John Battle, the Energy Minister, has threatened to invoke an EU reciprocity clause to prevent French electricity suppliers from signing contracts with UK companies until France's electricity markets are open to competition.
But a spokesman for the EU Energy Commissioner, Christos Papoutsis, said that Britain did not have the power to retaliate in this way. "As far as we know there is no such provision built into British law," he added.
Ministers have become increasingly angered that while the state-owned French electricity producer, Electricte de France, supplies 7 per cent of the UK market through the cross-Channel interconnector, UK generators have been unable to penetrate its protected markets in France.
Officials at the Department of Trade and Industry said the mechanism by which Britain would block French imports had not been gone into yet. But he maintained that any action Britain chose to take would be "legally sound".
It appears that Britain does not have the right to invoke the reciprocity clause because it has not enacted the EC directive on electricity liberalisation into UK law. A DTI spokesman said this had not been necessary because the UK market was already liberalised.
This means legislation would have to be brought forward in order to give the UK the power to block French imports. Mr Battle has written to his opposite number in France, Christian Pierret, saying the UK will consider retaliating if the French market is not open within the next three months.
France was supposed to have partially opened its markets on 19 February, allowing up to 25 per cent of French customers to chose their electricity supplier. But the bill enacting the EU directive in French law has got bogged down by parliamentary skirmishes and is unlikely to become law until October at the earliest.
Even then, the law will only commit the French to doing the bare minimum. The EU directive provides for a further opening up of national electricity markets to competition in stages, with 28 per cent of customers allowed to chose by 2000 and 33 per cent by 2003. But the law going through the French parliament does not specify what further steps it will take to liberalise the market.
A group of electricity producers, including the nuclear generator British Energy, recently wrote to the European Commission complaining at France's failure to implement the directive.
This is the latest run-in between London and Paris over France's failure to open its market. Earlier this year the European Commission refused to hand back to the UK authority to vet EdF's pounds 1.9bn takeover of London Electricity. The Government had wanted the power to approve the deal partly to give it extra leverage over the French.
EdF beat British Energy in the contest for London Electricity. Since then EdF has also bought the supply business of Sweb in south-west England, again pipping British Energy to the post.
Outlook, page 21