the attempted takeover bid by Enel SpA (Italy) of Suez S.A.(France), when the French government arranged a hasty merger between Suez and the state-controlled Gaz de France.  It is also a major source of contention in the competing takeover bids for Endesa S.A. (Spain) by E.ON AG (Germany) and Gas Natural SDG S.A. (Spain).

Both France and Spain have recently enacted laws that would appear to give domestic regulators the ability to prevent foreign takeovers regardless of whether the deals have been approved by the EU.  On the rival bidding for Endesa, the EUobserver recently wrote:

The European Commission is considering bringing the Spanish government to court for trying to block a €29.1 billion bid by German energy giant E.On for Spanish rival Endesa, the EU's internal market commissioner has said.

"I think that we will have to initiate measures against Spain" Charlie McCreevy said in an interview with German daily Handelsblatt on Sunday (12 March).

Mr McCreevy has told the Spanish government that if it does not withdraw a new decree giving it more power to prevent an unwanted takeover of the country's largest power company Endesa by German E.ON, the commission could bring the case before the European Court of Justice which could result in heavy penalties for Madrid.

The commissioner has given Madrid ten days to come up with a valid explanation for the new takeover rules in Spain, writes El Mundo.

And just yesterday, it was reported in the Spain Herald that French Prime Minister Villepin has now publicly sided with his Spanish counterpart, Zapatero:

French prime minister Dominique de Villepin yesterday coincided with Spanish prime minister Rodriguez Zapatero on the Endesa takeover issue, saying that he opposed "unfriendly" takeovers of energy corporations. After meeting with Zapatero at the Moncloa palace, Villepin said that his opposition to the takeover bid launched by German utility E.ON for Endesa was not related to "protectionism," but to the need to guarantee supply "in a sector that is strategic for security."

Villepin also called for "providing the necessary means to national corporations to compete in equality" in Europe," and for supporting "large European industrial projects that do not come from an unfriendly initiative, but rather cooperation between the companies involved."

Villepin said this was the case in the merger between French-Belgian corporation Suez and the state-owned company Gaz de France.

So it would appear that on the issue of ownership of energy companies, an alliance is beginning to form between France and Spain on the one side, with Germany and Italy on the other.

Speaking today before the European Parliament, Neelie Kroess (the EU's top antitrust official) made it clear that she would use all regulatory powers available to her to prevent this rising tide of national protectionism in the energy sector.  But given the current climate, cooperation for another regulatory body may be impossible in the short-term.