The move will come as a blow to management of the companies, which have already received approval from the French government.

The Commission’s initial market investigation has found that the proposed transaction would raise significant competition concerns at all levels of the gas and electricity supply chain in Belgium and at all levels of the gas chain in France, given the horizontal overlaps and the vertical relationships between the two companies’ activities.

The Commission now has 90 working days, until 25 October, to take a final decision on whether the concentration would significantly impede effective competition.

“The energy sector is essential for European competitiveness”, commented Competition Commissioner Neelie Kroes. “It is therefore crucial that the Commission carefully analyses the competitive impact of this merger, to ensure that it does not crate more barriers to a fully functioning single market for energy. I must ensure that industry and consumers in Belgium and France do not pay the price for this merger”.

State-controlled GDF is the incumbent gas operator in France, and is also active in other European countries, most notably Belgium, it is also a new entrant in the electricity sector in France, Belgium and the UK.

Suez is active in the gas and electricity sectors, in energy services and in water and environmental services. Its geographic focus in the energy sector is Belgium, via its subsidiaries Distrigaz and Electrabel. It has also recently entered the French markets in both gas and electricity.

The decision to open an in-depth inquiry does not prejudge the final result of the investigation.