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Jolly Good Fellows with a Purpose

by David Michaelson, Echo Research.
 
September 14, 2006


The Suez-GDF merger: a parliamentary row

It could be called "THE battle" of the new parliamentary session considering that 137,449 amendments to the government bill have been tabled in unending debates.

Put forth last 25 February by the Prime Minister, Dominique de Villepin, the planned merger between Suez and GDF incurred, at the onset, the wrath of both members of the opposition and certain politicians of the majority.

At the time, the plan was to counter a potential takeover bid by the Italian utility Enel on Suez.

The summer respite did nothing to calm down the politicians or the press. The media went over the pros and cons of the participants in the debate: "Merger necessary" for the defenders of the project, "dangerous" for its critics. In their speeches which were printed in the press, the left wing parties and the UDF denounced the industrial project, judging it to be against the interests of the company, the employees and the French people as in their view, should the privatization take place, there would be a rise in prices, the role of public service would be called into question, the energy supply would be threatened, and EDF would be destabilized.

Beyond the political quarrels, the press wrote that the issue of energy and its geopolitical consequences had to be raised and discussed at a national level. It also brought up the cost of the investments in this highly-competitive sector and the choice made by certain neighbouring countries. However, the much-awaited debate seems to be greatly compromised as last 7 September, the opposition tabled some 137,000 amendments paralysing the parliamentary debate - a first under the Fifth Republic. This is a situation which could push the government and the majority into using Article 49.3 before the end of September. Certain headlines were clear in saying that the number of amendments, sometimes qualified as "ridiculous", would have the opposite effect. They called it mere 'window-dressing' as certain amendments were basically identical, and they questioned the fact that such procedures be allowed to slow down the parliamentary debate of the merger.

While the debate generated more and more media exposure, the UMP came forth saying that it was necessary to reinforce France's clout in the constantly changing energy sector in order to block foreign competitors, such as Russia's Gazprom, and denounced in early September the "political nature" of the affair which prevented any debate.

In August, the press wrote about the grievances of the European Commission on the planned merger. At the beginning of September, the media referred to the "letter of remarks" written by Gérard Mestrallet and Jean-François Cirelli, Presidents of Suez and Gaz de France, who contested one by one Brussels' grievances.

While the debate was raging in the Assembly, the media picked up on another major problem facing the Members of Parliament. Because in as much as there can be a parliamentary debate, they will have to make a decision on an industrial project which will then be decided upon by the European Commission - a decision which will only be made public by the end of October or mid-November. The press pointed out that the new group - if it came to be - would have to give up some of its assets because of Europe's competitive energy markets. In their letter, the presidents did not however specify what compensation they would be ready to agree to in order to obtain Brussels' approval.

Be it for one side or the other, the game is far from over.

Sylvie Testard-Ramirez, Managing Director of Echo Research France

Analysis and commentary by Echo Research: www.echoResearch.comon the basis of 530 articles which appeared in the daily national press online between 1 August and 10 September 2006.

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