No one could accuse Neelie Kroes of slipping gently into retirement. In her last months as EU antitrust commissioner Ms Kroes has delivered a slap across the chops to several state-owned banks, and rolled up her sleeves regarding Oracle’s bid for Sun.
Now it is Italian energy conglomerate Eni’s turn to sweat.
Eni is due to testify before EU regulators in two weeks time to fight allegations it has abused its large European gas pipeline network to block competition.
This could be good news for activist investor Knight Vinke — a 1 per cent stakeholder — who with characteristic bluster launched a campaign earlier this year to split Eni up. The example of British Gas, spliced into National Grid, BG Group and Centrica, is cited as a success to be emulated.
One of Knight Vink’s arguments was that Eni shareholders would benefit more if the company chose to anticipate regulatory action instead of having change forced upon it.
This argument has its strengths.
The EC has already shown it means business. Once threatened with regulatory action European energy companies have tended to divest assets to avoid fines. In 2008 E.on let go of a section of its electricity grid, and RWE sold of a section of its gas pipelines.
According to the WSJ, Eni could face a fine of up to 10 per cent of annual revenues which hit €108bn last year. The EC could also force Eni to sell assets — something which would presumably be music to the ears of Knight Vinke.
But before those calling for a split get carried away, they would do well to remember who Eni’s main shareholder is.
Silvio made his position clear in March: “There are requirements that are more important than the rules”.
And as intimidating as Neelie may be, it is hard to envisage Signor Berlusconi allowing Brussels to lay its hands on a company he views as a national champion without a fight.
Related links:
Hello, is Enibody out there? – FT Alphaville
Eni Faces Threat to Lucrative Gas Network – WSJ
Eni – Lex