Outlook: French gall

THE PERFIDIOUS French are up to their old tricks again. Electricite de France won control of London Electricity while the regulators were looking the other way. Now the state-owned juggernaut is attempting to merge London with Eastern Electricity, creating one very large and potentially anti-competitive powerhouse in southern England, again without the regulators getting a look-in.

London claims its get-together with Eastern, which is also foreign-owned, does not technically constitute a merger, since the physical assets and operating licenses will continue to be owned separately by the two parent companies. This is disingenuous. The new joint venture will operate both distribution networks as one under a single management and the two parents will share all the usual cost-saving benefits that come from mergers in the shape of job cuts, single IT systems and shared procurement.

To add to their Gallic gall, EdF is not proposing to share any of the substantial cost savings it expects to achieve with the five million customers of the enlarged group. If the deal goes through unchecked, it will mean further consolidation in an industry which is already ruled by monopolistic fiefdoms, weakening the energy regulator's ability to ensure that customers are not being ripped off.

The French are gambling on the deal being whisked through in Brussels by dint of the sheer size of the respective parent companies and the usual pusillanimous display from the Department of Trade and Industry. Don't let them use the loophole. This is one deal that cries out to be hauled back to London and packed off to the Competition Commission. If ground rules aren't set now, more electricity distribution companies will follow where London and Eastern have led.

Outlook@independent.co.uk

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