Brussels, 22/11/2004 (Agence Europe) - Last Friday the competition services submitted a draft decision rejecting the proposal to acquire the Portuguese natural gas company, Gas de Portugal (GDP) by the traditional electricity provider, Electricidade de Portugal (EDP) and the Italian energy company, ENI. This decision will be examined by a consultative committee, consisting of representatives from the national competition authorities before the 25 Commissioners meet up in mid-December at the latest. The new College will then have to make a decision by unanimity on this plan, which was launched by José Manuel Barroso. In a final press statement before handing over to Neelie Kroes, Commissioner Monti regretted on Friday that it was "not possible to find a solution to the problems identified by the Commission". He explained that "Portuguese consumers and businesses were already paying some of the highest electricity prices in the EU and this merger will not improve the situation, unless appropriate conditions are found". Earlier, the Portuguese minister of the economy, Alvaro Barreto, recognised that reciprocal arrangements proposed by EDP at the opening up of competition did not convince the Commission of the absence of any risk of abuse of dominant position.
According to the project, EDP (whose activities involve electricity production, distribution and supply in Portugal) would have a majority stake and ENI, which operates at all levels of energy supply and distribution would have the other 49%. GDP, which is the traditional gas supplier in Portugal, is currently present at all level of the subsidiary. The Commission began a probe in August and fears that the operation would reinforce EDP's dominant position on the wholesale and integrated Portuguese electricity market, as well as that for GDP in the gas sector. In the context of gas and electricity liberalisation, the operation could lead to the elimination of GDP from the Portuguese electricity markets where it is a competitor to EDP and to EDP's elimination from the wholesale gas supply markets where GDP is dominant. According to the Commission's preliminary examination GDP also provides gas for EDP plants using this electricity to produce electricity and the merger of the two entities could monopolise the Portuguese electricity markets by keeping out electricity companies that wanted to penetrate the gas markets in Portugal. The reciprocal arrangement proposed by EDP in the final negotiations are only spread over a few months leading up to the launch of the single electricity market in June, which the Commission considers insufficient.