The European Commission has called for big gas and power suppliers to split from their transmission networks to inject more competition into the sector.
Laying out a sweeping shake-up of the energy industry, the Commission also said that 'tough conditions' were also needed on foreign companies to ensure a level playing field with suppliers from abroad.
If the Commission's proposals go ahead, the days are numbered for big integrated companies that both produce gas and electricity and then transmit energy to retail distribution networks. These include EON in Germany and EDF in France.
The body has long criticised what it considers to be a lack of competition in a sector seen as crucial to Europe's economy.
'If a company sells electricity and gas and at the same time owns the network it has every incentive to make sure that its competitors don't get fair access to its grid,' Commission chief Jose Manuel Barroso told journalists.
To avoid non-EU firms snapping up networks spun off in Europe, the Commission has proposed that foreign groups would have to prove that they did not own gas supply or power generating activities.
The conditions on foreign companies are widely seen as being designed to keep companies such as state-owned Russian energy giant Gazprom and Algerian state oil and gas group Sonatrach from gaining full control of the gas taps for European consumers.
