The merger of French utility companies Gaz de France and Suez could be refused over their natural gas activities according to European Commission sources.
The merger will only be approved if the regulators are satisfied that it does not reduce competition for energy supplies in France and Belgium.
The companies have reportedly told the Commission they would be prepared to sell GDF’s share of the Belgium gas market, but trading could be difficult for the buyer and the merger partners have to explain how a new entrant could survive.
The EC sources say the competition problems seem less for electricity.
The companies are likely to be able to keep the Belgium power supplier Electrabel if they merge and sell the GDF-owned 25% of Electrabel’s rival SPE.
But even if the competition issues are sorted out the merger still faces strong political opposition in France where parliamentary approval is needed for GDF’s part privatisation.