EU seeks to vet foreign energy investors - Barroso

The European Commission will propose a mechanism this week to prevent companies from outside the European Union buying up power networks in the EU for non-commercial reasons, its President José Manuel Barroso said.

Mr Barroso told reporters he had discussed the issue with Russian President Vladimir Putin, but the measure would not be aimed against Russian state-owned companies alone.

"We believe (that) in the energy sector we should be open, but we should not be naïve," he said.

"We want an EU-wide mechanism that could be activated if necessary to protect the internal market against external actions that could have non-commercial aims," Mr Barroso said.

The EU accepted and welcomed investments from states that did not have free market rules and were not in the World Trade Organisation, but it needed some safeguard against bids with non-economic motives "of influence or security, for instance".

The EU has been pressing Russia unsuccessfully to open its energy networks and markets to European companies but Moscow has tightened its grip on such assets through state-owned gas monopoly Gazprom.

Mr Barroso said he had told Mr Putin: "I find it strange that a Russian public company can buy network industries in Europe and that European companies have not the same right there."

The Commission will put forward detailed proposals this week to open the 27-nation bloc's energy markets to more competition, notably by splitting power generation from distribution networks.

Mr Barroso said he was not afraid of confrontation with big member states such as France and Germany, which strongly oppose so-called "ownership unbundling" that would force a break-up of their major gas and electricity companies.

He said the Commission would propose what it believed was best for Europe, while outlining other options. Member states and the European Parliament would make the final decision.

Some EU countries already have mechanisms that allow them to intervene on national security grounds, he said. (Reuters)

But the EU has no collective instrument to intervene when there is a suspicion that non-EU countries are using investments "to promote non-commercial interests". It is not clear whether member states will be willing to cede such power to Brussels.