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Article Deconstruction (vol. 2) - EU energy regulator

by Jerome a Paris Wed Mar 15th, 2006 at 07:58:54 AM EST

I started posting an extract of the article below in the "Breakfast thread, but I started to comment on it, and I started reading it more closely, and my comments grew and grew...

So here they are in full


Berlin and Paris reject EU fuel regulator (Financial Times)

Germany and France gave the cold shoulder yesterday to the European Commission's calls for a powerful regulator to prise open the EU's energy market.

Note immediately the assumption that the regulator's job will be to "prise open the EU's energy market", not to actually, you know, regulate it, which would include things like definition or coordination of technical standards, ensuring system balancing requirements, promoting security of supply and reliability, emergency procedures definitions and management, enforcement of rules, and (definition and) execution of EU strategy for energy, etc...

Last week the European Union's executive body suggested setting up a European regulator, as part of efforts to spur greater competition and lower the prices consumers pay for electricity and gas in the EU's liberalised power markets.

"greater competition and lower prices". Markets don't provide lower prices. They provide more accurate prices that allow market participants to better allocate their money. Linking "competition" and "lower prices" is pure propaganda - and it works, obviously, as it is repeated unthinkingly everywhere.

Need I post here my table and my map with prices, showing that the cheapest energy is in continental Europe? But maybe that means that France actually has the greatest competition?

Yes, let's post them again:

But Georg Wilhelm Adamowitsch, secretary of state in Germany's economics ministry, said: "We do not need a new agency."

François Loos, the French industry minister, said it was premature to create a European regulator and existing national regulators should first co-operate more.

Note to journalists: so who's against Brussels' bureaucracy now?!

As part of the policy, Brussels also called for compulsory gas storage in member states, more use of "green" energy and a common EU approach to dealing with big foreign suppliers such as Russia.

Energy has moved to the centre of the EU's policy agenda as the Union grapples with high oil and gas prices, climate change concerns, and alarm about its rapidly rising dependence on foreign fuel supplies.

What "rapidly rising dependence"? France, Germany, Italy, Spain (and most of Eastern Europe) import close to 100% of their oil, 80-100% of the natural gas, and have done so for a long time. They have cared about their imports for just as long.

The Netherlands are exporters of gas, but have had long term planning including a cap on production to spare their reserves for future use.

The only country with "rapidly rising dependence" is - the UK. Is Brussels in charge of a EU energy strategy, or a UK energy strategy?

At the same time, conflicts within the internal market are growing as France, Italy, Spain and Germany spar over proposed mergers in the utility sector and several countries fail to introduce EU laws opening their markets to full competition.

FALSE. Not such failure. It's just that directives have been implemented in some countries at the minimum required level, and not at the maximum suggested level. But now this is failing to apply the "spirit of the law" in Newspeak.

The Commission's suggestion for a pan-European regulator is at an early stage but envisages an agency with powers over cross-border infrastructure and transmission capacity.

I wonder if the freemarketistas realise the can of worms they are opening there. Are they actually suggesting that a centralised, Brussels-based entity become responsible for infrastructure investment in a number of countries (and presumably take over national procedures for authorisation of such investments?)

As that map above shows, we are talking about building high-voltage lines in places like the Pyrénées, the Alps or under the Channel, projects that have for a number of them been bogged down for local/environmental reasons. Do they want Europe to overrule these objections?

The Commission believes that alongside a smoothly running internal market, the EU must strengthen its relations with important suppliers such as Russia, which provides a quarter of European gas needs.

"strenghten relations" presumably means: having only one interlocutor facing Russia in order to get better negotiating terms. How is that compatible with "competition" and free markets? How would such public entity allocate the savings extracted from the Russians to the private operators in Europe?

Gas deliveries to the EU were disrupted in January after a price dispute between Moscow and Kiev, sparking concerns about the reliability of supplies from Russia, which is hosting a meeting of Group of Eight energy ministers this week to discuss energy security.

These concerns are stupid, as all Russian pipelines go to Europe - we are their only client. It's a relation of co-dependency, which means mutual benefits if there is a modicum of trust, and mutual destruction if things turn sour.

But there was a guarded response to calls from Poland, which imports 65per cent of its gas from Russia, for a Nato-like initiative to increase EU co-operation over energy security.

One EU official said of the plan: "It's a bad idea. How can we have a Nato without the Americans?"

Indeed, how can we?

So, do we want markets, or do we want top-level political control over the energy sector?

Or is it the fact that political control is enforced by France, Germany and Spain instead of someone else?

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In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 08:00:10 AM EST
when you don't have an energy strategy...


Ministers warn of prolonged problems for large energy users

Ministers warned of prolonged problems for the country's biggest energy users yesterday, admitting that the UK's main gas storage hub would be out of action until at least May.

In a sign of the seriousness with which the government is treating Monday's record rise in wholesale gas prices, Alan Johnson, trade and industry secretary, called in Sir Roy Gardner, chief executive of Centrica, parent company of British Gas, to discuss ways of avoiding a crisis.

After the National Grid issued an unprecedented warning this week to big electricity users that it might have to ration power supplies, Mr Johnson told MPs in a Commons statement that he was not expecting an emergency. The warning was lifted yesterday

(...)

The storage facility, which accounts for 80 per cent of the country's storage capacity and can supply 10 per cent of average daily demand in winter, would "not be back in action for a couple of months". The record surge in gas prices was a response to these unusual circumstances.

Mr Johnson warned that the vulnerability to sudden increases in prices and the difficulties facing industrial users would continue "this year and probably next year" and that "the days of cheap, indigenous fuel are probably gone forever".

In Northumberland, the Vald Birn foundry, which makes motor and engineering castings, said that it would close at the end of April, making 157 workers redundant. Its electricity bill had doubled to £2.4m.

(...)

A circuit-board plant owned by Circatex, in South Shields, is to close on Friday after a 60 per cent rise in its electricity costs. Meanwhile the William Cook Cast Products plant at Stanhope in Weardale, County Durham, has adjusted its shift patterns, turning to operating at off-peak energy times, using night-shifts to minimise the impact of hugely increased energy costs.

Who could have thought that North Sea oil & gas could run out?


In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 08:03:57 AM EST
Markets don't provide lower prices. They provide more accurate prices that allow market participants to better allocate their money.
Just because this point was emphasized by Hayek doesn't make it wrong (I say this because metatone hasn't tarred and feathered me for a while).

Now, in the case of natural resources it's beginning to be imperative that people have a feeling for the true costs of their consumption. Clean water, clear air, energy for heating... Those things we take for granted and are even metaphors for what does not have a price (presumably because it is too low: you used to be able to just take a breath of go down to the river). No more.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 08:05:34 AM EST
Hah! Ok, so Hayek said some reasonable things. I'll admit that and save the tar and feathers for a diary one day when I've reread a greater selection of his work... ;-)

Water is indeed a big issue, one I bang on about in the UK, relative to housing and economic policy. The Thatcher government theorised that you could run the entire economy for the benefit of the "City of London" and everyone would make their living servicing these elite financial workers. Now the consequence is beginning to appear, the South East just has too many people for the amount of water available. Worse, people pretend London subsidises the rest of the country when it gets free water piped down for the North of England.

I want to see money rolling into my region as the water rolls out. Then we'll see who gets to be smug about economic policy, service economies and property prices.

</rant>

by Metatone (metatone [a|t] gmail (dot) com) on Wed Mar 15th, 2006 at 08:12:22 AM EST
[ Parent ]
The lower prices come, when they are possible, from the efficiency that results from the improved information provided by market prices. Now, this is a little less easy to argue because there are many more hypotheses involved, especially the never stated hypothesis that lower prices are always possible, presumably because high prices encourage an inflow of capital into production and this lowers prices by raising output... expect when it gets more and more expensive to extract more and more. The other unspoken assumption is that extraction is production.  

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 08:19:30 AM EST
[ Parent ]
expect = except

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 08:22:16 AM EST
[ Parent ]
Does anyone believe 'competition = lower prices"?

With my simplistic understanding, the issue isn't about free markets vs state leviathans, it's about genuine competition (i.e. a number of genuinely independent players with approximately equal opportunities) vs monopolies and cartels.

Without regulation most markets seem to devolve towards monopolies and cartels fairly quickly as the big fish buy up the small fry.

This doesn't bother the Smithite fundamentalists because ultimately their aim is to become a monopoly. The cant about free-markets is just a convenient bit of a PR they use to sugar the bitter pill of monoculture.

And with something like EU-wide energy policy, the issue isn't regulation vs nationalism, it's intelligent long term planning vs inefficient and inept strategic management - which unfortunately is something the UK is remarkably good at, and which the instant gratification culture of Smithite fundamentalism has done a lot to promote.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Mar 15th, 2006 at 09:56:50 AM EST
[ Parent ]
I think you are actually arguing for competition = lower prices.

The way competitors undercut each other is by cutting prices. The player with the deeper pockets drives the other out of business, then takes over their assets and uses them to recoup their price-war losses. Then on to the next competitor. Who said businesses only care about immediate profits and not about the medium or long term?

When the cartel/monopoly/monopsony is established, then prices go up unnecessarily.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 10:21:03 AM EST
[ Parent ]
The player with the deeper pockets drives the other out of business, then takes over their assets and uses them to recoup their price-war losses.

In an ideal world. In the real world, the driven-out player can have no significant assets anymore (at least not enough to make up for losses), and the winner has a thousand means to make the users pay for price-war losses (not the least of which is PR).

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Wed Mar 15th, 2006 at 12:51:13 PM EST
[ Parent ]
The really hard part with electricity is that it has structural features that make it exceedingly hard to organise proper markets:

  • the network is a natural monopoly - i.e. it makes no sense to have separate networks in competition. So the one network needs to be regulated if you want it to be open to all comers on equal terms. This is not as simple as it sounds:

  • the one fundamental technical feature of power is that it is almost impossible to store, thus making it imperative that supply balances demand at all times. That means that the network operator has to have to ability to bring or to take out production capacity online at very short notice and without the relevant producers having much of a say in the matter;

  • the one fundamental political feature of power is that lack of supply is, quite simply, not tolerable in our society. It is vitally important for the economy to run and for our lifes to proceed. Thus, again, the requirement for a strong regulator able to impose the availability of spare capacity at all times, and to impose stringent technical constraints on the production of all so that the network is not put at risk.

The above roles of the regulator are hard to price transparently, and are hard to be made compatible with full freedom to compete.

Then you have the additional elements that investments come in big lumps, and it is thus hard sometimes to finetune capacity - so you end up with excess capacity or looming shortages in alternance. It also means that licensing and permitting procedures, and local hostility can have a big impact on a given project and thus on the overall balance of the market.

And, as I wrote before, some technologies are more sensitive to financing costs than others, so pushing for pure "market" solutions is de facto a technology choice - that of coal and natural gas-fired plants vs wind or nuclear.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 10:51:39 AM EST
[ Parent ]
You've said these things before, but that's a very good summary.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 15th, 2006 at 12:17:41 PM EST
[ Parent ]
Migeru:
The way competitors undercut each other is by cutting prices.

Not necessarily. You can also compete by keeping prices steady and running a marketing onslaught, which is more or less how Microsoft used to work when it still had competitors. With the exception of IE which was already a post-monopoly 'product', low pricing has never been part of the Microsoft model. So not everyone shops around for the best price, and those that do don't always find it - especially not if you can make yourself more prominent than the competition.

In something like the energy market you can also compete by offering bundled packages that offer more than one service - such as gas and electricity, or water, or even phone and broadband services. This can lead to lower prices through economies of scale and having more bargaining power because you can offer a larger slice of the pie to originators.

But the natural tendency will always be to maximise profits and not to lower prices, by definition. So consumer prices may - and probably will - rise, in spite of the economies of scale.

Jerome:
And, as I wrote before, some technologies are more sensitive to financing costs than others, so pushing for pure "market" solutions is de facto a technology choice - that of coal and natural gas-fired plants vs wind or nuclear.

Up to a point. I think there are three different areas where competition is possible:

  1. Primary origination - energy raw materials (as it were) which include coal, gas, oil.

  2. Secondary generation - conversion of these raw sources into electricity. This segment has unique properties as a market. Solar and wind are an even more unique subset.

  3. Distribution - which is really based on negotiation with originators, and potentially can leverage utility bundling.

Aside from a major breakthrough like superconducting cabling, competition through technological innovation comes mostly in the first two segments.

In the third segment competition is more of a purely financial issue and depends on negotiating and marketing ability. I'd guess this is the only segment where real competition is possible, because in the others the investment levels are too high and the payback terms too long to make market-only exploration a realistic option. Hence some government oversight is needed to set policy and sponsor innovation.

And that's the real point here. Markets can be used to implement policy, but they should never, ever be allowed to define it. Public interest - and that ultimately includes infrastructure support for businesses too - has to be managed strategically with a long term view. Pure market-think can only handle this kind of strategic planning in unusual cases.

What works best is when governments say 'We want such and such a strategic goal - now get to it' as has happened in Iceland and Sweden.

What works least well is when the originators own policy, as they have done in the US and the UK. Then the tail wags the dog, which means that sooner or later the dog falls over.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Mar 15th, 2006 at 01:35:12 PM EST
[ Parent ]
What "rapidly rising dependence"? France, Germany, Italy, Spain (and most of Eastern Europe) import close to 100% of their oil, 80-100% of the natural gas, and have done so for a long time. They have cared about their imports for just as long.

The Netherlands are exporters of gas, but have had long term planning including a cap on production to spare their reserves for future use.

The only country with "rapidly rising dependence" is - the UK. Is Brussels in charge of a EU energy strategy, or a UK energy strategy?

Brilliantly argued.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 08:07:24 AM EST
it's just mindless UK bashing once again:


These diaries are designed to show the UK on the verge of collapse, anti-European and inferior to the rest of Europe. "They are trying to rouse the sleeping economies of Europe with their vile Anglo-Saxon economic solutions." This is endlessly repeated because it plays to the meme that anyone who supports America, even when it was Clinton, is undermining Europe.

Much of the information is extracted from quality UK newspapers and journals with their excellent analysis and who are quite prepared to be critical of UK policy - especially that of the liberal left (the Financial Times and the Economist are like the Wall Street Journal in terms of politics) It is then overlaid with comments like this diary that the analysis is saying, "Stoopid foreigners... Evil, evil evil." It doesn't, but why spoil a good story.

Few of these diaries look at the critical self-analysis of France in Le Monde and other French papers, nor this type of analysis in the Financial Times.

It all goes back to de Gaulle and his feelings of inferiority at the end of the World War 2 - or perhaps even to Agincourt  :)

These diaries get highly recommended because people enjoy the UK bashing - teach 'em right for having allied itself to the States. In the Autumn, the gas crisis was going to bring UK industry and its economy to a halt. It never did. But, again, why spoil a good story.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 08:18:23 AM EST
[ Parent ]
One day you are going to have to come clean on exactly what is going on between you and Welshman, even if doing so would be bad for your blood pressure.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 08:21:32 AM EST
[ Parent ]
He's jealous because I get more recommends than he does on dKos.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 08:24:46 AM EST
[ Parent ]
Well, this comment got my Welsh blood pressure up.

However, Welshman does claim the comment is tongue-in-cheek, in good humour, wink wink etc.

It's going be nice, though, when he writes something really funny to disguise the underlying resentment.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 15th, 2006 at 09:24:10 AM EST
[ Parent ]
it's just mindless UK bashing once again:

Your energy posts do rather read that way Jerome. Welshman may have wrapped his point in gentle humour but he does have a point.

Money is a sign of Poverty - Culture Saying
by RogueTrooper on Wed Mar 15th, 2006 at 09:20:15 AM EST
[ Parent ]
How do you manage to read that into it? Bashing the prophets of the free-market? Yes. Ridiculing the UK government? Hell, yes. Bashing the UK? Where?
by Colman (colman at eurotrib.com) on Wed Mar 15th, 2006 at 09:24:08 AM EST
[ Parent ]
It doesn't read that way Coleman.

In fact, these threads never read that way.

Money is a sign of Poverty - Culture Saying

by RogueTrooper on Wed Mar 15th, 2006 at 09:29:58 AM EST
[ Parent ]
I'm afraid I don't understand your comment. Do you mean it doesn't read as an attack on the prats writing the article?
by Colman (colman at eurotrib.com) on Wed Mar 15th, 2006 at 09:31:45 AM EST
[ Parent ]
No-o-o-o... We're not back on that again?
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 15th, 2006 at 09:26:42 AM EST
[ Parent ]
Why not? We've revisited "ET is anti-Slavic" over the past week...

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 09:29:12 AM EST
[ Parent ]
I think I'm going to start complaining that ET is anti-Irish because there isn't enough coverage of Irish stories. And Alex in Toulouse keeps posting anti-French stories with the Internet freedom stuff.
by Colman (colman at eurotrib.com) on Wed Mar 15th, 2006 at 09:30:40 AM EST
[ Parent ]
That won't work, you have to actually believe it.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 09:32:44 AM EST
[ Parent ]
...with the continuous prattle about Holland...
by Nomad on Wed Mar 15th, 2006 at 09:55:53 AM EST
[ Parent ]
And Ritter's photographs.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Wed Mar 15th, 2006 at 09:56:51 AM EST
[ Parent ]
...are fine. It's the accompanying text that does it.
by Nomad on Wed Mar 15th, 2006 at 10:00:11 AM EST
[ Parent ]
What a bunch of sissies...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Wed Mar 15th, 2006 at 12:58:40 PM EST
[ Parent ]
Fuck off, Magyar.
by afew (afew(a in a circle)eurotrib_dot_com) on Wed Mar 15th, 2006 at 03:56:07 PM EST
[ Parent ]
If you want to be insulting you have to call him a Hun.

That's like trying to piss off Nomad by calling him a Netherlander.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Thu Mar 16th, 2006 at 01:36:29 AM EST
[ Parent ]
I'm starting to understand why some blogs have flame threads on a voluntarily basis with a competition for the most creative insult.
by Nomad on Thu Mar 16th, 2006 at 06:33:11 AM EST
[ Parent ]
But that's no fun. It's not real.  Pretend combat is no good. Which is why I'm not a fan of sports.
by Colman (colman at eurotrib.com) on Thu Mar 16th, 2006 at 06:36:59 AM EST
[ Parent ]
I don't think it's done because it's fun, but as a conduit to keep disruptive interactions out of "productive" threads.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Mar 16th, 2006 at 06:38:48 AM EST
[ Parent ]
"productive" threads.

Not something we need to worry about then?

by Colman (colman at eurotrib.com) on Thu Mar 16th, 2006 at 06:40:58 AM EST
[ Parent ]
That's like trying to piss off Nomad by calling him a Netherlander.

Well, I thought he is trying to piss me off as an apatriot...

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Thu Mar 16th, 2006 at 09:22:17 AM EST
[ Parent ]
there is some of that in my writing (chalk it, charitably, to the everlasting Franco-English feud), and that's precisely why I flag it myself often (like here), so that it can be taken into account properly and, hopefully, discounted.

These deconstruction exercises are first and foremost about an ideology that I think is fair to say most of us here on ET are fighting. But the fact remains that this ideology has been pushed by the right in the US and the UK, and has entered the mainstream of these two countries as "common wisdom", and there is an element of national superiority in pushing that ideology, especially against the designated opponent, the French (or alternatively the "Rhenan" countries), the country(ies) which (used to) have the most coherent competing economic model.

It is Wall St and the City against Bercy (the French Ministry of economy and industry), and it is London and Washington against Paris and Berlin - even if by all means not all English agree and not all French disagree with those we've been calling the freemarketistas.

So yes, I react as a Frenchman who sees his country mocked and brought down on a daily basis in the name of a dangerous ideology, and that plays a role. But please also admit that that ideological assault also has a real anti-continental bent, as exemplified by Thatcher's famous quote:


This century, all the problems of the world have come from the continent and all the solutions from the English-speaking world.

It's up to us to manage this tension between the ideological fight and the national rivalry. You are right to flag what you see as abusive generalisations or attacks from me, but please don't forget the context.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 09:45:34 AM EST
[ Parent ]
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.

by The Maven on Wed Mar 15th, 2006 at 02:42:08 PM EST
This idea of a European regulator is a transparent attempt at preventing the French and the Spaniards with going ahead with their "nationalist" mergers (and it's also targetted at Germany's semi-cartel, and the Netherland's "spare our reserves" policy).

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Wed Mar 15th, 2006 at 03:47:10 PM EST
[ Parent ]


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