(BRUSSELS) - The European Commission announced Thursday it was opening an antitrust case against Gaz de France and would probe the energy company on suspicions it sought to thwart competition illegally.

"The commission proceedings focus on behaviour which may prevent or reduce competition on supply markets for natural gas in France," Europe's top antitrust watchdog said in a statement.

In particular, it said the case centred around whether long-term limits on transport capacity, import agreements and under-investment in import infrastructure restricted competition illegally.

The state-controlled company is in the midst of a merger with French utilities group Suez, although the deal has bogged down over delays and political and union opposition.

The commission said that although it had no proof that GDF had broken EU competition rules, it was acting on evidence it had uncovered during a raid on the company's premises in France in May 2006.

If the competition regulator determines that GDF broke EU antitrust rules, then the company could face heavy fines.

In reaction, GDF stressed said that it would cooperate with EU regulators and stressed: "The initiation of proceedings does not mean that the European Commission -- as it says itself -- holds conclusive proof of wrongdoing."

It also said that if its competitors had suffered because its practices, they could have filed a complaint with regulators, which it said none had done.

At the end of July 2007, the commission already opened a separate antitrust case against GDF and German energy group EON over suspected collusion to keep out of each other's home market. That case is ongoing.

More broadly, the commission has been long concerned about the lack of competition in the European Union's gas and electricity markets, despite their liberalisation.

At the antitrust level, it has carried out a lengthy sector-wide investigation aimed at shaking out any cases of abuses.

Meanwhile, at the legislative level, it has proposed that big integrated power and gas companies hive off their distribution networks in order to ensure effective competition.

Member states are currently debating the plan, with France, Germany and some other member states strongly opposed.

Further details - European Commission

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