The French "right" and competition

GdF is an energy company, Suez operates in the energy and environment sectors. They want to merge. The French government is intervening to tell Suez that it must divest itself of its environment division if the merger is to go ahead. Why is that?

Is it on competition grounds? Quite the opposite. The competition threat comes not from the merging of Suez's environment division with GdF's energy activities, but from the merging of the two companies' energy interests. But the French government is not only unconcerned about creating an energy behemoth, it is actively encouraging it as the desirable outcome. They want to create another "national champion".

Is it because there are few synergies between the energy and environment sectors? Suez obviously doesn't think so, and as it is the active partner, protecting the tasty morsel that is GdF from the terrible fate of being swallowed by a foreign competitor such as Italy's Enel, Suez's opinion ought to count. And there are indeed obvious synergies, for instance in the potential for the use of waste as a source of energy, and in the environmental impact of energy-generating and -supplying activities. The French government has not tried to justify its intervention on these grounds.

No. It is because the French government wants to retain in the merged group the share of influence that it currently has over GdF. As Sarkozy said, "I proposed to Suez that it merge its energy activities with Gaz de France... to build a big gas and electricity group with... the state as principal shareholder."

Let's not worry that its influence has proved so effective that it has made GdF a target of acquisition. Nor that the group in which the French government has less influence (Suez) has been doing better than the group in which it has more influence (GdF). This is not about commercial logic and the good of the businesses in question. It is about power and making sure that the French state has the biggest finger in as many big pies as possible. Commercial logic and competition be damned. The inevitable result of political involvement in commercial activities.