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The merger project between Suez and Gas de France is meeting hurdles. For the merger to go ahead, the French government needs to change the law which prevents privatisation of Gas de France. This change needs a parliamentary majority which is not guaranteed. In the context of current rising prices for gas and the prospect that gas prices for domestic users will increase with the market opening 1 July 2007 (as prescribed by the European Directives for opening the gas and electricity markets) politicians are getting second thoughts regarding the presumed benefits of competition. The privatisation of Gas de France and losing control of the gas sector is not an attractive option for several political parties.
Against that background rumours multiply that ENEL is considering an hostile bid. It will do this in cooperation with several banks and private equity funds. One such fund that is mentioned in this context is General Electric’s private equity arm. ENEL has earlier pronounced that it is only interested in the electricity business and wants to sell the rest - water, waste, energy services and probably gas. Over 100.000 employees are employed in these services.
Against that background the Bureau of the EWC considered a number of issues:
- The lack of response to our request to meet the European Commissioner for Competition Policy, Mrs. Kroes to discuss the social implications. She was quick to meet the employers but has not yet agreed to meet with a delegation of the SUEZ EWC. The Commission’s reaction will be a test of its willingness to construct more then a Europe that works for the benefits of financial interests.
- The contents of our reaction to the European Commission which will underline the concerns regarding employment and the need of the Commission to discuss with us the possible disinvestments required;
- The approach to management of Suez to commence negotiations on an agreement that provides more information and consultation rights, guarantees for employment etc.
- A possible reaction to ENEL in the case the hostile bid materialises
- The alternatives to the project of ENEL and the proposed merger of Gas de France and Suez. The full meeting of the EWC will be 21 June.
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